Type "Business in China" into Google and it pulls up a whopping 3,340,000 entries; the same search on Amazon
returns 48,244 products. We can safely assume that doing business in China is important for every company today.
China is now the second biggest economy in the world -- it's been growing by an average of 10% a year over the past 30 years -- and this blooming market shows no signs of slowing down any time soon.
But it's also a market with a unique history, culture and political system -- a combination that presents very specific challenges to global brands entering the market in the hopes of reaching 1.3 billion potential consumers. At DDB
, we've uncovered a unique set of barriers and drivers to doing business. Here are our eight fool-proof ways to fail in China.
1. Fully rely on your global experience
Most global brands operate in Western, mature markets that demand similar approaches to marketing communications. Consumers' cultural background and market situations may vary and marketing is similar from Boston to Berlin. But China is still in a class of its own -- it can annihilate global experience and render it useless. Talent is a rarity. Local talent knows the market inside-out, but usually has little experience of working in a global context. Foreign talent is experienced on a global scale, but lacks the in-depth understanding of the Chinese market.
2. Be ultra-strict on global brand guidelines
Consistency is key for a global brand, but staying true to the same values and attributes, regardless of where and who you are selling will not reap the benefits in China. The language and culture here makes it imperative for global brands to be relevant, and understood.
French hypermarket chain Carrefour got it right. The Chinese expression is "Jia Le Fu" -- which loosely translates into "House of Happy Family/Home of Happiness & prosperity." It's a huge success throughout China.
3. Compete on price
China is a country where a worker from a rural area earns US$200 a month -- brands need to be able to reach the top and the bottom of the pyramid. A myriad of local Chinese suppliers manufacture inexpensive products with similar functionalities to global players. Not only cheaper, quicker, and better quality, but they are available everywhere. Distribution is key and if you cannot go there, eCommerce can.
4. China is China
There is more to China than the big Tier 1 cities like Shanghai or Beijing. Nanning or Ningbo may be similar in terms of population size, but consumers in lower-tier cities think, behave and consume differently from their counterparts. Values, media consumption, purchasing criteria and trigger points are completely different. Careful planning of paths of purchases and matching marketing communications is vital.
5. All consumers are the same
The thought is as understandable as it is tempting: getting through to basic emotions can be key to marketing communication success. Chinese consumers can decode messages in a different way than most. The triggers can be completely different and surprising.
6. When in doubt, be loud
In some categories, the market leader benefits from significant media investment. A strategy to outspend competition results in a significant stab at profitability.
For an established brand like McDonald's
, social creativity campaigns have helped drive creative effectiveness.
7. You cracked social media already
Due to its unique culture, history and political system, the digital landscape in China is vastly different to any other place in the world. The usual suspects are blocked and China has its own successful local social platforms; RenRen (Facebook), YouKu (YouTube) and Weibo (Twitter) are superior in their usability and functionalities. In China, the speed of information and impact is much higher than in the West.
8. Be hasty, be greedy
China is very tempting. A country running on rocket fuel, an entire middle-class emerging with new needs for new products. Many companies entering the market cannot wait to get things started fast in order to stake claims early. From a Chinese perspective, global brand value is only one side of the coin: potential demand and sales are the others. Regardless of which Chinese province you want presence in, take your time and make concessions.
Jenny Liu is group planning director at DDB China Group and Tim Schlick is the former co-head of strategic planning, DDB Greater China Group. Read their full paper here.