F21600265 Goncharov Ivan
Features of creating a marketing strategy for a European company to
enter the Chinese market
The relevance of the article's topic is due to the unstable situation on the global
and Russian markets. Many companies are restructuring, merging into corporations
or simply going bankrupt in order to survive. In such a volatile and brutal market, it
is important to diversify markets and retain customers in order to not only stay afloat
but also to grow, as huge market power zones previously occupied by other
companies are released.
The business of any company will only be effective when its product or
service finds a market demand and satisfying customers' needs through the
acquisition of the product/service brings profit to the company, i.e. it is not sufficient
to produce a product with certain physical and operational characteristics (in this
case, it is merely a product); it will become a product if there is market demand and
it is competitive (it satisfies a need and is appealing to the customer): (i.e. it will
have an attractive environment for the consumer).
In this case, product policy is the core of marketing decisions around which
all other decisions related to the conditions of purchase of the product and methods
of its promotion from the producer to the end consumer are formed.
The Chinese market is of most interest to entrepreneurs and large
organizations because it is quite large. After all, China is the first country in terms
of population, with 1.4 billion people as of February 2021, has one of the most
developed economies in the world, and its people are also the most active online
consumers in the world.
Trade relations between Russia and China have been stable for a long time.
The countries are doing their best to cooperate successfully with each other.
Recently, Russian products have become more and more popular among Chinese
consumers. This is evidenced by increased demand and, consequently, an increased
share in the import mix, but the Chinese market has peculiarities, such as:
1) Mentality:
The mass Chinese consumer has very different preferences from the average
European consumer. For example, individual consumption has not yet been formed
in the PRC; the Chinese are always guided by someone else's opinion. The market
for the middle class is not as well developed because this class in China is for the
most part divided into consumers who want to conform to the upper class and
consume similar products, and economical consumers who would prefer to
accumulate and use things for the lower class. Also, the Chinese population's trust
in Western products (even more so than their domestic counterparts), so many
companies try to emphasize this feature.
2) Censorship:
China has a number of laws (very different from Europe) restricting the form
of presentation, content (including advertising).
3) The Great Chinese Firewall:
The Golden Shield Project (Ch. 金盾工程, jīndùn gōngchéng), unofficially
known as the Great Firewall of China. This project filters Internet content in the
PRC.
Conditions for access to the PRC market include such forms of foreign presence as:
1. Establishment of an enterprise with 100% foreign investment
2. Setting up a Sino-foreign joint venture (joint capital enterprise)
3. Setting up a Sino-foreign contractual joint venture (Sino-foreign joint cooperation
enterprise)
4. The establishment of a permanent establishment of a foreign enterprise
It is reasonable to have all materials translated both into Chinese and
duplicated in English. It is also advisable to have a good Chinese translator when
conducting negotiations, meetings and conversations with Chinese partners. The
most popular service among businessmen today is payment in Renminbi (RMB).
Commercial banks with international settlement capabilities and that have opened
bank accounts for Chinese enterprises participating in the RMB foreign trade
settlement programme or correspondent accounts for foreign commercial banks can
provide RMB foreign trade settlement services in PRC.
At present, China's main banks have started to provide services, including:
1. the Bank of China;
2. the Bank of Communications; the Agricultural Bank of China; the Industrial
Commercial Bank of China; the China Construction Bank;
3. China Merchants Bank;
4. the Shanghai Pudong Development Bank.
The main dangers when entering the Chinese market are:
1. Cultural differences.
2. Risk of being banned from Chinese social media accounts.
3. High competition in the digital market.
4 Content delivery algorithms in Chinese social networks.
The main problem for a European company preventing it from entering the
Chinese market is that almost all European social networks do not work in China.
Therefore, all of the company's digital infrastructure will have to be done from
scratch. Also, a big problem is the lack of understanding of the Chinese social
networking algorithms, which generate the lion's share of access to your company's
online resources for interested users.
Preparing the infrastructure - adapting our business to be perceived by the
Chinese audience. First of all, we are talking about the website. Quality localization
and translation into Chinese is necessary. Dialects do not matter if we are talking
about hieroglyphics, simplified or traditional. The simplified writing system is
distributed throughout mainland China and is understandable to people in Hong
Kong, Taiwan and even Tibet, regardless of our targeting.
All video content containing a link to YouTube needs to be uploaded to
Chinese video sharing sites like Youku or Tudou, with frame tags (a separate
complete HTML document that can be displayed in the browser window together
with other HTML documents) being copied, then visitors from China will simply
not be able to play it due to the firewall. This way, visitors to the website will be
able to access the viewer unhindered.
You also need to study your competitors, the top Chinese advertising
agencies, to learn the local trends in the digital space, and interact with your audience
seamlessly, both visually and semantically. All legal and social "taboos" in Chinese
advertising need to be studied and crossed out.
At times it seems that the Chinese government's attitude towards online
advertising is predominantly hostile. Many industries, if not completely banned, are
constantly under strict scrutiny. For example, medicine, finance, education, real
estate and mobile games.
