Part 1: Optimizing China Market Entry for Brands
03 Feb 2016|Added Value China
Over the last few decades with rising incomes and increased consumer spending, China has been the focus of many companies’ global expansion plans. However, despite the rapidly changing economic landscape many international companies have struggled to grow their business in China and a number of well-known brands have miserably failed to replicate their global success within the China market. Determining what is the right strategy for a brand in China is dependent on a number of factors and varies across different sectors. Breaking into the China market continues to be an immense challenge and having a well-thought out market entry strategy is critical to a companies’ long-term growth. Two of the most important factors to take into account are defining a smart brand strategy and choosing the right channels to play in.
According to Christophe Meuter from Kantar Retail, “For any brand that wants to be successful in China we strongly believe that channel strategy and route to market are the core elements which will enable you to land your brand in the right way. Firstly, a brand needs to decide where to play – which channels make sense for your business but also which provinces and cities. There are many opportunities across China from the north over to the far west. Only once you decide which region is right for your brand then you can determine how to win by defining the organisation and the supports and enablers that you need to put in place”
Conventional market research is at the core of many of the market entry strategies that brands are employing in China – not only does it provide strong foundations for long-term growth, but it also feeds into all areas of marketing from digital to mobile to communications. But is this enough to succeed in the increasingly competitive market of China where a brand’s competitive advantage is built not only on product, service, and brand attributes, but also its ability to adapt to an ever-changing landscape?
Implementing the right strategy, effectively localizing the offer and committing long term are all important steps to achieving that goal. Any company, small or large, can succeed in China as long as they have the ability to think differently and do their homework early on. Starbucks, for example, not only understands the value of its global brand but in China it has taken important steps over the years to localize its proposition whilst maintaining brand integrity.
For a Western brand to maintain its perception as a premium brand in the minds of Chinese consumers it needs to have a smart approach from day one. This should not only be built on traditional in-depth market research and strong category understanding but should also derive from a more holistic strategy that combines three key pillars: category, culture and consumers – the 3C’s to coin a phrase.
Written by Panos Dimitropoulos, Account Director of Cultural Insight, and Sam Woollard, Client Development Director, with support from the Added Value China team, Kantar Retail and the China Britain Business Council.
Image source: Starbucksprev next