If you’re looking to reach China’s massive luxury goods market, you can’t just translate your ads into Chinese. Of course, good translations are very important and can help avoid unfortunate mistakes like that time Pepsi accidentally claimed to bring dead people back to life. But translations alone simply aren’t enough to be successful. The key to an effective communications plan for business opportunities abroad is cultural sensitivity.
China’s consumers have unique feelings about social status, relationships and even leisure activities that necessitate a tailored approach to advertising. If you don’t take the time to understand and then incorporate these tastes into your messaging, you will alienate your audience and eliminate ROI. You will also end up featured as a “Chinese Marketing Fail” on a fine blog like this one. On that note, here are three examples of brands that screwed up launching campaigns in China:
When eBay came to China in 2004, the brand hoped to take customers away from e-retailer Alibaba which at the time was helping small companies run online businesses. In an effort to dominate the market, eBay launched aggressive campaigns, even signing exclusive rights with major web portals that would block their competitors’ ads. It was a savage move that didn’t pay off and the reason they say “know your audience.” Because Alibaba executives recognized that China’s small business people preferred watching TV over surfing the Internet during their downtime. So they invested heavily in television campaigns promoting their new auction site, Taobao. These efforts soon made Taoboa a household name, allowing it to heavily outpace its American counterpart and forcing eBay to wave the white flag in 2006.
2. Home Depot
With home ownership on the rise in China, entering this market seemed like a no-brainer to Home Depot. But six years later, they managed to evict themselves. The company failed on several fronts including a lack of marketing that targeted Chinese women, who often make the final decisions about home décor purchases. Home Depot also greatly overestimated these consumers’ desires to “do it yourself,” a major messaging point in much of the brand’s advertising. Because manual labor is considered the trade of lower-class citizens, this was off-putting to new home buyers. By ignoring these important aspects of local culture, and trying to make middle class Chinese people do their own renovations, Home Depot never effectively connected with this audience.
Despite spending a whopping $432 million on marketing, Groupon failed in China and it wasn’t because the people there didn’t want to pay deeply discounted prices for concert tickets and hair removal services. They already had successful group-buying sites. Groupon was unable to bite into that business due to a lack of cultural understanding reflected in many aspects of their downfall, from their inability to steal executive talent away from competitors to their difficulty trying to build vendor partnerships. Not only did they scare off prospects during sales pitches by demanding much higher percentages than typical of the market, they also insisted on using mass email campaigns to target business owners because this had worked for them when expanding into Europe. But because Chinese small business owners do not typically read such marketing emails, Groupon’s efforts in China fell flatter than an unstuffed dumpling.
Chinese consumers can differ greatly from those in America. Ultimately, if your organization wants to capitalize on advertising opportunities in China, you’ll make efforts to understand the needs and preferences of its citizens. Because as even some of the biggest U.S. brands like Pepsi have learned, cultural sensitivity can make or break a campaign…especially when you promise to reincarnate your consumers.
The U.S. real estate market is well on its way to recovering from the 2008 collapse and in part, has China to thank. In 2015, according to a study from the Asia Society and Rosen Consulting Group, Chinese investors pumped $37.1 billion into American commercial and residential properties. By 2020, that total is projected to reach a staggering $218 billion.
As the population of China’s high net worth individuals continues to grow at rates which exceed the world average, American real estate agents can capitalize on their known propensity to invest in opportunities abroad. Here are some ways that you can be sure potential Chinese investors will keep you in mind when looking for overseas properties.
1. Establish a Presence
Studies have shown that about 45% of Chinese consumers learn about products through social channels, websites or blogs so it’s crucial that you utilize these owned touchpoints to connect with buyers. Customized landing pages featuring well-designed listings give your brand credibility and blogs are great for educating investors about what you’re selling. Social media is now an absolute necessity as it’s ideal for interacting directly with prospects. The key is to make yourself accessible. Because if your exes can’t track you down on the Internet, then your buyers won’t be able to find you either.
2. Know the Influencers
Luxury brands have found great success leveraging the impact that online influencers have on Chinese consumers, not only by utilizing key opinion leaders but also by working with “Micro-Influencers” who enjoy fewer but more devoted enthusiasts. China has the largest population in the world so marketing to its entirety is like casting your net in a giant ocean. Instead try hitting a much smaller pond by targeting the niche audiences of lesser known fan favorites. You should seek out and then build a relationship with a personality that has some established following as well as expertise in applicable areas like real estate, architecture, etc.
3. Be Culturally Sensitive
Though Chinese buyers often purchase American properties sight unseen, they are known for being cautious consumers. To help them feel comfortable, you should be aware of their customs and prepare to answer their questions in appropriate ways. You should also tailor your pitch to ensure it resonates with this audience or, more importantly, that it doesn’t scare them off. For instance, the number 4 is a homonym for the word “death” in Chinese. So you should avoid using this number whenever possible in pricing or marketing materials lest these targets associate your listings with their own demise. Ultimately, educating yourself on the specific needs and spending habits of China’s luxury goods consumers will pay off when it comes time to close long-distance deals.
4. Climb the Firewall
Targeting Chinese investors means working around China’s very strict laws about Internet content and usage. For example, your marketing efforts should avoid incorporating platforms such as YouTube, instead using Chinese video hosting sites like Youku, Qiyi or Tudou. You’ll also want to make sure your site is optimized for Baidu, China’s version of Google. And as for that social media presence we suggested you establish, consider building one on popular networking sites like WeChat or Weibo. Just be sure to keep in mind that half of all Chinese citizens use the Internet, so presenting unique content is imperative to cutting through the clutter. For example, because these consumers have shown to be drawn to narratives about things like love and success, consider incorporating such forms of storytelling to make your listings come to life and draw prospects into your pitches.
