Doing business in China and the emergence of WeChat
Asia is driving global growth and is expected to remain the most dynamic region post 2030 and is increasingly attracting strategic interest from the west. International companies are more and more looking to partner with locals and realise the opportunities created by innovation in these new markets. As a result, we have decided to take a deep dive into some of the key markets in Asia and provide local perspectives to assist those considering expansion or transactional opportunities in the region. One thing’s for sure is that it is critical to accept that in Doing business in Asia it is a region that cannot be ‘averaged’.
Key factors to consider when doing business in China
China and Chinese state-owned enterprises just like Chinese tourists are having a greater influence around the world, with a population of 1.4 billion (18% of the world’s population) it is an expanding market few can ignore.
Understand government policy and national priority areas – Understanding the local business environment requires consumer and market insights but there is also a need to understand government policy, the role of local tech titans and China’s unique new media landscape. The government’s national priority areas are AI and IoT and ‘Made in China’ policy, and this year alone it has reduced mobile charges by 30% and cancelled roaming charges between provinces, both enhancing the digital economy and advancing the domestic consumption of high-tech services (mobile data usage in H1 2018 exceeded that of all of 2017). All of this influences the must have capabilities in the country, with the Chinese state supporting its own unique digital ecosystem which explains why the home grown rivals have flourished (i.e. Baidu, Alibaba, Tencent).
Tailor your value proposition – In China, like elsewhere in the world, brands mean business, as evidenced by the fact that 14 Chinese brands are now ranking in the 2018 BrandZ Global Top 100, compared with just one Chinese brand 12 years ago. Many early entrants in China have taken a premium or exclusive positioning but as the local consumer and competition becomes more sophisticated this may not be the most sustainable and profitable, since ‘foreign’ no longer has the cache it once had. It may make sense for new entrants to consider re-positioning themselves for the Chinese market with the middle ground potentially having significantly more customers, and therefore they do not open yourself up to domestic brands that have started low, gained share and are moving up their value proposition for a strong established base.
Understanding the local consumer and competitive dynamics – Now there are as many rural internet users in China as the total user base in the US. As consumers in cities become more important it will be critical to understand that not all consumers are the same. In lower tier cities, consumers are more price conscious and embrace group buying so you may need to utilise different content for different tiers.
Nurture and empower local staff – It is best practice not to take a central control. Finding the right balance between your local Chinese team and global headquarters is one of the keys to success and local staff should be encouraged to experiment and innovate to drive business. The local firms are agile, adaptive and entrepreneurial, and empowering rather than constraining the local talent will open up new and different opportunities as the market matures.
Be nimble and be prepared to invest in the right platform – A ‘test and learn’ strategy is recommended and given that marketing channels and media are very fractured and change continuously, it is critical to stay agile and up-to-date on what is the most effective given your industry and size e.g. if prospective customers do not know you yet, you might focus on WeChat and Weibo, or even more niche emerging platforms.
WeChat (founded in 2011) is a ubiquitous app experience with a plethora of integrated products and services with strong messaging and payment capabilities within the platform and is regarded as a must-have for any business in China, and in time could be the dominant communications tool for CRM. After previously withdrawing from China in 2010, Google in July 2018 launched its first mini program, and plans to launch a version of its search engine in China, which further substantiates the widespread nature of WeChat and the increasing role it plays in internationalising China. There are already over 100 million users outside China, and WeChat Pay is available in some 40 countries and in 13 currencies.
We asked a number of specialist local experts for their personal tips on ‘Winning with WeChat’ to establish and build a sustainable business in China. They have raised a number of common themes and tips recognising that for many businesses a B2B rather than B2C stance is appropriate, and brand building is closer to transaction than ever before. Moreover, recognising that WeChat provides a breadth of tools so that your brand can create its own ecosystem to integrate brand and commerce.
[Thanks to Mike Golden, Founder, Brandigo China; Thomas Graziani, Founder WalkTheChat; Gontran Mullier, Founder flow.asia; Tony Ip, President Factalist China; William Lee, Founder SinoContact; William Ni, Founding Director, Bright]
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