Market Information

798 Art Zone.

With a large population of western and Chinese artists living and working in the 798 art zone the area has become the center for the art and creative community in Beijing. There are unique spaces available (if you know who to talk to), that are perfect for short term show rooms and for product launches.

www.unicon.co.nz

Photo by: Joe 2007

THE Minhang District People’s Court yesterday sentenced three Fujian Province natives from three to seven years in prison for selling fake cigarettes. The court also fined Xiao Zhongmei, Zheng Shufu and Li Yinghua 150,000 yuan to 200,000 yuan. The trio bought and sold fake cigarettes at a profit from April this year and were caught in June. Police seized 2.12 million yuan worth of cigarettes.

Source: Fake smokes   via Shanghai Daily: Metro by on 12/21/07

1. Take the get rich quick stories lightly: A launch in China, while holding phenomenal potential also takes a lot of heart to see through. There are dangers like misreading Chinese consumer habits, copycat competitors setting up faster than lightning, long periods of no visible returns, struggles with a workforce from a totally different culture, the list rolls out continually. Once the down sides are understood however, the potential sales campaign (considering good points and bad) can be conducted with a clear mind.

2. Look at your strategy: Does your company really want to explore new sales market? Total commitment is needed to break into a Far East Asian market place such as China. How far into the future do you look? The “We’ll clean up quickly here” mentality is often followed by excessive cash burn and a bemused collapse. Give yourself a 5 to 10 year horizon to build a worthwhile business; patience pays untold dividends in China.

3. Compare your offering: You will be going head to head against others in the most fiercely competitive market in the world. Your product or service offering needs firstly to be something that’s hard to emulate, secondly, have equal or better quality than theirs and thirdly, have something of the mystique of being foreign to the Chinese consumers. Foreign companies that reach kudos level in the Chinese high street have these traits (e.g. KFC, Starbucks).

4. Do your Market Research: The Chinese middle class is growing fast. While perhaps around 50-100m people right now, some predict it to be 250m people by 2011 and 520m by the year 2025. The clever ones are starting now, testing and learning, finding out what works and what doesn’t. When your learning period has identified your sweet spot in the market, then you can roll out wider scale (note: B&Q have used this strategy for the last 7 years to great effect).

5. Do your sums: No company can survive for long selling at less than cost price. Plan your financials thoroughly. Start with a 5 to 10 year ball park long range forecast, blending it with your overall company objective. Then break this down to the quantifiable first 2 years, getting real figures supplied by real people in China. Make sure that these figures are not being supplied by potential suppliers that could be understating costs so as to maximise the chances of getting your business.

6. Do your due diligence: This is a high priority in China. It’s a long distance from here and there are many pretenders. Make sure the business partnerships you build are with competent people who are in the place they say they are, can do the things they say they can, and have a good track record of getting things done properly. Get copies of their business licence, check references thoroughly, go to their office, meet them, and ask them the tough of questions before any deals are struck.

7. Talk to other operators: These tend to be the closest relating people to you that you will find in China. Although some of them could be in competition with you, most Brits I have met in China have been very helpful. There are many expat and business chambers that will lend a supportive hand and help out with knowledge. US and European organisations are also very helpful.

8. Watch the high street first hand: Spend some time watching how the Chinese shop. If you can take a local Chinese friend along to help you understand the mechanics of how people do business in the high street do so, it will expedite your understanding of how it works..

9. Formalise your network: Pay particular attention to your Chinese partners. Don’t forget that this is their market and you are the outsider. They are helping you to come into their world. When the time comes, spend time training them to fit well with your company but remember always that they’re the ones who really know the people who dwell in this market, not you. Make him or her earn your trust by complying with solid company procedure, and then trust them to do the job.

10. Keep learning: The fact that nothing stands still in China opens up some veryinteresting opportunities for fit businesses. Mighty western giants sometimes have toperform tactical withdrawals while small sole traders can sometimes build hundred people companies. Why? Because the small guys ask questions and listen for answers and some of those giants think that they already have the answers because they are successful in other markets, this almost guarantees spectacular failure. If you want to sell successfully into China do yourself a favour; never stop learning about the market and the interesting people in it.

