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Entering the Chinese Market: 10 things brands need to do

Over the past decade, marketing in China has become increasingly more internet-based. This has forced foreign and domestic companies that enter the Chinese market to become mobile-friendly, in order to allow instant access to customers. Along with the success and multiple uses of social media apps, it is no surprise to know that consumers have infinite information at their fingertips. It is therefore up to companies and brands to utilize this information in order to better connect with potential customers in specific markets.

However, before studying the Chinese digital ecosystem in greater detail, there are some other factors that should be on every foreign brand’s to-do list when entering the Chinese market.

Here are 10 things to consider when entering the Chinese market in 2020:

1. Benchmark competitors

Every marketing plan should begin with benchmark competitors, and the Chinese market is no different.

Often, the biggest mistakes foreign companies make in this market is a result of their lack of knowledge and/or underestimation of the local competition. For example, brands come to China with a vision to be a perfect fit in the Chinese consumers lives, but sometimes they do not take into consideration that similar products might already be present in the local market ( with a much lower price), or that the foreign version of the product is not appealing to the Chinese locals.

In an interview to HBO TV Channel, influencer, Mr. Bags, mentioned that luxury brands often reach out to him for the promotion of “western looking” products for Chinese consumers.  However, he tells these brands to not launch their products in China or to instead create a different version of this product customised to the local taste.

In the automotive market, miniature versions of cars are very popular in heavily populated cities of Europe. Therefore, one would assume that in a city such as Beijing where there is lots of traffic, very few parking spaces, and pollution is a big concern, that smaller cars would be a big hit – but surprisingly they’re not. As a result of this, the Smart line of cars were discontinued in China, and are instead now in the process of improving their USP by working together with Geely on a brand new electric car – which will appeal to a completely different type of customer.

10 things to do when entering the chinese market

2. Have a localised Unique Selling Proposition 

Bands should keep in mind that those products and services taking Instagram (or other foreign media channels) by storm, might not actually be very popular in China, and vice versa. The Chinese market is essential for most luxury brands, as well as digital product brands such as Apple, on-the-go brands such as Starbucks, lifestyle brands such as Ikea, and many more. However, it should also be noted that all of these brand successes came with experience and understanding of the different needs of foreign markets.

By understanding the concept of “面子/mianzi” or “keeping the face”, Apple made millions by providing Chinese people the opportunity to tell their friends that they are “rich” by only investing one or two thousand dollars on a new model of the phone. Of course there were many other reasons that made Apple so popular in China, but it is astonishing to see how the vast majority of citizens using the subway have the newest model of the iPhone every year – but each time no longer than a week after its official release.

When Starbucks came to China it realised that people were not interested in the coffee-to-go concept but rather the “here to stay” idea, so they immediately restructured their space into big comfortable communal areas so to accommodate their young customers. Starbucks also realised that in the larger cities, the younger generation needed a place to “hang out” with their friends.

As the country rapidly develops, the generations are growing up with very different values, which leads to a lack of common interest within families.

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3. Plan realistic goals

One of the most common mistakes a brand can make is planning to go after a whole country, without realising its size. For example, a lot of brand owners can’t name more than 5 Chinese cities, but yet plan to target every person in China. However, the problem with targeting a whole country like China, is the expense of such a large promotional campaign. China is also home to 56 different ethnicities each with different values, different everyday habits, and contrasting opinions. Therefore, it is almost impossible to target every city in China, unless your brand has a multi-million dollar annual marketing budget and an outstanding product/service retail price.

enter the Chinese market

4. Accept that in China people don’t lack any type of products 

This point is vital for any company aiming to enter the Chinese market. Brand’s should realise that China is not a third world country where imported products are being fought for, but it is actually referred to as the “factory of the world”, and has extremely rich resources – sometimes even things unheard of by Westerners, including imported and local items. Therefore, it is important to do thorough market research when planning to enter the Chinese market to have a clear picture of any gaps in the market and to understand why your product could benefit the Chinese market.

When working on your Chinese market entrance plan, be sure that your brand positioning doesn’t begin with “because we are an imported brand..”

10 things foreign brands must do when entering China-05

5. Educate Chinese people on how to use your products when your brand enter the Chinese market

Many foreign brands have succeeded in China with products that were previously unknown to the Chinese population. At the beginning, McDonalds, Nespresso, and Rexona all struggled in the Chinese market and had do a lot of research in order to introduce their products/services into the habit of local people.

The benefits of products such as coffee, chocolate, imported wines and spirits, energy drinks, avocados, bread, etc. had to be presented to the public in a sensitive and educational way. Brand still do this today, for example, influencer Viya, has recently been informing people on her livestreams why they “can’t live without” products such as dental floss and facial massagers, and selling thousands of items within minutes.

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6. Learn about the customers journey in China 

When entering the Chinese market, it is very important to consider the conversion funnel and customer shopping habits for different products and services in China. Companies should make sure that their marketing strategies are adapted to the cultural customs and way of life of the market they’re targeting.

For example, is your product more suitable for RED (Xiaohingshu) or WeChat Mini-program customers? To answer this question, you need to find out who uses these apps and why.

Enter the Chinese market, RED Customer Journey: Discover tutorials (make up, fashion, lifestyle) Follow KOLs and Superstars Discover new products (usually small brands, news bands, new designers) Purchase new products on RED platform Write reviews and create videos of products purchased
Enter the Chinese market

 

It is important to be clear on the demographics of the most-used apps and platforms in China, for example, the business focus and the best-suited industries, etc.

