We often hear the same speech among large companies that have failed to establish themselves on the world market. When a Chinese company in particular decides to go international, it has very little visibility, is badly advised and often does not succeed. So, here are some remarks to take into account for a Chinese brand to succeed in its international development …
Lack of understanding of legislation and the cultural environment can hinder settlement. Many large companies such as Google, Yahoo, or Amazon have failed in this regard due to their inadequate marketing strategy in China. Conversely, several Chinese companies have also failed internationally.
Indeed, how many Chinese brands are known to the general public when China has become the 1st economy in the world? Tencent, Baidu, Alibaba, Netease, or Qihoo, these are names that nobody really knows when these companies are gigantic in size. To be precise, I am not a consultant for a Chinese company, but Chinese decision-makers ask me for my opinion before entering new markets.
Here are the 7 tracks that I ask them to take into consideration to succeed.
1. Choose the market well
Many Chinese companies want to enter the European or American market directly. The dream of any Chinese boss is to be able to impress his friends by saying that his company is known in Germany, England or the United States. However, companies are entering already saturated markets, with weak growth and competition from old established brands. You may not know it, but Chinese policy makers are not in the habit of studying the markets, exploring the different options. They listen to their circle of friends, they go for it first and correct themselves afterwards!
There are currently a good number of countries with unprecedented growth. There are many opportunities to be seized in these developing territories like the countries belonging to the community of independent states (Russia, Belarus, Ukraine, Kazakhstan …). Although the political situation and the language may hinder certain companies from establishing themselves, the opportunities are increasing day by day. African countries (South Africa, Kenya, etc.) offer an increasing consumption potential which is not negligible.
As for India, it is very open to the world and its economy is booming. The Asian countries (Vietnam, Indonesia, Philippines, etc.) are also in full development. And finally, the countries of South America (Chile, Brazil, Uruguay, Peru) have stable growth and increasing purchasing power. Some of these markets do not have a high purchasing power at the moment, but they are developing countries. Their situation may therefore change.
However, many Chinese brands will first attack mature markets like the United States and / or Europe before going to countries with opportunities. Tencent (WeChat) for example succeeded brilliantly in India and Southeast Asia before tackling the American market where Facebook and Twitter reign supreme.
2. Have a real strategy
When Chinese companies export, they act like they have been there for a long time, but that is not the reality. They use a conservative strategy without opening up to modern marketing techniques. This strategy may work on certain products that have a competitive advantage. But if the product brings nothing new apart from what is already on the market, the most experienced competitors will be difficult to beat.
In this sense, you have to ask the right questions to enter the market:
- Does my target clientele correspond to my Chinese clientele?
- Who are my competitors?
- What is my unique advantage that sets me apart from my competitors?
- Why is it a good time for prospects to use my product rather than that of my competitor?
- If competition is entrenched, will there be enough demand to meet our needs?
The founder of Daxue Consulting explains that what most Chinese decision makers lack is the right information (or the right information).
Indeed, a decision maker who has the right information will make a good decision. Chinese leaders are not in the habit of paying to acquire information, as there are few companies offering services tailored to their needs. In addition, the feeling works well, because they feel the trends by questioning those around them. In an international market, this “feeling” will be limited.
3. Change your approach and think less about competition!
Take the specific case of China. To really win the market and compete with the competition, it’s not enough to be slightly better, you have to approach the market with a fresh eye. If your product does not have a real competitive advantage, it is better to change the market.
The Chinese are very pragmatic: they talk about efficiency, functionality and above all price. But Chinese companies fail to try to win the international price war, because Western consumers have a minimum of quality requirements. These companies act in the same way as their competitors: they copy and offer similar products at lower prices.
Thus, to sell, it is not only necessary to gain in efficiency or in price, it is also necessary to bet on branding. It is important to analyze the market, find a niche sector and propose innovations. These are the challenges of good positioning. This lever will differentiate a banal Chinese product from its competitors. It must be clear to convey a well-defined image of the brand’s values to its consumers.
For example, Xiaomi, THE big smartphone brand in China, is conquering the west, but it encounters many problems. It will experience rapid expansion in the world due to the saturation of its national market.
4. Choose the marketing channels
It is not enough to do massive publicity to make your brand known in Europe, you have to reassure the consumer, understand him and choose the best distribution channels. The first thing to do to enter a market is to get closer to the maximum of consumers in the country which is by definition different from the Chinese consumer.
Then, these Chinese brands should try maximum visibility on the country’s social networks. If we want to reach the French consumer, Facebook, Twitter and Instagram are the networks to favor, because each social network is different.
It is also important to know your future customers, their mentality and how they operate. Another very useful thing (which few naturally do) is to hire someone with experience in the country to guide them. Chinese companies prefer to send an army of people from China to new markets, believing that they will perform better. For a local, it makes sense.
5. Analyze consumer feedback
Of course, it is difficult to work with foreign clients due to linguistic and cultural differences. This is why it is necessary to use customer feedback to improve.
“Chinese startups are afraid of feedback, of bad comments. Marketing managers will hide bad feedback when it should be used to improve. It is important for brands to analyze user feedback and improve. Culturally in China, we are used to circumventing problems instead of finding a solution! I often explain to my Chinese entrepreneur friends that identifying problems is the only way to move forward and improve. Most of the time, they agree, but find it difficult to apply this within their organizations “, says the CEO of Atwins who spent 7 years in Asia.
A Western consumer will appreciate that the brand is improving and has taken their complaint into consideration.
6. Working with influencers
When a company launches a product abroad, the first thing it needs is not 10,000 likes on the product page, but at least 1,000 people who like the product and can recommend it. Chinese brands are used to spending their energy and time creating banners on websites rather than identifying influencers, talking to them and offering products. However, influencers are found on blogs and social networks, a community management job often overlooked when approaching a market.
7. Work on the brand image
Branding is really very important in the majority of countries, and it is often overlooked by Chinese startups who will focus directly on sales. Lei Jun, for example, has perfectly succeeded in giving a real personality to its product (Xiaomi) and has created a brand image of which China can be proud. Sure, it was inspired by Apple and Steve Jobs, but it worked.
The brand image is worked with a clear positioning and a country agency capable of adapting the brand’s DNA to the market and removing inconsistencies.
We can say that Chinese brands need to take more time to study the target market we want to enter in order not to make fundamental mistakes. We talk a lot in the media about the investments of Chinese companies in England, and few of the Chinese brands that are developing. I think in the future, Chinese companies will need advice, good information and to adapt if they plan to grow.
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