Key marketing strategies for foreign brands entering China

Key marketing strategies for foreign brands entering China

Contributor
Contributor
External Guest Writer
July 1, 2020

For more than two decades, China has been one of the most sought-after economies by companies looking to sell to the exploding population of middle-class Chinese consumers. It also has the most high net-worth individuals in the world. This is why marketing in China has become one of the most important considerations for any global brand.

But cracking the Chinese market and achieving success in China is not easy, as many foreign brands found out the hard way. Not only is it very demanding and fast-changing, it also requires specific China marketing strategies that may differ from what works in the West.


“I think one of the most challenging things about international brands is that they are brands which are successful in their home country. They believe they can do exactly the same for China,” said Elena Gatti, managing director of Europe for Azoya, a Shenzhen-based e-commerce enable, in an interview on The China Ecommerce Podcast. “So they update their road map for let's say Europe, and they want to do the same kind of road map, just change channels for China. It doesn't work at all.”


Overseas brands have had their own share of both success and horror stories of marketing in China, and companies have worked hard to understand what strategies are favorable in a country with a Chinese audience of 1.4 billion people. 


Here are some key marketing strategies for foreign brands to consider before setting up shop in China, both offline or online. 


Cultural Understanding


Although China is very interested in foreign products and ideas, Chinese culture is distinct and known to hold certain values around relationships, tradition and hierarchy. These traditions play a big role in shaping the Chinese consumer behavior, and customers therefore expect foreign brands to be aware and respectful of them as well. There have been many cases of both direct and indirect offensive or insensitive marketing campaigns that have ended in unfavorable results for foreign brands. 


Ideas that may seem simple, such as building and maintaining relationships, paying attention to the influence of word-of-mouth, and in general; learning how to appeal to the Chinese market and its various nuances, are steps that foreign brands must not overlook if they want to remain relevant in the long run.


Optimization


Baidu app download page. Source: Handout


Due to China’s various censorship policies toward foreign search engine and social media channels (such as Google, Wikipedia, Twitter, etc.), conventional search engine optimization may need to be completely revised. In order to be visible and accessible for the Chinese market, optimizing content for Chinese search engines such as Baidu and Sogou is crucial.


Besides search engines, optimization should also be focused towards mobile use. While the global average of internet use via mobile is about 50%, in China it is almost 98%. This makes smartphone-optimized webpages another essential measure.


Innovation 


Nowadays, China is one of the most technologically advanced countries in the world, and this is evident in daily life. Chinese services, particularly those related to the fields of e-commerce and digital marketing, are becoming increasingly reliant on new technological innovations and disruptive trends. From efficient electronic-payment systems such as WeChat and Alipay, to advanced customer insights backed by AI and machine-learning, the Chinese landscape demands advanced application and integration of such tools in order to remain competitive


Shorter product life-cycles, increased focus on buying experience and functionality of products, are some of the consumer trends that foreign brands should keep up with when marketing in China.


Presence and Touchpoints


Building, Nightfall, Neon Lights, Shop Sign
Shopping street in Shanghai. Source: Pixabay


Chinese consumers require more touchpoints than their foreign counterparts, and thus, a larger presence by brands is required across multiple platforms or channels. Just utilizing as many third-party platforms as possible, however, may not be the answer. Instead, brands should explore which ones fit their style and messages. 


The fast emergence of China’s affluent consumer means higher expectations and more sophistication. The improving quality of domestic brands, many sold at much lower prices, also creates a further hurdle for foreign brands. Considering these factors, foreign brands need to put even greater effort in aggressive engagement through social media and e-commerce.


Live Commerce


Livestreaming beauty products. Source: Xinhua


The last decade saw the rise of two important mediums for marketing and sales: e-commerce and livestreaming. The two now go hand in hand, especially in the Chinese market, and together are worth more than $60 billion a year, up from roughly $3 billion just three years ago.

Compared to conventional physical retail, e-commerce sales are an increasingly favored method of purchase, and China alone accounts for more than 50% of global online transactions, making online sales channels a must. Online marketplaces such as Alibaba, JD, and Pinduoduo together make up more than 80% of online retail, which is about 37% of total retail sales in China. Most of these platforms now incorporate live-streaming functions to help drive sales.


KOLs / Influencers


KOLs (Key Opinion Leaders) have boomed in popularity in China and are now being actively sought after by brands that understand China’s strong affinity to content marketing, word-of-mouth recommendations and impulse buying. As the country’s culture places high value on trust through mutual exchange (a social mechanism known as “Guanxi”), KOLs and influencers offer a way for brands to stay engaged with consumers and communicate brand messages more effectively. 


The KOL industry (and the related MCN industry) in China is valued at more than $8 billion. It has become a crucial medium for foreign brands looking to livestream on Chinese social media platforms.


Demographics


Chinese spending is becoming increasingly driven by women. It is also shifting towards financially-confident millennial and Gen-Z consumers, who are well-educated (often abroad), savvy and expected to account for more than 55% of luxury consumption in the country during this decade.

Brands are also directing more marketing efforts at consumers in the second- and third-tier cities, who are the emerging force in consumption in China.For more than two decades, China has been one of the most sought-after economies by companies looking to sell to the exploding population of middle-class Chinese consumers. It also has the most high net-worth individuals in the world. This is why marketing in China has become one of the most important considerations for any global brand.

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