Eric Lin is the general manager, Pacific Rim at Siegel + Gale.
Despite the recent slowdown, China still has significant growth opportunities for global brands. With a middle class expanding, ongoing urbanization and increasing consumption, China gives global brands to reach a wide audience with an insatiable desire for new products, services and experiences.
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Yet while China's growth opportunities abound, so do its challenges. Nascent days of economic growth where the mere availability of a foreign brand in the market was enough to generate excitement and sales are over. A more sophisticated public and intense competition have raised the bar for success, in what is probably the most dynamic market in the world for brands.
For global brands who are considering entering the China market, here are three key questions:
1. Do you have a compelling purpose to enter?
While the market demanded once new products and services, rapid development we have seen in recent decades has led to a huge range of products and services in virtually all sectors. Competition is intense with global players continuing to invest in the market and very ambitious and fast-moving local rivals close the gap in terms of innovation and quality.
Successful global brands must clearly define the purpose they bring to market. What is not satisfied that you meet need? How China will only benefit from your offer? Beyond the functional value you provide, what is the wider social or emotional value you bring?
If your organization is struggling to answer this question now, he will have an even harder time convincing the public once you are on the ground. In addition, the government is increasingly demanding that foreign companies contribute to the market not only benefit.
The organizations that can serve a higher order purpose- improved quality of life, development of industries, impacting communities look favorably in the eyes of the government and regulators.
2. Does your brand resonates locally
Global brands that have been successful in China all have one thing in common: each has localized areas of their brand resonates with the local culture, preferences and behaviors. KFC localizing its menu, away to adapt its size to the Chinese public, there are many examples of brands that include success in China requires a unique approach that meets the tastes and local needs.
Yet effective brand localization is more than just product or adaptation service. It begins with your story-locate which brand you are and why you are important. Your brand story, while probably very clearly defined in your domestic market, may need to be adapted for the Chinese public to reflect cultural differences, unique targets and competitive dynamics public.
When North Face first entered China, he struggled as he communicated his very history of the global brand, empowering individuals to push the boundaries of exploration and outdoor performance . After a better understanding of the market, it locates its brand story to be about experiencing the balance and harmony of nature with friends- a nod to cultural understanding of how Chinese prefer to enjoy the outdoors.
Today this culturally relevant history leads all they do and say in the market, their communications to their outlets to online communities, they have created for Chinese consumers looking to enjoy the outdoors "to the Chinese."
3. Are you willing to commit for the long term?
You will probably spend a lot of time to do your due diligence and map an entry orderly market.
But the reality is very little to go the way you plan. You will make mistakes. You will find your assumptions were off. You will discover what works in other markets might not work here. And you'll quickly discover the classic adage of China veterans in China, everything is possible, but difficult. If the short-term financial returns are your main motivation for enteringChina, it is best to turn away now.
Build your business like any important relationship engage in the long term. Embrace the country, people and culture.
While it is easy to be motivated by two decades of double-digit growth and expect short-term returns, the reality is that the supersonic growth of China begins to cool. There continue to be a major growth opportunity for multinationals in the coming years, but will require a strong foundation, patience and careful execution.
Companies like Coca-Cola, Nike and KFC who are reaping the benefits today planted the flag in China a few years ago. Similarly for any new or recent participant, it is important to understand that success in China will be a long journey.