China is a fantasy market for many people. It is one of the largest unified economic spaces. Its business is booming, and consumers are getting richer. These are just some factors that attract entrepreneurs with promises of growth, fame, and wealth. For many multinational companies, China is already its largest single market, and as China's innovation continues to move globally, China continues to grow.
At the same time, people often talk about China with fear. There are countless stories of foreign contestants failing. Unable to compete and survive in a ruthless business environment. Language barriers, lack of transparency, and local competition have harmed many people.
Here are some of our most valuable experiences that can help you avoid making fatal mistakes and increase your chances of success in China.
1 Localization of Your Products
Many companies lend us a helping hand and hope to create local versions of their products. Usually, they only achieve this goal by translating for the Chinese market. This method already has defects. It is based on the assumption that after entering China, the conformity between products and the market still exists, and people are only worried about being able to touch it in their language. Most of the time, this is not true.
When you enter China, you must assume that you have lost the adaptability of the product market and need to rediscover it. It is imperative to start with a beginner's mindset and test your current solution in the new market. Start with the Maximum Risk Hypothesis Test (RAT) or Minimum Feasible Product (MVP) mentality to verify what is valid and what is invalid.
You may find that geographical differences make your products useless. For example, a company that produces high-tech fishing equipment can achieve international success because most lakes are natural. Still, in China, it will find itself confronted with obstacles because many lakes are artificial and do not have the same ecological or physical characteristics.
Similarly, you may find that despite your success in the local market, it is too early or too late for China. It is too old to enter and fail numerous customer loyalty technology companies in the early 2000s. At that time, all retailers had to do to attract new customers was to open a new branch. When money is to expand as fast as the consumer market it creates, no one invests in loyalty. It was not until the market became crowded that the concept of customer loyalty began to receive attention, which made competition more profitable than expansion.
When entering a new market completely different from China, one must start from the mentality of a beginner. Overconfidence has cost many companies all their expansion budgets, but without any success. The secret of success is to test as soon as possible. Testing is cheap, open, and adaptable.
2 Understanding Your Chinese Users: Cultural Background
As a design-oriented company, users of products or services are always our most important reference point. Users have various complexities, including their demographics, pain points, intentions, and cultural backgrounds. The only way to find products that fit the market is to be obsessed with users and understand them as much as possible.
Users in China are very different from those in the West or other parts of the world in many ways. A key difference lies in the cultural background. Orientals are more concerned with collectivism than individualism. For Chinese consumers, this is a very social experience, rather than a more mission-driven approach used by the West.
It is essential to discover these differences among the target audiences and design products and services that can provide value for specific environments. Starting with user research is usually a good first step, followed by prototyping and testing new potential solutions. Having reliable customer support is crucial because Chinese users typically speak out about their experiences and expectations. It is not only an excellent way to show your concern, but also an excellent idea to gain market insight and wisdom. Let users tell you their experience, learn from it, and adjust your solution accordingly.
3 Coping with Technical Difficulties
Depending on how your product is made, it may no longer work in China. As we all know, many international services are blocked by China's firewall. However, people need to be aware of the inherent complexity of the technical field.
We have found it hard that any use of API, SDK, or similar plug-in services from abroad may be a critical problem. We have established a project that requires us and some development teams in Berlin to provide services to China. We regularly deploy the build and communicate closely with customers for testing and acceptance. At some point, the website entered an endless loading cycle. After some troubleshooting, we found that a team member inserted a call to a Python repository running in Google's library. The result was that it created a dead-end for the loading process. We have encountered similar problems with push messaging services, map services, and other standard tools.
Server settings are another essential consideration. Even if you host your site on the white list, your services may slow down unpredictably, cannot be accessed, or prove unreliable. Taking the operation in China seriously means holding it in China.
If your service caters to customers moving between countries, including China, this means establishing a global and local solution and calculating the number of relevant images needed to meet customer expectations.
Finally, depending on the type of technology you have, you may not be able to obtain the correct license alone in China. In some areas of SaaS, the ICP license is minimal. The best choice for you to enter the market is to find a local partner and allow you to operate under their consent under the condition that you share the profits.
4 Looking for Local Partners
Barriers to entry into China are manifold, including language differences, lack of access to commercial networks, contacts, and local regulations on foreign investment and institutions. Having a Chinese partner will help you deal with these factors more efficiently and increase your chances of success.
In Shanghai, we haven't been able to find a local partner for the longest time, which means we are trying to lay a good foundation and face the unique challenges of the market alone. When we finally met an experienced Chinese-American working in a similar field in the local business community, we quickly reached a cooperation agreement. We saw a series of high-profile deals that we had not been able to reach before.
