Local national brands are often expensive and of a poor quality, this puts Chinese consumers in a vicious circle of constant search for brands that they can trust.To sell in China, Brands has to solve their problems to success .
Top 10 Challenges of new brands to sell in China
Historically, Chinese consumers feel more comfortable with the major recognized brands. It has become a consumer culture to stay away from new and unknown brands.
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Chinese consumers do not trust easily, and they are right. Living in a counterfeit environment is pushing everyone to do research on most of the brands they find in the market.
Chinese don’t trust easily !
Chinese consumers do not trust easily, and they are right. Living in a counterfeit environment is pushing everyone to do research on most of the brands they find on the market.
Why Chinese buy brands ?
When it comes to buying brands, the Chinese adopt the Italian way “La Bella Figura”, because appearance is very important in China. They prefer to pay more for a recognized brand because it will bring respect and prestige in their social circle.Big brands can therefore sell effectively and with much higher price exploiting consumer priorities.
If a brand can sell among a community or a group of consumers, it will take full advantage of word of mouth that is very effective in China. Therefore, if you have a good reputation in china and as more consumers buy your brand, it will be more famous.
If you’re a famous brand.. What will happen to you ?
It’s not easy when you’ve just started your business in China
1/ Distributors will not trust you at first
You must find distributors and resellers for your product or, if you have a large budget, open your own stores. The sales infrastructure is very different in China.
Distributors are all looking to work with recognized brands; it’s very easy to sell. If you are going to meet them, very often they will refuse any possible collaboration.
The solution to sell in China:
Increase your e-reputation!
Distributors are going to do research about your brand on the internet. They will use research platforms that are very different from what is used outside of China. That’s why you need to have to be known in the digital world.
Ask yourselves these two questions:
- Did Chinese consumers like the product? They will see the reaction of those who have tested what you propose.
- What is the quality level?They will find that information in forums and Social Medias.
Distributors will want to know if the brand is popular, so they will use search engines like Baidu or Sohu, they will also look for how many Social Medias talk about your brand and how many followers you have.
The real key to success to sell in China is distribution, which is what brands need in order to begin their development in this vast community.
2/ Chinese consumers are wary of “new” brands
The big challenge to sell in China is that nobody wants to be the first to try a new product. Consumers do not venture too much on new products. I remember that during a campaign, we offered free test products, but consumers refused them anyway.
Sell in China : “Branding is the key to success” !
Chinese consumers are difficult to understand for foreigners. It is a different market that operates under different conditions.
In order to make them try your brand, you need to design a smart marketing campaign in such a way that consumers think you are already present on the market. It’s reassuring for them. You have to offer great offers in order to make your future customers to try out your new products. Samples, VIP services, special offers, discounts, coupons … are all examples of treatments that help target such a population thirsty for special offers.
If consumers try the product, post their feedbacks online (positive ones of course) and if the communication campaign is impressive enough, sales will increase. Having a flexible strategy to this complex environment is the key. A brand is a lifestyle. That’s what the Chinese want, to build their own identity in order to be respected in their social circle.
The positioning of foreign brands in China
A foreign brand must be seen as a well-known brand outside of China, which offers a good quality product, and which will soon be famous. Repeating these positive messages on the right platforms will influence the Chinese consumer and consequently his social circle. It is the digital age, consumers are much more connected than before and are more receptive to quality marketing content.
If you have distributors for your product and people do not buy, resellers and distributors will stop presenting your product and will concentrate on doing so for other brands (better known in China). Chinese distributors are not faithful, they are pragmatic.
They want to make money very quickly and will not waste time for brands with low attraction level. Never present yourself as new brand, what to do is to make yourself known online (the main portal for information for Chinese consumers) as a famous brand in your country of origin and that you’re gaining a growing reputation in China.
