By Olivier Verot
Founder at Gentlemen Marketing Agency : Lead generation, Branding, eCommerce in China
Chinese Consumers are scared of new and unknown brands, they prefer to buy famous brands in China.
This is because it is a matter of trust and many of them will have been cheated by Chinese fake brands, domestic brands are often expensive and of a poorer quality, they therefore become paranoid.
Chinese consumers are living in a difficult environment with many counterfeits, most consumers are increasingly wary and will habitually check for information on any brands they encounter.
Chinese do not Trust !
They do not really trust official sources such as articles in the press and never corporate communication. They care greatly however about the opinion of others, and this they can find easily on internet.
Why Chinese buy Brands?
Chinese people, for the most part, still buy Brands for the “face”, that is the status they connote, appearance is everything in China. As consumers, they expect to pay more because this brand bring them prestige and respect amongst their social circle. That is why in China, Big Brands can be more expensive and can sell effectively by tapping into the priorities of consumers.
After you have a strong reputation and influence in Chinese society more people will buy a brand the more popular it will be. If a brand can sell well among a community or a group of consumers then it will benefit greatly from word of mouth, this is very powerful in China.
But if you are not a famous brand.. what will happen to you?
When you just begin your activity in China, it is not easy.
1 / Distributors will not trust you
If you do not have a huge budget for opening your own stores, you have to find distributors and resellers of your product. If they want to sell in China, most Brands have to find distributors and resellers. This is because the infrastructure for sales is very different.
Distributors do not respond well to new brands. They are all searching for a popular brand , that is easy to sell and easy to promote to other smaller resellers.
If you meet them, usually they will refuse any collaboration
What is the Solution
Working on your online branding and your e-reputation, this is because distributors will research the Brand online. They will use Chinese platforms that are not typical outside the country so you must have a strong presence and reputation .
Do Chinese consumers like it ? They will check if people already bought the products and how they responded.
What is the quality like? They will check what users say about it in forums and social networks.
They want to see that the brand is famous and established; through search engines such as Baidu or Sohu they will access how many media sources are speaking about the brand and how many followers the brands have on Weibo & Wechat.
Distribution is really the key factor for success because brands need to sell at the beginning to start their development in this vast country.
2/ Chinese do not buy “New Brands”
Chinese people are not so adventurous and few are early adopters, the difficulty is that nobody wants to be the first buyer, it involves a risk as brands are status in China. This is their habit and brands have to understand that. I remember that once, as part of a campaign, we offered new products for free, people still refused to try them.
Chinese people like Brands and they will pay based on the reputation, level of awareness and the quality, if this is not evident then they will buy Chinese, local brands.
If you decide to compete with local brands, good luck. They are very cheap and super aggressive. It is almost impossible for an International brand to beat a Chinese competitor on price on their home turf.
Chinese consumers buy foreign Brands because they give the feeling of better quality, they reflect a certain lifestyle and the status that people demand. Yes, if you wear Adidas, you have a higher status in China, whilst if you wear a new luxury Brand unknown in China, people do not recognize your clothing and regardless of price and quality it is deemed worse.
Branding is EVERYTHING.
Chinese Consumers are difficult to understand for new foreigners. For all expats living here, their attitude is the source of many friendly jokes. It is a different market place that developed under very different conditions.
To let them try your brand, you have to construct a clever, marketing communicationscampaign to make them think you have a strong presence and a good reputation, to convey that you are already established before you are! It is self fulfilling.
You have to offer strong incentives to encourage them to try new branded products. Discounts, coupons, samples, special VIP services are all examples of how you engage with a population which is very sensitive to special offers, this will encourage consumers to try your products.
If consumers try, give feedback online (positive of course) and if the communication campaign is impressive enough, sales will increase. It is all about having a comprehensive strategy.
A brand is essentially a ‘lifestyle’, what the Chinese desire to construct their identity and be respected in their social circle.
The Positionning of Foreign Brands
A foreign Brand has to be seen as a popular product overseas , a product that will be famous soon, a product of very good quality.. repeating these positive messages on the right platforms for your target will influence the Chinese Consumers and in-turn their social circle. In the digital age consumers are more connected than ever and more receptive to quality content marketing.
If you have distributors, but people do not buy, resellers and distributors will stop representing your products and will focus on other brands (that are successful). Chinese distributors are not loyal, they are pragmatic, they want to make money quickly and will not waste money to invest in brands without some level of traction.
Never sell yourself as a ‘new brand’, instead establish yourself online (the key portal for information for Chinese consumers) as successful, popular and reputable in your home country and as a growing trend in China too.
3/ No Engagement
The difference in Communications between a new brand and a popular brand is simple.
It is difficult for a new brand to engage users, because nobody shares or likes a product of a unknow brand. In contrast the Chinese are proud to be fan of Chanel, Lancome or LV.
When Chanel put on an event, it is easy to get people along, but when a new brand organizes a better event , it is difficult to invite people , because most of them do not care, are not particularly curious and prefer to be seen at event held by the famous brand.
You want to sell to Chinese ? Target their community !
On Social Media, it is the same. Famous brands already have community, fans engage with them and are ready to share their news.
