Building a Successful Relationship with China

To many businesses encountering slowing growth in mature markets, the allure of an emerging market like China is almost irresistible. It is small wonder when you consider the potential over the long term. For example, on the business-to-business (B2B) front, one global chemicals player has said it anticipates China accounting for a full 50% of its volume just 10 to 15 years in the future.

But to achieve a payoff like that requires a lot of patience, not to mention the financial wherewithal to stay the course. It puts pressure on marketers to find ways to evolve the best practice that they’ve followed in established areas to work in a world where culture, language, values, and customer preferences and behaviour are dramatically different.

To succeed, B2B companies will best be served by first focusing on brand building and adjusting their marketing strategies accordingly. In the end, making inroads into an emerging market hinges around forging strong relationships.That is best accomplished not by rushing in but instead thinking about the best way to enter the Chinese market, what to promise, how much to go after, and taking care to not get too much ahead of the ability to build capabilities.

First, companies need to get a handle on customer behaviour. It is critical to understand the price/value relationship. What will the market bear? What can your brand and business model bear? What are the key triggers to customer loyalty? Companies that are patient in their pursuit of these answers will increase the likelihood of success. In China, for example, we see that many local companies are positioning themselves as low-cost producers with reasonable quality levels. Brands and offerings need to be seen as relevant to this type of manufacturer. If companies lead with premium strategies using innovative but potentially riskier technology, this will not appeal to customers as much as pursuing a low-cost, copycat design and production strategy.

Local Positioning

Global brands with Western associations and status can garner more interest in China, but that’s still no guarantee of success. Those that bolster their brand’s local positioning via partnerships with Chinese businesses (easier now that the nation’s regulations around joint venture ownership have relaxed) can gain better and faster insights into critical cultural nuances.

Yet even though this route may minimise risk (along with bureaucratic entanglements), “go slow” are words to live by. This is particularly critical in sectors of the B2B market where service is a key component of the brand. Do your partner’s people have the capabilities and values to deliver a consistent on-brand customer experience? Without proper due diligence, it might be easy to be lured by a partner with the requisite local knowledge but a brand with a negative standing. Or even one whose synergies only supplement your deficiencies.

There are also overarching considerations to brand positioning in China. Global positioning statements should be localized for this market. A focused range of products should be offered initially, with an emphasis on the benefits of the end application. Generic messages won’t resonate with the local market, and, generally, neither will “new to the world” (versus China-focused) innovations. And specialized product offerings won’t work in a market where business customers are looking to fill broad-based market demand, not become niche players.

General Electric (GE) did well when it entered the Chinese market with a focused product offering in the energy sector, positioning its brand around general benefits like quality. GE promoted its brand values using local marketing activities, which built awareness and credibility to the extent that it gradually stretched its brand into other industries like lighting and plastics.

Naming has its nuances as well. Many global brands develop a Chinese name for the local market after ensuring it doesn’t carry negative associations or cultural references. If possible, the Chinese characters should have the same or similar meaning to the English word; short Chinese names that are catchy and easily pronounced are best. The Chinese characters for Michelin, for example, don’t mean anything, but sound similar to the English pronunciation. Customers like using the Chinese name because it’s easy to pronounce and remember.

The ability to strike the right image and tone in brand positioning is another critical success factor in this market, and entrants would be well-advised to run a cost-benefit analysis to determine what balance between international and localized best suits the business. Using a global image, color palette, and tone of voice as a consistent reflection of the brand’s personality, familiar to customers everywhere, is often the safest place to go.

This approach has benefits in the way it reinforces and builds global brand equities and makes the mark easy to recognize. It also gives the brand mass appeal while making marketing materials easier to navigate. But it does make the brand appear to be more distant and impersonal to the Chinese customer and thus, may not resonate with Chinese customers on an emotional level.

Localizing the business involves adapting the brand’s personality, along with images, colors, and tone of voice to the Chinese market. This approach is appealing to those who love the Chinese culture and strengthens the emotional tie with customers.

National Pride and Heritage

Given the fierce and re-emerging sense of national pride and embrace of China’s long and rich cultural heritage, brands that take these extra steps to connect to the concept of China itself may be better received over the short-to-medium term, although it undermines a brand’s desire for global consistency.

Tetra Pak, headquartered in Sweden, struck the right balance in emphasizing a local tone when entering China as a provider of processing and packaging solutions for food. One of its strategies was to use photos of its chief executive visiting China, surrounded by local business people, in various publications. The move signaled Tetra Pak’s presence and interest in China, and helped reassure skeptical consumers about the ability of its packaging technology to bring products such as liquid milk (as opposed to powdered) to rural markets.

The marketing initiatives for China need to reflect the same considerations that shape the brand strategy: an understanding of the needs and wants of targeted customers. To that end, it’s important to understand some of the general needs of the business customer in the Chinese market — and see how some global companies have shaped their marketing approaches accordingly.

The Chinese understandably have a strong sense of pride in their culture, traditional values, and beliefs. They want to see foreign brands endorsed by local experts. They want to work with those who understand their requirements and speak their language. They need to work with businesses that respect not just their cultural traditions, but their formal societal traditions. They are hungry for information but they want to know that their business is valued. Responding to this need requires a mix of customized tactics:

• Treat customers like VIPs. Simple activities such as visiting customers regularly, wishing them well during relevant holidays, and organizing tailored events can pay off dramatically.

• Participate in industry trade shows to forge bonds with customers, giving them easy access to information. Advertising also pays off — use the Chinese trade press for brand awareness and mass media to build the corporate brand. Public relations is also critical; developing relationships with Chinese journalists opens the door to the third-party endorsement value of editorial coverage.

• Establish a local Chinese presence and connection. Arranging highly visible visits by senior executives sends a strong signal to the local marketplace and is a great opportunity to forge direct relationships with stakeholders. This can also be established through a website — an economical way of reaching customers across a vast country.

• Any corporate or product endorsements, particularly by a Chinese company or notable individual (such as a government official), also enhances both credibility and confidence in the brand.

Oracle has found huge success in China for software manufacturing by practicing many of these techniques. It established a brand promise — “satisfaction among clients, staff, and partners” — fulfilled by an open-plan area where staff, clients, and partners could share a network system. Oracle also became a localized player, leveraging its international experience while heavily recruiting Chinese job candidates who brought the company a deeper understanding of the culture and market. It partnered with schools to train Chinese general managers — promoting the initiative through a PR campaign.

Today, more than 90% of Oracle’s businesses cooperate with local Chinese partners to provide regionally tailored services. It also works closely with a Chinese human resource exchange foundation to train 4,000 Chinese software engineers. China increasingly beckons global B2B companies, representing a nation with vast opportunities for growth. Those that understand and leverage the differences in culture, experiences, and needs of Chinese customers will see it pay off over the long term. They will build a strong brand that helps drive sustained growth as the market continues to flourish.