3 More China Market Myths
- July 31st, 2015
- in Marketing
The path to success in the China market is a challenging one, even more so in light of the disinformation peddled by mainstream media and agencies seeking to keep themselves profitably middle-manning.
To follow the first five, another three China market myths exposed and refuted.
MYTH: Cross Border Is A Magic Bullet
TRUTH: There is no one magic channel or site.
The upside is well-understood: no need to license in China and export; just send to the free trade zone! The customer saves money on VAT, so everybody wins!
The downside(s), not so much:
1. Most (at least 90%) of cross border trade is Chinese looking for brands already iconic in China – Michael Kors, Estee Lauder, GNC, and the like.
2. Cross border sites have neither the mechanisms nor the desire to help smaller brands – much easier to be in the business of providing famous brands at lower prices, with last-mile logistics.
3. Most cross border sites have no robust methods for driving customers to their sites, as the big boys (Alibaba & JD, mainly) spend millions per day to buy consumer traffic.
4. The big boys’ cross border sites also have little interest in helping your small, lesser-known brand, and you’re playing on a super-competitive field that requires advertising/marketing savvy right out of the gate.
5. A significant legal grey area overshadows cross border sellers’ rights to advertise, and responsibilities, with the government rumbling ever louder about a comprehensive crackdown with enhanced regulation to follow.
MYTH: Chinese Companies are Just Waiting to Counterfeit You
TRUTH: An Ounce of Prevention is Worth a Pound of Court
Did you hear the latest? Jordan just lost a China lawsuit over his own name! Well, Chinese name, anyway –
“Qiaodan”. That’s how he’s been known in China since the 80s, and how a Chinese sports chain has been making millions since the 90s, by riding his high-flying coat tails.
LeBron had best put someone on trademarking “Leibulang” and any associated logo. A simple Baidu search will reveal no end of Chinese IP lawyers who can offer robust protection for low four figures, as well as international firms who can do the same in the low five figure range.
Worth it? Rhetorical question. Nike knows full well China is the place to make LeBron a billion dollar athlete.
The odds of your brand being iconic enough to get pilfered? Negligible. If it happens, it will be a nice problem to have, akin to paper cuts from counting your money after winning the lottery.
But considering the size of the market for virtually all western premium products, and the increasingly streamlined procedures for doing so, protection to prevent unplanned brand offspring is just common sense.
MYTH: You must change your offering to suit Chinese tastes.
TRUTH: Chinese want to taste the real thing.
Keep two words in mind for the next cultural consultant telling you how to translate your name and change your product/price/positioning for us inscrutable Chinese – “Haagen Dazs”.
The premium ice cream brand must have had frozen milk fat in their veins to ignore all the expert advice they got when entering the market in the mid-90s:
“The Chinese won’t understand your name – change it!”
“The Chinese are cheap – drop the price point!”
“The Chinese are lactose intolerant – make it dairy free!”
Instead, Haagen Dazs were to thineth own selves true, choosing to remain the Rolls Royce of ice cream for the China market. Rather than fretfully changing to fit in, they focused on delivering the authentic experience, with their own refrigerated trucks, Wedgewood service in-store, and a price point that said, “If you have to ask…”
Haagen Dazs quickly became the top premium ice cream brand in China. Those who tell you gimmicks like ice cream mooncakes and hot pot drove success are just scrambling to maintain the myth. These segments make up a fraction of overall sales. At Chengdu’s upscale Lotte supermarket, Haagen Dazs comes in the classic containers only. Most popular flavors? Chocolate, strawberry, and vanilla.
Globalization and technology have revolutionized world markets, China’s included. Yet myth is still framing the opportunities. Those who see through the veil have an unquestionable advantage over those who remain deluded.