China has become one of the most competitive consumer markets in the world. You don't need to look far to see signs of it. In Chinese cities you're bombarded with advertising—glowing screens on sidewalks, in taxis, waiting for the lift, in the lift, even projected onto the cavernous walls in subways. Billboards, magazines, newspapers, television... advertising is omnipresent.
Consumers in Shanghai are subjected to three times more advertising than their British counterparts. And advertising in China is still growing: 14.5% more was spent on advertising last year, growing at almost double the rate of China's economy, at a time when consumer spending is dropping as a percentage of GDP.
In such a competitive and dynamic market such as China, building a strong brand is imperative if you are to be picked out from the clutter of products.
Brand is important in China
Consumerism is relatively new to China, and many brands haven't established the same deep-rooted relationship with customers as they have in the West. An often-cited fact about Chinese consumers is that they're less brand-loyal than consumers in Western countries. McKinsey research has discovered that just 46% of Chinese consumers are loyal to one brand, compared with 71% of American consumers.
But that doesn't mean you don't have to invest in building your brand in China.
Chinese consumers are promiscuous, yes, but brands are still very important to them. Brands are much more likely to be considered if they're in their sphere of awareness. So, although they may not be loyal to one brand, they are "loyal" to a group of brands.
Corruption and countless product scandals in China mean Chinese consumers question the creditability of many products and look to reputable brands for safety and quality. 2011 BCG research found 70% of Chinese consumers cited brand as a reason for trading up across a suite of categories surveyed, higher than any other major market in the world.
Though every successful Western brand's road to success will be different in China, here are three pieces of advice that anyone building a brand in the Middle Kingdom should consider.
1. Build on your foreignness
Building a brand is about telling a story, and part of that story is where you are from. The good news: Western brands are much more trusted in China. As Western countries usually have higher standards and regulations, which are more likely to be abided by, Chinese consumers generally trust the quality and assurances of our brands more than their local equivalents.
Consider luxury goods: 86% of Chinese consumers refuse to buy products labeled "Made In China," according to the World Luxury Association. Some 61% of Chinese consumers are less confident about local food than in 2011, and 28% expect to replace domestic purchases with imports, according to Ipsos research.
Your country's brand can have a big bearing on how Chinese see your brand. USA is seen as modern and innovative with brands such as Apple and Google. New Zealand is clean and pure. Western Europe has strong connections with luxury; France, with cosmetics; Bordeaux and Burgundy, with fine wine.
With the exception of Japanese companies (because of political and historic issue—invasions and territorial disputes), most foreign brands have an advantage.
2. While keeping foreign, tailor your brand and products to Chinese tastes
While retaining your foreignness, you may need to tailor your products to Chinese consumer preferences. And that's more than just a few Chinese characters on the labeling.
Most brands who've earned widespread preference in China have made their products appeal more to Chinese consumers' tastes: KFC and Starbucks have quite different menus than in the USA. Procter & Gamble have introduced green tea toothpaste and skin whitening cream.
Chinese food preferences are often radically different from those in the West. Their body shapes, their lifestyles, their leisure activities... all different. What they think is cool/cute often doesn't align with Western cultural sensibilities.
Don't invest too heavily in building a brand or product without testing it with Chinese consumers first.
3. Make sure digital is part of your branding strategy
Though your budget may dictate the channels you use to build your brand in China, make sure digital is a key part of it. The transparency and ease of sharing opinions on social media means 95% of Chinese trust a brand more if they see it on social media, such as Weibo. With TV, radio and print controlled by the state, Chinese consumers are much more likely to believe what they read on social media.
Some 56% of Weibo users follow at least one business account, and the average Weibo user follows four businesses. Moreover, 50% of online Chinese believe Weibo is a way to make complaints to a business, and 55% have participated in a conversation on Weibo about a foreign brand. It serves as a good research tool in addition to a promotional channel. Good things spread fast on Weibo, so if your business has a great offer, new way of doing something, a creative venture, video or something with feel-good factor, it's not uncommon to be forwarded and commented on 10,000s of times.
Websites are equally as important as social media. Chinese spend an average of 2.7 hours a day online, more than any other country except Japan. Some 38% of Chinese consumers regularly increase their brand awareness via websites, and nearly 48% believe that websites influence their purchase intent—50% higher than cluttered traditional media like TV, radio, and newspapers.
Make sure your website is correctly translated, usability-tested with Chinese, and optimized for Chinese search engines, such as Baidu.
Go forth and win in China
There's no silver bullet for building your brand in China, and in most cases it won't come without an investment of time, money, and smarts.
If Chinese consumers are to consider you, they'll first need to be aware of you. Make sure they know about your foreignness, even as you appeal to their Chineseness. And use social media and your website; they're some of the best tools you have.