Following the emerging market in the world, China became the Treasure Island which everyone to entities wants to take a part in. More and more expat business, no matter an experienced one who has developed their products or services in China already, or a newcomer, trying to enter this market and benefits from which face same main problems in China.
If you are considering China as just one of the developing countries and can be applied the same strategies that most MNCs made in the past years in other developing nations, you are taking China business too simple. It might work well 10 years ago but right now, China is in a completely distinct image currently and they are making their new own chapters every day.
WHAT YOU SHOULD KNOW ABOUT THE CHINESE MARKET?
I will maybe afraid you if i tell you will retreat from this exquisite market as so many other international companies did in the past decade, and make effort in vain by equipping with the kind of old-fashion proposition toward China market. China is totally different right now with specific culture and outstanding development in various fields.
Don’t take it as an easy environment to operate in. That is the first rule to keep in mind. Over past decades, China grew into a high-speed developing nation with impressive advancement in technology and innovation, and as well, China has already succeeded in a lot of innovative and advanced items compare to their western counterparts. What amazes us the most are the digital industry flourish miracle, which even western countries have never attended in the past.
Before trying to step into China market, below are some advice in terms of the regular and typical mistakes western entrepreneurs and foreign companies are making in China.
UNDERSTANDING THIS FRAGMENTED MARKET
The Orientals, have little consumption interest and behavior in common with western people. Not to mention that Chinese people share an unique consuming habit. This is related to their growing environment and society factors intensely. And the characteristic of political vibe tends to be more autocratic compared to western countries, as the government would like to set up restrictions and censorship. People, in China, to react to different categories vary extremely as they are cultivated in a different style of environment and government. Thus, to succeed in this market, abundant of research and purely immersing into this market are a better and more promising action to take. By doing so, you can get a better understanding of the market. Or, I will say frankly, to live in China for a long period will be a considerable option.
By truly connecting to Chinese people in daily life, to better understand their consumer behavior and how they deal with problems, react to new coming brands, and interact through online media and social circle. Besides, the most attracting advantage is that there is a lot of first-hand information you can grab contrary to those living outside of China can only obtaining second interpretation materials. To see the fast pace and ever-changing market on your own and to experience it, is the sole way to catch up the Chinese trend in purchasing. With the above information, the important step to prosper in China is adapting your positioning, marketing strategies, pricing and communication methods in relation to China market. All the items need to be really tailor-made for the market, sometimes, some international companies made specific products or managing team especially for China. Global communication rarely succeeds in China, even with a considerable budget.
You may wonder why?
The answer is that it is needed to keep your western identity but to develop a different strategy through understanding Chinese customer’s need by reaching them. For example, Chines customers are into international brands, and they thrive for best services most time but normally they will require information and reputation from the online social network, and then look for a most efficient cost per value one. Besides, they are willing to spend a lot for products which can represent their elegant status, powerful background and a tendency to make others know they are with a fortune, but actually, spend up all the savings or buying cheapest stuff at home. It is an everlasting rule that for Chinese to keep a good appearance is the most important thing. The “Mianzi” cannot be ruined.
Besides knowing the market, it is also to know your target audience. The tricky fact is that most MNCs in China don’t pay attention to take time to understand their target audience and not even build up a relationship to talk with potential customers to truly understand their needs. To successfully catch your customers, you need to really familiar with their needs, China is not an exception. Due to Chinese culture, it is way harder to discover what the demand your target audiences care for because they appear to be polite and keep their thoughts in mind and treat you kindly. Therefore, it takes more time and more effort to know what kind of products they are interested in, and the pricing they are comfortable with.
Even though Chinese seems to prefer buying cheap service or products, the following two cases are not in the discussion. For products purchasing to build privileged business relationships referring to “Mianzi” and “Guanxi” as a gift, people are willing to spend a fortune on to show their respect and honor to the customers. It is still a great part of Chinese business culture. And as Chinese people are more like tribe communities, they are severely influenced by their social circle, which explains the importance of word of mouth in China business.
Another case about causing big money on is that China Millennial is at the stage of young white-collar people and they have a preference in “food safety” and “sophisticated designed product” since they are more focusing on the present, their own feelings, their health and their image in front of others. Likewise, for the young generation mother, they will pay as much as possible for baby milk formula and baby related stuff to ensure their children nurtured in a completely safe and healthy environment.