For more information visit the Modern Management Worldwide website at

www.momaworldwide.com

MODERN women display a higher appetite for luxury goods and property and expect to make their investments work harder compared with middle-class women, a survey has found.

Modern women in China - estimated at 17.4 million last year and likely to swell to 31.5 million in 2016 - are urban-based and aged 30 to 44. They have graduated from college and are professionally employed, according to the survey.

HSBC and MasterCard Worldwide conducted 1,736 interviews from February to May in Shanghai, Beijing and Guangzhou to identify the middle-class lifestyle and symbols of wealth and aspirations.

Fudan University was commissioned to devise questions and conduct the survey in the three cities.

Modern women display the strongest appetite for luxury goods with 85 percent having bought such items, followed by the middle class at 76 percent.

By Zhang Fengming 2007-12-8  Modern women’s insatiable appetite for sheer luxury

Photo by Joe: SOHO Beijing 2007. “Show your mercy to the green lawn”

A great sticky message is one that people can understand when they hear it, that they remember later on, and that changes something about the way they think or act.

Malcolm Gladwell’s The Tipping Point: How Little Things Can Make a Big Difference explains that successful messages have a Stickiness Factor: Stickiness means that a message makes an impact – it’s memorable.

“There is a simple way to package information that, under the right circumstances, can make it irresistible/sticky and compels a person into action. All you have to do is find it.”

Companies will often spend months coming up with business plans and product ideas for China but then spend only a few hours thinking about how to convey that message to their Chinese customers often translating it directly from English to Chinese. Great ideas need great messages. It’s worth spending time making sure that your message is going to be meaningful and memorable in the Chinese context.

When we undertook the market entry campaign for Canterbury of New Zealand we needed to create messages that would open doors and make companies sit up and listen. We wanted to present Canterbury’s company information in a way that would be irresistible to potential partners in China. Here’s a sample of some of the messages we used when introducing Canterbury to potential partners (translated from Chinese).

“Canterbury is the world’s original rugby brand, for this reason they have forever earned a place in history.”

“Canterbury’s products are the culmination of over 100 years of pride and tradition.”

“Canterbury is sold in many of the world’s leading retailers including Harrods and Saks Fifth Avenue.”

The elements in these messages that stuck in the Chinese mind were the references to Canterbury’s heritage and their international credentials “Ming Pai”. Ming Pai and heritage are two of the most important qualities Chinese businesses look for in foreign brands. We crafted stories and messages to reinforce these elements, giving just enough information to wet taste buds and leaving people wanting to know more.

Being able to create a meaningful message in China requires an understanding of the culture, language and a perception of how messages are understood and remembered by Chinese people.

The Stickiness Factor test

• Is your message going to be memorable?
• Does it make sense in the Chinese context?
• Is it practical – how does the message fit?
• Is the message unique?
• Is the message packaged to make the desired impact?

Unicon work with companies to create meaningful messages in the Chinese context and we’re bloody good at it too! (kiwi context).

www.unicon.co.nz

As part of their overall entry strategy, Unicon Group have launched the Canterbury of New Zealand Chinese information website.

