Entering the China market as a prestige brand: our founder's top tips
In recent years I’ve been proud to lead e2e business analysis to steer several luxury brands into the exciting and dynamic China market. In doing so, I’ve been able to leverage my cross-cultural knowledge as a bilingual native Mandarin speaker to remove roadblocks, but I’ve also developed some top tips for thinking about international expansion into China. Remember that while taking a brand into the China market can be complicated, it can also be extremely lucrative: my most recent success is targeted to return incremental net sales of £5.8-6.2m in Year 1 alone. The below list is somewhat tailored to European prestige brands, which are faced with a uniquely challenging set of circumstances that require some flexibility, but most of my takeaways would apply to all businesses!
Balancing brand image and brand awareness
Western luxury brands often cultivate a strong reputation while being relatively elite - and thus somewhat inaccessible. This might translate to a double-edged sword overseas: when I led market entry for one prestigious UK-based luxury store, the brand was relatively unheard of in China except by a small (if loyal!) group of online customers mostly from Hong Kong or Taiwan, more Western-facing regions. Another complication might be that while Western prestige brands normally encourage premium/full-price purchases and limit promotions to only Summer and Winter sales, Chinese consumers love and are accustomed to bargains, especially those discovered on platforms like WeChat and Weibo.
Tackling brand delivery while soothing the typical nerves of executives about compromising a prized brand image can be tricky: it is often too risky to attempt entering the pricing game, for instance. Instead, an obvious first step for bridging the gap between brand and consumer expectations is a strong communications strategy, through which other elements can differentiate the brand in a competitive market and create value for customers. Striking a balance is key: listen to how the brand wants to position themselves as well as cross-cultural experts who can translate this business identity for a Chinese audience. There is no one way to be successful!
Top things to consider could be:
Tone of voice: communicate a need to buy for distinction from high street brands to reel consumers in while thinking about your specific target audience - for example, they might be more educated/with overseas experience.
Creative content: use storytelling to attract and make an emotional link for consumers, creating a purchasing experience that makes the consumer feel individualised. For example, blog posts on topics that go beyond the sale, as Selfridges We Love does.
Social media engagement: Key Opinion Leaders can definitely be useful in China. One brand preferred to use these more relatable organic influencers, such as blog writers, rather than celebrity endorsements, as this did not align with this brand’s image (and was also pricey!).
Exclusivity and newness: exploit your brand’s novelty to create value, for example by providing a product which others can’t - especially as the local market is crowded with foreign brands.
Localisation versus prestige: Chinese shopping sites often employ a more crowded visual style while luxury Western brands typically use a simple, stripped-back look to signify prestige. Should a Western brand therefore rethink image delivery for a Chinese audience by using Chinese aesthetics or even a Chinese name? While some localisation is normally useful, it’s important not to dilute the brand by so heavily tailoring that the brand can no longer be distinguished from local brands or recognised according to its typical brand image signifiers (as may have been one contributing factor in ASOS’ China market entry failure).
Cultural demands: Make sure to be culturally relevant e.g, using only Simplified Chinese might be less appealing to Taiwanese consumers; not using just yuan for Hong Kong or Taiwan. Finding the right advisor will be important for this.
Overarching strategy
Have short, mid and long term stages of your plan to establish success in China by following the “Build, Test and Grow” approach. Remember that China is the size of Europe! Success might be slow, so manage expectations. It’s also important to closely monitor structural changes or external factors which could impact the whole business case: the political or economic landscape? Legal requirements like taxation changes? When I was handling a project for a large China market entry project with a >£1m budget and multiple workstreams, the government was in the process of launching new import and export regulations for cross-border e-commerce. Being on top of this development meant I could proactively react to deliver the project successfully on time and on budget.
The “Build, Test and Grow” stage:
In the Build stage, you will establish all the necessary building blocks for the business’ operation in China, including taking steps to establish the brand and e-commerce strategy - (what marketplaces, e.g. Tmall, etc).
In the Test stage, you will experiment (proof-of-concept) with multiple different channels to find the best fit for the business to grow sustainably.
Once the brand has found the product market fit and price market fit, it will be ready to move to the Grow stage to accelerate e-commerce transactions.
Key take-outs: set goals; be humble and stay open-minded
A hunger to learn, especially from the most recent technology, creative problem-solving and humility are key skills when it comes to any market entry or expansion, and no more so than for a market like China. Most stereotypes we harbour in the West about the Far East are no longer true, especially for prospering China. China’s relatively recent shift onto the world economic stage as a major player means it is more agile: working on more of a clean slate and with less “red tape”, it is able to innovate using cutting-edge technology at a faster rate than those who originally developed it in the West. This means Chinese companies tend to be more willing to try new things - and more flexible in cases of failure. Such resilience means that European companies must realise that, especially in technological terms, the China market outstrips the European one.
Set your goals clearly and early: know what is the most important thing for your brand before you get dragged into a highly competitive price war and so that you can articulate this to the right cultural expert to find the best possible practice.
As always, if you hit a roadblock, talk to customers to explore hidden needs, go back to basics in the case of uncertainty, and never be too proud to return to square one if things change! Don’t make assumptions about how the Chinese consumer market operates based on Western comparisons or experience: for example, Chinese consumers like to protect themselves from the sun, unlike Western consumers who love to get a tan...
Be proactive in keeping up-to-date with technology that is or might become popular in China, and be open to making any changes expected by the consumer. An old but an essential example is WeChat, a cross-purpose app unlike anything used by European consumers - Facebook, WhatsApp, Uber and PayPal in one app!
This post originally appeared on Monica's LinkedIn. Feel free to follow her.
