This post is by Karen Connell, founder of The SMALLmighty Ltd.
Got your eyes set on China? Don't take the plunge before you've read this…
In a land seen as the holy grail of growth it seems every industry wants to know the secrets to building their brand in China. With its huge population, vast geography, exploding wealth, a great appetite for brands – and let's not forget some enticing government-backed incentives for select businesses to invest in China – what's not to love about this economic powerhouse, and what could possibly go wrong?
It's true that there is an explosion of Middle and Affluent Class consumers; people with new-found wealth who are living, or look to soon live, a standard of life their parents or grandparents would never have dreamed of. And yes, there are some tremendous benefits but it's important that brand owners recognise that China is not an open invitation for their P&L statements.
I've seen countless examples of local teams exaggerating consumer differences to justify their own marketing initiatives. One look at the research and those differences appear to be very minor – perhaps the globally produced assets wouldn't have been so terrible.
I've also worked on and lead countless cross-country projects where the team's first meetings are peppered with cultural gaffs and insults but end with hugs and "hi-fives". "People are people" is my mantra, and I firmly believe that we are bound more by common values than differences. When it comes to China it is how well you acknowledge the differences that will make or break your brand, campaign, project, team or business.
1. Chinese people are very proudly and uniquely Chinese
The Chinese are not easy targets, they are not grateful for your presence nor are they waiting with bated breath for your product. They wont just buy anything simply because it has an international brand attached.
The Chinese don't take kindly to brands shoe-horning their existing global communications (or you) into their lives. Not only is it not Chinese, but it is more than likely going to make very little sense to a population which responds to brand communication quite differently to western consumers.
The same thing can be said for an international team visiting or working in China. It might be true that managers from other nations have more experience or potentially greater capability than the local team, but don't expect them to accept that. Your international name (brand) is not necessarily a ticket for a warm welcome.
Chinese people like to hear about brands from a Chinese perspective, this means becoming part of the national culture and not simply adapting messaging from elsewhere and expecting people to be impressed.
The same principle works when it comes to foreign colleagues looking to work with the local team. It is the foreigner's duty to acknowledge the culture and build the relationship. A critical difference in Chinese work culture is the emphasis placed on relationships and belonging. Without establishing some form of relationship with co-workers, the foreigner is likely to feel they are moving in treacle and you can kiss any form of quick delivery goodbye.
2. Impressing is a matter of proof
The Chinese are very literal and precise people, not necessarily easy bed-fellows for marketeers and story-tellers. This means that brand positioning and communication can be tricky. The emotional benefits and altruisms that are the norm for Western brands are often viewed as irrelevant, confusing or just plain nonsense. This means that when brands are looking to define a meaningful value proposition in China they must articulate and prioritise functional proof points and work relentlessly to prove the competitive advantage.
3. Product benefits must be for me, today
China is still a developing market and wealth and education for many is just one generation old. The Chinese are optimistic about the future but their sense of security around their lifestyle is understandably fragile. This means consumer needs are still relatively rooted in self-protection and safety; risk is acutely avoided and people's attitudes and behaviour are very much focused on the here and now.
For brands and businesses offering more future-focussed rewards, such as environmental improvements or even altruistic rewards like social health and charities, this is a real challenge. Brand owners need to find ways to explain why people should be interested by landing the benefit closer to their lives today.
4. Quality is a good USP
Cheap imitations of nearly every brand imaginable are freely available so the Chinese are practised at finding the cheapest alternative. However, unlike more developed nations where 'quality' for most products is a ticket for entry it can be a highly valued and unique selling point. While outward displays of wealth and status are still prevalent, people's attitudes and behaviours are beginning to change; quality and value is the new black.
5. "The blue sky opportunity" can be scary
There is no one way to build a successful brand or business in China (or anywhere else for that matter). There is no silver bullet or easy answer, period. Unlike Western or Developed nation team colleagues, Chinese managers operate more comfortably with answers or at least strong direction. Not easy if you yourself are new to the market.
The Chinese attitude to risk and the need to impress through proof (as mentioned above) mean that "starting with a blank sheet of paper", a term often associated with innovation, creation or challenging the status quo in the Western world offers quite a number of challenges to the uninitiated.
In a culture where certainty (proof) is highly sought after and risk acutely avoided, multinationals looking to harness the experience of the local team could be seriously flummoxed. The "blank sheet of paper" will very often remain blank.
Let me be clear, the difficulty is not in education or willingness to learn, but the thrill westerners might feel when presented with a "blank sheet of paper" or a "blue sky opportunity" is not what the local Chinese team may feel. A "blank sheet of paper" could well be seen as an "invitation to fail".
Foreign brand owners and multi-nationals serious about building local Chinese talent should offer short-term international placements or high touch project support. The trick is to find ways to make Chinese people feel more comfortable with not knowing all the answers and feel secure and confident enough to start creating.
6. The Government controls who gets paid
Money transfers to foreign companies is not easy. The level of bureaucracy is well beyond the usual purchase order. Contracts and invoices need to be provided in Mandarin, the decision maker/signatory needs to be recognised by government officials, company stamps are required, local taxes negotiated and more. It is not for the faint hearted or those relying on short payment terms.
Foreign companies' normal terms and conditions are pretty much meaningless in China so it's important to get local legal and financial representation.
With the above in mind, here are some top tips to help you avoid some of these pitfalls and build your brand in China:
- Forget what you know from other developing nations or Asian markets and find a good local research partner and invest in learning about consumer attitudes and behaviours
- Build relationships with your consumers and your co-workers
- Get real about your Unique Selling Points and Reasons to Believe. If it doesn't genuinely deliver a tangible and immediate benefit to the consumer then perhaps think again
- Demonstrate value through quality – remember, someone will always be able to do it cheaper (probably within an hour)
- Encourage and build local talent with high touch support. Provide templates, case studies and examples and go out of your way to help the team succeed
- Get the best possible local financial and legal advice and be prepared to wait for your money
Karen Connell is founder of The SMALLmighty Ltd a boutique consultancy helping traditional mass-marketing lead businesses understand and develop new processes that will connect their brands with today's more influential and connected consumer. She currently works with a number of the world's top global brands, including Shell, Coca-Cola, GSK, Cadbury and Diageo, and was formerly marketing director for Virgin.