Just as we’ve heard of many successful Western brands in China, most of us are aware of the folklores of failures from those who entered ill-prepared, naive and even arrogant. From Home Depot burning through $160 million chasing a market not interested in DIY, to eBay blowing an 85% market share after hiring a local CEO and CTO who didn’t understand China; there are plenty of examples we can learn from.
Almost every business entering China these days knows to approach the market differently. Even with this in mind, there are still many common mistakes and false assumptions that we see at China Skinny. There are the simple things such as having Facebook or Youtube on Chinese webpages, and the well-documented oversights such as failure to trademark both Western and Chinese brands. Yet most lapses are a little less obvious.
One of the most common misjudgements is thinking market fundamentals work in a way we are familiar with in our home markets. While this may apply for some things, many characteristics go against natural Western instincts and intuition. China is a unique machine that plays by a whole new set of rules, with factors such as the omnipresent Government regulations and influence, local competitors operating unlike competition anywhere else, and a consumer base who are wired differently.
Chinese consumers are unsophisticated in some ways, and the most advanced globally in others. They have been through more change in the last few decades than many of us go through in a lifetime; and because of that, coupled with underlying cultural differences, they often perceive things completely differently, and act distinctively, from the way we do.
China’s retail space is much more fragmented than Western markets, while its ecommerce segment is more consolidated than anywhere. Some businesses don’t consider this when meeting a distributor. It’s common to be picked up from the airport by a prospecting distributor, and wined and dined with silver service. Following promises of covering the country, and every offline and online channel they’d ever need, many brands unknowingly give exclusive rights to the distributor. If you meet someone who actually delivers on this promise, we’d love an introduction.
It’s impossible to prepare for everything in China, but here’s an article that we’ve written with some key differences between Chinese and Western markets which may help.
For our New Zealand-based readers, China Skinny’s Mark Tanner will be at the Build and implement your digital strategy for China workshops in Auckland on 28 June and Christchurch on 30 June. Click here for more information. We hope to see you there. Go to Page 2 to see this week’s China news and highlights.