How to Capture the Next Wave of the Exploding Chinese Market
The rapid progression of Western brands in China has slowed and if Western companies want to re-ignite company growth, they need to understand the changing dynamics of marketing to the Chinese consumer in a rapidly expanding market. The Chinese economy will rise from $11.2 trillion to $19 trillion by 2015, at which time the U.S. economy is expected to only reach $18.8 trillion. Western business models will have to react accordingly to China’s increasingly adaptable consumer market.
– Chinese consumers demand simple functionality and durability
– They favor convenience and service availability
– Chinese companies take into account political authority as well making money, keeping track of two very different goals
– Their demand for luxury goods is fuelled by spending power and no longer by the desire to show-off wealth
The changing patterns of consumer-demand offer great opportunities as well as challenges for Western brands in China. Generally, the Chinese find “breakthrough” destabilizing, and climb up the value chain slowly and surely.
– Western companies have financial strength – the Chinese have an in-depth understanding of consumers and markets
– Western companies have little presence in tier 3 and 4 towns where the growth is exponential – the Chinese have well-established networks there, slowly climbing a value chain to keep a competitive advantage
– Western companies are slow to react to changing conditions – the Chinese anticipate and respond quickly
– Western brands need to be modified for the Chinese market – Chinese brands are already developed for this market
– Western businesses in the U.S. and Europe lack a true desire to understand the basic motivations of Chinese people
Launching Western products in China or expanding markets for existing products requires companies to understand Chinese business strengths in their domestic markets and meld these (and their rivals’) into their own marketing strategies. Inherent in China is a fundamental transparency and respect for the challenges in their world view, which might take a long time to truly understand from the outside.
“I do feel like America has not yet really gotten China. There is still not, when you go back to the States or when you go back to Europe, a true desire to understand the basic the fundamental motivations of Chinese people.”
– Tom Doctoroff, JWT’s North Asia Area Director & Greater China CEO, author of What Chinese Want: Culture, Communism and China's Modern Consumer.
The next wave of Chinese consumerism is on the horizon and to capture significant market share and build brand loyalty in China, Western businesses will have to act fast by:
– Collaborating with Chinese companies to leverage their local strengths
– Developing a more extensive marketing network that covers tier 3 and 4 towns
– Localizing operations to produce faster responses to market demands
– Increasing digital presence. The internet is a hugely popular marketing network in China now where product features and availability as well as prices are also determining factors in purchase decisions.
Video: Tom Doctoroff, JWT’s North Asia Area Director & Greater China CEO, about China’s recent rise as well as the misconceptions that exist between Western and Chinese businesses each looking to expand at home and overseas.