Given China’s huge consumer base, the increasing spending power there and the strong control of COVID-19 infections within the country, it was the only major world economy to have positive economic growth in 2020 and has staged a strong economic comeback. It’s no wonder that brands are keen to gain a foothold in the market.
But entering a new market is tough, especially one as fast-moving, competitive and challenging as China’s and it has defeated some very big, well-funded brands like Tesco, Uber, eBay and Home Depot.
Are you ready for China?
Does your company have more than US$50 million in yearly sales revenue? Is your brand well-known among Chinese consumers? Are you agile and in it for the long haul?
Yes? Then you’re ready.
If you’ve got US$30 million in yearly sales, or you’re a known niche brand with few competitors, you probably have a good shot as well, but you’ll have to work harder or with tighter budgets. China isn’t cheap. We’ll talk more about that later.
If you’re ready, what’s next?
1. Do your research and fill out your paperwork
A) Is there demand or room for your brand?
Before going into the market, it’s important to determine if there are customers for your product or service. If it’s not something that Chinese people are interested in or if it’s a market where a Chinese competitor already has an extreme advantage, you should probably save your time and effort.
For example, if Uber had taken a cold hard look at the market and been rational about its chances, it would never have taken on China. It entered a market where taxi hailing app Didi already had a near monopoly and a number of other key advantages that made it very hard to beat. Don’t be Uber.
How can you tell if there’s a demand for your brand or your products? Check on Taobao and social media platforms. Are there mentions of your brand? Are people dissatisfied with the current offerings in the market? Were "daigou" selling your products before travel was restricted? If so, then there’s interest already.
B) What’s your trademark status in China?
Check if your trademark has been registered fraudulently or if unrelated local brands are already using similar trademarks. If so, you need to decide what action to take. Trademark issues also affect local Chinese brands. Large and mid-range brands usually engage lawyers to regain control of their IP and register the trademark. This brings us to the next step.
2. Choose your 3 key partners
A) Law firm
You’ll need a China-based law firm that is used to dealing with business issues and Western firms to help you secure your trademarks, licences, set up your local entities, make robust, China-compliant contracts, deal with tax issues and more. Finding a good law firm will cost you money in the beginning but will more than pay for itself in the long run and you’ll need them to secure your IP rights, accounts and sales channels.
B) TP partner
After you’ve secured your IP rights, you’ll need a good TP partner. TP partners are registered companies that act as extensions of the brand in China to onboard brands, plan budgets, distribute products, run Taobao or Tmall stores, look after inventory, deal with logistics, organise and film live streams, do customer service and more. They typically look after everything on platforms that is related to transactions.
Brands need to proceed with caution here as many people refer to themselves as TP partners but there are a limited number of companies that are qualified and registered to fulfill the roles and do the duties of a real TP partner. The registered TP partners for Tmall Global are listed here.
C) Marketing agency
Once you’ve registered your trademarks, taken care of your legal paperwork and found reputable TP partners, then you’ll need a marketing agency to help you plan your marketing strategy, run your branding and communications, create content and execute campaigns. You may also need a research firm, a strategy consultant, an offline distributor and much, much more. It takes a village to succeed in China. It also takes focus, investment and time.
3. Choose a good Chinese name and know your nicknames
Chinese consumers need to be able to say and remember your brand name. It needs to sound nice in Chinese, be easy to remember and not have unpleasant, boring or unrelated meanings attached to it. Take some time and get good advice to get your Chinese name right.
Examples of good Chinese brand names
Coke is an example of a well-crafted Chinese name. Coca Cola (可口可樂) - ke kou ke le. 可口 means “delicious” and 樂 means “fun” so the name carries lots of positive meanings, especially for a drink, and the pronunciation is also very similar to the brand’s English name.
BMW (寶馬) - bao ma. BMW is an acronym for Bayerische Motoren Werke (Bavarian Motor Works). The company’s Chinese name captures some of its acronym sounds and means “precious horse”, expressing dignity and class.
The nickname that it’s been given by Chinese people is bie mo wo (别摸我), meaning “Don’t touch me,” - shows how much it would be valued and protected as a possession. Which brings us to nicknames.
Beauty brands need to be aware of their Chinese nicknames
For many beauty products, no matter what your product’s English name is, if it’s a hot product or unique, consumers in China will give it a nickname that’s much easier to remember. They’ll use that name to talk about the product in posts and videos and use it to search for the product on e-commerce platforms and social media.
Smart brands pick up on these names quickly and start to feature them in their product listings and their marketing. Brands also seed cute, memorable names in their early marketing to gain traction and get attention. Take the time to think about good names for your brand and your products and then keep your ears open to find out what nicknames people are using and embrace them.
4. Choose the right sales channels
People have a very oversimplified view of the Chinese market. They think, “I’ll just set up a WeChat mini program or an official brand website and sell there.” It’s tougher than this.
