China has entered a new era of sophistication and influence on the global stage in the last 15 years. The market now stands to account for 63% of global online sales by 2023, and according to a recent analyst report, its citizens’ private consumption is set to more than double to reach $12.7 trillion by 2030.
For brands, there is clearly a lucrative opportunity to cash in on this booming market of 1.4 billion people.
But how can brands empathise with the multicultural and multi-generational consumer nuances that China presents?
As part of our Summer Webinar series, Butterfly’s Jas Tang and Dal Mahil, Group Head of Strategy, were joined by Andrew Ho, Global Senior Director at PepsiCo to explore this question. Here’s what was said..
Learning from the past
Dal Mahil opened the session by pointing to case studies of brands who had unsuccessfully attempted to enter the Chinese market, such as eBay, Uber and New Look.
“These are big, global brands. But each of these encountered significant difficulties.”
“eBay didn’t understand how much Chinese consumers valued ‘new’ things. They do not have the same attitude to buying second-hand items that there is in other markets. Equally they didn’t offer the comprehensive choice and speedy logistics Chinese consumers expect.”
“Uber’s model of entering a local market and undercutting the established businesses on price to build a customer base came unstuck in China. The government made it illegal for businesses to sell services below their cost – and consequently Uber quickly had to withdraw from the region.”
“New Look under-resourced their expansion internally, and so they simply copied the strategies and style of their stores in other markets.” explained Dal. “Without reflecting the needs and values of their local market – the brand was unable to achieve growth.”
“All of these brands faced different challenges when entering the Chinese market. But there was one common denominator for all of these: a lack of empathy.”
“Either empathy with the consumer, or with the wider forces that influence success. It is difficult to find the right resources and the right moment to approach a new market with distinct cultural differences. But if you can attack these challenges with empathy – the opportunity for growth is immense”.
How can your brand win the hearts of consumers today?
Chinese consumer values are changing as a new generation emerges. Dal Mahil and Jas Tang, who have both lived and worked in China, explored some of these developing characteristics.
Carving out uniqueness
Chinese consumers live amongst the largest population on earth. This shines a light on the age-old tension between fitting in, or standing out. Young Chinese consumers are seeking a balance between collective harmony – and shining a light on their own uniqueness.
Jas Tang pointed to Freitag as a brand who has leveraged this trend successfully. “Each Freitag bag is made from recycled resources – and this is its major appeal in Europe. But to Chinese consumers, the unique origin and design of each bag speaks to this growing desire for individual distinction, and so the brand has seen massive success.”
Women in China want to maximise the sacrifices made by their own mothers by fulfilling personal and professional ambitions before settling down. The new three-child policy puts pressure on these plans.
Jas Tang highlighted some brands who have successfully leveraged this trend. “Mercedes Benz has seen good growth in China through a powerful campaign with the slogan ‘She is Mercedes’”.
“The campaign celebrates the ambitions and achievements of modern women in China. It targets middle-aged women – but a clever twist to the campaign happens on social media where they tweak the execution to be more glamorous and aspirational, helping drive brand affinity with younger audiences”.
Young people in China feel caught between the pressure of fewer opportunities, and the presence of higher expectations. They long for escapism that allows them to manage their emotions. Chinese youths want another life outside of the normal routine – and they are finding this in a number of places.
Jas Tang summarised with an example. “Yi Tiao is a media publication which focuses on the life of Gen Z youths in China. It has grown and attracted millions of followers over the last five years as it showcases young people moving out of the city, to the countryside where they build a new life. It’s an example of total escapism.”
Escapism doesn’t always mean living in fantasy – it’s about addressing the tensions of expectations versus reality.
Connecting with the Chinese market: the PepsiCo approach
For the final section of the webinar, Dal Mahil was joined by Andrew Ho, Global Senior Director at PepsiCo.
“I’ve had the privilege of working in China for over twenty years” Andrew opened. “And in that time I’ve seen plenty of brands and organisations, from P&G to Unilever to Mondelez, all go through the different ages and phases of China.”
“The last thirty years has seen radical shifts in culture, technology and behaviours that Western cultures slowly adopted over the course of over a century. Think about how undergoing 150 years of change in 30 years will change people and shape a culture. The degree of fragmentation is unprecedented”.
“The forces that are propelling China forward still have decades of gas in the tank. To become part of this change, there are three big questions every organisation and brand needs to ask themselves.”
“The first is: do you and the local market agree on the role of global brand power? What does your brand bring that is not already there?”
“The second is: what do you expect from the Chinese market other than profit? What are your strategic goals? The answers to this question will set the bar for how much you really want to enter a partnership with China”.
“Finally – how are you engendering a level of trust and cohesion that allows your local operations to run and be free? Is your corporate culture empowering local leaders? Are you giving people genuine reasons to stay in your business?
These are the big questions that brands need to answer to engage, adapt and grow in China.
To catch the full insights from this webinar, you can watch the full discussion here: https://hellobutterfly.com/webinar-chinese-dreams/
Butterfly has a decade of experience in empowering brands to enter China effectively, to adapt brands and propositions to local nuances and to help brands communicate more effectively, honed over nearly 30 projects with PepsiCo, Unilever, Heineken, P&G and Danone, among others. To learn more about how Butterfly can help your brand understand and engage China – get in touch with Dal Mahil, who leads our China team at firstname.lastname@example.org.