An article that appeared recently in AdAgeChina - 3 Golden Rules of Brand Management in China – caught our eye.  In it, Tom Doctoroff of JWT offers some advice for global brands looking to make it big in China.

Since we conduct a lot of branding research within China (as indeed we do across the rest of the world), we thought we would reproduced Tom’s article today on our blog. Of course, if you wish to find out more about how to establish yourself in China, why not read our white paper Marketing and Selling to Chinese Businesses, or email beijing@b2binternational.com for more information:   

To maximize relevance and trigger loyalty that results in a sustainable price premium, global brands need to be aligned with China’s cultural imperatives and operational realities.

At the risk of oversimplifying, here are three “golden rules” marketers must be sensitive to before landing in the mainland.

1. Maximize public consumption to justify price premiums.

In China, a Confucian society torn between stifling regimentation and ambition, consumers regard brands as tools for success. “Face,” the primary currency of upward mobility, is rooted in status projection. This is why brands that are consumed in public are able to command huge price premiums relative to goods used in private or within the house.

All leading mobile phone brands, for example, are international. Even in tier-five cities and the rural fringe, Nokia commands a 40% market share, despite significantly higher prices than local competitors.

Sony’s Handycam, a product brandished outside the home, is a brand leader. However, Sony television sets, although aspirational, struggle to be more than a niche product.The leading household appliance brands are, without exception, cheaply-priced domestic brands such as Haier,TCL and Changhong.

The “public display” imperative leads to fundamental positioning differences. As a general rule, benefits should be “externalized,” not “internalized.” Bath gels should not promote “sensorial indulgence” in the shower. They should “stimulate” the user to begin the day with a kick, ready to conquer the world. Beauty products must help a woman “move forward” and enhance her ability to “open doors” professionally or “control” her man. Mass market beauty brands should still help lower-income women be “admired” as a great mom or adored wife. Even beer must deliver something. In Western countries, “letting good times roll” is enough. In China, pilsner must bring people together, reinforce trust and optimize opportunity for mutual (financial) gain.

Automobiles, now a middle-class “must buy,” should make a statement about a man on the way up. BMW, a winner, elegantly fuses its global “ultimate driving machine” with a Chinese declaration of ambition.

DeBeers achieved 80% penetration of engagement rings by morphing universal passion inherent in “A Diamond is Forever” into Confucian “proof” that “commitment will last a lifetime.”

The importance of public display is also critical in shaping business models. To conform to Chinese tastes, Starbucks, for example, broadened the sandwich menu, identified prime site-to-be-seen real estate, and made stores bigger. Starbucks has established itself as a public place where professional tribes gather to proclaim affiliation with the New Generation Elite. Likewise, both Pizza Hut and Haagen-Dazs have built mega-franchises rooted in out-of-home consumption.

2. Simplify communications and benefits to enhance comprehension.

Chinese are overwhelmed (yet excited) by the explosion of brands. Twenty years ago, the public phone was the only way to make a telephone call; today, there are over 300 different mobile devices,from $30 basic models to state-of-the-art smart phones. Making matters worse, China’s media landscape is cluttered. Television screens, most owned by Focus Media, are ubiquitous – in taxis,elevators, restaurants, building tops, locker rooms and bathroom stalls.

Complicated messages, therefore, are not easily digested, even amongst the most brand-literate. Consistent messages must be conveyed directly. Advertising must be ruthlessly single minded. Visualize the key benefit, leverage demos as creative ideas, slice of life formats revolving around  torture tests and so on. Select celebrities, usually Chinese, whose star attributes reinforce a core brand proposition.

For simplicity mandate, heavy mass media is essential. China’s untamed landscape requires forming brands from scratch; television fits this bill. Digital is increasingly critical to deepening engagement and loyalty but mass media will remain center-of-the-plate for years.

3. Extend brands downwards to generate scale, affordability and margin.

Multinational brands must need to profitable and have mass-market scale. Most multinational can charge a price premium because Chinese consumers prefer the reliability and “cool” of foreign   brands. The tough nut, however, is scale. Scale is critical in a reassurance-driven market such as China.

The only way to target a broad swathe of price-sensitive consumers is to extend premium-priced brands downwards across lower price tiers by reducing costs and simplifying benefits. At the same time, great care must be taken not to degrade quality perceptions, usually by advertising the most premium variants.

Colgate’s Total Oral Care, a premium toothpaste made largely of imported ingredients, costs   approximately 200% more than local brands and maintained a 3% share. Colgate Herbal and Colgate Strong, however, use cheaper local ingredients and are priced slightly higher than or at parity with local brands. The combined Colgate franchise controls a phenomenal 20% of the toothpaste market, one with hundreds of regional and national competitors. In recent years, Nestle and Procter & Gamble (with varying degrees of success) have adopted a similar strategy. So, too,   have higher involvement categories such as mobile phones.

