With its vast and growing young population, rising incomes, and hunger for consumer goods, China looks like a fertile hunting ground for foreign brands.
It has the money, brands such as Coca Cola, KFC and Snickers already do well there, and there appears to be room for more.
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Yet there is much that can go wrong. Just look at Marks & Spencer, which beat a hasty retreat. Many foreign firms fall into the trap of assuming that Chinese consumers are clamouring for foreign brands. They're not.
Launching or building a brand in China is not easy. Here are some key points to consider.
Abandon Preconceptions
To launch successfully, you need to go back to marketing basics. Your existing product and proposition is unlikely to be a slam dunk in China, so you need to behave as though you are launching an entirely new brand.
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How do these consumers live, how do they shop, what do they want, and, most importantly, why do they want your brand? Only by answering these questions can you bring your proposition to life in a relevant way.
A brand must prove its right to thrive – if it doesn't communicate its points of difference, it will fail.
No Such Things As Chinese Consumers
While China has a growing, mainly urban middle class, the differences between cosmopolitan areas such as Shanghai or Beijing, provincial cities, regions, and the rural hinterlands – in terms of income disparity, lifestyle, and cultural values – are vast.
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There are regional differences too. The contrasts between Guangdong and Guizhou are as stark as those between France and Albania – it's certainly not a one-size-fits-all solution.
You should also think across generations. Chinese millennials have a strong desire to consume. They also have the money, thanks to rapid economic growth and the rise of Little Emperor or Empress Syndrome.
The one child policy in China, in place until 2015, means some only children may have two working parents and two sets of grandparents, all eager to spoil them. Buying a house might be out of reach for many, but they are still willing to spend on affordable luxuries.
There Are No Channel Experts
The startup culture is incredibly energetic, which means that new channels emerge all the time, and shoppers, as well as brands, are spoilt for choice.
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Take just one of China's latest billion-dollar startups: Xiao Hong Shu, which translates as The Little Red Book. It's an online shopping channel for foreign products where visitors can leave reviews, with a mainly young, mainly female audience.
China Is Digitally Native
Digital and ecommerce are huge in China, and it's important to have a grasp of its major channels, including the world's fourth most valuable start up Dianping, which provides services such as delivering groceries.
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In digital terms, China is as advanced as many foreign economies – if not more so. There are 900m users on Chinese social media app WeChat, for instance. So, in China your brand must live digitally or it will die. Just look at the spectacular sales figures on online retailer Tmall for Singles Day – they reached 168.2bn yuan. You don't want to miss out on that action.
The Rules Of Guanxi
Comprehending the notion of Guanxi – or relationship building– is crucial. Without Guanxi, even the simplest administrative tasks can take forever.
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You need to get to know your Chinese business partners and gain their trust. You need staff with enough Guanxi to get things done. And you need to avoid making promises you can’t keep – whatever Guanxi you had will rapidly disappear.
Go Early And Evolve
It can take foreign companies years of research before launching a product. But in China's firms pursue an iterative business model, where less-than-perfect products are launched, then tweaked, beating the foreign competition to the punch.
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There aren't any shortcuts, and it's important to be patient. Don't underestimate the local competition, such as smartphone makers Xiaomi or Huawei. They understand their market, they're increasingly competitive, and they have existing distribution and relationships.
What if your product is too easy to copy? The best advice we have is to go premium. French bottled water brand Evian followed both these tips – it successfully entered the Chinese market early, and is now synonymous with a luxurious lifestyle.
Nurturing The Consumer
The secret to launching a brand into an emerging market is to ask the right questions. Does the category for your product even exist yet?
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If the market is at an early stage, you'll need to help consumers by playing a category education role. If the market is at a more developed stage, you can start talking about what makes your product special and dial up an emotional connection.
Source | cityam
HACOS,Business Services Solutions Master