KNOW YOUR COMPETITORS
Another advantage of living in China is that you are close to your competitors. By investigating and observing each business steps tightly, you are more flexible to change the plans accommodating to local changes. It is a key step to research your competitors to win the market. If companies are expanding to the field you are digging, it means this market is huge and profitable. At the same time, if the competitors are reaching various fields and activities, it indicates that this is a competitive market. A special strategy needs to be applied or a niche segmentation needs to be explored. Also, by knowing how the competitors are positioning themselves, are exposing to digital industry in terms of SEO, SEM or social media. From that, you can know what their focus is and predict what they are going to invest in the near future, and to make corresponding measurements.
ONLY THE FASTEST AND ADAPTABLE FISH SURVIVE
Chinese business same as the country speed of development, no longer than 10 years, China nowadays is seen as a global market and the fastest growing one. You may find out that Chinese take a fully different explanation of “Time ” compared to the westerns. Everything is moving super-fast in China, no matter in decision making, project execution, new business launching and expanding, or even the successful moments comes faster. The society operates in the same way, it changes dramatically and brings new trend every day. The breakneck speed of changing paces results in most of well-known MNCs failure in the market. And you cannot just fast for a while; you have to move fast all the time, or else you will be left behind by competitors.
Imagine that Alipay which invented by the largest digital player in China Alibaba set up in many major shops around the country within 6 months after the launch date and now are in partners with lots of international store in different countries. Turning to western companies, it may take for years to make a new developing plan or to practically implement a project because internal procedures take time from generating ideas, document making and transmit through the different level of the hierarchy to become a project, then to execute. This scenario won’t happen on small companies inside China, otherwise, the competitors will get ahead of you. Or, the market and society change that all you have done are in vain. Therefore, in China, adapting to the fast pace, performing dynamic and react quickly is the key. When you are waiting or thinking, your competitors get on the train already.
DISTRIBUTORS ARE THE ACHILLES’ HEEL
Many companies find it difficult to cooperate with a fair local distributor. There is a void between western brands and Chinese distributors, but it is necessary to have a local distributor for most brands. Lots of brands suffered from cheating or abandon by local distributors when they find new investment targets with greater margins. The solution for this problem is to develop a strong reputation and increase visibility to attract the right distributors. The truth is that it is hard to negotiate with Chinese distributors because of language barriers, and local distributors always search for fast and significant returns of investment. But with a high reputation and visibility, can increase Chinese distributors’ interests in you since you deem to help them earn more money.
CHINESE’S STYLE OF COMMUNICATION
As mentioned before, Chinese are convinced by their social circle and make a purchasing decision based on the brand reputation from friends, relatives or online comments. That is, communication in China is the king.
The Millennial generations or the middle-class consumers are more willing to spend money on high quality and safe products, instead of cheap ones which the previous generation may choose. Therefore, they will pay more time on knowing the reputation of brands and to ask opinions from peers. Also, this generation tends to build their own identities which differentiate from other person and generations. Western brands usually equalize to high quality and can present unique taste to peers for Chinese.
But to catch their eyes, high visibility and reputation are still important. That to purchase the brand can be something show off to their friends or post on the social media to get followers.
Still, even though a lot of local luxury and high-quality brands are emerging, Chinese people tend to have more trust in foreign brands and they used to have stereotypes for different countries’ brands. To build well communication ecosystem in China is an evitable way to reach success in China.
However, unlike any other Asian countries by using western communication website or tools, China developed their own digital products. This is because China government censorship is controlling all the information. To get good performance on communication tools or website in China, you need to be familiar with their system and operation. Or, it may be impossible to attract your target audience. For example, Chinese use Baidu search engine instead of Google, Taobao instead of Amazon, Wechat instead of Whatsapp, Little Red Book instead of Instagram and so forth. Also, it is important to use Chinese network word to be more localized.
To sum up
China is a dynamic and huge market but not an easy one to enter. It is always recommended to developing business in China but adapting to China culture is an important take. Many MNCs failed in the fast-paced environment and fierce competition conditions even with considerable budgets. However, the road to success is always the same- knowing the markets, target audience, competitors. And put every effort to tailor the strategies and adapt to China market in a right way.