The Chinese business battlefield is treacherous, rife with kamikaze commoditization. We have not covered issues such as avoiding censorship, in-store activation, product localization, the supremacy of the “single child” and safety issues. However, these three “golden rules” are essential to consider before finalizing a China strategy.

The annual ESOMAR Asia Pacific Conference was held this year in Beijing, just down the road from B2B International’s Asia Pacific Office. As a company based in Beijing, we were delighted to have the opportunity to exhibit on our home turf and welcome colleagues from across the region and beyond to one of the greatest cities in Asia and the world, and show-case our Asian research experience in our striking booth, pictured. If you met us at this year’s event, it was a pleasure and if you were not able to attend, feel free to contact us on +86 (0) 10 6515 6642 or email us on beijing@b2binternational.com.   

Jason Zhang was a little surprised when the five shirts his friend had bought for him arrived in the mail; he had been expecting to receive long-sleeved shirts and yet found his new garments had short sleeves. Although he thought he had been clear in his request, Jason discovered to his detriment that effective communication is not always as easy as you think…

Last summer, during my visit to Tianjin, I bought a couple of long-sleeved shirts in a department store. These shirts fit me very well and I really love this particular brand. Unfortunately, they’re not available in Beijing, where I live.

A week ago, I rang my friend who lives in Tianjin and asked her to buy five shirts on my behalf. During our conversation, I briefed her in detail on the particular brand name, the size, my favored style and color, and certainly what was an affordable price for me. I thought that was all the information she needed to make the purchase. However, I was wrong as I didn’t communicate to her one of the key pieces of information – long sleeves! In the meantime, she didn’t check this information with me either as she took for granted that short sleeves would fine with me. This is understandable, as Beijing is pretty hot in summer – with daytime temperatures as high as 38 degrees centigrade. Most people on the street have short-sleeved shirts, but my preference is long sleeves.

This is a real example to illustrate the importance of effective communication in our life and our workplace. Basically, in the workplace, at any given time, we all have to communicate in some way with our internal or external clients. As an effective communicator, you can bring real concrete benefits to your work and your organization. At the very least, you avoid having to do things twice, as you get it right in the first instance.  

In our capacity as professional consultants, perfect communication – both internal and external – is a crucial factor in building our sustainable competitive strengths, like efficiency, productivity, and a comfortable working environment.

As a business-to-business market research agency, our typical clients are marketing and business development professionals from national and international organizations. They come to us for help in making difficult and expensive decisions. At every point in the process, these clients’ expectations for effective communications from their suppliers are very high.

You would agree with me that the foundation to effective communications is precise information via an appropriate medium at the right time. At each contact point with clients in our work, effective communications are vitally important, from taking enquires, RFQ/RFP (request for quote/proposal), briefing, commissioning meeting, project design, through to the final reporting. It is our company’s normal practice to deliver an interim presentation, to ensure all the parties involved in the project have the same level of understanding of the exact project deliverables. 

Within the marketing research and consulting business sector, to ensure client liaison in an effective and efficient way, your essentials skills are listening, plus market insight, to understand a client’s particular business and needs.

In any communication, trying to use easy-to-understand expressions rather than special terminology or abbreviations, is a good idea. Let me give you an example. Last year, we conducted a market assessment study for a leading American industrial valve maker, to help them penetrate Asia’s pharmaceutical markets. For this market entry study, we used PEST (Political, Economic, Social and Technological) analysis to review the attractiveness of the opportunity and the barriers to entry to each individual market in Asia. When our project team leader and myself co-delivered the final presentation to the Client, we kept talking about PEST and IPR (Intelligence Property Right) issues in China. When we approached the end of presentation in the Q&A session, one of the audience asked the question, “What do you mean by PEST and IPR?” I then realized we should have clarified the abbreviations we had used.

It is quite normal in all walks of life and in all ways of communication to expect the audience to have the same level knowledge as we do. However, on many occasions, this is not the case. This is the reason why our project team always has detailed briefings, commissioning meetings and interim presentations with our Client. With these efforts, we can ensure both sides have the same level of knowledge and expectation from the marketing research and consulting project.

The other day, I got an email enquiry forwarded by our New York office. There were merely two sentences in the email: “We’re from Brazil looking to acquire a Chinese company. What is the cost and time frame for you to research this target company?”

How do you find the communication of this email enquiry? If you were sending out an enquiry for this sort of buying and acquisition study, what information do you think you need to provide to your agency?