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China in Spotlight




(L-R) CARLA CICO, CE0, Rivoli S.P. A. Italy, JENNIFER ANGENEND, Director and Co-Owner, WaterFilled Barrier Systems, USA. and THOMAS HOMBERG, Corporate Vice President, EADS, speaking at the respective session during the Global China Business Meeting 2010 in Luxembourg.

Q: China is often cited as a good location for commodity products but what about niche players?

Angenend: “There is no argument that China is an excellent place for production of commodity products…however, with the increasing attractiveness of investment in China, I believe many niche market players will find ways to create successful businesses.”

Tang: “The Chinese market absorbs all types of products, whether from commodities, or not. In China one can see the amount of foreign brand cars, higher technology machinery that have made Germany’s economy so strong, wines from France and other countries.

There are many niches still to be filled in the Chinese markets. One example is a Brazilian manufacturer of cheap hot water taps and shower heads for about US$ 10 each. Normally hot water in China comes from boilers that are large, expensive and costly to install.”

Q: It is often thought that the best way for a company to enter China is with a Chinese partner. Any suggestions for finding a good partner?

Tang: “Depending on your field of business, you may not need a Chinese partner. Our chamber has introduced many strong partners to companies wanting to do business in China.”


Homberg: “Let me say that the partnering selection is crucial for both the Chinese partner and the foreign investor.”

Brutto: “Finding a logistics partner is also critical to success in China. When seeking a partner it’s critical to find a company that can move products to and from China quickly, efficiently and cost-effectively, helping to carve out a competitive edge.”

Q: Is the Starbucks model for success in China still a good model to follow? Are there others?

Angenend: “The Starbucks model for success will not be right for every business, industry and idea, regardless of where it is. Of course, there are key components to the success of this model that any company or entrepreneur can learn from and incorporate into their own business.”

Barbalas: “I don’t think there is one model for success in China. Those companies that have done best have understood the Chinese consumer, adapted their business models to the Chinese realities and stayed nimble to adjust to changes in the business environment.”

Q: It is often mentioned that it takes longer to create a brand image in China. Why and how long does it usually take?

A: Angenend: “The distinct culture of each Chinese province makes the time frame longer for a brand and company reputation to be established. There could be several factors at play, especially depending on the industry in question. In regard to consumer products, the Chinese have an expectation of demonstration of reliability which is perhaps more stringent and pronounced than in other places. In general, much like it takes time and reliability to build trust in interpersonal relationships; these are also components that contribute to building trust in a brand. Additionally, each of China’s provinces is distinctive and it may not only take time but also proven performance to establish a good reputation throughout each. When other things are not necessarily as transparent, establishing the accountability essential to building a solid brand may not take some time.”

Barbalas: “New companies coming to China can expect to invest for one or more years before they start seeing results. It takes time to build the China team, understand the market and build the customer recognition that a successful business needs to take off.”

Cico: “There is no a rule or a criteria for this and very much depends to the products (and brand) that you want to sell. In reality the time and effort that you need in China are the same that you need in any new market. The fact that people think that in China takes longer, it is because a lot of people were expecting it to be easier and faster to do it in China. It was easier until 10-15 years ago, when there were few foreign brands in China and very little competitions from local brands. Last, but not the least, the consumers were less sophisticated and easier to be pleased. Now the consumer is not buying a product only because it has a foreign name, but also for the price and the quality.

Another problem is that you have to study carefully where to position the product, and this positioning can be different than the one in your home countries and/or others markets.”

Chen: “China is a huge country and creating a brand in China will take a lot of effort and money to do so. Especially, China has different cultures across the country. One brand that is making sense in the south may not be making sense in the north. It all depends on a company’s marketing strategies and how people implement them. So in general, I agree with you that it takes longer to create a brand image in China. However, there are also exceptions. With today’s Internet media, as well as impact of celebrity marketing, certain brands may get created in a short period of time, say 1 to 3 years.”

(L-R) Frank-Jürgen Richter, President, Horasis, Switzerland, Jean-Claude Juncker, Prime Minister of Luxembourg and Xu Kuangdi, Chairman, China Federation of Industrial Economics - China and World Economic Outlook at the Global China Business Meeting 2010 in Luxembourg.

Nizami: “I have been involved in China for some time and have seen things moving very slowly, but it all depends on the product, services and most of all timing. For a good brand it will take years. I have been involved with the Buddha Bar brand from France for a year and now it is coming into the reality of making one. We had to do an extensive study of the local Shanghai market, the spending habits and evening activities before deciding to move to Shanghai, the city with the largest international community.

Brand recognition in China is one of the toughest jobs for the local brand owners because in the last decade only, Chinese people have been exposed to the international market in China and outside. Brands must have a good local marketing company especially in small cities in China. Only in the last 15 years have worldwide brands been introduced in the China market.”

Tang: “This would depend on many factors and type of products. Some brands are launched within a short period of time, while others take longer to firm their image.”

Brutto: “To succeed in China, a company must work closely with local communities and governments. Although there is no set time frame for building a strong brand in China, it’s critical to understand that business in China is based on relationships and trust, which takes time to develop.

First of all, it is important for a company to demonstrate its operational competence and be recognized by the Chinese government and regulatory authorities as being valuable to the economic and overall development of China.

Second, foreign enterprises must understand that China is not a homogeneous market. To enhance a brand’s chance of success, a company should offer products targeted to specific regions and demo graphics within China, and then develop an appropriate marketing strategy to support that image. A marketing strategy that works in the U.S. might not necessarily work in China. A company must maintain enough flexibility to adapt to shifting needs and stay abreast of consumer demands.”

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