Chinese e-commerce platforms are a necessity
To really get into China, you have to be on Tmall, Taobao or JD.com and a physical presence will eventually be necessary, even if it’s just pop-up stores. It takes three months or longer to open on a big Chinese e-commerce site and you need to prepare even before that. Trademark issues, applications, business licenses, certificates, supply chain issues, Chinese copywriting, photos, usage guide videos, 360-degree videos, multiple thumbnails from various angles and more.
Choosing the right platforms
So, how do you choose the right platforms? It depends on what your products or services are and who your customers are. If you’re in apparel, shoes, beauty and personal care, Tmall, Taobao and VIP.com are the best platforms for you. For appliances or electronic products, a presence on JD.com or the Suning and Gome sites is a good idea.
Being a top international brand is no guarantee of success
Some big brands think that once they open a store on Tmall, they’ll have immediate success because they’re a global leader. But a brand’s global standing is no guarantee. International brands need local relevance, outstanding content, an intriguing narrative, money to boost content and advertise, great partners and a top-notch supply chain team.
5. Build a robust marketing matrix
Your marketing matrix should be based on your consumers’ journeys and match it in terms of platforms, social media, influencers/KOLs/KOCs, content marketing, live streaming and more.
Brands should also start developing groups and communities on social media for their customers. This is called private traffic or a private pool. This is also where brands build their customer relationship management systems to communicate with customers and fans.
What is China’s marketing matrix? Well, Google isn’t available in China and the country’s biggest search engine, Baidu, doesn’t play the same role in marketing. Chinese consumers usually search for particular brands and products and they usually use e-commerce sites and social media as their search engines. They also look for recommendations from friends, family, co-workers, and influencers that they trust.
Your marketing needs to include great content, excellent campaigns, trusted, effective KOLs, short videos, live streaming and more. What is done, when and how depends on the brand, the products and the customers they are trying to reach but all brands need to spend time building layers of trust and reliability.
6. Create a launch event that will wow people and campaigns that people will remember
To announce your arrival, a launch event is important. Of course, not everyone can afford the kind of showstopper that Hyundai pulled off for its luxury brand Genesis, with a record-breaking drone show in the sky over Shanghai, but even a well-designed pop-up store, a great small local event or a well-coordinated online launch that fits your brand can get the kind of attention that your brand needs.
The bar has been raised in China so making a big impression, especially in top tier cities, now means using drones, huge LED screens that create 3D illusions, holograms and full-building or multi-building light shows.
Then it’s time to do some campaigns and build a solid foundation with great content, then run regular campaigns to boost awareness.
A) Decide which type of campaign you need
Do you want to do a sales, awareness or CRM campaign? It’s important to focus on one objective as the three are set up and executed differently and target different groups. As one example, a sales campaign by Uniqlo featuring American artist KAWS was hugely successful in 2019. A statement by the artist that this collaboration would be his last with Uniqlo led to a strong fear of missing out which resulted in epic demand. Six million units sold out (source in Chinese) on launch day.
B) Localise your offerings in China
One great example was in 2019, Maybelline developed a lipstick range that was packaged with a customised mahjong set. It sent out the sets to lots of beauty bloggers all over China who loved it and it created a huge stir on Chinese social media.
C) When your campaign is over, evaluate it and build from there
Based on your goals for the campaign, how did it do? Did your awareness campaign gain your brand greater awareness? Did your CRM campaign increase the number of people using your membership platform or in your private WeChat group? Did your sales campaign result in higher sales? Analyze what went right and what went wrong and move ahead with gains made and lessons learned.
7. Deliver outstanding customer service
Speed is the key in China and customer service is no different. People expect fast deliveries, quick replies to queries and complaints and rapid action when there are problems. Replies in under 30 seconds are considered the norm in China and people want a live human to deal with them in a personalised way.
The instant availability to many apps and communication channels all within one platform, all on one’s mobile phone, and the fast reactions on the part of e-commerce giants like Tmall, Taobao and JD.com have created this expectation.
A brand’s private pools of social media communities allow for instant communication and also allows brands to let loyal customers know first about discounts, new products and news.
And also remember that in China now, very often, the communication and the relationship is the manufacturer to consumer. People are in direct contact with factories that can customise orders in minutes.
8. Remember that China is not cheap
It seems that some very old ideas still persist when companies contemplate their budgets for China. They think it’s a cheap, easy market to enter. The truth is, it’s not only expensive but more expensive than many Western markets.
As mentioned earlier, companies with US$50 million in global revenue have the best chance in China followed by those with US$30 million global revenue.
How much money will you have to spend on marketing in China in your first year? It all depends, but around RMB4 to10 million (about US$600,000 to US$1.5 million) is a good benchmark.
China is a lucrative market, but not one for the faint-hearted and not one for every brand. Some brands stumble at the start line and never regain their momentum. Do your due diligence and research before taking any action, take the time to plan your strategy and choose a good name. Then set up a big brand launch and execute your strategy with effective campaigns. Put together a great local team that you trust and empower. It’s simple, but not easy. Is your brand ready?
This article is contributed by Ashley Galina Dudarenok, founder of ChoZan and Alarice.
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