Marketing in China

China  has the most Internet users in the world today, with over 800 million reached in 2018, triple the number of Internet users in the US (275 million). China became the world’s largest e-commerce market when its total online sales reached USD 409 billion in 2013. This figure then jumped to USD 586 billion the following year, accounting for 10 per cent of China’s total retail sales. In 2018 China's online retail sales was USD 1.33 trillion. At this rate of growth, China’s total online retail sales are expected to hit USD 2.4 trillion by 2020.

But it is a complex and diverse consumer market, and it is vital to tailor your marketing strategies and even your products to local preferences. In addition to intense competition from both domestic and international companies, you must consider the diversity of cultural backgrounds, differing levels of wealth and sophistication, and the sheer size of both the population and land mass.

The best way to deal with the complexities of the Chinese market for marketing and advertising purposes is to invest in and hire local knowledge. Both Chinese and international companies specialise in marketing in China. A comprehensive marketing plan is required that considers core elements such as your brand, stakeholder management, public relations, media (including digital and social media), and your product/brand value proposition. Be aware, however, that you will need to continually reassess your marketing strategy and plan. The Chinese socioeconomic environment is constantly evolving and expanding, which in turn impacts on consumer choices. You should be particularly mindful of factors including:

Brand awareness: Chinese middle-class consumers place strong significance on brands, particularly luxury brands. Status is a key factor – many people will buy luxury goods not because they necessarily like them, but because they are representations of success. Make sure to have a specific strategy focusing on brand localisation, brand building and awareness creation. New entrants to the market with a recognised brand may wish to consider a product launch or media conference to announce their arrival in China.

Price consciousness: Price is an important consideration for Chinese consumers, particularly at the lower middle-class and lower income levels. As opposed to status items on which Chinese consumers are willing to spend more, non-status items are likely to be chosen based on price. This can impact on even well-known brands, whose makers may have to develop a lower cost alternative to their most popular products to address China’s price sensitivity.

Demographic dynamics: In addition to vast variation in income levels across rural and urban areas, China’s household consumption has been impacted by the previous one-child policy. Single children are often lavished with attention, consumer goods and high quality food. This is producing strong demand not only for imported and ‘safe’ food items such as milk formula, but also high-status goods for children. Younger Chinese consumers are also more willing to spend than their parents and grandparents, making them the driving force behind the Chinese consumer market. They are driven by peer perception, and are regularly informed of new trends through social media. Market segmentation and positioning is therefore crucial with marketing strategies tailored to the specific targeted group.

Logistics: China is still a developing country with a less developed logistics capacity than Australia. More limited infrastructure in some poorer regions may cause delays in getting goods to markets and consumers. This should be considered when deciding where and how to sell in China, particularly for perishable items.

Given the size and diversity of China, it should be viewed as a series of markets, each with thousands of different outlets for goods and a broad mix of channels, including large chain stores such as Walmart, traditional trade (local mum-and-dad stores), and on-premises (restaurants, schools, and internet cafés). Be aware that different regions have different tastes. Eastern cities such as Nanjing and Shanghai, for example, have more sophisticated and educated consumers with high incomes and a desire for the latest trending items, relative to western regions with the lowest income levels and underdeveloped transportation infrastructure.

Useful information at the city and provincial level, such as main industries and GDP per capita, is available from the Hong Kong Trade Development Council. For more information visit its website and follow the link ‘Retail Hubs’: http://www.hktdc.com/en-buyer/.

Trade shows and exhibitions

An effective way to reach potential new customers is to visit one of the many trade shows and exhibitions that are frequently held across China. Although consumers may come to look at your product, you still need to persuade them to buy it. You should have your sales and product literature and technical specifications translated into Mandarin when advertising in trade journals, participating in trade shows or organising technical seminars. It is also strongly advised to have a bilingual representative or interpreter at your stall, and a senior representative of your business. This can establish your reputation and trustworthiness in the eyes of Chinese consumers.

Product and service adaptations

You may need to adapt your product to meet Chinese preferences or requirements. Adapting to local regulations, tastes and cultural preferences vastly improves your chances of success.

Brand marketing and advertising

Chinese language, culture and symbolism need to be considered when marketing and advertising in China. Your company or product name may have an embarrassing or negative meaning when directly translated into Mandarin. This can have a substantial impact on sales, with customers, distributors and agents all avoiding your product. Seek professional advice when translating your business or product name into Mandarin to avoid these problems.

Symbolism is strongly emphasised in Chinese culture, with meanings associated with numbers and colours. Colours red and gold and numbers 8, 6 and 9 are seen as positive whereas black and white and the numbers 4, 14 and 24 are viewed negatively.

The Chinese writing system also poses challenges and opportunities for marketing your business or product in China. The Chinese writing system is based on characters representing words and ideas. How Chinese characters are written, also known as calligraphy, is an important consideration when communicating to a Chinese audience. Be aware that calligraphy is covered by intellectual property, which can cause issues.

Australian businesses should aim to have names with auspicious meanings, such as longevity, good health, luck, happiness and wealth. Given the different symbolism, writing system and cultural nuances, you should consider engaging an advertising or marketing company that has had success in China.

Advertising is subject to significant regulation in China. Advertisements must "be good for the physical and mental health of the people" and "conform to social, public and professional ethics and safeguard the dignity and interests of the state". It is recommended you engage experienced China specialists as the laws governing advertising can be applied inconsistently throughout China.

In addition to seeking guidance from a local advertising company, Australian businesses should also consider Chinese language publications to promote their products and services.

Want to learn more? Explore our other China information categories or download the China Country Starter Pack.