Marketing to China: Why Companies Struggle

The Chinese market has long been both enticing and mysterious to western peoples. Since the market became opened in the late 1970’s, some of the biggest multinational firms have come and gone. Big names like Google, Home Depot, eBay, and Best Buy have all been forced to leave the Chinese market with their tails between their legs. Marketing to China hasn't been easy, to say the least.

On the surface, it looks like each company failed for it’s own reasons. Perhaps it was a failure to understand the market. Maybe their products had trouble connecting with the locals or they had difficulty with confusing government regulations. Whatever the reasons seemed to be, if take a closer look the failures all strike a very similar chord. These companies failed because they weren't able to effectively market their business to the Chinese audience.

There are a lot of variables in China specifically that companies tend to ignore. Instead of focusing on all that can go wrong, first let's think of one simple truth: China is as different as it is far away. Companies that understand this will understand that they need to approach marketing in a different manner. China has a deep craving for good quality products just like everybody else. It’s just that the messages and the mediums they respond to need adjusting - marketing to China and Chinese people takes a different approach to be successful.

It’s not all that difficult to understand why it would be important to change tact in a country long famed for it’s mystical qualities. The hard part is figuring out how to tap into the very different zeitgeist in China. The reason companies fail to tap-in boils down to four fundamental issues:

  • Limited access to proper advertising channels (leading to wasted money on the wrong mediums)
  • A lack of marketing resources (that doesn't necessarily mean money)
  • Communication problems (leading to a dysfunctional marketing process)
  • No consumer behavior knowledge (leading to further maladjusted marketing directives)

These Channels are All Chinese to Me

The first of these issues is a lack of access to proper advertising channels. Without access to these channels, the message will simply fly under the radar unnoticed. Currently there are many ways to get a message out in China: social media, Internet search, print advertising - really the same channels you would expect in the west. The difference is that access we talked about before.

It’s not hard to sign up for social media accounts or make websites in China, but it takes time to develop a working social media strategy or to make your website searchable online. There are a lot of x-factors to consider when navigating the Chinese Internet landscape, but if your product or service is in demand, there are channels that can be used to your advantage.

SEM or search engine marketing is essentially a “risk-proof” approach and can be used to great effect with the adwords service provided by Chinese search engine Baidu. SEM offers a one-to-one way of connecting with customers in a very straight-forward way. If you are selling French wine, users who search for French wine can find your product on Baidu with the right keywords. This advertising channel makes communicating with the right customers a whole lot easier. Also, since Baidu SEM is PPC (pay per click), you won’t break the bank if your campaign is designed correctly.

The Not-so-straight-forward Art of "Guanxi"

Another reason companies fail in China comes down to a lack of resources. This doesn’t necessarily mean that companies lack cash, it’s that they are ignoring the Chinese concept of “Guanxi”. Guanxi is a bit difficult for westerners to understand, but it‘s a sort of relationship short-hand that helps get deals done in China. No amount of money can make up for a lack of Guanxi, so companies often end up in situations that cash cant't help. This is where it pays to get help from the right kind of agencies who know how to take a strong marketing plan and make it work in China.

The third problem companies run into comes down to communication. Sounds simple enough, just hire some bi-lingual employees and watch them go. Not so. Communication comes down to so much more than just language. People may be gifted at language but may at the same time bad at communication. For example, people in China are much more likely to avoid challenging their superiors. In the west, if managers are wrong about strategic direction, somebody will probably pip up. Not necessarily in China.

Chinese Consumer Behavior: Just a Bit Different

The last reason companies fail in China is due to a lack of understanding when it comes to consumer behavior. Chinese people like good products, but they don’t always see the novelty in everything directly. This could come down to cultural differences or just a lack of necessity. Whereas I couldn't imagine a world where The Home Depot wasn't around, the Chinese market doesn't have the same kind of attitude towards home improvements. 

We can understand the Chinese market a little more by looking at a Chinese made product that sold well in China but wouldn’t have a chance selling in the west: the “facekini”. A facekini is literally a bathing suit mask that people wear when they go to the beach. If you still needed convincing that marketing to China is a different kind of beast, I hope you are converted now. This is of course an extreme example, but the logic here can be reverse engineered to gain some insight. Not every product will work for the Chinese audience and no amount of marketing will change that.

Doing business in China presents many difficulties, but with the right approach, it could be one of the most lucrative expansions any business could hope for. It's arguably one of the more challenging places to do business - according to the World Bank (via this article on the Wall Street Journal) China ranks 83 in the world. Considering how much business they do internationally, one might expect a better ranking. Still, money rains from the skies in China at the present moment, and if companies have a product that fits the market they could be set to collect.

Intimidated by the vast Chinese market? Learn everything you need to know about marketing to the Chinese audience:
Download our latest whitepaper