October 22nd, 2009
03:02 AM GMT
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China = 1.3 billion people.

That’s an equation that intoxicates marketers and drives businesses to invest serious cash in capturing the Chinese consumer.

But experts in brand marketing in China warn businesses not to get dazzled by the numbers. China's consumer market is large, but it is also complex, fragmented and fiercely competitive. If you want a piece of the action, you better do your homework and be prepared to stay for the long term.

Here are a few tips from our experts.

Target your customers

Only 33.5% of retail sales now come from China's top 24 cities, according to a study from Ogilvy & Mather Group China. China's smaller cities and towns are a growing market for foreign brands.

However, consumers in these areas have considerably different shopping habits than those in big cities. They are less hurried, spend more time in public spaces and have limited access to the Internet. Differences like these can be crucial for market strategy.

Regional, cultural and ethnic differences have to be considered as well. Chris Reitermann, President of Ogilvy Shanghai, says focusing on a smaller market segment can pay off more than a broad, unrefined strategy.

Have a local partner

There are a lot of benefits to choosing the right Chinese partner and building a strong relationship with them. GM, a long-term success story in the Chinese market, has made out of its joint ventures with Shanghai Automotive Industry Corp. "They know the market," says GM marketer Joseph Liu. "They help us on the distribution side. They bring the government relationship which is extremely important in China."

Take your time

Both our experts advise that building a brand in China is an energy and time-consuming business. Liu recommends putting someone in China full time to build relationships. Reitermann says studying the Chinese way of life can help you build a marketing campaign that is sensitive to local culture and appeals to local tastes.

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soundoff (5 Responses)
  1. gillkarim

    to come up start manufature everything made in usa compitive price,quality also export and will take 5 to 10 years , that the solution only.

    October 22, 2009 at 9:03 pm |
  2. Daniel ,Wang He Ping, Templeton

    After four years in China in a "real" Chinese city, I finally gained the relationships that gave me access to different levels of decision making. I taught and led business students at a major University and their business lab. There we created new business ventures and got them funded. The students were very successful. It is very important to develop the relationships, show respect by learning and participating in cultural ritual and showing them that you are there to help China, not rake profits off the top. When you are trusted, access is provided.

    October 30, 2009 at 1:33 pm |
  3. Mekhong Kurt

    I lived in China 1985-88 and then in Macau 1990-94. I also was there from September, 1999 until June, 2000.

    I'm a university teacher, not a businessman, but it has long amazed me how little some people know when going into China to conduct business. This article correctly points out that there basically *isn't* a 1.3-billion people market, but a great many rather localized ones.

    An anecdote can illustrate another point: the importance of relationships.

    When I flew to Guangzhou in 1999 to take up a teaching post, I hadn't been to the city in a number of years, during which time a new air terminal had been built. I looked outside but didn't see any taxis, so I turned to a nearby policeman and asked where I could find one. He gave me directions, and after I thanked him, he smiled, then startled me by rendering a soft salute and saying, "Welcome back to China, Teacher Kurt. Thank you for coming back to help us. I hope you enjoy living in Shunde" (about midway between Guangzhou and Macau). I asked him how he knew who I was and where I was going, he chuckled and explained that all the airport police had been told I was coming in to to assist me if need be. Then I asked *who* had told them. He said he didn't know specifically, but he did know people from the Foreign Ministry, the Ministry of University Affairs, and the Ministry of Public Security in Beijing had all notified the airport police chief. Clearly, the links I was able to forge in my one year in Tianjin and two years in Beijing paid off handsomely.

    And I know of many more such stories, both my own and others'.

    Also, as is true just about anywhere, it goes a long way to learn even rudimentary Chinese, especially if you learn both Mandarin, the national language, *and* some of the local dialect; some dialects are virtually mutually unintelligible. While everyone is required to know Mandarin, if you're in, say, Guangzhou, knowing a few Cantonese phrases will be sure to generate a lot of smiles and good will. And you don't need to be able to conduct a in-depth, complicated discussion, just a bit of social chat.

    One of the biggest gaffes foreigners make regards food. Most Chinese realize that many of us, especially Westerners, prefer not to eat something like dogs and cats. And they're not likely even to offer you any. But whatever they do offer, common courtesy calls for us to try it, even if just a tiny bite. *Not* to do so is a grave insult, if normally an entirely unintentional one, which the Chinese realize, so they probably won't say anything.

    You might be surprised and like something you thought entirely unappealing - that's how I reacted the first time I ate a small bite of a sea cucumber, which many Westerners insist of call a "sea slug." It was delicious, and remains one of my favorite Chinese foods.

    In case anyone's curious, no, I never ate bear paw, monkeys, dogs, or cats - as far as I know, anyway.

    I'd like to mention one other matter that irks many a Westerner: the volume of ordinary conversation. Chinese tend to speak comparatively loudly, sometimes annoyingly so, to Western ears. I don't know why that is, but it really doesn't matter. They're *not* being rude; they're simply having a perfectly normal chat.

    Finally, in major cities, most places a Westerner normally goes are almost certainly places where locals are well-accustomed to foreigners in their midst so won't give you a second glance. But off the beaten track - even in cities like Beijing, Shanghai, and Guangzhou - it's another story entirely. Many Chinese have never seen even an *Asian* foreigner, let alone a Western one. In such settings, you'll likely be surrounded by a crowd of curious people who have no ill intent. I've even had people touch the hair on my arms and my head - not at all threateningly. After all, virtually all Chinese have very dark hair and little or no hair on their arms or, indeed, most of their body. So someone with blonde or red hair draws a lot of attention, even if that person has no visible hair elsewhere. Just smile. And don't be surprised if some of the less timid follow you right into a store or someplace - and watch what you purchase. Then some of them will buy the same thing, assuming that it must be good if a foreigner bought it!

    I loved living in China, and met many wonderful people there. I still go back sometimes, and I invariably have a wonderful time. I could happily live there again, I'm sure.

    November 13, 2009 at 6:14 am |
  4. wilson

    US trade and economic policies toward China are undermining US economic and military security. They urgently need fundamental reform. Fueled by record global surpluses of production and trade, particularly with the US, China’s modern productive and financial capacities soared, becoming far more diversified and less dependent on the US or on any set of industries. Even as China’s economy grew at record rates, four times faster than the US since 2001. http://electronics.wesrch.com/pdfEL1GP9E0KLOOC

    November 13, 2009 at 7:06 pm |
  5. jerry

    If one will crack into the China market, she/he should know China market well.
    It's true China have 1.3 billion people, but this not means a 1.3 billion market. For only the people worked in monopoly industry or goverment can consume, for most others, they will not consume anything if not necessary.
    For most comman people, they should save their money to purchase house, which need more than 30 years income averagely, without house, their child can not be educated.
    And farmers should save money to pay the cost of college for their children, which need 35 years income for the farmers in west of China.
    Also, every people (expect goverment employment) should save money for health, or once they got a serious sick, the only thing they can do is to wait, wait to death.

    December 9, 2009 at 9:28 am |

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