Web attraction – seducing the Chinese consumers in the internet

China now has over 591 million internet users, which is 125 times more than in Finland (ca. 4.7 million)… 460 million of them are mobile internet users. China is now also competing for the first prize of being the world’s largest ecommerce market.

Chinese people spend more than 20 hours per week in the internet, which is like the total working time of half-time worker per week. There are more users in e.g. instant messaging, blogging, gaming and social networks than email users. I have also noticed that if I want a quick response from China I need to use other tools than email. More than 80 % of the internet users are under 40 years old. And; majority of the internet users browse information from the web before they go for shopping – price, quality and feedback counts.

The most popular websites in China include such names as Baidu, QQ, Weibo, Taobao, Kaixin001, Youku etc. etc. They are search engines, instant messaging platforms, social networks and ecommerce platforms. What about a sole company; how do they attract more visitors and interest in their offering?

I understand that in order to be attractive in the Chinese web your company must have the following:

  1. localized web content
  2. search engine optimized website
  3. internet marketing
  4. active social media accounts
  5. pictures, videos, stories
  6. campaigns
  7. Anything else interesting?

Which companies, both Chinese and foreign, do YOU think have succeeded in gaining positive attraction from Chinese consumers in the internet? Why; what do they do well?

Accelerate your sales in China; few thoughts

Close to 1.36 billion people. The second largest economy. The biggest trading nation. No wonder companies are aiming to gain presence and growth in the market full of opportunities. The competition is severe and many companies fail to succeed. I have listed few considerations that we often forget to think when planning an entry into the China’s competition ground.

  • Do your clients understand what they are buying? The economic growth has developed in a relatively short period of time. Chinese market has not always had all the products, services & solutions that it has nowadays. The buyers may not be familiar with all the features that your offering provides, yet what value-added the offering brings to their lives or operations. You may take a leap over your competitors by teaching your clients to buy Your products; what good does Your product bring to your client, why Your product is better than the other existing solutions in the market, how Your product operates and what the results are when using Your product. Invest in training, bulletin, marketing, workshops, seminars etc. in order to improve the awareness of Your products.
  • What are the influencers on your client’s purchase decision? It’s all about price; or is it? Maybe the reason is gaining “face” or personal advantage. Maybe the decision makers owns a favor to someone in his/her “guanxi” network. The seller needs to make his homework and learn who the decision makers really are, what they value and who they are “friends” with.
  • How do You visualize the good and benefits the client gains when acquiring your product? How can You appeal to your client’s feelings? Yes, your technology, solution or service may be world class but You need to create that image by visualization and story-telling. The technology experts step in after you have sold the idea that your product is “must-have”.
  • Is Your product suitable for the Chinese market as it is? The taste, beliefs and values are different than in Western market. Yet, the existing technologies in China may not support your solutions. You might even consider of finding co-operation partners to provide a larger entirety with compatible products in order to ensure your client gets well-functioning wholeness.
  • How is Your company perceived in China? Chinese are active internet users and information on companies is widely spread and available. You must invest in internet visibility, take good care of your employees and clients, obey the local rules as well as show respect to the challenging, yet so potential market.

The list is not complete but I hope it inspires the companies take their sales actions a little deeper. I bet there are other experts of China, Asia, sales, marketing etc. that can easily continue the list and I am definitely willing to hear others’ ideas. 🙂

China’s next top travel destination – Finland!

We have had active discussions among our Finland China Business Club (FCBC) members about the opportunities of increasing Chinese tourism to Finland and the challenges Finland is facing as a potential travel destination. As I am a lazy writer I first list shortly few facts about the Chinese tourism, then I summarize the discussions we’ve had in FCBC and last challenge all the readers to share their ideas on how to attract more and more Chinese tourists to our beautiful country of thousands of lakes.

Few facts:

  1. In 2011 Chinese made ca. 70 million overseas trips. It is estimated to reach 100 million by 2020.  15 years ago the number was only 5 million.
  2. Altogether 74.000 Chinese visited Finland in 2011.
  3. Chinese spent the largest sum of money per visit compared to other foreign visitors in Finland. The sum was 670 € on average.
  4. Overall Chinese tourists spend around 1.000 $ (770 €) per visit abroad. However, some individuals may spend as much as 100.000 ¥ (~12.000 €) only for shopping.
  5. Average spending of Chinese is less than that of Western travelers. However, due to increasing number of Chinese travelers the total is high – leaving the Germans and Americans behind.
  6. Asia, Australia and Europe are the top destinations – in Europe, UK , Germany and France are the most favored destinations.
  7. Today’s Chinese travelers are looking for comfort, activities and shopping opportunities whilst enjoying scenery and different cultures.

