EXPORT INSIGHTS: SUCCESSFUL BRANDS IN CHINA

Part 1: Principles of sales success

Size. Speed. Opportunity. Power. Future.

Not a week goes by without China making it in the news for one of these reasons. In today’s global economy nothing seems to last without reference to China. Its consumers are making the difference in virtually all industries – if China is buying, the global market stretches and grows around it.

Australian and New Zealand brands should not be intimidated by the China market. Our clean produce, healthy processes and generous climates are the envy of the Chinese consumer. Many brands we have worked with have discovered this, building their reputations off the back of this success. Some of their products have become the gold standard in the biggest market in the world - their willingness to risk exposing a wider pool to their passionate work has been handsomely rewarded.

As with any business venture, there is no magic formula: the key is to make the best of the circumstances you’re given. In China the circumstances are changing faster than any one business can pre-empt, so anyone waiting for favourable winds before giving it a shot will be disappointed. Fortunately there are some principles to success in China which do not change. Our goal with this series is to show you how you can apply these principles in the market in its current state.

THREE PRINCIPLES

1. Create the meeting space for the customers you want

The China market is huge. Not only are there innumerable brands to compete with in any one space, there are so many channels across the market that finding the right ones for your brand is a bit of a lottery. Even when do you do find a space that is right, you will expend considerable resources protecting your profitability and standing there.

An alternative approach is to generate the spaces you want customers to come to. If you have already identified that your product meets a unique need in the China market, you might also see shortcuts between your customers and the product. You must own and populate these shortcuts, because this is where you have the best chance of educating potential customers of the value of your product.

Manuka Honey is a case study in China brand success and we use their example to illustrate these principles. When Manuka launched in China, the strategy was to create Manuka-dedicated micro-stores in 10% of high-end malls across China’s big cities. This immediately placed them on the map as no brand had created stores for honey in China before. It communicated that Manuka was a premium product for a premium audience. While this required a huge upfront cost, there are other much cheaper ways to create meeting spaces for customers, as we will see in Part 3.

2. Earn the trust of the customers you want

The size, growth and crowded nature of the China market mean that there are many operators wishing to take advantage of the consumer to make a profit. Chinese customers are especially wary of ingestible products after a string of food product scandals over the past decade. Chinese authorities have become strict about what is allowed to be sold in the country.

This makes trust an essential factor of success for foreign brands in China. Gaining trust is the first hurdle and should be the first goal for any new brand in the market. As there is such variety of consumers in China, it is best to focus on gaining the trust of specific consumers rather than relying on your general reputation. What does your target audience care about? What do they trust and what makes them suspicious? Any research you conduct that indicates high level of consumer trust in a particular area or product will be worth many times its original expense later on.

Manuka accomplished this by rigorously training over 1000 part-time staff, paying them very well, and centralising all the feedback they received from consumers in one system. They gained quick access to customer perceptions of their brand and were able to precisely respond through the interface of a trained and motivated team. The quality of the product was effectively communicated to the right audience and they gained that trust.

3. Leverage the local market to do the leg-work for you

Once you are in the market, you want to expand your foothold for longer term sustainability. If you do not have a large war chest it can be difficult to replicate initial successes at the pace required to keep with the competition. There is still the problem of finding the right spaces for your brand, and there are so many people to reach…

For this reason is it vital to have a strategy for using the market to promote your product without your active help. This is really the only way that one brand can gain widespread traction in China. Unlike the first principle, you want your product to enter spaces where you cannot go. This is achieved by relying on local knowledge and movement in the market.

Once Manuka was able to generate consistent profits from their sales model, they visited trade shows and invited distributors across the country to hold the product. The attention shifted from winning the trust of the consumer to winning the priorities of the market gate-keepers. By then Manuka didn’t need to build any more stores – the market was doing more for them than what Manuka was operationally capable of doing themselves.

In part 2 we will see why Manuka’s model would have no hope of working now – and what this means for Western brands in 2019.

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David Desmond explains the different regulation categories for food imports in China.