When targeting a specific group of customers, brands must understand every aspect of the customers’ life and find a way to fit in with it.

For example, ZnB fitness club in Shanghai targets busy professionals of both genders aged 30+ in premium locations of the city. It understands that people of that age are most likely to have young children, and won’t want them to be bored at home. So the brand introduced activities for both children and parents, but also some weekday classes for Chinese nannies to attend with children they care for.

Whilst Gym WYS24, offers its members late hour access to the facility with a fingerprint scan.

10 things foreign brands must do when entering China-07, Enter the Chinese market

 

7. Prepare to take a personal approach when communicating with your customers

In 2020, the Chinese consumer is more service oriented than ever before. For example, it is a well-known fact that Chinese customers are very demanding, as they expect amazing service 24/7 and this service must make the customers lives easier.  Customers are now expecting an even more personalised service.

In 2020, like many other brands, Luckin coffee in Shanghai began to increase its customers via private location groups (dependent on the store location). These groups are used for promotions, announcements of pop-up events and sales, weekly draws, mini games, and other online products.

How does it work for most brands and why should they care? By the end of 2019, brands started to pay more attention to the customer journey and brand discovery of WeChat. A big problem for companies was their low following of WeChat official accounts.

However, WeChat doesn’t provide an option to view the WeChat ID of the followers, therefore, there’s little chance of having a private conversation or being able to check whether the follower is a “bot”. To overcome this, brands started adding potential followers, customers, and friends, to private group chats.

WeChat "private traffic" concept's customer journey: Discover a private group of brand/service (at offline event / from a community manager online or offline / get invited after a specific action) Join WeChat group of brand/service Receive news and private links to best deals of brand/service

 

 

8. Stimulate “word of mouth” by offering attractive deals

There is no better marketing than “word of mouth”. A good (or bad) word of mouth message can be spread faster throughout communities than any type of advertising. To encourage this, it is not enough to just have a great product, but instead, brands must provide appealing offers.

Local Chinese brands are champions when it comes to word of mouth marketing. Chinese brand, Perfect Diary, uses a great scheme to stimulate its sales. For example, when a customer buys one of their items for 99 RMB (12 USD) he/she then has an option to get a second complimentary product for 1/10 of the price. Every order they process includes samples of their new products. Perfect Diary was one of the highest selling brands in 2019 after the Double 11 festival, and has only grown since. The sales revenue of the brand at Double 11 spiked up to 80,000,000 RMB, and the brand was 7th place in the list of most popular cosmetics of the Double 11 festival (the first among Chinese brands).

Foreign brands entering the Chinese market should consider providing a good deal or offer. Whether that means offering competitive prices, an extra service, or an upgrade – it will beat any other long-term marketing tactics.

Enter the Chinese market

9. Make sure you speak in the local language

It is important for brands to develop a reputation in order to enter the Chinese market. Many variables go into the making of a brand name/image, therefore, it is vital to come up with a name that associates the message that your company wishes to convey. It is also important for companies to be aware of how the name translates into other languages.

Brand name translation is implemented in 4 main steps: brand image consideration, knowledge of a target audience, benchmark of brand names of existing competition, and linguistic aspects of the new brand name.

This might sound obvious, but companies must know who their target audience is.

Companies should also bear in mind that different names will appeal to people of different ages. Regarding the logo, it is always important for companies to think about message that they want represent their product. For example, this can be a multitude of things, such as premium, historical, natural, informal, serious, etc.

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Next, you need to localize the content. Localization is the process of adapting or recreating a company’s marketing materials to fit another market so that it appears natural and effortless. This can include a variety of actions, from translating the content to changing fonts and images.

The purpose of localization is to make the product feel as natural as possible in the hands of the new users. Companies should make sure that their marketing strategies are aware of cultural customs/languages, because if Chinese marketing materials seem unnatural or unprofessional to the online user, chances are, they will be less likely to take an interest in the product or service.

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10. Have a flexible mindset when enter the Chinese market 

A unique feature of the Chinese digital market is its fast-paced development.  For example, something that was a main stream yesterday, might be not an option tomorrow. However, a lot of foreign brands do not adapt to these changes, which leads to weaker product visibility and decreasing brand loyalty.

Today, in order to get a space on the Tmall platform, foreign brands must go through a detailed assessment by Alibaba’s representatives, in order to find out whether they’ll have a “fighting chance” on this platform.  This includes an analysis of the brand’s mindset. Only flexible and adaptable brands” are able to receive a green light and join the platform.

Tmall is a highly competitive platform, and Alibaba spends a lot of resources to serve the stores it hosts. Therefore, if these stores will never be profitable, then it seems sensible for them to not take up valuable online space – for the benefit of both the brand and platform.

 Enter the Chinese market, HI-COM, Chinese marketing

 

Read more about Banned marketing terms in China.

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HI-COM is a multilingual communication agency dedicated to providing China specific social media communication and e-commerce marketing services to businesses around the world. Working with more than 100 brands, HI-COM is the go-to partner of companies that want to enter China market!  Contact us for your free consultation today!

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Kate CHERNAVINAEntering the Chinese Market: 10 things brands need to do