The problem with Finland has been and still seems to be that it is the Finns that do all the thinking for attracting Chinese visitors – though it should be the Chinese themselves. The Chinese that have visited or even lived in Finland know the attraction of Finland the best. Let’s summarize what thoughts and ideas we’ve shared with FCBC members that learnt from our Chinese members.

  • Finland itself is not a brand and the country is still relatively unknown – a little mysterious even – in China.
  • Chinese do not know what to see and experience in Finland. For example, they go to ski to Switzerland because they know they can ski there.
  • Chinese do not know what to buy in Finland. Shopping opportunities are one of the key attractions.
  • Some Chinese travelers are also interested in investment opportunities.
  • How is Finland different from other European countries? – Finland should offer something special to its visitors. Some ideas e.g. berry and mushroom picking, experiencing traditional Finnish summer cottage, swimming in a lake, hiking in clean nature etc.
  • High level of education, advanced society, developed hi-tech sector and Santa Claus support the brand building of Finland as clean & fresh, modern, yet memorable travel destination.

And then finally the challenge! What could be done in order to attract Chinese travelers to Finland?

Some thoughts and ideas:

  • Utilization of the Chinese social media.  More than 300 million Chinese use it.-Could we jointly make a marketing buzz for Finland? Maybe challenge students to create short videos about our country sponsored by travel companies and service providers? Videos could be published in youku.com or suchlike site.
  • Chinese love stories and sharing their experience. How could be boost the story telling and experience sharing in order to make Finland more attractive, interesting and exciting?
  • We should engage more Chinese in the improvement of Finland brand in China. Chinese students provide excellent pool of talents for insightful development of tourism activities and promotion. I challenge the students provide their insights and ideas to companies in forms on school assignments and thesises.
  • Radical actions should be taken in order to draw people’s attention and interest in vivid China. An FCBC member suggested we could follow the example of “Radical Design Week” held in Shanghai and create a concept of “Radical Tourism Week” and take it to different cities in China. For that we need someone to take the initiative and gather the radical ideas into one feasible concept. Who is it going to be? Volunteers?

These are just few ideas from a common woman inspired by resourceful FCBC members. Please, feel free to comment and add your ideas. Let’s take the “Brand Finland” to China and warmly welcome Chinese visitors to Finland that they eagerly want to see and experience!

Sources: Finnish Tourist Board (2012) www.mek.fi & The Guardian (2012) “Chinese to become biggest spenders as record numbers head overseas” www.guardian.co.uk

Picture: Helsinki South Harbour – taking the travelers across the Baltic Sea (www.portofhelsinki.fi)

Growth opportunities in China and Asia – join the September seminars in Finland

I am happy because the importance of Asia (and certainly China) has been recognised as a driver and huge opportunity for growth. It makes me especially happy that cities outside of Helsinki has shown increasing interest in the opportunities in these diverse, yet so excitingly challenging markets. Though we are such a tiny little country compared to Asian tigers, we do have something to give and share with them.

Please, find a list of seminars held in Turku, Mikkeli and Karjalohja during September. The seminars will focus on current opportunities, trends and business culture in few selected market areas. I will be sharing my own experience and expertise regarding to China.

Thu 20.9.2012 Kasvua Aasiasta -seminar in Turku

The seminar focus on the opportunities of Finnish companies in China and Philippines. Also the specifics of the market areas and business culture will be share by the market experts.

More info: http://www.wtc-turku.fi/cms/index.php?view=details&id=83%3Akasvua-aasiasta&option=com_eventlist&Itemid=8&lang=fi

Tue 25.9.2012 Kansainvälisty! Vauhtia kasvuun Aasiasta -seminar in Mikkeli

The seminar focus on few different, yet interesting market areas incl. China, Philippines, Japan and Vietnam. Asia experts share their view on the opportunities and the currents trends in the selected markets.

More info: http://www.ely-keskus.fi/fi/ELYkeskukset/EtelaSavonELY/Ajankohtaista/tapahtumat/Documents/Vuoden%202012%20tilaisuudet/Aasia250912.pdf

Thu 27.9.2012 Targeting China – a phenomenal market place -workshop in Karjalohja

China is a rapidly growing market of which expanding middle class is willing to spend – also in Western brands.The workshop concentrates on the increasing opportunities in the Chinese consumer market. Experienced professionals share their knowledge, expertise and views on the intriguing market.

More info: http://www.fortunefalls.fi/Tahtaimessa%20Kiina.pdf

Welcome to listen, learn and share your own experience and views on these exciting markets!

