Your business is making great strides in your home country and has even had success in international markets. But now that you feel that you’ve reached the top of your game, you ask yourself – what’s next?

Like many, you may consider market expansion, setting yourself a goal to reach the largest market in the world. With 1.5 billion people making 23 trillion dollars a year in GDP, it’s safe to say that this market is none other than China, which exceeds the USA’s revenue by far. 

The obvious decision: you’re going to China!   

First things first – have you done your homework?

The most common reason that foreign companies fail in China is that they don’t do the proper market research. Overconfidence is what encourages brands to head for the market full steam ahead. This daring approach may work one out of 1.5 billion times, but a surefire way towards business success in this country is to do your homework thoroughly before entering. 

Let’s use Uber as an example. Uber has become a household name in countries across the globe. However, it failed to impress the Chinese market because it did not invest in enough research. But it’s hard to put the blame on these companies that “try” because even experienced marketing experts can miss pieces of the puzzle when entering markets that they are unfamiliar with.

After discussing with Mikhail Preobrazhenskiy, Affise China Country Manager with eight years of experience bringing tech products to the Chinese market, here are some challenges that make marketing research in China difficult.

Top marketing research challenges everyone who plans to expand to China needs to know:

● Unpredictable data

Combine the largest economy with the largest world population and you have a recipe for extra opportunities and many risks.  New companies and organisations emerge and disappear on a daily basis in China, making it a volatile market with data that is constantly fluctuating. There’s just no way that accurate predictions can be made when focusing on short-term periods. The key is to go in for the long haul and apply long-term research. 

● Communication

Face-to-face communication in China is a prerequisite for business and you are going to need someone on your team who speaks Mandarin. But penetrating this language barrier is not going to be enough. Communication in China is enriched with culture and ideologies and if you are not familiar with these characteristics, then you may find yourself being misled or completely cut out of the equation. To be treated equally, you need to be able to communicate efficiently. 

● Finding a competent research consultant

There are few research consultants in China who can provide you with a creditable service, in fact, the lack of credibility can be overwhelming. This is because it is so easy to open a market research business in China today – all you need is a modest amount of capital, an office, a phone, and a pen! The country is now booming with incompetent consultants and it’s very hard to find the right company to trust. 

While it can be challenging to conduct efficient market research in the People’s Republic of  China (PRC), it’s not impossible if you keep the above factors in mind. Make sure that you do your homework well – and then ask someone to double check it for you!

Preparing for your slice

Entering the Chinese market can be both an affordable and costly investment. To start, it’s important to brush off the stereotype that labour is cheap in China. Labour is NOT cheap in China. Moreover, the basic costs of running a business are not lower than in western countries – so just keep this in mind. What makes China an affordable investment is its demand. 

However – domestic companies dominate the market, and with the government’s assistance, they can implement one resilient tactic that foreign investors cannot match: cutting prices. To add, these companies are also generally backed by giants such as Alibaba and Tencent and are thus provided with resources that are hard to beat. 

Demand and competition

Once you are 100% sure that there is demand for your product or service, make sure that you can cope with it!

There may be no time or opportunity to grow your supply if you suddenly find that you are not coping. And if you are entering an industry with strong competition, it’s likely that you will fail – or a better ending is that someone will buy you out. 

Consider a partnership:

It may not be such a bad idea to find yourself a Chinese partner – this is something to consider, anyhow. You may not want to share your slice of the pie, but it could be your only chance to get a taste of it. A solid partnership will help you to develop your business presence and open new opportunities.  It may also provide you with access to legal, political, and staffing solutions along with financial assistance and valuable knowledge.  

Make sure that you utilise the right marketing channels

Another aspect you’ll need to pay attention to is marketing, especially marketing via digital channels. China offers a broad selection of marketing opportunities, which is great, but choosing the right channels for your brand is what will make the best impact. Detailed targeting and strong analytics is what you will need to directly engage your audiences and help you to save time and money.

So, is marketing the defining point of your ultimate success? 

It can be. But once again, I do encourage you to partner with a local! 

Affiliate marketing is incredibly well developed in China, and if you can get a piece of the established “audience pie”,  then you will quickly attract local affiliates and media partners. What’s more, is that you may even have the opportunity to revel in a performance-based scale where you pay for certain results only! As the saying goes, “when in Rome do as the Romans do,” or even better “when in China go along WITH the Chinese”.

Keep your mind sober

If you see that the piece of pie you had your mind set on is out of your reach, then let it go. A sound piece of advice that many foreign companies often share is: if you failed — admit it. If this happens, it’s better to rest, reflect, save up, analyse your mistakes and then start over again. Learning from your mistakes and then improving on them are what make you a winner.

If you achieved your goal — then the slice of pie is all yours, well done! You have created a unicorn and have proved that what may have seemed possible is achievable (if you do your research and connect with the right channels).

An example of such a “unicorn” is  Starbucks. Starbucks made China its largest market with over 4000 stores, even though the locals are not used to drinking coffee daily! And then there’s Tesla. Tesla sold cars in China worth 6.6 billion dollars in 2019, which accounted for about a fifth of its total revenue. The game “Fruit Ninja” also made 500 million installs worldwide with 200 million stemming from China. 

So yes, the proof is in the pudding and entering this complex market is still worth a shot.

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