For new brands, you need to start from scratch. You can be super famous in your home country , but you come to China, it is a new world.. you have to start from nothing and it is difficult attract followers to an account, and to like or share a good article.
Engagement is the key for Communication in China in 2017, and there is a link between intelligent engagement and successful brands.
Do not attempt to target everybody, but small communities who are more open, young consumers, or Chinese overseas student that may be happy to try, discover and become engaged than older, traditional buyers.
After, the communication has to fit this target market and step by step the brand will achieve small victories, attract more interest, some followers and after people will become more engaged, this all leads up to buying the product. All this work take time , 1 year usually , and is time consuming because at the beginning it is 1to1 communication, you need to get feedback from consumers to find the right communication angle. The key is how you tailor your brand to the different Chinese market.
Online Marketing is today the effecient way and Brands have to go Mobile
4/ No favours for small players
In China, experienced businessmen know that everything is negotiable and you can leverage a lot of favours to benefit from special advantages. Usually famous brands will have a special price for their rental of their shop, they will participate for free at an event, will benefit from special introductions and will have the pick of the best Chinese partners. It is called ‘guanxi’, and it is always easier to have guanxi with powerful people that are working for a successful company.
For small brands, nothing.. usually. They will have to do everything by themselves, will not have privilege of cheaper rentals or prices. They have to give first and after, hope receive something, they have to pay and fight.
Example: The rental of Starbucks is low because it is a positive brand but if a new coffeeshop want to set up , usually it will be the full price. Lancome will be highlighted by Tmall and will get a lot of free traffic, whilst and a new cosmetics brand will not receive such a leg up.
Life is unfair in china, and you have to know it. Its better to be a famous, big and successful brand which is exactly why you need to create yourself as this.. The emperor’s new clothes!
Communicate and communicate , let your partners step by step feel that you are growing and successful, that your popularity is increasing. They have to understand that you will become a big brand and it is in their interest to have good relationship with you from the start.
5/ Recruitment : you will scare people if you tell them that you are a startup
In China, the best employee does not like to work for a startup, small companies and new brands. You have to realize this. It is not Silicon Valley and working for a startup is anything but sexy for the Chinese. Do not even state that you are a startup or a new brand.. you will scare businesses and consumers.
Young talented Chinese prefer to work for free for a Famous brand than to be paid in smaller companies. For most employees, the engagement will not be the same. They will work harder in a big brand and will do everything to not lose their job (and be humiliated).
For a small brand, they do not care so much. We have seen many smaller, start-ups struggle with staffing and also experienced issues with recruiting quality employees when we started in Shanghai almost five years ago. It takes time for the Chinese to see you as a legitimate business proposition.
High profile candidates will ask for 2 or 3 times more money is they work for a small company than for a big one. Logically they do not want to take risks and prefer the safer career path, Making mistakes is also more detrimental in a newer company. You have to set up everything, it is time consuming and high profile candidates know that it is usually more relaxing to work in a stable and already developed company.
Everything is how you sell your company, your brand.. explain the future of the brand. A good manager in China has to sell his company to his collaborators.
In China it is the candidate that choose the company, it is usually not the company that choose the candidate (except for big companies). I am convinced that the job inside of small and medium company is more challenging, employees learn more, doing different things, see the whole business of the company. Even Jack Ma, the most successful entrepreneur in China has said the same thing.
Companies have to invest in their communication, in their image for human resources and to be able to recruit and retain talent.
In China, Branding is really Everything ?
In China, I always tell my clients that Branding is everything. It is the difference between easy and hard, between open and closed, between lucky and unlucky.
Even B2B companies in China, that typically (around the world) do not invest much in their branding, have to launch communication and marketing campaigns in China to brand themselves.
Most Chinese businessmen do not understand much about marketing , but know that branding is very important.
What is the essence of branding?
For me it is the action of working on promotion and image, on visibility and e-reputation.
When large percentage of consumers know you, see you somewhere or hear good stories about you.. that is branding.
I like to work for small companies and new brands..
I always prefer the beginning of stories and how people make brands successful from the start, how do they grow their awareness, engage users and create virality. I also like the challenge, to create the new brand of tomorrow, working harder to create everything from nothing.
I am proud to participate in the success of my customers, it makes me very happy, really.
I am an entrepreneur, we started with my partner Philip with nothing and we know how hard it is when you start, the energy that you need to climb the first rung of the ladder, and I understand the steps you need to take.
When you start a business, you also realize that it is the small brands that trust you, they have everything to win, and top brands are usually scared by new players, new ideas and marketers, they are conservative and have everything to lose.
Working for New Brands
Most marketing agencies do not work with small brands, budgets are lower, it is time consuming, and there is less prestige in working for them, but me and my partner prefer working with the underdog.
It is financially better to work with bigger brands with bigger budgets, but we are like David and fighting against giant. We build brands from nothing in China and forge long term partnerships, we are your team on the ground and only start making money when our clients make a return on their investment and commit to long term growth in China. This is more rewarding.
And as we always say; in China, it is not the biggest fish who survive.. It is the fastest and smartest ones.
And we really like to work with smart Fish 😉