Marketing Mistakes Foreigners Make in the China Market

With the rapid development of China’s economy, the importance of this huge market with a population of 1.4 billion has become increasingly prominent for foreign companies.

The importance of the Chinese market

According to statistics from the National Bureau of Statistics of China, China’s GDP growth rate has remained above 6% in the past 10 years. The WTO announced in 2020 that China replaced the United States as the world’s largest trading nation for the first time. IMF data show that China has been the world’s second largest economy for many years, and consumers have huge purchasing power. The McKinsey report predicts that in the next five years, the number of Chinese middle class will increase by 100 million, and the demand for high-end products will continue to be released.

At the same time, the degree of openness of the Chinese market continues to increase, foreign investment restrictions have been greatly reduced, and many free trade zones in China have also provided more policy dividends. The environment for foreign companies to enter China is becoming increasingly relaxed.

Executives of well-known multinational companies have publicly emphasized the importance of the Chinese market to their global layout and performance growth. Apple CEO Cook said that China is where Apple’s biggest growth opportunity is located. The former CEO of Intel once said bluntly that there would be no new Intel without China.

It can be seen that the Chinese market, which has a customer base of 1.4 billion, is attracting global attention with its huge potential. If a foreign company wants to realize its global strategy, it cannot do without its deep participation and layout in the Chinese market.

1. The key Role of Marketing in the Chinese Market

The huge potential and opportunities of the Chinese market have attracted global attention. With the rapid growth of the middle class, the purchasing power of Chinese consumers is being released. By 2027, the number of Chinese middle class is expected to reach 1 billion (McKinsey report). At the same time, China continues to relax market access, and the foreign investment environment continues to optimize.

Facing this vast blue ocean market where openness, change, and opportunities coexist, how to carry out effective brand marketing has become the key for foreign companies to go deep into China.

• Foreign companies need to conduct precise market segmentation to determine the positioning and marketing strategies of different consumer groups. Due to regional differences and diverse consumer preferences in China, Starbucks launches customized products according to the tastes of consumers in different cities.
• Carry out localized marketing to make the brand and culture deeply rooted in the hearts of the people.
• Digital marketing is essential, and we must use new media such as WeChat and Douyin and key opinion leaders to expand our influence.

2. Successful & Failed Marketing Cases

Let’s look at two cases of success and failure, which help us better understand the important impact of marketing on business.

After the cosmetics brand Xishubao entered the Chinese market, it launched a customized product line “Oriental Mystery” according to the different lipstick needs of Chinese women, which achieved great success. This shows the effect of marketing strategies targeting local cultural needs. The automobile company Volkswagen holds the “Visible Touch” charity event in China every year, and builds a responsible image by appealing to resonance, and the brand favorability has been greatly improved. This reflects the positive impact of precise cultural marketing.

In order to save costs, the American pizza chain brand used inferior cheese ingredients in China, which seriously damaged the brand image. The Japanese electronics giant used inappropriate TV advertising positioning in China, resulting in a severe decline in sales. This shows that the wrong positioning strategy and quality control will seriously damage the reputation of the enterprise.

It can be seen that adapting to the local culture and paying attention to customer experience are the keys to a company’s success in the Chinese market. Wrong marketing decisions can also cost companies dearly. These cases prove that in the Chinese market, if an enterprise wants to gain a foothold, it must take marketing seriously.

3. Common Mistakes in Marketing

People can’t help but ask, what common mistakes do foreign companies in China make in their marketing?

3.1, Lack of a Clear Marketing Strategy

According to McKinsey’s “Marketing Research Report on Foreign Companies in China”, some foreign companies did not set a clear brand positioning, target user group and core marketing plan when they entered the Chinese market, resulting in indifferent brand propositions and lack of focus in various marketing activities. Impress consumers. According to ACC Chinese consumer survey statistics, 70% of foreign companies that have entered the Chinese market but have no clear marketing strategies in the past three years have not significantly improved their market share and brand awareness.

On the other hand, many foreign companies have not conducted sufficient research on the Chinese market, and do not know the specific marketable products and the best marketing channels. For example, relying too much on TV and newspapers for publicity, while ignoring the power of social media. According to CNNIC data, the number of Internet users in China has reached 950 million, and new media channels have a huge user base. If a brand cannot acquire customers through new media, it will lose the opportunity to reach major consumer groups.

3.2, Brand Localization Not Implemented

The Interbrand research report pointed out that after some foreign companies entered China, they did not take into account that the recognition of their own brands in the Chinese market was still very limited, and they went ahead with product-led promotion. The result is a massive marketing investment, but consumers remain ignorant of the brand. According to Millward Brown survey data, the average brand awareness of foreign brands entering China in recent years is only 35%.

On the other hand, many foreign companies do not fully consider the cultural context of the Chinese market, and simply copy Western brand propositions, making it difficult to resonate with local consumers. For example, blindly promoting “individualism” while ignoring the collectivist cultural tendency of the Chinese people.

Therefore, foreign companies must realize brand localization, and shape cultural identity by incorporating Chinese elements, so that the image and personality of the brand can impress Chinese consumers. Only by deepening the local culture can the brand image match the mental model of consumers and realize the effective communication of marketing.