www.canterburychina.com

THE cost of living in Shanghai is catching up with more expensive locations in the region such as Hong Kong and Taipei, according to the latest global cost of living survey. The ECA cost of living survey listed Shanghai in 100th place among the top 300-plus most expensive cities in the world, up 23 spots from last year. Shanghai was also one position higher than Singapore among Asian cities, which ranked at 122nd place globally, according to the report. ECA International, the world’s largest membership organization for international HR professionals, carries out the survey twice a year comparing a basket of 128 consumer goods and services commonly purchased by expatriates in more than 300 locations worldwide. Lee Quane, general manager of ECA International Hong Kong, said that soaring food, oil and grain product prices, along with strengthening yuan against the US dollar pushed up the ranking. “The difference in living costs throughout China remains considerable,” he added. For instance, Hong Kong is the highest ranked city in China, which remains at the 79th place in the world this year. It is followed by Taipei, which dropped back from 88th place to 94th this time. Mainland Chinese cities, especially second-tier cities, reported rapidly rising living cost in the past 12 months. The 95th-placed Beijing is the top-ranked city with a rise of 13 spots from that of last year. The cost of living for foreigners in Chongqing grew by about 12 percent, a figure which was double the rise in Beijing. Xiamen is in the 182nd place and is the least costly city for expatriates in China on the list, according to the report. The survey also suggested that Seoul in South Korea beat Tokyo of Japan to be crowned the most expensive city in Asia. The global crown for the world’s most expensive city went to Luanda in Angola.

from Shanghai Daily: Metro by Rachel Yan:  Counting the cost of living

“The challenge of learning to speak Chinese fluently, the complexities of the Chinese way of doing business, and a strong sense of national pride mean that a foreigner will only extremely rarely be accepted by Chinese interlocutors on equal terms. The solution is to find a reliable Chinese ally to work with you. An effective Chinese colleague will often be able to analyse body language at meetings, work out who in the other negotiating team holds real power - not always the boss - and help smooth out any inadvertent wrinkles. Conversely, the presence of a Westerner should be exploited to the full. Chinese interlocutors will often see a visit by a foreigner as an indication of sincerity and commitment by the Western company. Perversely, they often do not accord mainland Chinese or Hong Kong representatives the same status as a foreigner. The ideal sales team, therefore, is often a Chinese to take care of the working level contacts, and a foreigner to do honour to the higher echelons” (British embassy, 2006).

Taken from:   Golden hints for doing business in China

Unicon can be an in-market ally for New Zealand companies in China. We give our clients  both kiwi and Chinese in-market representation. 

FOREIGN food companies are making a beeline to China hoping to tap the huge potential in the imported food industry as they cash in on people’s rising disposable income and easing of import tariffs. A record 800 companies from 35 countries and regions yesterday promoted their food specialities and beverages at FHC China 2007 in Shanghai for the first time. One of the largest international food, wine and hospitality equipment and supply exhibitions, it opened yesterday and will end tomorrow at Shanghai New International Expo Center in Pudong New Area. A wide variety of imported products will be displayed, from fresh and preserved foods, beverages, wine and spirits, bakery ingredients to confectionery, suggesting foreign companies are really eager to tap the emerging market. Seven Austrian companies are showcasing food specialities like Julius Meinl Coffee, Darbo jams and Pfaffl wines at their pavilions. “China’s entry to the World Trade Organization has lowered tariffs and brought economic liberalization that yielded gains for US food exports,” said Wayne Batwin, an official from the Agricultural Trade Office at the US Consulate Shanghai. “Continued economic growth boosted the demand for high-quality foods and improvements in retail, distribution and transport system also increased competitiveness of imported food and beverages in the local market,” Batwin added. Metro Cash & Carry China is one foreign food and beverage wholesaler which is benefiting from Chinese people’s interest in imported food. Revenue of imported food now makes up 10 percent of Metro China’s total food sales and the retailer has set up an imported food area in all its 34 stores nationwide to meet consumers’ demand, Philippe Bacac, general manager of Metro Cash & Carry China East China Business unit, said. Besides wine, snack foods such as ice creams and frozen foods are also becoming popular. “The competition in the snack foods sector is quite demanding amid people’s growing disposable income and willingness to try new things,” said Zhong Wei, marketing manager of Gourmedis (China) Shanghai Office. He also added that sales were also boosted as consumers trusted imported food meets international safety standard. Gourmedis, which added Alberto Pizza, Cellini Coffee and Maina cakes into its existing 1,000 items under 15 brands this year, is expected to double its turnover next year, Zhong said.

via Shanghai Daily: Business by Jin Jing on 11/15/07 Foreign food firms keen to bite into huge market

Here is a useful article from the guys at Idealog with information about brand protection in China

Idealog