The world is globalizing and to many, the idea of breaking into a foreign market is extremely attractive. However, just because your brand is doing well in your home country doesn’t mean that same success will transfer in a foreign environment, especially in a country like China.
The Chinese market is already heavily saturated and regulated. This doesn’t mean that your brand can’t break into the market, but it needs to take careful measures to ensure that it doesn’t flop.
What is your target market?
Mattel thought opening its flagship House of Barbie store in Shanghai would be an undoubted success. And why not? Chinese women love trends, shopping, and chasing after Western trends. However, Mattel tried to accomplish too much in a developing market. Aside from Barbie not having strong brand recognition in China, Mattel struggled to identify a target market. It designed its store to appeal to young girls and grown women. This meant a design center and fashion runway for young girls and a spa and cocktail bar for women. This stretch in product offerings left the company blindly allocating resources and the customers thoroughly confused.
How will you market your brand?
Home Depot is a success in the US because Americans have a DIY attitude. They see their homes as extension of themselves and want to add their own personalities to them. In China, homes are an investment, not an object of sentimental value. In fact, the percent of homeowners in China went from zero to 70% in the last 15 years. Chinese people prefer stores like IKEA that provide showrooms and step by step instructions in home decor over stores like Home Depot, which just provide help and resources but no creative inspiration. Also, women, not men, hold the purchasing power when it comes to home decor and improvement, so Home Depot’s industrial warehouse feel did not resonate with them. After six years of trying to gain market share and struggling to appeal to the do-it-for-me mindset, Home Depot shut down its seven stores and fired its 850 workers in China.
How will you develop and maintain a relationship (guanxi) with your customers?
In the Chinese business world, guanxi （关系）is an important term. It’s literal translation is relationship, but it essentially means networking or developing connections. During a Western business transaction, the buyer takes the sale at face-value and trusts that the seller is being honest. In China, business exchanges take on a personal aspect, often including sharing meals and interacting with each other’s families. Ebay ultimately lost to local, e-tailing giant, Alibaba, because it failed to understand the importance of guanxi. To the Chinese, trust is a major factor in a commercial exchange. Alibaba’s TaoBao facilitated this by developing a chat feature on its website. This allowed buyers and sellers to communicate. Asking questions about the product or negotiating prices are all integral parts of the purchasing process to develop trust. Ebay assumed it could operate in China like it operates in other countries. This naivete led them to shut down its operations in China within 4 years and give its reins to Tom Online, a mobile Internet company with no experience in online auctioning.
While having a surefire strategy to market your brand to your target market increases the chances of success in China, implementing some sort of digital component in conjunction can better your chances. Chinese people are addicted to their smart phones and social media, so before taking the deep plunge, social media is a great way to test the international waters. More big brands are headed towards popular Chinese social media sites like Weibo and WeChat to reach consumers. While Macy’s has no physical presence in China, the American department store launched a Chinese New Year campaign on Weibo and recently uploaded its Fashion Look Book on WeChat to engage with potential Chinese tourists. With the right objectives and social media strategy, your company can enter China without a hitch.
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