You are a foreign entrepreneur, (expatpreneur) and there are several basic things your need to know in China. Over the past two decades, entrepreneurship in China has grown at an exponential rate. The open market policy leading to economic explosive growth, in combination with the Internet bubble sweeping through China like a storm has produced generations of successful Chinese entrepreneurs.
In 2000, total revenues earned by Chinese state-owned industrial enterprises and those in the non-state-owned sector Chinese private enterprises were roughly the same at about 4 trillion yuan each. By 2013, while total revenues at state-owned companies had risen just over sixfold, revenues in the non-state sector had risen by more than 18 times. Profits in the same period showed an even more remarkable difference, with state-owned companies showing a sevenfold increase but profits at non-state-owned ones increasing nearly 23 times.
Things have changed drastically since when the market was just opened. China is now a very competitive landscape with global brands, foreign companies as well as domestic players competing aggressively for the pockets of millions of Chinese customers.
With more than 10 years of establishment, our agency has worked with numerous clients and helped them build their empire in China. Learning from our own experiences as well as from the clients, we’d like to share with you the most important tips every businessman needs to know in China.
Start small (dream big)
We know when you research China, you are amazed and excited about the enormous opportunities this country can offer. Western media usually talks about China as the land of gold where the future lies. Market research and reports release huge numbers indicating how potential China is.
Businessmen in China all have big aspirations and want to get there fast. Sometimes, they try to jump to “big” too soon. They try to have an immediately huge vision.
While there is nothing wrong with thinking big, when it comes to taking action and making progress, starting small is the key. Starting small requires less time and energy; thus, your chances of giving up on it will not be high. Starting small also prevents overwhelming and paralysis. Thinking too much and planning too much may lead to the delay of actions or missing the opportunities.
Starting small builds your momentum and confidence, as well as gives you immediate feedback so that you can adjust in time. Learning and adapting from the market is key to success in China.
Adapt and keep your DNA
Apart from language barriers and legal hurdles, one of the most significant and yet consistently underestimated reasons, why global brands struggle in China, is simply the cultural difference. Many fail to acknowledge that consumers in the Chinese market have entirely different mindsets and motivations to those in the West. They also have different ways of shopping and interacting with brands.
No book or research can cover all the particulars of Chinese culture and thinking. You can only experience, discover and learn for yourself.
In fashion, for example, simple criteria include meeting Asian sizing requirements (a Western small is typically a medium in China) and manufacturing clothes with shorter sleeve lengths to accommodate body shape, as well as introducing China-specific lines that speak to local fashion trends. Where many brands have ignored these golden rules and failed, Zara has embraced them and is steadily building its market presence. On one hand, the brand maintains the essence of a global brand, but on the other, adapts to satisfy the high expectations of Chinese consumers.
Adapt to China. China will not adapt to you.
Move fast (or die fast)
In China, everything is moving so fast. Society is changing dramatically; trends appear and disappear at a breakneck speed; new platforms emerge and submerge in the matter of a few years.
Chinese companies are investing heavily and expanding quickly both in the domestic market and overseas.
- In less than 6 months, Alibaba, the largest digital player in China, set up Alipay (a mobile payment service) in every major shop across the country.
- Within one night China can put 100 000 bikes in Shanghai.
- In one night, they can copy the latest iPhone model.
In China, you need to think fast, make fast decisions and move fast. If you wait too long, the market will change, the competitors will become stronger, the consumers will change their minds, and you will miss the opportunity. Business in China is about speed and flexibility. It is not the largest fish that survives but the fastest and most adaptable one.
If you want to be successful, you have to adapt to the reality of the ground.
You may have read a lot about China before entering this market; however, when it comes to actual execution, you have to start from the ground up. No matter how much you have been prepared for this market, it will never fail to surprise you.
Stay pragmatic and don’t be lured by artificial figures. Instead, patiently learn from the consumers, your suppliers, your partners, your Chinese colleagues, and friends. Then, adapt. Be as pragmatic as Chinese people. Do not think too much. Do not come in with too many Cliché, pre-perceived ideas of how things should be. Instead, focus on what works and avoid what does not work.
