You may use this image in your ezine or website if you choose to publish my article. Click here to see the picture full-sized.--- Gerard Brandon

When you are considering any investment by your company into 
the Chinese market the following considerations are worth 
considering.

The consumer tends to seriously browse as this is seen as a 
treat and not a chore. Most households find new products more 
interesting than the cinema, so you have a greater opportunity 
than 3 seconds to attract the consumer. GUO QING or 'special 
needs of the Chinese' are the key to buying impulses.

Shelf space and glossy free-standing still have less effect than 
advertising in media such as radio, newspapers, and television 
and indeed promotional advertising by major actors works quite 
well. The media remains a significant way to promote acceptance 
in the eyes of the public. Consumers believe what the newspapers, 
radio and TV tell them, being state controlled, they also believe 
that advertiselment is validated and authorised by the State.


Provide Complete Information

They want complete information and even specification details 
about it. They are known to read this information to improve 
their knowledge and pass it on to help their community.

If in a prominent space consumers tend to wonder what is wrong 
with it. If they heard of it, they will look for it so bottom 
shelf is equally as good as eye level. Promotion cheapens the 
product and gives an indication of low quality, as they believe 
cheap products are no good.

Suspicion of something for nothing dates back to the 14th century 
when the Hans launched a rebellion against the Mongolian Yuans by 
giving away special cakes, inside of which were slips of paper 
carrying messages to the Hans about the planned rebellion. 


Value And Not Bargain Hunters At Heart

Many of the people who are in the stores are not necessarily 
buyers, 'Never make a purchase until you have visited 3 shops' 
is an extract from a Chinese proverb so footfall is not always a 
good indication of buying capability within a store. There is a 
high regard for foreign quality and technology that is appealing, 
as they are wary of low-quality home grown products.


Who Controls the Purse Strings?

Chinese marriages are sometimes made up of a State Worker and a 
Private Sector worker and the State Worker is the one who shops. 
This affords certain subsidies for the household from the State 
Worker. The Private Sector worker earns more and it is not always 
the male.


Statistics

There are 5 cities that have greater than 10 million people in 
each (Shanghai has 13 million) and about 15-20 cities that have 
5 million and above, so regions are worth exploring rather than 
every outlet.

The average consumer spends less than $500 USD per year, so the 
1.2 billion population is an aspiration and not an immediate 
target.

The ratio of premium products in some cities supermarkets like 
Guandong and Shenzhen account for 50:50 and 60:40 respectively. 
As an example of how the population demographics pan out.

One food product in 19 key cities, accounting for 15% of the 
total population and 22% of GNP, had 40% of unit product sales 
and 90% of the potential profit pool.


Choice of Presence

It is possible to be a 'Wholly Owned Foreign Entity'. 'Equity 
Joint Ventures' are dropping off, but if your partner has a good 
level of distribution nationwide they may worth considering. 
Chinese EJV's tend to look for short term profits, so you should 
also be seen to focus on short term returns on your Chinese 
venture or you are likely to be met by levels of discontent with 
your local partner who wants to see returns and not long term 
growth.

The idea that the Chinese market is so big and growing so fast 
that it is worth the short term loss to break the market is not a 
viable consideration. Coca-Cola didn't have to, but Pepsi-Cola 
are still a long way behind. Pepsi still seem to have a second 
class citizen about their attitude. Volkswagon made a great 
profit and control the market, but Peugeot pulled out after 12 
years of making a loss. Fuji film made the entrance first but 
Kodak learned quickly and now dominate the film and photo-lab 
market.

Sometimes it is just bad local knowledge and distribution. Look 
at what and how Coke did it from the outset.


Branding in China

Find out what the sound of your brand means in Chinese. You might 
find that the pronunciation may be insulting and needs to be 
adjust to sound positive. The original sound of Coca-Cola was 
kou-ke-kou-la which meant 'a thirsty mouth and a mouth of candle 
wax' .It was changed to sound like ke-kou-ke-le which means 'a 
joyful taste and happiness' which amounted to a subtle change in 
promotion and significant alteration of consumption in volumes.

Chinese are not renowned as pioneers and word of mouth in China 
are by far the greatest means of selling. For instance Coke only 
recently made it 50:50 Sprite:Coke, as the black liquid was not 
very well received and did not look as good as Sprite...

In personal care and clothing only soaps in foreign brands have 
succeeded along with shampoos and shoes. In food only Coke and 
Pepsi have achieved a strong position. All the rest of the food 
brands are domestic. Toothpaste for instance is dominated by 
domestic brands cosmetics foreign brands account for about 25%. 
Health Drinks are purely Domestic Brands.
 

Gerard Brandon is editor of Guru Manager Entrepreneurs' 
Toolkit Founder and former CEO of Alltracel Pharmaceuticals 
Plc, with multiple partners and suppliers in China. Guru Manager 
provides Entrepreneurs interactive tools for building their 
global business. http://www.gurumanager.com/