5. Embrace Mobile Marketing
China is now home to over 1.3 billion mobile users and nearly everyone in the country owns a cell phone. Therefore it’s no surprise that mobile advertising spends make up over 22% of total ad spends there, a higher level than any other market in the world. When building out your Chinese marketing strategy, be sure to include mobile marketing opportunities that will showcase your available properties to investors on the go.
Given that in 2015, the average price for an American home purchased by Chinese buyers was $831,000, this is a group clearly ready and willing to make large investments in U.S. real estate and one that you should absolutely target with culturally appropriate efforts that will reach potential consumers in China.
With its rapidly growing middle class and their increasing disposable incomes, it’s easy to understand why your organization should consider advertising in China. But it’s quite difficult for a brand to effectively expand into this market with no knowledge of its unique customs and tastes. Once you’ve established a budget for your marketing yuan and figured out the differences between Renren and Tencent, it’s time to familiarize yourself with the cultural distinctions that could make or break your interactions with Chinese consumers.
1. DO present e-commerce opportunities.
Increased access to smartphones and social media among the country’s burgeoning middle class means the Chinese are now able to buy products online…and that they’re even more glued to their devices than we are. Pricewaterhousecoopers found that 75% of consumers in China shop online weekly, compared with a global average of 21%.
2. DON’T forget about “Singles’ Day.”
This Chinese shopping holiday was supposedly started by university students celebrating their independence by buying themselves presents on November 11th. While American retailers focus on Black Friday or Cyber Monday, Chinese brands know Singles’ Day is their time to cash in, with $20 billion in sales projected for 2016.
3. DO understand the importance of relationships.
Confucius knew his stuff and based on the principles of Confucianism, the Chinese value harmonious relationships. Therefore, they may respond better to marketing messages that place emphasis on family and friendships as opposed to those accentuating individual pride and autonomy.
4. DON’T ignore your new customer feedback.
Chinese consumers rely heavily on product recommendations from online reviews and are very likely to post their own. With over 200 million users, China’s Dianping could give Yelp a run for its money. According to Forbes, about 75% of all online users provide purchase feedback at least once a month, compared to less than 20% in the U.S.
5. DO take advantage of their tastes.
Tmall.com is China’s largest website for authentic branded goods and its shopping patterns indicate that Chinese consumers choose American brands for several reasons including better quality, product safety and lack of domestic availability. In fact, per a report from the Boston Consulting Group, 61% of China’s consumers are willing to pay more for a product made in the U.S. so if you sell it, they will come.
Due to the distinct behaviors of its consumers, entering the Chinese market may at first seem daunting. But by adopting a culturally sensitive approach to marketing, outside brands can capitalize on the opportunity to expand into this lucrative emerging market.
As the Chinese middle and upper classes enjoy increased disposable income, their tastes have grown more expensive. In 2015, luxury good spending in mainland China reached $19.3 billion or about 31% of the global market. But before you rush to get your pricey products listed on Alibaba or Tmall, consider these interesting facts about Chinese buyers willing to shell out more yuan for international indulgences.
1. They’re not just shopping in China.
Many Chinese consumers now buy luxury items in Europe and other parts of Asia, where lower taxes make prices significantly cheaper than in the mainland. In fact, it was estimated that 80% of China’s total luxury spending was made overseas in 2015. Though efforts are being made to slow down the “gray market” that has arisen for international purchases, for now Chinese travelers are as likely to buy expensive items abroad as they are cheap souvenirs.
2. It isn’t about logos.
Chinese consumers have evolved beyond simply loving labels, so brand alone no longer determines a product’s success in this market. A survey conducted by Simon-Kucher & Partners showed that China’s luxury buyers now place the highest value on product quality (74%), style (70%) and comfort (70%) when making fashion purchases, while Bain & Company found that 39% of wealthy Chinese don’t find logos to be a priority. That collective sigh you hear in the distance is from Louis Vuitton’s marketing department.
3. The consumers are younger than you’d think.
The average age of Chinese luxury consumers, at home or abroad, is 33.1 years. And more than 80% of all Chinese luxury consumers are between the ages of 25 and 44. This is a generation of shoppers that has grown up on luxury marketing campaigns and which embraces the concept of “Treat Yo’ Self.” But in China they call it Singles’ Day.
4. The Internet is where you’ll find them.
Chinese consumers are quite likely to research luxury brands on the Internet or apps, and are open to developing a relationship that goes beyond the point of sale with the companies behind them. Albatross Global Solutions found that about 75% of China’s most affluent consumers follow brands online and that almost 90% of them want to be contacted by brands they have purchased. Organizations now take advantage of these stats by allocating about 35% of their marketing budget to digital efforts, and that number is growing.
5. The brand story matters.
According to McKinsey&Company, Chinese consumers are now finding that the allure of luxury products can be driven by a brand’s cultural heritage. For that reason, outside luxury brands have found success in promoting their history and craftsmanship as selling points. But there’s also something to be said for assimilation as one-third of luxury consumers expressed a preference for items that incorporated Chinese imagery or that were designed specifically for China.
Thanks to rising incomes, the availability of products online and more openness towards displaying wealth, Chinese consumers now feel increasingly comfortable investing in luxury items. This presents an incredible opportunity for marketers accustomed to targeting less cost-conscious consumers if they’re willing to take the time to understand the nuances of this growing market.