Number of well-known companies share advice on tackling the Chinese market.
In an article on BBC News, the top 20 most powerful foreign brands in China were asked to discuss the secrets of their success in China, including Samsung, Apple and Adidas, following research conducted by brand research company Millward Brown between 2011 and 2013.
Of the top 20 brands, 13 were from the US, two were German, two French, one was from Italy and one was Anglo-Dutch conglomerate Unilever. The only Asian company was Samsung, of South Korea. All of these companies were ranked according to how “meaningful”, “different”, or “salient” they were, as well as “how easily they came into consumers’ minds”.
It was found by Millward Brown that Chinese consumers are increasingly looking to international brands as the importance of low prices falls due to “higher living standards and falling trust in local brands”. Peter Walshe of Millward Brown said: “This is an opportunity for well-known and well-supported international brands to make their move as consumers start to value quality and experience as much as price.”
11 of the 20 brands responded to BBC News, all of which entered the Chinese market pre-2000. Among the advice given by the companies was to “understand your market”; with McDonalds, which was ranked seventh on the list, warning businesses to “never assume what works for your mature market will work in China. Success comes for those who stay relevant to the needs of the Chinese consumer.”
However, Giorgio Armani, ranked twentieth on the list, said that “he doesn’t really change his offering in China from other markets as the customers want the western style he sells internationally”.
“Be bold” is another tip for those wishing to expand business to China, with many of the long-established brands now regularly opening a large number of sites. Leading brand KFC, for example, has 4,400 restaurants in 850 Chinese cities and plans to add a further 700 this year; while for Volkswagen, China is its biggest market, with the car maker currently planning seven new production plants in the country.
A further piece of advice is to tailor business approaches to different regions and recognising the differences between coastal areas and cities and the north and south of the country. Many brands are finding increasing amounts of business in in-land cities, including Adidas which opened around 400 of its 800 new stores last year in “lower-tier” cities.
Finally, the brands recommend building a team within China, finding the best Chinese talent and joint venture partners, with KFC, L’Oreal, Volkswagen and Adidas claiming that “hiring and training the best local talent helps them understand their customers better”.