3.3, Lack of Measurement & Analysis of Marketing Results

Some foreign companies invest a lot of money in marketing, but rarely establish quantitative indicators to evaluate the marketing ROI of different channels (Prophet brand consulting case study). For example, it is impossible to judge the conversion rate of social media marketing, nor to understand the customer acquisition cost of sales field promotion. This makes it impossible for companies to distinguish truly effective marketing methods, and the result is often investment but no output.

Foreign companies should establish a systematic KPI system in the Chinese market, track important indicators such as brand awareness, page views, sales, etc. in real time, and conduct correlation analysis with specific marketing activities to judge ROI and influence. For example, you can set a specific goal that social media advertising will lead to increased sales.

Only by conducting continuous marketing effect measurement can resource allocation be optimized to maximize returns on investment. This also requires the strengthening of the mathematical and analytical capabilities of the corporate marketing team. Otherwise, no amount of marketing expenditure will be able to promote the actual growth of the brand.

3.4, Ignoring Online Marketing Tools

The official websites and social media accounts of some foreign companies in China have not been updated for a long time, and the content is outdated. On the other hand, it did not use Google, Baidu and other search engines for keyword advertising, and failed to further enhance the brand’s online popularity.

More importantly, many foreign companies have not fully realized China’s unique social media matrix. According to statistics, there are 950 million Internet users in China, with WeChat and Weibo users reaching 1.2 billion and 570 million respectively. However, many foreign companies only rely on Western platforms such as Facebook and Youtube for social media marketing, and cannot reach mainstream Chinese audiences.

Foreign companies must pay attention to China’s unique digital marketing ecology, and use new media and KOL to enhance brand influence on a large scale. Only by carrying out localized digital marketing can brands integrate into China’s Internet culture and achieve effective reach. Seizing the opportunities of China’s mobile Internet and social media is the key to the success of foreign companies.

3.5, Lack of Optimization of Marketing Plan

Kearney Consulting Group’s research on the marketing models of foreign companies found that after entering the Chinese market, some foreign companies have followed a fixed marketing model that has rarely changed over the years. However, China’s consumption upgrades and cultural changes are changing with each passing day, and it is difficult for this solidified marketing strategy to keep up with the times. The Nielsen China Consumer Behavior Report reveals that 80% of foreign companies that have used the same marketing methods in the past five years have stagnated in customer size.

We suggest that foreign companies should take the initiative to continuously optimize marketing methods and keep pace with the times. For example, you can increase the proportion of new media marketing targeting young people, or develop emerging channels such as live streaming and delivery of goods. Brands also need to establish a flexible market feedback mechanism and make strategic adjustments based on consumer data. Only by rapid iteration can we gain a foothold in this ever-changing market.

In particular, the rapid development of China’s mobile Internet requires brands to keep an eye on new platforms and new opportunities. Only by constantly trying new marketing methods and optimizing strategies according to the results can we take the lead in the digital age.

3.6, Not Enough Interaction with Customers

The management of many foreign companies is not familiar with the social CRM function of WeChat, and has not established an official account to interact with Chinese users. But China has 1.2 billion WeChat users, which is an important platform for brands to interact with Chinese people. If social marketing cannot be carried out through WeChat, the way to connect with mainstream consumer groups will be lost.

At the same time, many executives of foreign companies seldom face Chinese customers directly and lack opportunities to communicate with them. We strongly recommend that executives of foreign companies actively interact with Chinese people through new media such as WeChat and Weibo. At the same time, we should go deep into the front line and terminals, communicate with Chinese customers in person, and listen to their voices and feedback.

Only when the management enters into the local culture and actively listens to the voices of the people can the brand be in harmony with Chinese society and develop symbiotically. This also requires foreign companies to continuously strengthen the localization of corporate management teams to adapt to China’s complex consumption environment.

4. Suggestions for Fixing These Mistakes

In order to avoid common marketing mistakes in the Chinese market, we recommend that foreign companies follow the five-step process of “strategy, planning, implementation, monitoring, and optimization” to carry out systematic and meticulous marketing.

1. Enterprises should conduct in-depth market research to clarify brand positioning and target user groups. This will ensure clarity in subsequent marketing strategies.
2. Based on the research results, formulate a detailed marketing plan and design creative activities around brand propositions and target users.
3. Scientifically select marketing channels according to the Chinese market conditions, accurately reach target users, and complete effective execution. Then, establish quantitative KPIs to measure results, measure the effects of different channels, and optimize resource segmentation.
4. Continuously iteratively improve the marketing plan based on the monitoring results and consumer feedback.

Only by establishing a systematic and scientific process, continuous research, design, practice, evaluation and optimization, can we avoid common mistakes in marketing and allow brands to continue to win in the Chinese market.

5 Conclusion

In this fast-changing Chinese market with unlimited opportunities, foreign companies can only win the hearts of consumers if they actively adapt to the local culture.

The vigorous development of China’s mobile Internet has made consumers accept new brands faster than before. New media also provides a more accurate communication channel for brand marketing. Such an environment requires brands to actively explore and innovate with an open and inclusive attitude, and keep pace with the times. Specifically, foreign companies should learn from local successful brands, conduct active market research, and establish systematic brand positioning, plan formulation, execution monitoring, and optimization processes to adapt to the complexity and variability of the Chinese market.

Only continuous and active brand localization can match the hearts of 1.4 billion Chinese consumers. We believe that the vast opportunities in the Chinese market will belong to those brands that have a keen insight into the culture and remain open, inclusive and learning. The key to seizing opportunities is active participation, proactive adaptation and deep understanding.