Why Your Pricing Strategy Is Core to Your Success, or Failure, in China

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A fragrance brand I worked with had signed an exclusive distributor for mainland China, but the territory didn't cover Taiwan. One day, a buyer based in Taiwan placed a single order, large enough to qualify for a decent discount, and then disappeared. A few weeks later, the brand's own mainland distributor flagged the same products selling for noticeably less on a local marketplace. No one could prove it was that buyer rerouting the stock back into the mainland, but the timing left very little doubt.

This is what happens when pricing isn't treated as infrastructure from day one. And once consumers start seeing your products cheaper somewhere else, there's no quick fix: it's not one sale that gets hurt, it's how the whole market prices you from then on.

In this article, we analyse three pillars regarding your pricing strategy in China.

1/ Lock down Greater China, not just mainland China

If your business model is to find a distributor in China, it's recommended, to give your Chinese distributor, once you have validated his capability (cf. our due diligence checklist), an exclusivity territory that covers Greater China: mainland China, Hong Kong, Macau and Taiwan. If even one of these is left uncovered, a distributor based there can legally buy from the brand and reship the products into the mainland, undercutting whatever price your official distributor is holding.

Your mainland distributor, who monitors the market constantly, will notice and flag it. But they'll rarely have certainty that this specific buyer is the source. That "easy money" from a brand perspective, as the Chinese would put it, turns into a long-term trap and quietly rots your core business in the region that actually matters.

2/ Build your pricing structure (价格体系) before the marketplaces build it for you

If you are aiming to keep control on your business in China, you need to understand how the game is played in Chinese retail: how it works, and the mechanisms that come with selling on them. In China, the bulk of online sales and market share happens on marketplaces, not on brand-owned DTC websites as it often does in the West.

Once you acknowledge this, keep in mind how Chinese marketplaces actually get paid: on sales commissions, and on the media buy budget you invest in their ecosystem. That's what drives them to put the brands that participate in their campaigns in front of more shoppers.

To get that visibility, the condition is simple: a more attractive price than usual, usually for a short window (often 15 days), with enough stock on the eligible products.

There are generally one or two of these events a month, and the discount asked ranges from 5-10% off on smaller campaigns to 15% or more on the big ones, like Double 11 or 618. It's genuinely rare for a brand to succeed in China without attending at least some of them. The exceptions are brands with global name recognition, like Apple, or brands with high investment on pure branding side.

So when you build your annual plan, set your Chinese Yuan's RRP with enough flexibility to actually play: define an annual average discount rate (commonly between 10% and 15%, depending on the industry) and build a price ladder with your partner under it, for instance:

• RRP — 0% off
• Daily Price — 2-5% off
• Small Campaign — 5-10% off
• Medium/Big Campaign — 10-15% off
• Lowest price (influencers, specific events) — 15-20% off

From there, be more flexible and pick the events that actually fit the brand instead of joining everything available, and track your discount rate. It gives your operations team on the ground a clear mandate instead of case-by-case calls, and it avoids chaotic, last-minute execution.

If you don't want to do any discount, be aware of the limits. In that case, you should move the related discount rate budget into branding strategic activations.

Psychological pricing also works the Chinese way. The classic 99 vs 100 RMB trick works in China like everywhere else, but numbers also carry meaning here. 8 (八, ba) sounds like 发 (fa), as in getting rich, so prices like 168 or 888 are an easy win. 4 (四, si) sounds like 死 (si), death, so keep it out of your prices, especially for gifting and around Chinese New Year.

3/ Avoid uncontrolled price war

Once your sales run across multiple marketplaces, or through multiple sellers, without one entity owning the pricing, conflicts are close to guaranteed:

• Marketplaces don't run the same campaigns, at the same time, with the same discount conditions. Even with good intentions, the same product ends up at different prices from one platform to another.
• If influencers sell your product at a specific price on only one platform
• If a sub-distribution network grows past what's manageable, sellers start undercutting each other to get surfaced by the platform's own ranking logic, and prices get pushed down round after round (cf. 内卷 neijuan, "involution": the term Chinese business media use for competition so fierce that everyone bleeds money and nobody actually comes out ahead).

In most cases, the fix means going back to the master distributor or sales partner to re-align on a single pricing structure (价格体系) and who actually enforces it, or changing partner before it spreads further. Without a pricing structure that both sides have genuinely signed off on, a price war is close to inevitable.

Once a brand has been discounted too hard for too long, it's genuinely difficult to bring it back to normal. Chinese consumers remember what they paid, and won't go back to full price unless the brand invests seriously in re-education and cleans up the distribution network that got it there in the first place.

Want a customized opinion on your pricing structure depending on the business model you are looking for in China? Get in touch.