 

Should I stay or should I go – The confidence in China seems vague

Business Confidence Survey 2012 carried by European Union Chamber of Commerce in China indicates that European companies are making significant revenues and profits in China though global downturn has influenced their global business performance negatively. The respondent companies of the survey in general seem optimistic on the continued business growth.  However, the obscure regulatory environment is causing frustrations and even considerations of moving investments out of China.

Hmmm, reading the results was quite confusing. Three-quarters of the respondents told that China has increasing importance in their overall global strategy and almost one-quarter said it maintains the same level of importance. However, some 22% of the respondents actually could consider of moving their investments to other regions of the world. The major concerns are the Chinese economic slowdown, increasing labor costs are discretionary enforcement of regulations by government. Nearly half of the respondents felt they had missed business opportunities due to regulatory barriers.

In general, however, the companies are more optimistic on their prospects in China than elsewhere in the world. 63% of the respondents were considering of new investments in Mainland China within 2 years. Ca. three-quarters of professional service providers and same proportion of industrial goods/service companies thought China as one of their top three destinations for the new investments. However, the figure was 59% among the consumer goods/services companies. The companies that had been in the market relatively short time were going to invest heavier in order to gain market share.

In addition to new investments, companies are looking for expansion opportunities into other provinces. This allows business expansion, lower operation costs for example in Middle and West China as well as better government incentives. The number of employed personnel within the companies has been primarily increasing during the past couple of years and the tendency is going to continue.

The survey also implies that Chinese companies have improved in brand recognition as well as marketing and sales. The top investment areas for foreign companies were also branding and sales & marketing. In addition, HR was in the top three areas as the competition for local talents has got severe and skilled people know their value. In order to stay competitive foreign companies have also been cutting down their expenses and reduced their prices. After all, most companies are nowadays in China to serve local clients.

Some time ago I read from a newspaper that the CEO of Rovio, the company behind Angry Birds, said that their success relies on the fact: “we Finns are so good in selling”. That was of course a sarcastic comment since we Finns are generally known for our other virtues. However, Rovio has understood how to play the game in China. Invest in branding; adapt the products/services into the local market; sell aggressively while developing new services. Yet, it doesn’t make any harm to invest in government relationships in order to pass through the barriers. If you’ve got what it takes – guts, creativeness, and the right mixture of resources – stay.

Original survey is found in http://www.euccc.com.cn/en/chamber-publications

Location does matter.

In recent years, Finnish companies have established their companies in China mainly in Shanghai. However, there has been increasing amount of discussions on the opportunities in tier 2 and 3 cities. I’d say one must do its homework before entering anywhere in China.

All the big players operate in Shanghai and it is the most westernized city in whole China. However, the developed city has its price. Shanghai is by far the most expensive city in China and the land is vastly utilized. For example, the office rents are even less than third of Shanghai’s prices in surrounding provinces Jiangsu and Zhejiang and manufacturing facility costs almost half cheaper. Shanghai might be the New York of China, but there are other attractive locations in China too. When considering where to locate in China, first thing to consider is whether the main operations are focused on a) selling, b) sourcing or c) manufacturing/outsourcing. One might do them all.

a) Focus on selling

Who are your clients and where do they locate? If your clients are the headquarters of globally recognized companies and you deal directly with them, sure you need to be in Shanghai and invest in developing and maintaining the relationships. However, if you are selling consumer goods, IT services, machinery or other products of which clients locate all over China or in certain areas (such as forestry and agriculture sectors in North-East), save your money and choose other location than Shanghai. Firstly, for Finnish companies that are rather small in Chinese scale it is easier to find clients outside of tier 1 cities (e.g. Shanghai, Beijing, Guangzhou) where both local and foreign companies are already competing severely. You should remember that “small” tier 2 and 3 cities in China have easily much more than 5 million habitants and they are less competed markets than tier 1 cities. Secondly, if your clients locate in relatively remote locations, they do appreciate your proximity to their operations.  Let it be North, West or South China.

b) Focus on sourcing

What do you buy and where do your major suppliers locate?  As distribution and logistics become to more critical role in sourcing one should consider the infrastructure of surrounding areas, proximity to the suppliers and exporting ports as well as overall costs of operations. Development zones, which are established by the government with an aim to promote industrial and economic development, are attractive options for sourcing companies. They offer good infrastructure and transportation access, preferential policies, support and participation of government, autonomy, support services as well as resources. However, the variety of development zones from district level up to national level is notable and requires a careful study on suitable options.

c) Focus on manufacturing/outsourcing

Where do your suppliers locate and where do you find the staff? Again, the development zones are attractive option as they, among above mentioned things, also offer relatively inexpensive land and facilities and operate as hubs of technology, learning and innovation. Most development zones are located close to universities and therefore have an access to local talents. The competition over foreign companies between different development zones is hard and all kinds of benefits are provided. One must compare different options very carefully. The benefits that the zones offer you now, might not exist after three or five years. Therefore, when making the contract, the future terms must be negotiated right in the beginning in order to avoid unexpected and unwanted changes in the conditions.

