When American big brands entered Chinese markets two decades or more ago, they had a perception that consumers favoured price over any other factor. Since Coca-Cola, VW, KFC and McDonalds set up shop in 1927, 1983, 1987 and 1990 respectively, the world around them has been changing. They have all survived. Others like EBay have been less successful in their attempts to enter Chinese markets.
Important Conclusions by Millward Brown
By 2011, the situation was stabilising. The BBC asked Millward Brown (a UK company focused on brands, media and communications) to reassess the situation in the light of the emerging, wealthier middle class. Millward Brown found that a mix of higher living standards and falling trust in local brands meant people were looking to international offerings as opposed to Chinese markets more and more.
“Our research shows that in the last three years, trust in Chinese brands has eroded quite dramatically,” Millward Brown’s Peter Walshe explained. “This is an opportunity for well-known and well-supported international brands to make their move as consumers start to value quality and experience as much as price.”
Strategies that Help Famous Brands in Chinese Markets
Unlike EBay, that famously entered China in 2002 without an executive able to speak Cantonese or Mandarin, Western companies succeeding in Chinese markets readily adapt to Chinese culture. As a Nike spokesperson told Millward Brown’s researchers, “Never assume what works for your mature markets will work for China. Success comes for those who stay relevant to the needs of the Chinese consumer.”
- McDonalds tracks social attitudes and evolving aspirations
- Nike develops products around Chinese sports and habits
- Omo studied Chinese laundry traditions and pitched accordingly
It seems that going big and bold has a huge influence on Chinese sentiments. KFC has thousands of restaurants and is adding hundreds annually. Manufacturing giant VW has invested more than 25% of its global business in automotive Chinese markets, and is rolling out a number of new production plants. Size does count in the world’s largest nation.