LEARN Highlights | Cracking the Chinese Market

On Wednesday the 31st of July, we were delighted to host our eleventh #LEARNbyVERB on cracking the Chinese market. Tom Griffiths, Commercial Director at Verb China, part of the Verb Brands Group, led the workshop at The Century Club.

Attendees included the likes of Charlotte Tilbury, Temperley London, The Lanesborough and Seven Global. For those who sadly couldn’t attend, we’ve collated the key learnings from the day and we will also share the content through our YouTube channel.

Defining the Chinese Market

The growing strength of the Chinese consumer means that for many brands, the opportunity is just too big to ignore. Tom highlighted one key driver of the market: authenticity.

The market is categorised by low-trust, with many Chinese consumers making a decision based on authenticity. This authenticity is seen through positive peer reviews, social media presence and the right sales channels.

‘Your strategy should revolve around localised content and campaigns with injections of cultural touch-points in your global messaging and this requires bilingual, bicultural team; experts in luxury marketing and steeped in Chinese culture.’

Overview

The statistics speak for themselves, the potential that the Chinese market holds is unfathomable. However, they are no longer wooed by products and brands simply because they’re foreign, Chinese consumers purchase luxury items that resonate with their self-image; brands that help them say something about themselves.

Far from being a frontier market where only the brave and the bold brands risk expansion, Chinese malls are full of international and domestic products. Therefore, it is very important to think more strategically when planning your market entry.

For instance, their consumer behaviour differs across cities, meaning a blanket approach won’t be effective. This includes spending habit and products desires. Example:

Tier 1 Cities – Shanghai, Beijing, Guangzhou

Tier 2 Cities – Provincial capitals and affluent cities

Overseas Chinese – Students and young professionals

Misconceptions of China

Market Potential

While the opportunity in China is great, the market does sometimes get over-blown in the media. This leads to under-planning and over-estimating from brands launching in the market. A realistic, well-planned strategy coupled with an experienced execution team is a minimum, even for well-known brands.

Cultural Differences

While there are similarities that brands should lean on when entering the market (family, food, love, sex, etc.), a millennia-long history makes China a cultural minefield for brands and marketers.

Some examples of terminology which brands should be careful of include:

“Countryside”

“Green Hats”

“Chrysanthemum”

“250”

Challenges

Entering the market means more than simply translating your brand. While watching out for potential cultural faux pas is important, China can present a few unique challenges outside of the obvious.

Market protection, legal set-up, logistic support, repatriation of revenue, and IP protection all need to be navigated. Tom Griffiths ran through a few examples of brands who have made ill-advised decisions, emphasising the importance of careful consideration.

Branding and Positioning

Put simply, your brand should be the same in China as it is at home (positioning in the market, visual id and brand story) the main difference is in execution.

Campaigns that are successful in China tend to be localised executions of global campaigns or brand messages – marketing to China in a silo can risk alienating your audience there.

Platform Overview

There are 3 big parent companies that dominate the market in China. As part of the session, we broke down the main channels.

Entering the New Market

There are three preferred routes to market entry:

WFOE – Wholly Foreign Owned Enterprise

Cross-border Ecommerce – Duty-free direct to consumer ecommerce sales

ICP license – Internet Content Provider license required to host website in China and to sell through eCommerce

These all differ in regulations easing and digital improving. We’ve compared them in a matrix grid for you below:

Tom also gave a brief outline of what you should be focusing on within your first 6 months.

Month 1 – Getting everything in order

Month 2 – Content launch

Month 3-4  – Sales channels soft launch

Month 5-6 – In market sales channels launch

Conclusion

What with so many factors dependent and the variety of channels available,  it really comes down to the specific needs of the brand and the effort taken to remain authentic. At Verb, we take a personal approach to every client we work with. If you would like help with deciding your market entry strategy into China, please get in contact with us today.

The next LEARN event topic will be announced soon. Please email us on marketing@verbbrands.com if you are interested in attending.