Marketing research in China is an exciting first step to lift the potential of the Chinese market.
Are you an entrepreneur or business owner of a startup, SME, or established company? Have you completed the development of your products and/or services and are now aspiring to expand your business?
Are you intrigued by the Chinese consumer market due to its large size and enormous potential? But you are not sure how to start your China market entry?
Don’t worry. The China experts at Tenba Group have all the information you need to take your business to the next level!
Table of contents
- The Power of the Chinese Market
- How do I Start?
- Marketing Research in China – The Takeaway
The Power of the Chinese Market
Expanding into China is one of the hottest topics for businesses. But why is that? Despite the ongoing Coronavirus-pandemic, China manages to maintain its economic growth as one of few countries globally.
Overall, China has the second-largest economy in the world behind the USA. Besides, the Middle Kingdom is the largest e commerce economy worldwide with revenues exceeding 1.6 billion USD in 2021.
This is largely attributed to two factors: large-scale capital investment and rapid productivity growth. For the latest China e commerce trends click here.
Besides, for cross-border e commerce – CBEC – we have put together the hottest insight for you here. There you can also read up on the most popular China e commerce platforms and channels.
Chinese consumers absolutely love luxury and brand items in fashion (apparel, lingerie), accessories (bags, shoes, jewelry, watches, eyewear), as well as cosmetics (perfume).
As Chinese consumers have increased access to independent and international information, the health and fitness sectors are booming in the Middle Kingdom. The demand for healthy and organic products that aid wellbeing and fitness are experiencing a never-before-seen trend. Western organic foods and health items as well as cruelty-free products and home accessories are also in high demand.
How do I Start?
You can outsource the necessary research in China to specialized research consultants. Or you can do it yourself. It can be a bit challenging, especially if you don’t speak Chinese. But don’t worry. We’ll guide you through every step along the way.
- Trends in China & Future Development
- Conduct initial market research for your planned products or services
- Is my product/service relevant/in demand in China?
- Which cultural and other adjustments are necessary?
- Are my trademarks and domain already registered in China?
- Competitor Research & Consumer Research
- Who are my competitors and how is their reception?
- Consumer research to identify your target audience
- Business to business or business to consumer?
- Business Structure
- Which business set up is suitable for me?
- Based on the competitor research, how can/should I price my products/services?
- Which price points do I need to check?
- Determine Channels & Platforms for Your China Marketing Strategy
- Do I have a special USP in China?
- Are my brand values the same as in the West?
- What is my budget?
- Do I need a Chinese website?
- Where and how do I want to promote my brand, products and services?
- Networks & Partnerships
- Which partners do I need, e.g. for distribution?
- Implement, Monitor & Adjust Your China Market Strategy
Next, let’s look at these points in a bit more detail.
1. Trends in China & Future Development
First of all, in case you don’t speak Chinese, you can use an extension to automatically translate Chinese content. For example, Zhongwen on Google Chrome.
Secondly, you can get the first idea by simply entering the keywords of your business or the most common terms which define your business in China’s most popular search engine, Baidu.
For example, if you have a Baidu account, you can check the Baidu trends for market intelligence on certain keywords. We have a ton of useful articles around Baidu SEO and understanding of this platform on our Tenba Group blog.
In the same way, you can check on WeChat, China’s app for everything, which products or brands are most liked and discussed among its users. You can check official accounts for the number of their followers, reading time and engagement of articles, and other information through third-party tools like newrank.cn in order to get an understanding.
Likewise, on China’s top e commerce platforms like Tmall or JD.com, you can see the number of sales of a product and the prices.
Later on, during the detailed competitor analysis phase, you can take a deep dive and also compare these prices on different platforms. For example, compare the brand’s own flagship stores with its retailers and distributors to get an understanding of key players, partnerships, and margins.
Unfortunately, some Chinese businesses have made it their business to register popular Western trademarks and domains before the original owner or company does so. This is not an unusual practice known as trademark squatting.
There are really only two things you can do. It’s important to not skip this step as a missing trademark registration can result in high-value lawsuits. So, it makes sense to check the trademark status of your business in China at the beginning of a potential market entry. If it’s not registered yet, you may want to consider doing so at an early stage. In case it is already registered, you may want to negotiate a sale or explore other options like an adaptation of your branding in the Middle Kingdom.
While the same is true for your website domain, it’s of course much less critical in terms of high-volume lawsuits. However, keep in mind that your audience needs to find your original business quickly and reliably online, and not land on a competitor’s site, where maybe less quality products and services are traded, damaging your reputation.
