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China assumptions hold back MNCs

News, 12 August 2016

SHANGHAI: Multinational brands must move beyond assumptions about Chinese consumers to find success in the fast-growing market, a local expert believes.

Many international brands come to China determined to 'force fit' their brand to the Chinese market. But in order to be successful, brands must understand how, culturally, products fit into the lives of local consumers, says Jerry Clode, Head of Insights at Resonance China.

Fundamental behaviours that underpin a category may be different. Clode cites fruit-based jam as an example. In Western markets jam goes on toast, but in China, jam is seen as more of an additive or seasoning. (For more, including advice on overcoming such misconceptions, read Clode's Warc Exclusive: Five misconceptions about Chinese consumers.)

The fact that Chinese view a product like jam in this way has profound implications in terms of product format, shelf location/presentation and brand messaging – but assuming Western behaviours apply in China is a common trap international brands fall into.

Clode warns that far from preferring international brands, Chinese consumers will choose foreign brands only if they believe they are the best offered at that price. One only has to look at Apple's slide in market share to fifth place behind four local smartphone brands to see that no global brand is immune.

Essentially, a brand not offering a distinct proposition – beyond the fact that it is more foreign than competitors – will simply not be enough in China anymore.

International brands should also be aware of an evolution in Chinese families where, far from being patriarchal and male-dominated, 58% of Chinese women now make the financial decisions, according to data from Mintel.

Overcoming this assumption is critical as brand savvy, highly-connected millennial women in particular become a major spending force in the country.

Data sourced from WSarc