China’s Marketing Environment

1. China’s Marketing Environment

2. Discussion questions • 1) How would you assess the development of the marketing environment in China and how different is it from that in Hong Kong and other countries? • 2) Are concepts and practices developed in the West applicable to China? Do they need to be adapted to the Chinese environment? • 3) What are the challenges for marketing professionals, say, those working for Hong Kong and foreign firms in China? • 4) Are there good examples of successful marketers among HK and foreign firms in China, and what are their unique strengths and characteristics?

3. Features of China Marketing Development中国营销进程的二大特征 • Feature One: The development is dramatic and fast, and it is a compressively accelerating process.特征一，变化大而快，是一个压缩式的加速进程 • Feature Two: The development of China marketing occurs in a special environment, an environment of transition.特征二，中国营销的进程发生在特殊的环境——转型环境中

4. 1) How would you assess the development of the marketing environment in China and how different is it from that in Hong Kong and other countries? • Two driving forces of the improvement of the competitive power of Chinese firms. • First, the floating of international corporations and global knowledge.第一，跨国公司和国际知识流动 • Second, the spirit of continuous studying and innovations of the Chinese entrepreneurs, marketers, and researchers.第二，中国企业家，营销人和研究者结合本土环境不断学习和创新的精神

5. Demand & Supply of Consumer product – Shortage or Surplus? • Marketplace -- Planned or Free? -- Production-oriented or Customer-oriented? • Communication network • Technology standards • Business practices and cultural norms • Legal framework • Political risk

6. China is in a unique situation:from marketplace of consumer product shortages to surplus • Selling-intensive marketplacequality and sophistication are increasing, but prices are declining • The focus changed from production to sales:production-oriented firms became customer-focused

7. Communication:from a few telephone lines to cellular mobile, with satellites and digital transmission technology – even more advanced than the USA • Many manufacturing firms are operating in production mode:move to marketing-focused system • Hyper-competitive market • Competitors: domestic, foreign, JVs

8. Car Industry • Joint ventures • Shanghai Automobile with VW and General Motors • First Automobile with VW and Toyota • DongFeng with Peugeot and Citron • In addition to the three large groups of Shanghai, First Auto and DongFeng • Guangzhou Honda • Chongqing ChangAn • AnHui GiRui • ShenYang HuaChen • Nangjing Fiat • Zhejiang Jieli

9. 2) Are concepts and practices developed in the West applicable to China? Do they need to be adapted to the Chinese environment? • In theory, yes • Concepts and Practices: Market research, Global marketing, Internet marketing, and Customer relationship management. • In reality, they need to be adapted • Language, culture, practices

10. Standardization vs. Localization • Standardization: • uniform, efficient, low-cost, easy to remember • neglect local conditions, may not be effective, • Language and cultural barriers • Sometimes more costly • Localization • Closer to the local knowledge • Consumers and market more responsive • More effective, • Lower cost

11. Applicable! • China has implemented 85 years of Western marketing thoughts in less than 20 years. • From the Article China may leapfrog the West in Marketing, it is said that China is “leapfrogging” traditional Western cycles, i.e. a big jump. • Absorbing anything from the west in order to grow! • With the aid of technology development: • e.g. China went straight from having few telephone lines to millions of mobile phone users.

12. Adaptation is necessary • For example, the Brand Loyalty: • Fact 1 : Chinese people frequently switch brands. - Intense marketing for a parent company rather than products is more suitable. - Trust needs to be gained by the company as a whole for higher retention of products.

13. Fact 2: The Chinese are more focused on brands And they Believe: Luxury goods represent success (Businessweek.com). • Whatever brand is fashionable at the moment is more important than price competition. • Marketing needs to focus on the high class and Quality of the product instead of a Discounted Price. • Thus, Brand Management needs to adapt to the Local Preference!

14. Challenges for Marketing Professionals • Size of Territory  Marketing Practices –Accessible or not? • Competition  Price & non-Price  Fair or Unfair? • Intellectual Property Right • Information released from the Government Trustworthy?

15. Challenges for Marketing Professionals • Vast Territory  Difficulty in distribution • Keen Competition  Price Competition  Product and service competition  Concept competition • Fake Product • Fake and Unreliable Statistics • Unfair Competition

16. 3) What are the challenges for marketing professionals, say, those working for Hong Kong and foreign firms in China? • Size of Territory  Marketing Practices –Accessible or not? • Competition  Price & non-Price  Fair or Unfair? • Intellectual Property Right • Information released from the Government Trustworthy?

17. Vast Territory  Difficulty in distribution • Keen Competition  Price Competition  Product and service competition  Concept competition • Fake Product • Fake and Unreliable Statistics • Unfair Competition

18. 4) Are there good examples of successful marketers among HK and foreign firms in China, and what are their unique strengths and characteristics? • Focused know your strengths and weaknesses 2) Upholding Principles “Quality is first. Technology comes second, then the production cost.” 3) Far-sighted Everything takes time.Understanding Quality should come first in order to maintain long-term relationship 4) Seeking for Cooperation, not Competition Other home manufacturers such as Chery and the First Automobile Group joined together to develop Car Manufacturing Technology

19. Examples • Volkswagon: early entry, good government relationship • GM Buick: superior technology • Chow Tat-fook: low profile, focus on quality • Lacoste: brand power, persistence • McDonalds, etc., etc., etc.,