5. Think E-commerce first – Retail second
In China, a total of 816.98 million users used mobile devices to access the internet as of December 2018. 610 million users shopped online in 2018, 14.4% more than a year ago.
Social media and online shopping in China are developing very fast and becoming much more advanced than in the West. Therefore, when brands first enter China, they would put e-commerce and social media marketing as the cornerstones of their business plan. Entrepreneurs have to understand popular digital platforms in China, and know how to do e-commerce before doing retail.
Care of your reputation, because trust matters in China
The Chinese consumer market used to be and is still dramatically riddled with copycat brands and fake products. Therefore, consumers are cautious and highly beware of new unbranded stuff. In China, branding is everything.
Furthermore, Chinese consumers trust the review and feedback from their fellow buyers more than the brands themselves. Therefore, word-of-mouth marketing is critical, and “guanxi” is so advantageous in this country. When a person introduces you, his/her friends would be guaranteed that you are a trustworthy person. This is more powerful than any marketing tactic.
As an individual, building and maintaining relationships with people in the industry is important. As a brand, establishing and nourishing a strong and positive reputation on social media is key to making sales.
Start- work – optimize and then scale
Previously we explained why you should start NOW and start SMALL; then continuously adjust, constantly adapt your business idea to the tastes of Chinese consumers and the Chinese business environment. This is where you must devote the bulk of your time and efforts to ensure success.
Once you have figured out how to attract and retain the first group of happy customers (most likely belonging to the urban Chinese middle class) you will want to scale. Done correctly and at the right time, this will allow you to tap into the upcoming second-and third-tier city markets.
But beware: While it is fairly easy to get going in China, building a strong and loyal customer base and scaling your business successfully will take quite a bit of time, energy, and business acumen.
Hire local partners and learn from them
If you’re planning to expand to any foreign market, you’re far more likely to be successful if you rely on local partners who can guide you through the cultural and logistical hurdles that await you. This is especially true in the case of China, a country whose values and systems are still largely misunderstood by most casual Western observers.
Also learn from your team members
Most leaders settle for learning by themselves. They read a book or attend a conference by themselves. Good leaders learn with the help of a mentor. A coach can come alongside a leader and help the leader see things from a different perspective. The best leaders learn with a team. An old proverb teaches that where there are many advisors, there is much success.
Don’t forget to incentivize your partners and team members. Award them with excellent performance and spend time building relationships with them. Sometimes, just a dinner makes difference!
Think Social & Viral – forget Advertising
It’s harder and harder to catch the attention of Chinese consumers. Every day, they are bombarded with too many information and advertisement on their mobile phones, laptops, on the streets, on trains, in restaurants, billboards… Every space in China is filled with advertising.
Therefore, advertising alone is not enough to attract customers and keep them interested. You need smarter strategies, more creative campaigns, better analytics, and more innovative marketing initiatives. The digital/ technological landscape in China is diverse with numerous platforms, functions, and tools for you to run the hardest-to-execute campaigns you ever imagine.
Because only results in the matter…
How can I achieve this? What do I have to do now to get there? Being result-oriented means you get what needs to be done, done. You become much more focused on actions towards the result.
Chinese are Results-oriented, and this country produces a large number of successful people, because in the end, no matter how only results in matter;
To win in China, you have to move fast and be result-oriented. When a problem arises, many people will spend a good amount of time trying to understand what happened; what step in the process was missed, why didn’t the process work, where was the error? But result-oriented people, cut to the chase, do not waste time looking at the past but instead look forward; how do we fix this now?
Partner with result-oriented agencies who will assist you navigate through this market and save you so much time in “trial and error”!
Do you need help?
We have developed startup packages, to help entrepreneurs to start something and get their first sales, leads, or feedback.
Let me know if you want to know these cost-effective solutions.