In addition to officially banned themes and images, there is a list of things that
advertisers avoid. They may attract the attention of a segment of the population that
may complain. In the largest cities, though, for example, creatives and their clients
are trying to take risks. The metro in Shanghai seems to be one such testing ground.
Interestingly, one such banner appears first and only then - after a few days or weeks
- does a massive "attack" appear on passengers.
But as a foreign company, it is better not take the risk of playing on "hot
topics" and minimise reputational risks from our advertising campaigns, to
guarantee a positive image in the media sphere.
The latest major update concerning market regulation has been the People's
Republic of China's Law on Advertising. Some of its provisions include bans on:
● the use of superlatives and words such as "most" and "best";
● the use of the national flag or national anthem of China
● any advertising that contains anything detrimental to national dignity or the
national interest;
● advertising of tobacco products;
● advertisement of prescription drugs;
● any advertisement that contains anything detrimental to national dignity or the
nation;
● any falsehoods in advertising and misleading material.
But overall, the government's motives are clear - to protect its citizens from
low-quality and harmful products and, perhaps most of all, its reputation.
All the algorithms and trends of China's major social media players need to
be studied, such as:
 Weibo is a microblogging service that is often compared to Twitter or Instagram,
with a few differences. Pictures, news updates, and videos are streamed directly
to the official account. The channel is regarded as an image channel, and is ideal
for brand promotion.
 Douyin is the progenitor of Ticktock. An app for quick creation, editing, video
sharing, and viewing news feeds. Unlike its international counterpart, it has an
advanced e-commerce system within the platform. One-click purchases of
products from advertisements are available. Targeted advertising within the app
or a separate Ocean Engine advertising cabinet can be used for promotion.
 Youku is the equivalent of Netflix and YouTube, with a huge audience. Ways to
promote - text links, banners, post and middle rolls, ads after the pause. Advanced
targeting options are available and pricing is flexible. A good choice for
promoting products to a wide audience.
 Baidu Tieba is a blogging platform. Here you can create a personal profile, track
comments, post news, and answer questions. Direct linking is a plus to the
standard set of promotion tools. The online service is integrated with the Baidu
search engine, so content is automatically pulled up in the search engine if it gets
a decent frequency of mentions.
 Zhihu is the Chinese equivalent of Quora or Mail.ru's Answers, but with much
more advanced functionality. In addition to blogging on behalf of the company,
it is also possible to purchase media advertising on the platform.
 Bilibili is not just a video platform, but a full-fledged community for the new
Chinese generation. It has both paid subscriptions and an online TV service, as
well as user-generated content. It's ideal for promoting mobile apps, games and
other themed products to a younger audience.
 QQ is an instant messaging service from the creator of WeChat. It's a great
platform for so-called guerrilla marketing and spreading the word through private
groups and chat rooms of people who share a common interest.
 Toutiao is a Chinese news and blog aggregator platform, analogous to Yandex
Zen.
In this article, we will look at market research on two of the social networks
presented above.
WeiBo was launched in 2009 as a microblogging service and today it is a
counterpart to the familiar Twitter or Instagram and along with WeChat is the main
communication channel with the Chinese audience. In 2017, Weibo surpassed
Twitter in terms of capitalisation and number of monthly active users and was ranked
6th in the 2018 China iResearch Mobile App Index. Weibo currently has an audience
of over 500 million people, 93% of whom access the app from mobile devices.
Almost half of its users (194 million) are actively interested in outbound tourism.
The service allows users to publish and share media content, comment on
publications, subscribe to other users (bloggers) and has all the basic functions of
any Western social network.
WeiBo allows users to create a personal account and run your own blog,
publishing interesting content and attracting the right target audience. Anyone can
subscribe to your updates, recommend you, or 'repost' your publication. Through
built-in promotion tools, publications can appear in other users' feeds as
recommended content (relevant to the user's interests). WeiBo allows to "boost"
subscribers, including organic traffic that helps increase your account's search
engine indexing. Put simply, your account is easier to find and visible to more users
on WeiBo.
There are 4 types of accounts:
 unverified account;
 verified account (marked by a yellow check mark in the top of the page);
 verified account for legal entity (indicated by a blue check mark in page
top);
 verified celebrity account (marked with a red tick in the top of the page
and only available for accounts with a million organic subscribers).
In addition to image and field of activity, verification affects the available
promotion tools, two of which are:
● Contextual advertising with advanced targeting settings (keywords, geography,
gender, theme, etc.);
● Targeted promotion of publications (filters by topic and bloggers).
Contextual advertising is available to accounts registered to both a person and
a legal entity, it is important that these accounts are verified.
Registration as a non-resident is also possible. In order to verify such an
account, the company's statutory documents, information on the representatives and
their personal details translated into Chinese must be provided. The application takes
up to 30 calendar days to be processed, after that you will get access to your personal
account, which will be opened after the deposit is made. The minimum deposit for
launching contextual advertising on Weibo is 10,000 CNY.
