With 1.3 Billion people and an economic growth rate of over 10%, China has long been on every CEO’s target list for expansion. But for every success story, there have been numerous misfires and high-profile setbacks (think eBay or Mattel…).
It is not for lack of ambition or investment that companies fail in China; it is that many harbor a number of pre-conceived notions and misconceptions about the country, its people, its culture and its attitude towards the West.
Recently my company, eYeka, a community platform for co-creation, published a white paper on ‘Using Co-creation to Conquer the Chinese Market‘ focusing on the cosmetic industry. Out of it came a lot of broad insights that can be used by any business thinking of expanding into China, even outside the cosmetics industry. While there is still a lot to learn about China, here are four key misconceptions to ponder about as you plan your company’s expansion into the country.
China Cares About Your Product: While many western products are lusted after, there is a good chance that the Chinese public doesn’t know or care about your product. Mattel made a huge investment building a six-floor Barbie-doll flagship store in Shanghai. Unfortunately, the company overlooked the fact that Chinese consumers do not know much about Barbie and its aspirational qualities. Barbie just did not connect with them the way she enthuses generations of little girls in the West. Even with a large marketing push, the store had a hard time overcoming that gap.
The solution: Do not take your brand for granted. Get insights from Chinese consumers to assess their basic awareness and understanding of who you are and what you stand for. Incorporate this feedback into your product or service development process before launching.
You Understand Chinese Culture: If you weren’t born there or haven’t spent considerable time in China, you probably do not understand their culture.
In China, concepts foreign to many westerners like mianzi (face-saving) and guanxi (relationship) run deep within the system. Due to this, many rules learned in business schools fall apart in China. For example, traditional verbal/face-to-face consumer research techniques are of limited use due to the cultural nature of mianzi or “face-saving.” Participants in a research project will tend to agree with the facilitator, more so than in Western cultures. Public self-expression is just not widely accepted in China and this can completely mislead your market research findings.
The solution: Find alternatives that are better suited to Chinese culture like using creative and projective techniques rather than traditional verbal/face-to-face research. The Internet for one has become a powerful research tool in China as it is a way for Chinese consumers to actually express themselves in an open way without fear of being ostracized.
China is one entity: China is not a single block. It is a culturally rich and diverse country. This might seem alien to many US companies, as a product sold in New York is generally not all that different from one sold in Chicago. However, the vast social, cultural and economic differences that exist within the country necessitate having different strategies for different cities and regions.
The solution: Think of China like you would of Europe. Every region has a unique and distinct culture. For sustainable success, quickly implement localised communication relevant to each region and work in conquering territories rather than tackling the country as a whole in one go. One good source of inspiration is to look at other Asian brands as they enter China. Since heterogeneity is common in Asian countries (like in India, Indonesia, etc), Asian brands know how to connect more easily with a diverse range of consumers. They also provide strong competition to Western brands entering China as you will soon find out.
Chinese consumers want Western products: They do and they don’t, but most importantly they’re interested in products that fit their needs. This is a simple idea that is often overlooked by most Western companies. Expanding into China is generally not as simple as repackaging your product or service. For example, a specific finding in our white paper was that Chinese women show a strong preference to buying cosmetic products that they believe have been made especially for Asian women.
Understanding what the Chinese consumer wants can open up new revenue streams you wouldn’t normally imagine. For instance, Chinese men actually have a much stronger interest in cosmetics than their western counterparts and are interested in seeing more products made for them.
The solution: Make a product or service designed specifically for the Chinese consumer, perhaps even involving them in the process. Make this known in communication, focusing on what has been redesigned for them. This will result in your product not being “made in China” but “made for China”. This is one of the best recipes for success.
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