By Angus Street
We are all familiar with China success stories - Blackmores, Swisse, Jurlique - and wished that it was our business that had taken advantage of the world’s largest consumer market and its powerful ‘middle-class.’
Conceptually, the idea of selling your product or service to 1.4 billion consumers makes complete sense. China, as a market, is so huge and potentially lucrative that many companies simply cannot afford to ignore it.
Without a doubt, the driving force behind its consumption is China's ‘middle class’. By 2022, the country will have more than 500 million middle-class consumers - that’s approximately 1.7 times the total population of the United States.
The overall consumer economy is forecast to grow by 55%, bringing its value to $6.5 trillion by 2020. Which is like adding a new consumer market 1.3 times larger than the current consumer market of the United Kingdom.
However, what we need to be mindful of is that a big market traditionally means a big marketing budget. Remember, every business in the world is just like you. They have eyes on this huge consumer economy and have done the numbers on capturing just 1% as well.
This growing trend is evident in Tmall’s latest report, indicating that in 2016 the number of categories of goods offered doubled to 3,700 sourced from 63 different countries.
Tmall’s international brand stores jumped by 169% to 14,500 with the top six performing Australian brands being Chemist Warehouse, Blackmores, Swisse, NaturesWay, the dairy farmer cooperative Devondale and the supermarket Woolworths.
Additionally, many foreign businesses are finding they have to adapt to the local Chinese context in order to survive in the market.
The latest example came recently, when ride-sharing colossus Uber announced it would sell its China business to homegrown competitor Didi Chuxing, ending a bitter and costly battle for market share.
In a market that is traditionally fragmented with a target audience that is price sensitive and has relatively low loyalty, it is extremely difficult for a business to build awareness, let alone gain traction.
The old saying "In China everything is possible, but nothing is easy" still rings true. Success is now down to a few key components:
Do your research and really know the market.
Desktop research and modelling is great because it tells you how much money you ‘could’ make. However, if you really want to know whether there is a gap in the market for your product or service, you must visit China. Get your hands dirty and spend time in the market meeting, interviewing and listening.
Be stubborn about your China goal and flexible about how you achieve it.
There is no one size fits all method to engaging China. The sheer scale of the market means that there is quite often sub-markets within sub-market. Hence your original plan to market may need to evolve, adapt and be tweaked on a regular basis.
Don't be deterred, the reward is worth it. Just remember to half your expectations and double your budget.