Marketing to China: Why Companies Struggle
The Chinese market has long been enticing and mysterious to western peoples. Since the market opened in the late 1970’s, some of the biggest multinational firms have come and gone. Big names like Google, Home Depot, eBay, and Best Buy have all been forced to leave the Chinese market with their tails between their legs. Marketing to China hasn’t been easy.
On the surface, it looks like each company failed for it’s own reasons. Perhaps it was a failure to understand the market. Maybe their products didn’t connect with the locals or they had difficulty with confusing government regulations. Whatever the reasons seemed to be, if we take a closer look, the failures all strike a very similar chord. These companies failed because they weren’t able to effectively market their business to the Chinese audience.
There are a lot of variables in China specifically that companies tend to ignore. Instead of focusing on all that can go wrong, first let’s think of one simple truth: China is as different as it is far away. Companies that understand this will understand that they need to approach marketing differently than in the west. China has a deep craving for good quality products just like everybody else. It’s just that the messages and the mediums they respond to are different.
It’s not all that difficult to understand why it would be important to change tact in a country long famed for it’s mystical qualities. The hard part is figuring out how to tap into the very different zeitgeist in China. The reason companies fail to tap-in boils down to four fundamental issues:
- Limited access to proper advertising channels (leading to wasted money on the wrong mediums)
- A lack of marketing resources (that doesn’t necessarily mean money)
- Communication problems (leading to a dysfunctional marketing process)
- No consumer behavior knowledge (leading to further maladjusted marketing directives)
These Channels are All Chinese to Me
The first of these issues is a lack of access to proper advertising channels. Without access to these channels, any message, no matter how well crafted, will fly under the radar unnoticed. Currently there are many ways to get a message out in China: social media, Internet search, print advertising – really the same channels you would expect in the west. The difference is that access we talked about before.
It’s not hard to sign up for social media accounts or make websites in China, but it takes time to develop a working social media strategy or to make your website searchable online. There are a lot of x-factors to consider when navigating the Chinese Internet landscape, but if your product or service is in demand, there are channels that can be used to your advantage.
SEM or search engine marketing is essentially a “risk-proof” approach and can be used to great effect with the Adwords service provided by Chinese search engine Baidu. SEM offers a one-to-one way of connecting with customers in a straight-forward way. If you are selling French wine, users who search for French wine can find your product on Baidu when they search using the right keywords. This advertising channel makes communicating with the best customers a whole lot easier. Also, since Baidu SEM is PPC (pay per click), you won’t break the bank – provided your campaign is designed correctly.
The Not-so-straight-forward Art of “Guanxi”
Another reason companies fail in China comes down to a lack of resources. I’m not talking about cash. I mean companies don’t have what they need to get things done in China. Companies don’t have these resources because they are ignoring the Chinese concept of “Guanxi”. Guanxi is a bit difficult for westerners to understand, but it‘s a sort of relationship short-hand that helps get deals done in China. No amount of money can make up for a lack of Guanxi, so companies can often end up in situations that cash cant’t help. This is where it pays to get help from the right kind of agencies who know how to take a strong marketing plan and make it work in China.
The third problem companies run into comes down to communication. Sounds simple enough, just hire some bi-lingual employees and watch them go. Not so. Communication comes down to so much more than just language. People can be gifted at language but at the same time bad at communication. There are cultural differences as well. For example, people in China are much more likely to avoid challenging their superiors. In the west, if managers are wrong about strategic direction, it’s much more likely somebody will pipe-up. This reality can lead to some real “why didn’t you tell me about that sooner” kind of moments – not great for business in China, or any market really.
Chinese Consumer Behavior: Just a Bit Different
The last reason companies fail in China is due to a lack of understanding when it comes to consumer behavior. Chinese people like good products, but they don’t always see the novelty in everything directly. This could come down to cultural differences or just a lack of necessity. Whereas I couldn’t imagine a world where The Home Depot wasn’t around, the Chinese market doesn’t have the same kind of attitude towards home improvements.
With this in mind, let’s look at the Chinese market a little more closely by examining a Chinese-made product that sold well in China but wouldn’t have a chance selling in the west: the “facekini”. A facekini is literally a bathing suit mask that people wear when they go to the beach. If you still needed convincing that marketing to China is a different kind of beast, I hope you are converted now. This is of course an extreme example, but the logic here can be reverse engineered to gain some insight. Not every product will work for the Chinese audience and no amount of marketing will change that.
Doing business in China presents many difficulties, but with the right approach, it could be one of the most lucrative expansions any business could hope for. It is, despite all the upsides, one of the most challenging places to do business on Earth. According to the World Bank (via this article on the Wall Street Journal) China ranks 83rd in the world in terms of how difficult it is to conduct business. Considering how much trade they do internationally, one might expect a better ranking. Still, money is raining from the skies in China at the present moment, and if companies have a product that fits the market they could be set to collect.
Intimidated by the vast Chinese market? Learn everything you need to know about marketing to the Chinese audience:
Download our latest white-paper