Lately, China has been put on a pedestal concerning the gold mine of opportunities it represents. It will be a shame to not enjoy it right ? Nevertheless, what companies keep forgeting is that the strategy that has to be used in China is very different from the one they use in Western countries. Thus, it is important to know what to expect and the mistake that can be avoid when you want to establish your company in China.
1. An inadequate strategy
China is a big country. Foreign companies keep forgeting that it is 17 times bigger that France with over 1.3 billion inhabitants. Therefore, you can’t invest the market the same way as you do it back in your country. You need to have partnership with Chinese company in the first place to understand how does it work and how you should procede. Not only on the consumption part but also on the organisation part.
Do not underestimate the government power. In China, everything is connected in one way or an other to it. Thus, you need to have good relations with it, respect it and adapt your strategy in function of. Your relationship with supplier is also very important and might help you to get goods faster or having discount. It will save you time and money relationship in business is what wil make you company successful.
2. A lack of patience
In China, finding leads is not too difficult, having potential client neither but when it comes to make them sign a contract and start to make money, it takes a long time. If in Western country, everything is fast and you know quickly if you are loosing your time or not, in China, the most time you spend, the most chance you will have to close the deal.
Chinese will cast doubt on your arrangement several time before truly accept it. They won’t tell you what is wrong directly and this will lead to a long process of discussion. However, you need to understand it is not to annoy you, it is the way they make business. After you won their trust, everything gets easier and faster so be patient and it will pay up.
3. A misunderstanding of the culture
The culture in China is very specific and nothing like you have seen in Western countries. You need to study and understand how does chinese comsumers think and act before trying to sell them things. You will arrive with prejudice of Chinese society and it will be your first mistake. You need to study the market and the general atmosphere to be able to have a relevant marketing strategy.
Moreover, when you will have to hire Chinese employes, you need to know that they do not function like Western employes so do not use the same management methods on them. It is an other commun mistake that foreign companies do. Chinese will never say « no ». So when you ask them if they understood or know how to do it, they will always say « yes » or nothing. Therefore, you need to ask them to repeat to make sure they understood. They do not have any iniative if they do not know how to do it, they won’t try.
4. Not adapting your marketing and communication
China has a very specific market and you need to adapt your marketing and your communication in function of the local market. Nowadays, it is useless to use magazine and newspapers to comunicate or make publicity. Everything is happening online. 600 million Chinese are using Internet this year, which is 46% of the population and it is increasing in a exponential way. 92% of the netizens are using social network and 417 million are using cell phone. It is the most connected nation in the world. It became a leasure to use Internet for them so use this channel to communicate.
On the marketing side, be careful, Chinese are very aware of the reputation of brand so if you commit a misdemeanour the connected community will know it as fast as the information is spreating online. Therefore you might need to use a community manager to take care of your e-reputation.
5. A wrong positioning
Chinese population is huge, they are a lot of different type of consumers even if they all have quiet the same patern. Nevertheless, you need to target the right people for the product that you are selling.
Foreign brand usually do not know how to find the right positioning for their brand in China. Because they are foreign, they think they can target high-end segment of the population while they neither have the budget nor the quality of product. Price is very important in China so if you put it too high or not enough it won’t match the market.
6. Need to start all over again
The business relationship you had in your country won’t be useful in China. If you want to launch in this country, you need to start all over again. This is not because you used to have a good reputation that this reputation will follow you in China (especially when it comes to reputation !) You will need to invest time and money to find supplier and maybe partnership with chinese companies to be able to establish well in this complicate market.
7. Underestimate competitor
Last but not the least, don’t underestimate local competitor. They know the market better and they have more experience than you do. They are here since 10 to 15 years and they already learn from their mistakes. Even if local brand are usually leading the low-end market and seems to be no harm, do not underestime them because they already won chinese consumer’s trust and this is the most important in the market. And do not forget, in China, prices are more convincing than a nice speech.