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A story of expansion: DermiClean looks to China

   2021-08-22 2470
“DermiClean” [a fictional US company] is a medium-size but growing US brand of skincare products, with a wide

“DermiClean” [a fictional US company] is a medium-size but growing US brand of skincare products, with a wide selection of creams and lotions. Products are made in the US, and a small but effective team runs the company. Over the past three years, they have mastered Amazon and now have over 20 stock keeping units (SKUs) on the platform, including three products with more than 10,000 reviews and growing sales.

The next strategic marketing step is international expansion. DermiClean is in a few foreign markets—a   result of early success – but wants to expand while still managing the brand and channels. There are various markets to consider, though one looms large: China, the world’s largest skincare market. China is both intriguing and foreboding, a market with conflicting scenarios: China seems easy to enter, China is really difficult; the market is full of opportunities, or it’s saturated and rife with questionable players and methods.

DermiClean executives know that success in China will bring substantial rewards. Not only will it drive sales units and revenues, but for a young company like DermiClean it will prompt a substantial gain in corporate valuation. For qualifying companies that imagine a liquidity event in the not-too-distant future, China success is an alluring objective.

The company has received unsolicited emails from China from “Tmall Partners” (TPs) and distributors, even arms of the big e-commerce platforms, offering to bring them into the China market at minimal cost. A perusal of Taobao shows that DermiClean products are already unofficially sold in China at different prices through multiple resellers, despite the company having never contracted with a distributor.

DermiClean is not an MNC and cannot write a check and expand at will. Executives must weigh their choices carefully. What to do?

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