China is a complex market, where the attractive sales potential comes hand in hand with tremendous challenges for Western companies. Surprisingly, the industry is full of customers that – sometimes consciously – ignore all the cultural nuances, political issues, and business insights that come with an entry strategy.
Here’s our roundup of brand personas with matching cases of ‘conquering China market went wrong’. What all of them have in common?— ignoring the voice of marketing experts.
The “Stubborn”. My way is the right way.
Being well-established and successful in other countries doesn’t necessarily lead to success with Chinese consumers, just by default. So, when you meet consultants recommending you to invest in research to gain a better understanding of the market and to adjust your business model to it, don’t underestimate their suggestion. Unless you want to struggle for years like Walmart did:
Walmart” case, 2016
In China consumers in different areas differ greatly in preferences and spending behaviour. Since the opening of the first store in 1996, Walmart has struggled to find the right solution to sell a core set of products nationwide.
Besides, a fundamental misunderstanding of China’s political environment led the company to troubled relationships with the Chinese government that fined the retailer and forced it to temporarily close stores.
Additionally, the company’s business model ignored that, at that time, infrastructures in lower tiered cities were not as advanced as required by Walmart’s extended supply chain.The inaccurate business strategy caused low profits and underperformance.
The “Globalism ambassador”. One culture for all
For all the good that globalization brings, there’s a persistent worry about nations loosing their cultural identities in the process. We are not quite there yet: cultural differences do matter and ignoring them may cost a lot.
“Barbie” case, 2011
In 2009, when the iconic American doll established its presence in China, little girls couldn’t relate to the sexy image Barbie embodies. Chinese mothers and girls preferred cute dolls over flirtatious, winking figures.
Some insights about Chinese culture here would have helped.
The “Braveheart”. Competition doesn’t scare me.
Here we go again. When marketers suggest that you do a comparative research to identify the industry leaders, all your competitors, your strengths, and your weaknesses, they are not trying to sell extra services. Ask eBay.
“eBay” case, 2006:
In China, eBay kept its auctioning B2C model, including service fees for sellers and online payment system via Paypal.
On the other end, Taobao.com was winning users’ hearts by offering a C2C model with fixed prices, no service fee and ‘cash upon delivery’ later replaced with Alipay.
The result? After only four years, eBay had to withdraw its share in the Chinese Joint Venture and exit the market, while Jack Ma… Well, we all know the story!
The “Digital-savvy”. Digital is cool and so am I.
Yes, digital in China is a fundamental component of sales strategies now, but online success somewhere else, doesn’t mean that in China your brand will succeed just because it sells online.
China’s digital landscape is complex and brands are fighting tough to bring the most convenience to consumers.
“Asos” case, 2016:
Fashion website Asos closed its local operations in China at a cost of £10m, less than three years after it launched in 2013.
The British online retailer entered the market with a rather conservative social media approach and didn’t partner up with well-established platforms like Tmall or JD, more familiar to Chinese consumers.
Last but not least, the British retailer ignored how well-informed Chinese online consumers are, and didn’t localize its pricing strategy. That’s what happens when you skip homework!
NOTE: Don’t get us wrong, we are not trying to scare you. We only want to warn you about the potential risks that your brand may have to face while entering the Chinese market. And if after this long list of “brands that did wrong” you haven’t given up yet and still feel motivated, then you are ready to start your project in China!
In the following articles, we’ll post about choices that may help you avoid the mistakes listed above. Stay tuned!