Strategy
By Jan Bierman.
Breaking into the China market successfully can seem like a daunting task for companies with limited or no experience of doing business there. The China market is several degrees more nuanced and complex than new market entrants initially expect, and they can find their China success stymied through a poor understanding of local business opportunities and brand fit in the market. Many foreign companies experience trouble introducing their brands into China because they fail to put in the research and effort up-front to understand the opportunity.
China is a powerhouse and it represents huge potential for New Zealand goods and services but its sheer size, scale, regulatory environment, heterogeneous nature and rapid evolution presents distinct challenges for new players. An aspiration to enter this dynamic market requires courage and determination and more than a little help in-market. Jussara Bierman of global branding agency Rare HQ says, “We have seen too many businesses fall on their faces in China because they have over-rated the street-cred of Brand NZ, trusted distributors, taken a one-size approach, or had a DIY attitude. China requires a discrete mindset, commitment, and insight, and this can only be reliably informed through on the ground market research”.
“Success depends upon previous preparation, and without such preparation there is sure to be failure.” – Confucius
Why do many New Zealand companies overlook the most basic of tenets of market research for the multifaceted China market? Jacky Leung from the China division of Union Alpha CPA comments, "To establish your footprint in China, you need to have 2Hs in hand, “How” and “Homework”. New Zealand businesses are cost and risk conscious. Leveraging off third party consultants like market research and brand experts, tax and legal support, and operational and logistics consultants can help companies to go through the “How” process. Like the old school days, extensive “Homework” is a must. There are no short cuts in China. A good investment in brand development, market research and business strategy on the ground can definitely give a New Zealand company a good start, and most importantly avoid the risk of wasting money”.
Good market entry studies provide practical and actionable findings, and identify any potential roadblocks and weaknesses in your company’s product or service offering.Whilst short visits, desk research and consultation with home market advisors and well-meaning Sinophiles will provide some insights, nothing beats independent up-to-date in-market analysis. There are some standard questions that need answers before a company develops its China strategy, explicitly:
Which markets (at provincial or city level) are suitable for your products?
Who are the players in the market?
Who are your competitors?
How competitive is the market for your products?
Through what channels are similar products sold?
What are the price differentials?
What opportunities, trends, threats or barriers are present in the market, specifically for your brand, product or service?
How does your brand translate into market – packaging labeling, naming, story and so on?
Do your products stand a fighting chance in the new market?
“In initial discussions with companies investigating China entry we are continually surprised at how ingenuous they can be. When asked where they see themselves fitting in the China market they often say “we are a luxury brand”, with no comprehension of how their brand fits in the China context”, says Jussara Bierman. “One of the most important things is localising your brand. Without time on the ground most businesses don’t understand how to do this. Smaller brands often think localising is to stick on a Chinese label.But really it’s about being able to present your brand as a foreign brand in a Chinese way”.
Whilst each company's China strategy is likely to be informed by any number of different factors – from industry sector, product type, company size and culture, through to long-term business aims and global corporate vision, market intelligence gives you market insight and first-hand knowledge that will help you tailor your brand and determine the best entry vehicle.
Jan Bierman is the New Zealand-based director of Rare HQ Ltd. Rare HQ - www.rarehq.com - is focused on supporting companies to build and strengthen their brand on the international stage. Rare HQ has recently launched its China market entry Kickstarter packages - http://rarehq.com/china-kickstarter/
May 16, 2014