I did not mention the labor costs. They do not count as much as they used to. If you wish to choose a competitive management team and other key persons, you probably end up paying them the same amount of money everywhere. It is the focus of your business and other costs that should determine where to locate your operations.

Hurry up; let’s take your goods to Chinese market!

Finland to Chinese people represents high-quality, innovativeness, creativeness, modern design. How about your products? If these qualities apply to your products, please, let’s go to conquer the Chinese market!

According to the National Bureau of Statistics the average growth rate of consumption in China was 18,1% annually during the years 2004-2010. Chinese Academy of Social Science predicted in 2011 that the consumption will nearly double by the year 2015. And not only the Chinese buy local products but they also spend more and more money on Western brands.

We conducted a market study on the potential for selling Finnish textile products in Chinese market. Based on our study, the key success factors for foreign brands in highly competed market are:

  • Products are adapted to Chinese taste and, in textiles, body figures
  • Products are well branded, won awards, have certificates
  • The country of origin is European
  • Products are widely available
  • Brand utilizes online marketing opportunities
  • Brand invests in sponsoring and charity

Availability nowadays means that your products are sold in shops and stores and online too. It is certainly not enough that your website is translated into Chinese. It needs to be optimized for Chinese search engines, you need to provide online services, sell your products in the internet and be recognized in different sources. The estimation of Ministry of Industry and Information Technology is that the sales volume of China’s e-commerce will grow at least 32% annually during 2011-2015. The growth would increase the transaction volume to RMB 18 trillion from RMB 4.5 trillion accounting for more than 9% percent of the country’s total retail sales of daily necessities and consumer goods. Enable your share on this!

You are afraid that Chinese will copy your design? Why? That’s a good thing. It means that your products are attractive to Chinese consumers and worthwhile to copy. Your target customer is not the one who buys cheap replicates but the one who wants to have the original Finnish product. Just make sure you have secured your trademark and made your brand visible, well-known and available.

To patent, or not to patent – that is the question in China

IPR seems to be one of the biggest concerns for companies that consider of entering Chinese market.  First thing to remember is that international patents do not apply in China. Three different types of patents can be applied under the China’s Patent Law:

  1. Invention patent – valid for 20 years and subject to annual fees. The registration procedure time varies depending on the case.  In general, the application process goes through the procedures of acceptance of application, preliminary examination, publication, substantive examination and approval.
  2. Utility model patent – valid for 10 years and subject to annual fees. The registration procedure time is around 5-8 months. Registration application usually goes through the procedures of acceptance of application, examination and approval of the authority.
  3. Design patent – valid for 10 years and subject to annual fees.

The patent is granted based on novelty, inventiveness and practical applicability. The documents shall be provided in Chinese.

One may also protect its trademark, which is important factor in branding and localization process. First-to-file principle applies in registration. One should consider whether to apply the trademark in both Western alphabets and in Chinese characters as significant number of Chinese still can only recognize their own characters.

I am often asked whether it is worthwhile to apply patents in China as it is time and money consuming. There is not one clear answer. For the branding purposes I definitely recommend to protect the trademark and make clear its origin. Finland has very good reputation in China. Our products and services are considered of high-quality, advanced and ecological. Not to mention, how reliable and easy going people we are.

IPR infringements do happen in China a lot. However, nowadays foreign companies get more equal treatment in Chinese court than before. But if you have not patented your innovations locally in China, you may not sue the copycats.

You should consider how critical for your product or method is to be protected. Consumer products can be copied rather easily if they are already available in the market. If your products are copied and sold in the Chinese market, it is a good sign. It means that there are indeed people in the market who like your products and design and therefore the copies are made.  However, Chinese consumers have become very brand conscious and are willing to spend more money on the original product than the cheap copy. It is the brand and country of origin that counts. Therefore, make sure that your brand and trademark are known if you want to sell your original product in China.

