Since China opened up to Western investment, some of most important international brands have failed to succeed in the Chinese market. Most of them have to go through misunderstanding and frustration and the reasons have been largely discussed. Counterfeits, lack of understanding of the legal and cultural environment or even difficulty to reach Chinese consumers are the main issues.
However, while their local market is difficult for overseas player, how Chinese brands are performing outside of their borders. It seems that the opposite path is not easier. Indeed, Chinese companies that are trying to expand to foreign markets are facing a lot of problems as well.
1. Different Market different strategies
The US and EU markets are obviously highly saturated and already extremely competitive for new comers, including Chinese giants companies. Also, Chinese brands might have an image of low-quality product producers on these markets.
Still, there are other regions that could be much interesting for Chinese companies. African markets are already largely developed by Chinese firms, which benefit from the faster potential consumption growth rates.
Also, India offers new opportunities for many Chinese Companies with their fast growing economy. Other Asian countries, especially Asia Pacific countries which are very close to China are interesting looking at the similar codes and business practices Chinese firms can find.
Worth of considering as potential new markets is also South American countries. They have good income levels and a stable economic growth.
2. Efficient methods in the companies’ home countries are not always efficient in different country
As US brands in China, Chinese companies usually take the methods that are efficient in their home countries, and try to transplant them in foreign countries instead of adapting them. The companies therefore did not consider the local conditions well enough to create business and advertising strategies. Chinese use a conservative expansion strategy. If the product doesn’t have a unique advantage, you really have to adapt your method to the local market.
Marketing research is almost mandatory before launching business activities abroad. Before selling its products, any company has to gather data and information on the market, including expectations of consumers, distribution channels, or the competitive environment.
- Have I well targeted my customer?
- Who are my competitors?
- What is my competitive advantage?
- Will this unique advantage make my product different from my competitors?
- What is my selling point?
- If there are a lot of concurrent product is the potential user base growth big enough to meet my needs?
3. Be different
In order to be competitive abroad, the company should be different and justify a game-changing feature. In term of price Chinese companies are always more competitive than they Chinese counterparts. It is of course too short to target international markets where the competition is fierce and always evolving.
Moreover, it is also important for Chinese startups to extend their communication strategy to develop these new markets. Social Media support is a perfect way to develop this communication, with real engagement of overseas customers. It is easy for the brand to play on emotions through the message that will be transmitted since the consumers are receptive to this.
Olivier VEROT expert in Social Media explains that it is very difficult for Chinese companies to really adapt their Branding to international Social Media Landscape, because it is so different and they really need to have unique identity and content. In China, Marketers prefer to copy first and after improve; they think it is a safe bet.
4. Marketing channels
Unlike on the Chinese market, buying traffic on search engine and various media is definitely not enough on overseas market. You have to be very close to your customer. That is why social networks are the best place to start.
One of the benefit from Western social media for Chinese companies can be to get feedback from their consumers. Indeed, when these feedbacks are difficult to get from Chinese consumers, Western consumers are more likely to share opinion on social media. However, it still can be difficult to work with the feedback from foreign markets because of language and cultural differences, explains Anthony Colas from Atwin, 3D printing specialist. Moreover, you can’t build a successful product without continuous optimizations based not just on users’ data but also on live feedback provided by them.
« Chinese starts up have still a lot of to learn before being fully able to integrate US markets. Still, with their low cost models, US companies should be prepared for this wave of competitors. » explains Doug Young, a journalist based in China.
For branding, you can have a look at Xiaomi’s strategy and his charismatic CEO, Lei Jun, who really succeeded in giving personality to the business.
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image credit: Google
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Thibaud Andre is a French consultant working at Chinese market research firm. Daxue Consulting. He is passionate about Chinese culture and likes to share insights about the many emerging markets of the Middle Kingdom. In particular, he likes to identify emerging trends and innovations that may change economic landscape in China.