Is Loss of Trust Creating Business Opportunities in China?

Trust is a headline issue in China. The most dramatic examples of unsafe products—tainted baby formula, dangerous additives in milk, expired meat—have resulted in not only a loss of trust in products, but severe punishments for those deemed responsible, up to the death penalty. Despite authorities taking swift action, consumers (both B2C and B2B) are being extremely cautious and feel confident only when dealing with sellers they know well, and, even then, there are lingering doubts. As discouraging as this may seem to companies that sell products in China, we see this as a prime opportunity for many B2B companies.

With Challenges Comes Opportunities

To reestablish trust, a number of innovative companies have taken the lead in creating methods to ensure that the quality and safety of products can be verified. For example, buyers of bottled water can call a toll-free number to verify that the bottles are new and genuine, rather than refilled from the tap. Mainland parents fly to Hong Kong in search of brand name baby formula, which is perceived as safer, because Chinese consumers recognize that issues that occur in China typically do not happen abroad.

So What Does This Mean for B2B companies?

B2B companies that can help reestablish trust in a market wrought with doubt and suspicion have a prime opportunity to create value and establish a winning position in one of the world’s largest economies. For example:

  • Companies in the barcoding and tracking industries can work with manufacturers and distributors to prevent substitution along the supply chain
  • Packaging companies can work with product manufacturers to introduce tamper-proof packaging, smart packaging technologies that can detect the presence of chemicals produced as foods spoil, or difficult-to-duplicate graphics on packaging to indicate legitimate products
  • Foreign suppliers of supply chain management services could guarantee that tainted or knock-off products will not be introduced in the supply chain
  • Chemical manufacturers and printing companies can manufacture/produce ink that responds to temperature by appearing or changing color to verify that products were not subjected to high temperatures in the supply chain
  • B2B eCommerce sellers can guarantee that all the food and home products they sell are imported. While a niche market, it could be a lucrative one for U.S. producers, after years of localizing production in China to meet the price expectations of the average consumer

With more mature technologies and long experience, B2B companies can help ensure product and supply chain security and rebuild trust among Chinese end customers. U.S. B2B companies can turn the challenge of trust into a business proposition that creates value for end customers and in return be rewarded.

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