In 2016, China was one of the most complex, fascinating and digitally connected markets in the world, but as the world continues to connect virtually, opportunities in China may become more accessible for international companies. App Annie recently released a report on mobile momentum, highlighting China as one of the largest drivers of growth in app store revenue. Meanwhile, The Cyberspace Administration of China has ordered that app stores must register with the government to more closely monitor the content available to Chinese users.
There are many mixed messages being sent to marketers, and it’s hard to know which challenges companies will face trying to find success in the Chinese market, but it’s certainly possible – and I can say that from first-hand experience. In 2012, when my company had seen success as a global player in mobile advertising, we realized the opportunity in China should not be ignored. Building a sustainable business in China demands a shift in mindset and a carefully crafted strategy that balances the right mix of technology, understanding the complexities of the local market, teaming up with partners that have local market expertise, and having a respectful tenacity to see the business succeed.
Understanding Marketing for the Chinese Market
Where global players have faltered in China, homegrown entrepreneurial heroes have risen. It’s easy for someone in the United States to say WeChat is a Facebook copycat, but in reality, it has revolutionized what social platforms can achieve by understanding and meeting the unique needs of the Chinese market. With more than half a billion monthly active users in mainland China, WeChat’s unmitigated success in China comes from adapting its product beyond the basic social network to include other services to further integrate into users lives. Features that may seem mundane like paying utility bills allows WeChat to distinguish itself from major foreign rivals, domestic competitors and adds real value to WeChat’s hundreds of millions of users. Western marketers have the advantage of being able to capitalize on the public social networks, a network like WeChat needs to capitalize on the one-to-one or small-group conversations.
eMarketer predicts that digital ad spend is going to reach more than $80 billion in China by 2020, the Chinese market may not be thinking enough about native advertising in the Chinese market. While Chinese native ads might look a little different than they do in the US, here at InMobi we saw that China had the largest independent native ad network in 2016.
Partnering for Success
A joint venture might seem to be the quickest path to success given China’s wall against foreign businesses and entrepreneurs; it can be difficult to bring together two foreign organizations and work towards one single goal. Companies need to find alternative ways to work with a local partner to meet China’s needs, as the market certainly does not cater to a one-size-fits-all audience.
One option is a loose partnership with companies with local expertise. It’s important for marketers, especially from the U.S., to remember that China has several different provinces with more than 200 dialects spoken throughout the country. The challenge outsiders face is that companies trying to break into the country will often have overlapping offerings to your services. In another time, these companies would be considered competitors, but China embraces coopetition. For example, while one could easily look at incumbent Internet giants such as Baidu, Alibaba, and Tencent as competition, there are plenty of opportunities to collaborate and blend strengths to drive a meaningful relationship. Many Chinese internet companies have found it difficult to succeed in the global internet market, but this is where partnerships with strong international players can help move the needle.
Priceline provides a different spin on partnering in the Chinese market. Rather than going head-to-head with local companies, Priceline made a conscious decision to invest more than $1 billion in Chinese companies including Ctrip, Baidu, and Qunar. This led to a strategic partnership where Priceline now supplies much of the inventory of hotels for Chinese users booking through Ctrip, leading to major booking sales gains for Priceline.
Localize and Decentralize
Business localization in China requires a shift in mindset. Companies need to be ready to build a completely local team, re-engineer corporate culture to suit that of the local market and decentralize decision making.
It might make you uncomfortable in the beginning; teams learn to trust and help each other over time. Hiring English-speaking nationals with global exposure help bridge cultural gaps and eases the process of integrating the Chinese team into the global entity. By localizing a team in China, marketers will have a deeper understanding of the cultural nuances that will make all the differences. On top of having an understanding of peak times to target users. For example, it would make more sense for marketers to capitalize on November’s Singles Day, which saw a record-breaking $17.8 billion in sales in 2016 than it would to focus advertising around Christmas.
Given the rate at which technology evolves, it is inevitable that there will be hundreds, if not thousands, of companies in the coming years seeking expansion into China. Companies that remain too stubborn to embrace the balance of coopetition, tenacity and gaining a deep understanding of the market in the business spectrum, will continue to hit roadblocks on the path to success. As a famous Chinese proverb goes:
Be not afraid of growing slowly, be afraid of standing still.
© 2016 DK New Media.