3/ No brand loyalty or commitments
The difference between the communication of a famous brand and a new one is very simple :
It is difficult for a new brand to attract the attention of potential customers online, because no one will love and share the product of an unknown brand. The Chinese consumer is very proud to be a fan of Lancome, Chanel or LV.
Example: When a big brand like Chanel organizes an event, it’s easy to invite people. On the other hand, if a new brand organizes a better event, it is very difficult to gather a community around the product because most of them are simply not interested, are not particularly curious and prefer to be seen attending the events of well known brands.
Target the right Chinese community !
In the social medias, it’s a little bit the same thing, the big brands already have their communities, so there is more interaction from the fans who share the brand’s novelties..
For new brands, it is a bit difficult as you start from the bottom. You may be very famous in your home country, but China will remain a new world for you. You have to start from nothing, and it’s hard to attract followers to an account in order to like or share a very good article..
There is a strong link between smart engagement and famous brands.
The Solutions to Sell in China
We’re not targeting everyone. You start with small communities that are a little bit more open: young consumers or Chinese students abroad who will be able to try the product.
Then, communication will be more effective in this market, will achieve small victories and will attract more interest which will lead customers to you.
All that work takes time, a year on average, because at the beginning is a 1to1 communication, you must have feedback from consumers in order to find the perfect communication angle. The idea is to tailor your brand to the Chinese market.
Online marketing is today the most effective method and brands are moving towards Mobile
4/ Small brands are at a disadvantage in China
In China, experienced businessmen know that everything is negotiable and that it is possible to benefit from a number of advantages and special offers. Very often, the big brands will have a special price for the rent of their stores, will participate free of charges at an event and will benefit from the selection of the best Chinese partners. We call it ” guanxi ”, and it’s very easy to have guanxi with well placed people who work for big companies.
For small brands, they will get almost nothing. They will have to do everything themselves, they will not have the privilege of less expensive rents, they will have to give and hope to receive a counterpart. They pay and must fight.
Example: Starbucks rent is very low because it is a recognized brands; If a new coffeeshop wants to settle in China, they will pay the full price..
The Philosopher’s Stone: Communication, your partner must feel that you are growing and successful, that you are evolving. At that point, they will realize that you are on the right path to becoming a great brand, and that it is best to have a very good understanding with you from the start.
In China, the best employees do not work for startups, or small companies. This is not the Silicon Valley, so working for a startup is anything but sexy for the Chinese.
The young Chinese talents prefer to work for free for famous brands than to be paid to work for small companies. For the most part, they will be more engaged if they work for famous companies and will do the impossible to keep working there.
The senior profiles will ensure that their salaries are 2 or 3 times higher when working for a small company or a new brand. Logically they do not want to take any risk when it comes to their career plan. It is safer for them to work for a company that is strongly present and already established.
6/ Quickly changing (and sometimes unclear) regulations
You might have already heard about this, but China is quite famous for it’s quickly changing its regulations, indeed it is not rare for the chinese government to come up with brand new laws and regulations regarding commerce for international brands.
In order to override these inconvenient regulations, we recommend you to call on professionals in order to navigate as simply as possible the throes of China’s administrative difficulties.
7/ Intellectual Property Issues
Intellectual property (IP) protection in China is a major concern for foreign businesses and most always the target for new reforms. China has almost always been considered as the “world’s factory,” constantly producing low-quality manufactured goods and imitating all types of products, from children’s toys to luxury items.
Many foreign companies have been complaining that enforcing their intellectual property rights in China is difficult because of the local judicial protectionism and more particularly the challenges in obtaining evidence, proving the small damages inflicted, and the perceived harm inflicted against them.
To prevent brands from being stolen and protect themselves international brands operating in China, the best way to resolve intellectual property issues is to focus on patenting and being able to prove and protect their brand in China.
8/ For companies hiring in China: Be aware of the big turnover
In China the big turnover is a very common phenomenon among recently hired employees indeed they enter a company with the intention of getting proper training, once their target achieved they leave their company in search of an equivalent position but offering a higher paid salary and better working condition.