The fastest and equally effective way to reach more of your target audience is
to promote your publications. The promotion tools do not require any verification
and are available to all registered users, including non-residents. All you need to do
is register a Weibo account by providing your personal details and a verification
code, which will come to the number you enter during the registration process.
The two main parameters for promoting publications are topics and bloggers.
Topics are chosen based on your line of business, for example, if you are in the travel
business, then tourism, travel bloggers, individual countries and cities are the main
subject matter. In the case of blogger promotion, the posts will appear as
"recommendations" in that blogger's general feed of subscribers.
Thus, for the greatest reach and effective targeting of your target audience, it
is best to "mix" both, allocating the promotion of each publication to bloggers and
your chosen subject matter.
User coverage depends directly on the allocated budget. On average, the CPM
is 25 RMB. For example, 500 RMB allocated per post gives 20-25,000 reach. The
range is determined by the individual topic, the blogger and their audience.
The microblogging service Weibo is an integral part of integrated marketing
in China. It is not only an image tool, but also an effective way to reach the right
audience. As we are in a business industry where our product and services need to
be visualized, the Weibo service will do just as well as its Western counterparts,
which are blocked in China. In conclusion, we can say, that Weibo can be an
effective marketing instrument in communication with Chinese audience.
Advertising in China via Youtube, WhatsApp, Facebook is not available, but
national social networks are. The most popular is WeChat, China's main messenger
with over 1 billion users worldwide, developed by Tencent. WeChat is incredibly
important to the Chinese - if potential customers can't find information about the
company on WeChat, there will be no trust in the company. You can promote your
brand on the site in several ways: content marketing, buying advertising traffic, or
all at once. In the first case, you need to create an official WeChat account where
you will publish articles, talk about your product and communicate brand value.
Learn more about that here. In the second, you'll need to set up an advertising
account in the Tencent ecosystem, where through detailed targeting settings you
select your audience and run your ads.
Standing alone is an alternative promotion in the Chinese online space promotion through opinion leaders and bloggers. China is not only the world's
largest social media market, but also an incredibly rich and diverse online landscape.
Despite the differences between the Chinese and Western social media worlds,
China is 3-5 years ahead of the rest of the world. The increased functionality and
integration of social media, digital payments and e-commerce has created business
models that have yet to be explored in other countries.
It is through the integration of e-commerce and social media that the blogger
market in China is growing at a huge rate. In 2019, more than 430 million people
watched live streaming, about 30% of China's population. And in 2020, that number
is projected to reach 560 million, or about 39%. In April 2020, a blogger known as
Viya sold a record 40 million CNY, or 5.6 million USD, worth of goods during the
live broadcast.
The main difference between promoting through opinion leaders in China and
working with bloggers in Russia is that such advertising is not treated with hostility.
On the contrary, subscribers are waiting for live broadcasts from their favorite
bloggers, so that they, in turn, recommend and sell them products at a big discount.
The level of trust common people have in bloggers is very high. It is therefore
important to know that without the involvement of opinion leaders, the process of
promoting your product in the Chinese market can take a very long time.
60% of search queries in China go through Baidu, so it is a very important
tool in promoting our brand.
Unlike social networks, which are more responsible for a company's image
and branding, contextual advertising and SEO promotion in Baidu can be used to
promote in the Chinese market. While Chinese consumers looking to make a
purchase usually look directly at products on marketplaces like Taobao and Tmall,
they also often look for reviews, tips and other information on Baidu. Therefore,
how much information about you is found on China's main search engine will
determine whether your products will be bought or not.
The existence of local payment systems in China that are separate from the
rest of the world can make life difficult for ordinary foreign companies. It is virtually
impossible to launch sales and even advertising without connecting Chinese
payment systems such as WeChat Pay and Alipay. A Chinese bank account will also
be required in most cases to withdraw money. To be able to receive online payments
from Chinese citizens and pay for some advertising services themselves, such as
targeting in Douyin, Asia Pacific provides services to connect online acquiring
through Alipay and WeChat Pay.
So, before you launch an advertisement in the Chinese market, you need to
decide on the target audience, the location of the advertisement, and most
importantly, the goals you are pursuing. Otherwise, money will go to waste.
LIST OF REFERENCES
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(20.06.2022)
2. Kreutzer R. T. Online-marketing. – Wiesbaden : Springer Fachmedien
Wiesbaden, 2016.
3. Impex Consulting — Checklist for the entrepreneur: what to look out for
when starting a company in China // URL: https://www.hongkongbusiness.ru/biznes-v-kitae/na-chto-obratit-vnimanie-otkryvaya-kompaniyuv-kitae.html (15.06.2022)
4. Piñeiro-Otero T., Martínez-Rolán X. Understanding digital marketing—
basics and actions //MBA. – Springer, Cham, 2016. – С. 37-74.
5. Asialink Business — Marketing in China URL:
https://asialinkbusiness.com.au/china/sales-and-marketing/marketing-inchina?doNothing=1 (18.06.2022)