China, the business hub of the world is a dream for many entrepreneurs. With a 10% growth every year, one billion potential Chinese consumers; of those billion consumers 800 million are cell phone users, 540 million are Internet users and millions of millionaires. China is like a big pot of gold that is just waiting to be dug by eager entrepreneurs.
The gold may be there for everyone’s taking, but one must have enough understanding of the market to be able to get a piece of the gold. Culture, competition, copyright, a market that evolves too quickly, these are all extremely important factors every business needs to respect and understand before they can get their hand in that pot of gold.
To do business in China, there are rules. These rulesmay not always guarantee success but being aware of common errors will instantly help with your survival and eventual success.
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1 . Adapt yourself to the Chinese market
Sounds easy enough, but this is one common misconception many foreign entities had to learn the hard way. Foreign companies have to adapt to China’s market not the other way around. Adjust target consumers and market, this rule is valid for all countries of the world and across all sectors, even for a new market like China. Due to the mysterious culture many companies are struggling to adapt to the Chinese market.
2. Have a coherent strategy
Although easier said than done, it is very difficult for a company that establishes itself as a Chinese market to have a coherent strategy, because the coherent of China is not necessarily the same that of the West.
Study the competition:
China is a country super-competitive. Competitors are probably numerous in your area, so it is important to know what they offer, their strengths and weaknesses and how they are perceived by your potential customers.
Positioning is really difficult for many Western societies, because decision makers are often not immersed in the Chinese society and in the area in which the company addresses.
The price positioning is important, you have to know : “which prices for my products in the Chinese market? “It depends on many factors, including competition, company image and quality of product offered.
Chinese professional buyers willing to pay 30% more for a quality foreign but usually not more.
Consumers, meanwhile, are irrational if they are wealthy and looking for the rest of the population.
3. Be responsive
China is a country that changes all the time and Chinese people are very reactive to change. Decisions are made quickly and often this something our Europe is not use to.
If a company wants to succeed in the Chinese market, one must react quickly to the market and competitive developments.
4. Keep control of ones company, its distribution
If a company is suffering in China, it will have no problems keeping control of its distribution and its products.
However, if the company is experiencing a rapid success then new problems will arises: copyright, entry of new competitors, lower cost and loss of control of part of society.
The Chinese partner may also decide to go it alone (eg Danone in China), the sales manager can establish his business and the purchasing manager can with the money of the company to buy a house in Hainan … It happens!
5. Communicate in Chinese
I know a lot of divergent opinions. Some people think that speaking English gains more respect from the Chinese. I do not believe so.
Most of the Chinese population still does not speak English. Having a brochure or a website in English is often a brainteaser for them, pushing them to do so will not help with your business.
Communicating with a Chinese in Chinese is very difficult for a Westerner (see this article). Usually they will use a translator who will do a literal translation, not expressing the right tone.
Develop a slogan, trademark, visuals and a website request to have a local expert that can give advice and make some suggestions.
And believe me it is not given to everyone.
The classic error is: the translation entrusted to the young Chinese population who are new graduates and freshly employed who will do their best but the translation can sometimes be inconsistent.
The western managers do not read Chinese, and do not understand the subtleties validate the draft without any problems. Even the largest companies, however, accustomed to a marketing quality fall for it.
A French automobile company brand named Biaozhi, which sounds close to a Chinese work, Biaozi meaning bitch in Chinese.
Shangxia (Chinese brand of Hermes) means “to have the heart that goes up comes down” “feel dizzy”.
KFC “we do chicken right” 我们 做鸡 是 对 的 also means “we make prostitution!”
In China, we use different ways to search for information, Baidu is better than Google, and Weibo better than Facebook. For a person immersed, it is instinctive…For a newcomer, it is much less.
6. Keep employees
“Mostly good, tell a friend! ”
It is difficult to keep a good staff in China!
The market offers many opportunities for growth: large business groups offer better salaries and more responsibilities. On average, a Chinese business stays two years in a company (source: Zhaopin), China is moving and people too.
One factor causing this change is the salary increase of 20% on average in changing company because apromotion and a raise within a company are difficult. Consequently, the Chinese know that in order to evolve you have to change employers.
But maintaining consistency is essential in a company, to capitalize on its experience to improve. An employee will have to train for at least a year before they will be effective workers. It is important for a company to anticipate this and provide for wage increases.
It’s not easy is digest, but that is the reality, and being aware of this can prepare you for having a good staff.
7. The art of relationships
Relationships with employees, suppliers, customers are crucial for survival in China. Chinese people are more sensitive to interpersonal relationships than Westerns are.
In China it is referred as ‘Guanxi’, it is essential for success in most sectors of the Chinese economy. The concept of service to consumers is very common in Chinese society.
Like any human being on this earth, the factor “sympathy” plays an important role in productivity and loyalty to a company.
The Chinese are very flexible, they accept everything the customer wants or almost. Chinese SMEs are often oriented “customer” and have great flexibility. European companies offer very little flexibility and suffer in the Chinese market.
A hierarchical system where heavy Chinese employees often do not have a place helping to defeat a rigidity that these Chinese buyers, accustomed to meet commercial “local” who bow to their every whim. China “the customer is god”, and he does not like being kept waiting.
9. Capitalize on your brand
The trust factor is very important in China. A foreign company will have a higher level of trust with the local. All Chinese people have already lagged (quality, scams, time, customer service …) by a local company they prefer to secure their purchase with a foreign company.
– A brand is a commitment to quality
– A brand is a trust mark
– A brand is a benchmark
– A brand is also service, after sales service, advice …
Chinese people can copy but branding level is something they cannot copy, for now.
10. Be Patient
Overnight success in China is quite impossible. I still do not know of examples of foreign companies that have succeed quickly. All China experts agree on one point, “be patient in China.” In other words, the payback is long, and successful companies now, in 2011, are present for many years like: Volkswagen, Louis Vuitton, or Ikea.
Only after several years that these companies were able to adapt, but the reward is great.