Five Tips for You
China research and market knowledge have their own challenges. Keep these things in mind to overcome them:
- Keep in mind that China is the largest country in the world by population and the fourth-largest country by landmass. Having said that, it’s no surprise that there are vast regional differences and even larger discrepancies between metropolis, city and countryside residents.
- Moreover, a combination of qualitative and quantitative data collection is ideal. The quantitative research you can do is scanning various online channels like Baidu, e commerce platforms, and social media channels.
- Qualitative research is usually achieved through discussions with focus groups but requires a bit of a higher budget. You can consider simply engaging with key users of the above-mentioned platforms by chatting with them.
- In terms of research methodologies, online research is efficient and cost-saving. However, coverage in low tier areas may be limited and the truthfulness may be less secure. New research services include WeChat and other mobile surveys, which consumers typically find interesting and engaging. If you have a larger budget, you can also conduct mystery shopping (test buying products/services) and store checks, big data collection from China’s leading online platforms through business intelligence solutions, as well as social listening.
- Chinese culture greatly influences the way people communicate and discuss topics. Therefore, appropriate data interpretation depends on a good understanding of China’s culture. For example, Chinese consumers tend to avoid negative ratings or feedback.
A specialized research agency can help you to figure out if your product/service is relevant or in demand in China. Besides, they can help you to identify potential adjustments that are necessary for the cultural context to make your products and/or services successful.
2. Competitor Research & Consumer Research
First, you should identify who you want to target: businesses (B2B) or consumers (B2C). Next, it makes sense to look at your competition.
If you research projects online/on search engines, you may ask yourself where you can find company information and contact details for in-depth research. In China, the contact information on a website can typically be found at the bottom. Besides, almost all Chinese websites have a live chat plugin as Chinese users expect immediate responses.
Finally, is your target audience only in mainland China or do you also plan to reach Chinese in Hong Kong, Taiwan, Singapore, and abroad?
In terms of competitors, you can look at their business strategy, e.g. where are they promoting their services, how are they interacting with their audience, online visibility, pricing structure, and much more.
3. Business Structure
It is important to check if you already have or may need trademark rights for your product in China.
In terms of business structure, consider if you need a representative office or a wholly foreign-owned enterprise (WFOE) in China.
Maybe you also want to consider partnering with a distributor or business partner in China. Besides, you may need a Chinese company as a partner to get an ICP license for you to host your website in China.
However, keep in mind that for most products and services you don’t need a physical company in China. For example, if you offer CBEC products online or provide services, you don’t need a physical presence in China. In most cases, it’s perfectly sufficient to have a website that is hosted outside of mainland China.
In terms of added value or unique selling proposition, you may have to reposition your brand for the Chinese market. This depends on the cultural context, taboos, and other specialties around language and traditions.
For pricing, it makes sense to look at your own calculation and your competitors. For your own pricing, make sure to include all costs until the product is available in the Chinese market (whole supply chain). In terms of your competitors, take a look at the platforms and promotions they choose.
5. Determine Channels & Platforms for Your China Marketing Strategy
After your marketing research in China, you know your target audience, competitors, and niche information. Then, you can create an online marketing plan. This includes setting your budget for SEO/PPC as well as ads on WeChat and other relevant channels.
Depending on the size of your business, you may also want to localize your website for your market in China. If you have a smaller brand or are just testing the Chinese market, a business account on the relevant social media and e commerce platforms may be sufficient.
6. Network and Partnerships
Now it’s time to build your network, and enter partnerships with distributors, promoters, and marketers of your products and services.
For example, you could collaborate with KOL/influencers to promote your products/services through one of the hottest topics at the moment – live streaming!
7. Implement, Monitor & Adjust Your China Market Strategy
In this phase, your digital marketing strategy comes to life. Isn’t it exciting to engage with your audience and see them react to your product?
Keep an open mind and look at this phase with curiosity and positiveness. It can be disappointing when your product doesn’t take off as you had hoped. But this is also a chance to learn and improve your marketing strategy.
Maybe you have to go back to a previous point, and look again at your target audience, competitors, pricing, or other aspects that you haven’t considered before. You may also want to try different online channels to lower your costs and improve conversion rates.
Also, a China expert like Tenba Group can help you with your marketing research for China.
Marketing Research in China – The Takeaway
To sum it up, you have now done your due diligence to prepare a market launch of your business in China.
Market research in China can help you to prepare and optimize your China market entry. By analyzing your niche, potential market, and customer size, you can identify your key segments, and competitors, and derive adequate digital marketing strategies. A Chinese business consultant can help you with this.
Tenba Group is your market research firm of choice for the Middle Kingdom. Get started with your FREE consultation today and secure business success in China long-term.