As you might’ve already guessed, the best solution in order to prevent your company from suffering from a high rate of “big turnover”, providing a salary in line with the tasks of the job, that way your employees will be less tempted to look for another position.
9/ Marketing strategy without offending the locals while keeping an identity
For foreign businesses located in China, making sure not to offend the chinese public and consumers must be a maximum concern, for the simple reason that chinese consumers and internet users are known for their sensitivity. Nevertheless, it is essential for companies to be able to create and develop their brand image, yet the problem arises when it comes to assuming its image without offending anyone.
In order to avoid controversies of any type, it is recommended to hire a digital marketing agency, which will be able to advise and assist you in navigating the Chinese social networks.
10/ Getting a Chinese business license
Are you in the business of launching your business based within Mainland China ? If that is the case, then you probably already know about Chinese business licenses. This document is the most important one to obtain when trying to open a business on chinese ground. However China is filled with quite a consequent history of complicated, quick and ever-changing bureaucracy and regulations, foreign entrepreneurs are faced with many challenges in order to obtain the much-needed business license.
As you can imagine, in order to avoid dealing with all the endless Chinese bureaucracy, going through an agency that knows its way around is undoubtedly the best way to obtain the famous license.
Read more about business licences in China.
The Solution to Sell in China
Explain the future of your company, a good manager in China must sell his business to his employees first.
The employee chooses the company for which he wants to work in China, except for big companies, they select their candidates. I am convinced that working for startups is more challenging because employees learn better by participating almost in most of the management activities.
Companies are therefore forced to invest in their marketing and the image of their human resources, in order to recruit and retain these talents.
Branding is Everything in China:
I always tell my customers “In China, branding is everything”, it makes the difference between open and closed, between easy and difficult, between lucky and unlucky.
If you want to sell in China , first invest in your Brand
Most businessmen in China do not go into too much detail in marketing, but know that branding is very important.
What is the heart of Branding ?
In my opinion, it is the work done in image, visibility and e-reputation.
When a large percentage of consumers know you, had already heard about you or have nice stories with you.. This is a brand image.
After establishing a Brand you can think of Ecommerce in China
Tmall : largest ECommerce website in China
JD : 2nd largest companies.
Wechat : set a store and sell on Wechat
We like working with new brands and startups
The beginnings of the stories fascinate me, how people make a brand famous from the beginning, seeing them increase their level of vigilance, get more users, etc.
I am proud to participate in the success of my clients, its self fulfilling.
I’m an entrepreneur myself, i’ve started with my partner Philip and we know how difficult it is, the energy you need to do the first step.
When you start your business, you realize that the small companies are helping you, they have everything to gain, while big companies are afraid of new players, new ideas and marketers, they are conservative.
Working for new brands.
The vast majority of marketing agencies do not work with small brands, the budget is less important, it takes time and they think it is less prestigious. My partner and I have a very different opinion.
It is true that financially it is better to work with big brands, but we consider ourselves as David versus Goliath.
We build brands out of nothing and forge long-term collaborations. We are your field team, and do not start our profit until our client has a return on investment and an excellent future for his business in China.
It’s even more rewarding.
And as they say in China, it is not the biggest fish that survive.. It’s the fastest and smarter ones.
And we like working with smart customers.
If you want to sell in China, develop your business and need more than a simple provider, do not hesitate to contact us.
It is a really interesting article, actually it is true, it is not easy for new brand to sell in China, they first need to invest and 99% of them do not realize that;
Thank you Mike , yes nothing is easy in China, but everything is possible 🙂
Yes, I believe you’re right Mike, and a lot of investment (money) for a long time, actually it’s more easy for a service companies that still have room to success in China
Great Article. I suggest to send this article to all new Brands that try to enter the Chinese Market and are obsessed by Short time Profit…
Read this carrefully and then we talk