For foreign brands working on the China market is tough, says business analyst Shaun Rein, author of The War for China’s Wallet: Profiting from the New World Order. They can both over-localized and under-localize, he tells Hicom-Asia. Some of the pitfalls for foreign companies.
HI-COM: In your experience, what have been the most common misconceptions about China held by foreign companies?
Shaun Rein: Companies entering China can over-localize or under-localize. When I say over-localize, what I mean is that they can forget their core brand, their core DNA, and the result is that they have no clear direction or strategy when launching in China. One example is [Mattel’s] Barbie. When Barbie launched in China, they opened a Barbie themed store and Barbie themed café, avenues they had never pursued elsewhere in the world. The result was that Barbie’s China entry appeared a bit confusing. In another sense however Barbie under-localized; the outfits for Barbie sold in China were too ‘sexy’ and didn’t fit the local taste of young Chinese girls who generally prefer fashion that is more ‘cute’ and girly.
Another misconception foreign companies often hold when entering China is thinking there is no need for a local mainland Chinese on the management team. Companies would be well advised to have a local Chinese on their team and empower this individual to be able to guide and steer strategy. This local representative knows better than anyone the unique political, regulatory and consumer dynamics that are at play in China and can help steer or pivot your company as needs be.
HI-COM: When it comes to a successful China market entry, what would you say are the critical elements companies should be aware of?
SR: Understanding what consumers want through undertaking ongoing research that has regular feedback loops. Consumer preferences and channels can change so quickly in China that it is vital to closely monitor what is happening on a quarterly, if not daily, basis. Understand that e-commerce as a distribution channel is huge here. You need to also get the right manager that is aware of government policies and can help you pivot strategies as needs be. Politics and the market are so intrinsically tied in China, creating a unique ecosystem that is not found elsewhere in the world.
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