Article
Western companies can unlock the Chinese market
This article has been taken from The Gen newsletter - Summer 2008.
Click here to download the pdf.
The Chinese middle class represents a market so huge that it could easily resolve any Western recession. But what is the best way to approach this lucrative market in order to ensure success?
International companies – especially in the consumer product sector – are watching the Chinese middle class explode; wages are currently rising by 10-15 per cent, and the middle class is expected to hit 560 million by 2020. In addition, quality-conscious consumers are increasingly articulating a mistrust of local products through their spending. Yet despite being faced with a market hungry to spend money, many Western companies fail to take full advantage of this opportunity.
There are two key factors influencing this. Western companies often think that they can roll out the same product in China with little or no modification. This is a costly mistake and will limit the potential returns. Even within Western cultures, such as Europe and the USA, products need to be adapted to be marketed to the right audience. Nissan cars, for example, have a very different build and specification for Europeans than Americans.
There are also more subtle differences regarding look and feel that Western orientated organisations are extremely unlikely to uncover. China is immensely different in its culture. You only have to walk down the street in Shenzhen to get a feel for this, or look at Chinese publications or products. If the look and feel of a product is not right culturally, the Chinese will reject it.
For example, in China DIY (Do-It-Yourself) is regarded as something the lower classes do – it is associated with manual labour and low social status. In the West, it is seen as a pastime, a hobby, a way to relax. In China, personalisation is key, and B&Q, one of the UK’s leading DIY chains, unlocked this market by designing their stores around ‘bundles’ or packages of room makeovers. A potential customer visits and purchases a ‘room’, a way of life, a personality. As a result DIY in China has really taken off with the Chinese middle classes.
We’ve found through our partnering with clients that companies need help not just in business practices, but also in identifying technologies and innovations that really appeal to Chinese customers, and which can be packaged in ways that are even more appealing. This demands a huge shift in cultural perspective for a western person. Speaking the language and getting on a plane and doing a classical unmet needs study just isn’t enough. There is a real need to work with locals skilled in these disciplines, and work with them to translate the real market and technology needs into a culturally significant product.
The Chinese market is moving far faster than any other economy. To capitalise on this growth, Western companies need a Chinese partner capable of understanding both business ideologies and able to use this understanding to ensure successful market entry. We offer a 'rainbow bridge' for companies. We provide the design, innovation and manufacturing skills required to ensure a company is welcomed rather than rejected by the Chinese consumer.