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The China Challenge: Best Practices for the World’s Most Dynamic Market


October 21, 2013

Think about China in the same way that you would think about Big Data.

With Big Data projects, there is a mass of information that decision-makers must understand before they can apply it in any useful way. News about China always involves an unending flow of information about the business environment and the country’s overall development. What strategic communicators need in order to use this information best is accurate input about the market and what’s happening with their target audiences now, and some rules to help navigate China’s unique potential pitfalls.

China attracts businesses of all sizes, and many CEOs believe that they need to compete in China if their company is going to be a leader in their niche or industry. Contrary to popular perception, most companies in China are serving local B-to-C and B-to-B customers, not solely manufacturing for export.

Most executives know that they can’t simply mass-produce products designed for the Western world and expect them to fly off the shelves in China. Similarly, communications campaigns and messaging deployed in the United States usually require adaptation before they’re China-ready. When on their home turf, consider the best practices of our profession, then be ready to adapt them with Chinese culture in mind. As Robert Louis Stevenson said, “There are no foreign lands. It is the traveler who is foreign.”

Know your audience
 

  • Targeting: A common rookie mistake is not sufficiently understanding your Chinese audience. The country is vast, and there are significant regional differences in culture, consumer behavior and language. Thinking of China as a monolithic, unified market would be like applying a single strategy across the European Union, with its 27 countries. Depending on whom you want to reach in China and where they are geographically, it is common to have 10 or more variations on a campaign.
     
  • Urbanization: China is in the process of moving 250 million people off the land and into cities — the equivalent of minting a new Manhattan’s worth of consumers every year.

    City living is about much more than where someone resides; it permanently alters people’s buying habits and mindset. Today, China has about 160 cities with a population of more than 1 million, and by 2025 that number is expected to reach 220. The United States, by comparison, has nine cities with more than a million residents.

    Urban consumers in China are typically sensitive to price, ready to embrace technology and interested in new products. The market is extremely competitive, and these consumers need to feel that they are getting quality products at good prices.
     
  • New consumer demands: Existing consumers over 40, and teenagers and young adults, who are bringing new perspectives to the market, are driving other titanic changes.

    Today’s young consumers never experienced China’s history of poverty and isolation. As only children, they are highly individualistic. They often shun the mass-produced merchandise that their parents couldn’t get enough of, and emotional gratification plays a greater role in the products and services that they choose. Most live on social media, occupy niches defined by individual preferences, are increasingly discerning about product features and tend to be among the most brand-conscious consumers in China.

    Another group changing the consumer landscape is middle-aged and older buyers who are replacing products. Imagine if neither you nor anyone in your family had ever owned a car, refrigerator or washing machine. A few years ago, you bought your first one. First-time buyers usually think a lot about price. But when it’s time to replace the item, while price is still important, features, and in some cases brand, start playing a bigger role in the purchase decision. Successful marketers need to identify and target these consumers and appropriately balance their messaging around features and value.

Understand e-commerce

E-commerce is skyrocketing in China. The online economy is large, diverse and unique. Compared with their U.S. counterparts, most Chinese online consumers want more information about products, are more likely to switch among brands for the sake of trial and engage in product-related social media discussions. The country is expected to be the world’s largest online marketplace by 2015. Then, China’s economy will likely trail the United States’, but its Internet population is anticipated to reach 700 million, or almost double that of the United States and Japan combined.

Don’t think of Chinese e-commerce as the sole domain of young tech-oriented urbanites. Today, shoppers 18 to 30 years old make only about 61 percent of online purchases. There are about 5 million online shoppers over 50 years of age. Businesses already account for a significant number of online purchases, and by 2020, B-to-B could represent as much as 70 percent of China’s online transactions.

Chinese shoppers prefer digital marketplaces and storefront platforms because it’s easy to make transactions. American companies are reaching a growing audience through these sites, and many brands have created their own retail hubs. People sell about 58 percent of foreign goods through Chinese websites instead of purchasing them directly from a foreign site.

Digital marketers should consider targeting residents of small, underdeveloped cities. These consumers are contributing to the growth of the Internet and e-commerce in unexpected ways due to rising incomes, Internet penetration trends, and their desire for new products and a better lifestyle. People often overlook this segment, even though growth outpaces the expanding Internet population. The consumers spend more disposable income buying almost as much as neighbors in large, wealthy places.

Connect with social media

Companies should question whether their social media strategies in China are as broad and creative as they should be. China-based marketing managers and executives sometimes react to uncertainties in the dynamic social media space by shooting low and recommending ultraconservative strategies that are narrower than headquarters may have intended. Frequent, frank discussions can help companies balance the risks while maximizing social media’s potential.

Anyone accustomed to writing for Twitter who switches to Weibo, the popular Chinese social media platform, suddenly has a whole lot more to talk about. That’s because they can communicate significantly more in 140 Chinese characters than they can in English. The reason is that each English letter is a building block, while individual Chinese characters represent complete words or thoughts. The difference gives communicators a better opportunity to connect with audiences who are hungry for interaction and information.

Another difference that spells opportunity for marketers is that both Weibo and the new breakout app WeChat include features directly tied to sales and e-commerce. Both platforms have a critical mass of users and are competing to expand options for marketing and selling.

Social media usage patterns are also different in China. Weibo users post at a higher frequency, and they tend to disclose more personal information. They are also more active in sharing their views and reacting to other people. Interestingly, Weibo users publish 19 percent more posts on the weekend, whereas Twitter users are typically 11 percent less active on weekends.

Although China’s economy is currently slowing and restructuring, the country remains a critical business destination. In July, foreign companies invested more than $14 billion in China, the highest monthly amount since 1997, and growing numbers of communications professionals are engaging in PR work in China. The successful ones adapt best practices to the Chinese market and continually sift through torrents of information to understand the current state of play.

 

Matthew Wisla Matthew Wisla co-founded the Marketing, Advertising and Public Relations Forum for the American Chamber of Commerce in Beijing. He was also a vice president for Fleishman-Hillard in Beijing.
Email: matt.wisla at yahoo.com



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