The key to business success in China
Doing business in China can yield significant profits and Thai companies are increasingly looking north to build their businesses. To succeed, however, they will need to become smarter about the complexities of operating in a market of unparalleled size a
To help businesses avoid common pitfalls in China, I have identified three key areas that must be properly thought through. These are: understand, educate, and connect.
Understand:
Identifying and understanding potential customers and target markets, both digital and physical, is an essential part of any market strategy. All the more so in the world’s most populous nation which boasts some 1.4 billion inhabitants, 15 megacities (those with populations exceeding 10 million), and 40-plus cities of more than 1 million.
China’s middle-class also grew to 109 million adults last year, eclipsing the US’s 92 million, to become the largest in the world.
While the numbers are attractive, the geography is intimidating. About one-quarter of the population lives in the country’s east, including the affluent eastern seaboard. The remainder are dispersed across the rest of the country. Reaching these people and markets presents significant challenges for businesses, especially those trading physical goods. These include needing to work with myriad distributors, agents and sub-agents – a process fraught with risks and challenges. Obtaining a clear picture of how the distribution network operates can be a hard task, and that’s before addressing any particular problems such as distributors carrying competing products and brands.
Part of developing this understanding also requires an analysis of how relevant a business’s brand is for Chinese consumers. Some companies have decided to modify their existing offering or launch China-specific brands – such as InterContinental Hotel Group’s Hualuxe or Tripadvisor’s Mao Tu Ying – in order to make themselves more relevant in the market.
Educate:
Building on the previous point, brands need to educate Chinese consumers about their products and services. This may require different strategies for different regional markets or demographics within China. Companies will penalise themselves if they fail to build relationships with target customers.
Connect:
This is intrinsically linked to educating potential customers. Once relevant markets and segments have been identified and targeted, companies must start communicating with their stakeholders in an authentic, open and engaging manner. China is a very tech-savvy market, and businesses need to learn how to make use of indigenous channels and social media such as Weibo, WeChat and the numerous online-to-offline networks, as well as other technologies.
To recap: Building strong foundations will set you up for the future. The strongest foundation of all is understanding the market. As Confucius is reputed to have said: “Success depends upon previous preparation, and without such preparation there is sure to be failure.”
