For many brands, the allure of entering the Chinese market has proven too tempting to resist, but doing so before you’re really ready can lead to mixed results. Some brands fail, but some have succeeded. Take a look at Nestle, or even Peppa Pig, these brands know what makes the Chinese consumers tick and have successfully won them over.
The Drum recently dedicated an entire issue of its magazine to the enormous opportunities that China can provide to the western world.
At the Made In China breakfast panel on 28 February, Gordon Young, editor-in-chief of The Drum sat down with industry experts from ASAP+, Eurostar, China-Britain Business Council and Puzzle to look at the opportunities out east and how brands can determine the best strategy for entering the market there.
Where do the opportunities lie?
According to Alpha Xu, chairman of ASAP+, a digital marketing agency based in Shanghai, western brands should take advantage of services like WeChat. The Chinese multi-purpose messaging, social purpose and mobile payment app offers a platform where consumers can engage with a brand in multiple ways all in one place, with seamless integration.
“We call it social CRM,” explained Xu. “You can buy online, the products plus e-commerce and data checking and make the whole journey in WeChat. Most brands start there.”
Over in the west, consumers take a bit of convincing before they hand over their data, whereas in the east, the Chinese customer is more willing to hand over personal information in exchange for highly personalised services and advertising, insisted China market business advisor and UK sector lead at China-Britain Business Council, Chris Lethbridge.
“Look at the way Alibaba has its online to offline retail experience,” he added. “The supermarkets that are hyperconnected; you walk in you scan things with your mobile phone and pay for it with your device. You then walk out, and the food is delivered to your house. Following that, you receive personalised recommendations. What we are seeing is this merge between the online and offline worlds.”
Technology presents other interesting opportunities for Western brands, according to Eurostar consultant, Carmen Tse. If you want to learn the essence of the Chinese market, the first thing that Tse suggests brands do, is look at mobile usage. “Look at how they [the Chinese consumer] use the mobile and what it is used for. Their mobile device is their life.
“The first trip I did to Shanghai was fascinating,” Dan Beasley, managing director of Puzzle, recalled.
I went there with my Visa card expecting to be able to pay but it wasn't that easy. Things like WeChat Pay and people’s willingness to trust their device in a way that the western market is just getting into [with] things like Apple Pay. It was a big eye-opener and presents a lot of opportunities for brands.”
Keeping up with regulations
In the past decade, regulations in China have strengthened. And a lot of those regulations have become more helpful for brands, such as investing in areas like IP protections.
“Try and operate with the first to file trademark system,” said Lethbridge. “If you’re the first person to put the trademark in, you’re the one who owns it in China.
“Before you go to China, you need to register your trademark. Companies who get into trouble are the ones who don't understand the system they are operating in. A bit of research before you go in to prepare yourself pays off enormously.”
Don’t just drop your brand in the ocean
As with any unfamiliar market, product testing and research are key to a brand’s success. China is no different. You can’t expect that what works in the UK, will automatically work in the east, the panel agreed. Brands like Peppa Pig, Maceys.com and Nestle have all succeeded taken note of this, and to great success. China is a very big market, it’s varied and diversified, and one size will just not fit all.
Xu emphasised the need for localisation when it comes to the Chinese. For Xu, what is really critical for brands to find success is to immerse into and understand the culture of the place.
Take Tesco, the supermarket giant as a prime example of failure within China, said Tse.
“They weren’t ready. They just took the UK model and applied it in China. These are two very different demographics. They didn’t allow for regional managements, so you're stocking the same products in the shops nationwide and that doesn’t work.
“In the east of China, we eat sweet and sour and rice, in the north we eat noodles and dumplings and in the middle we eat Sichuan spices. It's quite different in terms of flavour and taste. That's the sort of adaptation you really need to pay attention to.”
More recently, Dolce and Gabbana’s brand fell in favour among consumers in China when it released its racist and sexist ads that made fun of chopsticks. The e-commerce and retail giants were forced to remove its products and cancel fashion shows.
Generation Z in China
When Chinese tourists come to Britain, the second most visited place after Buckingham palace is Bicester Village. “This tells you everything you need to know about the Chinese appetite for British and luxury brands,” Beasley added.
China’s generation Z is a growing demographic in terms of luxury products. However, Tse suggests that some of their traits and personalities are more involved with their pride in China and sustainability.
“They are a generation that care about health, environment and don't just look at the price,” affirmed Xu. “For gen Z, they are trying to find products that are fit for them.
“Don’t underestimate the increasing national pride of China’s youngsters who are bolstering the growing middle class. They want foreign experiences but are proud of a new global China, this is why it is criticality important to work with a Chinese partner who has a global outlook“ Xu concluded.
Social purpose in brands is nothing new, but those who step up and take the lead in effective change resonate with youth culture.
“It's a global thing,” added Beasley. “The brands that have a purpose and stand behind what they preach, they're going to be successful and that's with the younger market coming in through the west and the east want.
“It’s a global shift in how brands operate and what brands people want to engage with.”