Most big and established brands in China have been doing their best to be respectful and connect with Chinese consumers since the coronavirus outbreak. Well-publicised initiatives include thoughtful campaigns and large donations. But there has been little airtime about smaller brands and entrepreneurs who are looking to test Chinese waters in 2020 – how should they be approaching China in these unique times?
We have seen a few negative reactions as some SMEs are indefinitely postponing future China development plans, or even diverting China activities to other markets. We see this as a short term and potentially costly approach. Right now is arguably the best time to start developing your China strategy and building a deep understanding of the market, so that when the ball starts rolling again, you will be placed ahead of the crowd and ready to jump in.
Building a brand is paramount in China, and this takes time. It is widely understood that you will not make money in your first or even second year despite ‘decent’ sales, largely due to administration and customer acquisition costs. If the economic recovery from SARS in 2003 is any guide, pent up demand and positive emotions saw China’s GDP growth actually accelerate from 9.1% in 2002 to 10.0% in 2003. New brands should be taking this time to strategize their target audience, branding, positioning and channel-approach to hit the ground running when normality returns.
What better time to arm yourself with knowledge on the China market? Foreign brands looking to enter China face an incredibly alien business environment, and you will need help along the way to combat the quickly changing landscape.
While often engaging consultants, research firms and strategists can very valuable, it can also be costly in the early stages. Building up your knowledge and understanding your knowledge gaps can save costs and time in the long run. We’d suggest self-educating to stay informed and up-to-date with free, English-language resources which can help narrow down potential approaches for your business. We recommend the following resources:
WalktheChat: a Beijing-based agency that does social media management with a key focus on WeChat
InsideRetailAsia: InsideRetailAsia looks closely at trends in offline retail, and does a great job of quickly updating new openings, brand activations.
SixthTone: SixthTone provides a small window into popular culture in China with its down-to-earth journalism covering the weird and wonderful side of China.
ChinaSkinny: More than just a shameless plug, our newsletter is the most-read globally on the topic of marketing to China – so there must be something of value in there!
There is no “one size fits all” strategy to approach the China consumer market, which means doing your due diligence on current trends, popular products and identifying your key target audience. It’s valuable to have an understanding of the type of content and campaigns they like to engage with, as well as best platforms to reach them on each stage of the customer journey. This will ensure they greatest likelihood of a successful strategy to maximize your ROI.
For example, many consumers are currently self-quarantined in their homes and looking for something to do. This can be the perfect time to engage an agency for quantitative research studies aimed at gathering consumer sentiment to narrow down your target market or sending products for trial tests.
Conducting market research is often just the beginning. While saving you time, money and often ensuring eventual success, this process can help brands identify strategies that are unlikely to succeed before too much time and money is sunken into them.
Don’t forget the importance of digital
The current COVID-19 virus has changed the way of life for many people in China over the past several weeks. As we saw with the H7N9 virus in 2013, consumers are cooped up in their homes spending more time online, researching, ordering and seeking entertainment.
According to McKinsey & Company, pre-outbreak digital consumers in 2019 were already spending an average of 358 minutes per day online, with 33% using social media (WeChat, Weibo, etc.) and 11% using short video apps such as Douyin. Since the virus has hit the amount of time people spent online has soared from an already staggering 5 billion hours on January 23, to 5.73 billion hours on January 24 and topping 6.11 billion hours on February 3, says QuestMobile. The proportion of time spent online gaming alone has risen 38% alone.
With people intensely immersed in social media during these trying times, social e-commerce is primed for growth. Ironically, the cost of acquisition on digital platforms has declined over this period, allowing a lower-cost method to engage and nurture consumers. This reiterates the importance of getting your digital strategy in order as soon as possible, and ensuring it is relevant and optimised for China.
The Bottom Line
Our final word of advice is to not only be patient as China grapples with this crisis, but to take advantage of this unique downtime. China moves at lightning pace and will soon continue to do so. While other companies and brands rest on their laurels or move on to other markets, start preparing. China is a complex environment, and the better your preparation, the quicker you will be able to start making an impact on the ground.