Although it is possible to enter China alone as a foreign start-up, and given that the legal and financial environment has become more friendly in recent years, the barriers to entering China are still considerable. A local partner can help you navigate these waters and is a valuable asset in the long run.
5 Turn to Local Platforms and Ecosystems
Whether your product is a mobile application in your domestic market or your online store selling physical products, bringing your platform to China means you probably need to change it. Adapting your products to the local environment means checking where people are used to consuming similar products or services and adopting this form.
If you sell your products online, this means providing your products through popular channels such as Taobao and cooperating with local Taobao partners to achieve this. Many companies set up and operate stores in Taobao, Tmall, Jingdong, or Alibaba. These stores provide all the services you need so that you can start right away. If you deviate from the channels familiar to the local people and try to make people use your website to buy your products, it will lead to substantial marketing costs and low sales figures.
Similarly, many services entering China, which may be local mobile applications in the local market, will need to create a WeChat application as their main interactive channel. The download rate of international mobile apps is negligible, and the abandonment rate is very high. People have become accustomed to consuming various services (booking taxis, paying fees, ordering drinks, etc.). ) via WeChat. By approaching users in a familiar environment and integrating their services (e.g., WeChat payment), you remove the barriers to adopting your products and increase your chances of success.
Besides, many large Chinese technology companies have complete teams and infrastructure dedicated to your company's success. By opening up to Alibaba or Tencent's ecosystem and taking advantage of existing opportunities, you are significantly increasing your chances of success by using some of the world's largest platforms.
6 Adjust Your Marketing Strategy
We have seen many companies enter China and insist on the marketing strategies they have created and perfected by launching in various global markets. However, these efforts often fail to meet expectations and achieve the natural results, resulting in huge bills piled up without any return on investment.
When marketing your business in China, the key is to adapt your social media strategy to local channels and different ways of use. Facebook is not the place to promote your products unless you want to target only young, skilled, and internationalized Chinese. Applying your Twitter strategy to microblog wholesale will also fail because people use the platform in different ways. Considering that consumer-oriented services are also widely used as platforms for enterprise marketing, it is necessary to integrate WeChat into your playbook.
Another reality is the different roles of social media in China. In China, every enterprise must participate in social activities actively. Even German B2B industrial companies (some of which are our customers) have WeChat, which they use to interact with Chinese business partners and customers. From publishing product catalogs to promoting activities and sharing interesting content, even B2B companies can benefit from strong social presence and actual participation, just as the Chinese market expects and appreciates.
Before deciding on a marketing strategy, it is worth observing how other companies use local social media platforms for marketing, and setting aside a smaller budget to test several different channels and measure returns.
7 Hiring Local Employees
Over the years, we have seen many foreigners enter the market and believe they know more. The fact is often the opposite. China is different. Only those who live and work there are people close to experts and people who know China. Whether it's about language barriers, cultural barriers, or just knowing how to overcome some obstacles and think differently, a local team is essential.
It includes not only the operation staff, but also the management and senior management of the local entities. We have found many knowledgeable people who have changed everything. They are confident, intelligent, creative, and manage things in a way that no foreigner in China can.
Recruiting for cultural integration is as crucial as working abroad. No matter what your company's values are, no matter how you define culture, make sure that this standard is maintained and reflected in the office you choose, the process you run, and the people you hire. When everything is running in different ways locally, it is easy to feel disconnected from headquarters, so maintaining global standards can ensure that people remain committed and accept your culture. It will also help to combat China's generally above-average staff turnover rate.
8 Data Perspective and Re-evaluation in Shorter Periods
So far, almost everyone knows that Chinese companies work harder, move faster, and lower operating costs than Western companies.
They are obsessed with success, learning quickly, and innovating rapidly. Once you enter the local market and find business opportunities for yourself, you can also be sure that local competition will emerge and take advantage of it.
It will once again test your ability to keep your products adapted to the market. Don't evaluate your business model and value proposition every few years. You must be prepared to change your business regularly. The market is continually evolving, and competition is rapid. Although you may be a valuable partner or supplier today, you may not be able to sell the same product tomorrow.
"Are you ready to have fun with China Scale and China Speed?“
The question you must ask yourself is: Are you ready to compete at the “ China scale” and “China speed” ?
The people on the scene spoke very well. China has excellent opportunities. There is no harm in reality check before trying to seize the opportunities. So far, the outline is not exhaustive, but it should be helpful for your initial plan and first step.