In the case of high technology products and processes that are difficult to replicate I would recommend applying for Chinese patent -unless you may keep the manufacturing processes secret. It is common for industrial manufacturing companies to transfer only parts of their production to China and maintain some critical parts in someplace else or carry out the installation themselves. In some cases the Chinese manufacturers have copied the design of foreign brand identically but the technology has been totally different. In these cases it is again a benefit to have protected trademark to prove the origin of the product.

Sometimes you do not even need to go to the court to demand your rights. One CEO of Finnish machinery company told a story how their machinery was copied identically from the outside but otherwise the product was of poor quality. The replicates were being sold to the clients of the Finnish company. The CEO and his colleague, both big and tall Finnish men, went to talk directly with the owner of the copy making factory and told him kindly but firmly: “You do anything else that you wish but stop copying our machinery”. That was enough and no more copies of their machinery were made.

Whatever your protection need is I advise you to discuss on different options with professional patenting officers or other. There is not a simple guidebook for IPR in China, but who ever said China is a simple market ;)?

Fast and furious – Vol. China

Things happen fast in China. If you do not seize the day, somebody else does and make the gain. We Finns tend to think too long and do not grap the opportunities when they are served on the plate.  First we consider whether we are ready for the Chinese market, then we start to make the project plan and soon we realise that our moment has passed.

Lao Tsu once taught “Do the difficult things while they are easy and do the great things while they are small. A journey of a thousand miles must begin with a single step.” If you are the first one in the market, you have the advantage of starting from the scratch and make it big. If your idea is great, it can be easily sold. If you wait for too long, somebody else gets to the market first and gains the first mover’s profit.

It is not enough that you have stepped into market with a great product once. “The development develops fast” is definitely the case in China! The government encourages the domestic innovation and invests heavily on science and product development. If you do not come up with new ideas and improve your products in full speed, you soon will be dropped out from the competition.

Confucious said: “When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.” We Finns tend to think for too long and make too detailed project plans that do not allow the adjustments of the steps. Operational environment in China changes rapidly and it is difficult to foresee the exact route to success.  Therefore it is more advisable to jump into competition, keep the goal and agilely change the route if necessary.

I feel the lack of speed of Finns is one of the most problematic issues in sourcing from China as well. We Finns have been taught that customer is always right. In China that does not apply. Finland is a small market and our order quantities are insignificant to Chinese suppliers. We want good quality at small quantity. We are lucky if we find a supplier for required products on those terms and at considerably low cost. However, the suppliers also want to proceed fast. Once you find the supplier that meets your standard, make the deal or you lose it. Once you start hesitating, you may lose your face and end up into unwanted clients’ list.

Finland won the World Championship in ice hockey by playing fast and furious. That is the nature of the game in China as well. Think fast, move fast and make the goal before the competitor does.

Good, bad China sourcing experts

Sourcing from China is difficult; that is what we are being convinced by the sourcing agents and consultants. There are the language barriers, cultural differences, unreliable suppliers, fluctuation of prices, complex distribution channels, etc. you name it.

Yes, all the above mentioned can be a big challenge for a foreign company not familiar with China market. However, can all this bullying be tactics of sourcing experts to make their clients dependant on their ”expertise”? More I hear the stories of these experts have made themselves irreplaceable to their clients by appealing to the almost impossible conditions in China, more I am convinced that they are not doing their job right. Aren’t we as China experts responsible of finding solutions to overcome the challenges and easen the way of our clients in China?

Sourcing from China requires expertise of local market, that is for sure. However, the procedure of building reliable supply network is not more mystical than in any other country. Language barriers can be solved by using skilled interpreter, reliable suppliers can be found by sorting out the potential suppliers and making a proper factory audit and maybe paying a personal visit to the factory, as well as by investing in the win-win relationship with the supplier.

We keep hearing that all the documents can be faked in China. Yes, they can; I have seen many faked documents, unfortunately. I heard a very clever story from my dear colleague Deze about  how to ensure that the factory is providing correct information on their  capabilities and references of supplying abroad. Zhejiang Tailong Bank (which could be actually an interesting contact  for small Finnish companies targeting China market) came up with an idea to ensure the reliability of the factory:

  1. Check the electricity consumption.
  2. Check the water consumption.
  3. Check the customs duties paid.

Three simple things and you get a lot of information on the factory operations. This is just one simple and practical example of how to make a background check on the potential supplier.  I feel that making China to look like a big and hungry lion’s throat, we fail as China experts. Our job, instead, should be to facilitate our clients to create their own China strategy and become China experts themselves. It is pure lack of self-confidence to scare your clients by telling all the ”horror” stories of China. Instead, as the the China sourcing expert, you should smoothen the way and let your clients learn on the side to become experts themselves.