Chinese market entry is not something you can plan on-the-fly.
The lure of China is huge. These are massive markets. Plus, the level of wealth of a large portion of Chinese consumers is on the rise...
But, at the same time, simply having a smart business idea or product which works in the “West” is no guarantee of success in China.
Some of the biggest names have failed to find traction there:
Uber. Google. Amazon. eBay.
They all failed to work out how to penetrate the Chinese market. So what did they do wrong?
In this article, we'll take a look at four critical success factors for your Chinese market entry:
Consider the different modes of entry into China
Choosing the right company type is one of the key decisions you will need to make before entering the Chinese market:
Joint Venture– this is the old standard and still a good choice. The downside is you need to have a trusted local partner.
Representative office– you cannot deliver goods or services with this option, making it only a good choice for QA of in-country manufacturing efforts, for example.
WFOE (Wholly Foreign-Owned Enterprise)– this is the modern standard, difficult to set up and requiring investment, but generally worth it in the end as you maintain full control.
Your Chinese market entry strategy: location
Most companies expanding into China fail to truly take on board one very important point:
China is big. Very big.It is also very diverse – probably more diverse than Europe – and the exact location you choose for your company is going to seriously affect how likely you and it are to succeed.
Most of the big cities are known for certain industries. A more inland location might be good for you if you are product-centric.
Localise your marketing strategy and products
Localising your marketing and products for a Chinese audience involves:
Segmenting your market: The Chinese market is, in fact, many markets. Different regions and the big cities often have dramatically different audiences you'll need to tailor your message to.
Choosing the right dialect: Mandarin and Cantonese aren't the only major dialects of Chinese
Selecting the right platforms: Every company in China has a WeChat presence. Facebook only has a small following. Twitter is entirely replaced by Weibo, which doesn't really work in the same way.
Adjust your product market-fit: Don't just assume that your idea has universal appeal.
Doing business in China involves making the same adjustment to local corporate culture as you would when trading in any new market:
The idea of Guanxi: “social connections”, the harmonious system of positive relationships is a very real thing in China.
The concept of “face”: today, the meaning of the phrase “lose face” has spread around most of the world. In China, however, it is a way of life. Especially in business.
Collectivism: while “Western” countries tend to prize individualism, in China the collective tends to be more important.
Business cards: are very important in China. Don't forget to have your name and title printed in the correct dialect of Chinese on the reverse. Always treat cards you receive with care.
Stay calm:raising your voice in anger can cause you and the person you are speaking with to lose face.
When you are effecting your Chinese market entry, that is the last thing you want to do.
About the Author:
Julie Giguère is the Managing Director of Asian Absolute. Holder of degrees in Specialised Translation and Law, Julie’s career before Asian Absolute saw her manage
translation projects for the Bank of Montreal as well as at major Language Service Providers in France and the UK. These roles were a natural fit for Julie, a passionate communicator who speaks fluent French, Spanish and English.