Top 5 Ways to Win in China
27 Feb 2014|Added Value
China is not an emerging market. It has already emerged. These were the words of Sir Martin Sorrell at BrandZ’s Top 100 Most Valuable Chinese Brands event at the House of Commons in London earlier this week. So how can brands harness the power of the world’s second largest economy? Added Value China shares the top five ways to win.
1. Scale matters in a collective society
To win in China brands need a strategy to navigate the fragmented market. Take international FMCG brands Mondelēz and Nestlé, who are continuing to extend their footprint to drive growth outside high tier cities.
Kantar Worldpanel China – Scale matters. Mondelez & Nestle are continuing to extend their footprints to drive growth outside high tier cities
Or Snow Beer, a light pilsner that is little known outside of China, who succeeded with a sales strategy that started in lower tier cities and marched across the country. Snow heavily invested in channel marketing and dedicated distribution, while acquiring and integrating smaller regional players along the way. The brand has been the world’s top-selling beer for the past five years.
2. Find the sweet spot between the latest big thing and adapting it to Chinese market dynamics
Facebook and WhatsApp may be hitting the headlines globally, but Tenecent’s WeChat (微信) dominates the Chinese market by combining the best features of both services and adapting to cultural needs.
WeChat took advantage of the non-Facebook market and the fact that for Chinese consumers, more is more. The brand brought a supercharged Facebook type experience to mobile in China including messaging, photo services, a Twitter like newsfeed, blogging, games and even a dedicated newsreader.
The brand also responds quickly to culture-led demand in the marketplace. When its users started running stores and businesses through the app, it facilitated payments with a new mobile wallet bank that now pays 7% on deposits. And at Chinese New Year, it digitalised the traditional Hongbao event of giving money in a red envelope in a playful new format, attracting more than five million users.
3. Keep it fresh
Starbucks marries a distinct unique selling point with constant innovation. It has a clear brand identity and ‘third place’ positioning, a place apart from home and work that carries a similar importance as these two places, resonating with a Chinese audience. On the other hand, Starbucks is constantly changing, constantly innovating. It caters to Chinese consumers in its product range with special selections and packaging for holidays like Chinese New Year or the Moon Festival, as well as the Chinese palate which prefers sweeter, creamier drinks.
How to win? In a world of constant change, consumer’s needs, wants, thoughts and desires are fast changing too. Brands must innovate, offering variety to keep up.
4. Build trust through your brand
Chinese consumers are concerned about product quality and food safety. And it’s not just local brands who are involved in the scandals. Last year, Fonterra decided to recall baby milk supplies in China with potential botulism contamination (May 2013). A German car brand hit the headlines for clutch quality issues covered up from Chinese car buyers (March 2013). And a leading Chinese drinking water brand reported failure to meet quality standards (March 2013). So what can brands do to gain consumers’ trust? Well, according to BCG brands are key to building trust with the top two reasons for trading up being health and brand.
How to win? With so many quality issues and food scandals in China, earning and retaining consumers’ trust through an authentic brand is critical.
5. Expect to ‘hand hold’ consumers through new brand concepts
Although there is growing exposure to new brand concepts via media and travel, it often takes time for them to take off in China. Take the IKEA cafe, for example. As a bright, heated and clean space, its Shanghai shops have been embraced by elderly local residents who come to buy a free re-fill soda and play cards and socialise throughout the day. While consumers are welcomed to stay, IKEA needs to educate and change the way in which consumers interact with the brand and in its space.
Written by Katie McClintock, CEO Added Value China.