Business Seminar: Branding a Product In a New Market, Part 2

Okay, so last post I spoke about using the government’s five-year plan when entering the Chinese market, inspired by a talk from Arthur at Strategic Public Relations Group. Today I’m going to talk about how things can work in reverse – moving a Chinese company to the UK.

One member of the panel on Wednesday was Georgia Yaxley from Mobike (摩拜单车), who has just launched the brand in Manchester, UK. For those who don’t know, there are a few companies in China that allow you to rent out bikes anywhere at any time. They line the streets and can be picked up by anyone – all you need is your phone to unlock them and pay. The bikes are monitored over GPS so that the company knows where their bikes are at all times, although apparently this technology is exclusive to Mobike – other companies use the GPS on your phone and hope for the best.

Mobike has over 5 million bicycles in circulation throughout China and Singapore, making them one of the largest networks of IOT (internet of things). IOT has really taken prominence in research and design lately and some examples of the application include kettles that switch on when they know you are coming home, mobile apps that control central heating and there is talk of fridges that scan the barcodes of products put in, so that they can reorder foods when you are running low. It’s taking off, but a lot slower in the UK.

Part of Mobike’s success lies in the ease of purchase. Renting a bike is cheap and easy to do, as you only need to scan a QR code. Although most people are familiar with these codes, they are rarely used in the UK, which could cause a potential problem for the company. In order for people to see how efficient the system is, they first must know how to use QR codes and be willing to do so, so one of the first steps of marketing Mobike in the UK has been educating people on this ‘new’ method. Last year another company attempted to launch in London and did not last very long, as they had not prepared consumers. They showed up, presenting a different method than they knew and the lack of understanding led to an unsatisfactory uptake. From the sound of it, Mobike made sure that consumers knew exactly how to use the bikes and the app before launching.

Another important part of ensuring success was communication with local authorities. I’m sure it will shock no one when I say road rules are a lot more lax in China, so the idea of picking up a bike anywhere and then leaving it anywhere is a lot more feasible. In the UK, there are designated areas for everything. In order to ensure it works in the UK, Mobike have worked alongside the City of Manchester and City of Salford Councils, not only ensuring the bikes aren’t disruptive, but also feeding into cycle-to-work and green energy schemes. Thinking on this, I’m sure there are going to be more restrictions on UK cyclists than those in China, perhaps in the form of designated pick-up and drop-off points, that may impede the brand’s current way of working and inhibit how quickly they can expand the geographical area covered.

Finally, I want to talk about something Georgia mentioned about the ‘stigma of a Chinese company’. Even just that word – stigma – resonates with me. Everyone has a stereotype in their head of what China is like and how things function and, truthfully, that image is 10-20 years out of date. People still think of the ‘made in China’ label and use it to represent different prejudices – the quality is inferior, the service is bad, the employers are poorly treated – and trying to tell the world that ‘made in China’ doesn’t mean that anymore is a hard job. Changing people’s opinion is hard because they don’t like to feel that they were wrong. Rather than tackling this head-on, Mobike has opted to remove many of the overtly Chinese elements from their marketing. It’s an unfortunate but wise business move as the West doesn’t currently respect Chinese business as much as they should. I’m hoping this will change in the future as more and more brands emerge, showcasing top-quality and this may be one way to do that. Establishing Mobike as a familiar brand, only to later find out that the firm you have given your loyalty is Chinese could open up your perspective. I hope so.

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Business Seminar: Branding a Product In a New Market, Part 1

Last night was the first event hosted by CRCC during my time here. I was quite excited as it was a business seminar based on branding an international product in China and vice versa, which is essentially what my entire degree is about!

We began with a talk from Arthur Hagopian from Strategic Public Relations Group, which covered the basics of the marcom (marketing communications) mix and how it needs to be tweaked for the Chinese market. He mentioned a particular case he worked on with is client Merz, an American pharmaceutical company whose global brand revolves around the idea of ‘curiosity’. Bringing this to China was a delicate matter, as curiosity is something acceptable in moderation, but could lead to some serious culture clashes if handled poorly. The way around this was to tap into a ‘childlike wonder’, which would be acceptable in the majority of countries around the world.

Most of what Arthur said was common sense if you have a background in marketing, but one thing he said stood out as something I had not considered before. The Chinese government focus on five-year plans, which are goals for social and economic development in the medium-term. As such, companies that are aligned with the government goals are more likely to have an easier time entering China. I’ve done a little bit of investigation and China’s current plan for 2016-2020 is focusing on the following areas:

  1. Innovation (modernising practice)
  2. Balance (bridging the welfare gap between urban and rural)
  3. Green (developing environmental tech)
  4. Opening up (increased international cooperation)
  5. Sharing (sharing the wealth)

There are two points on these that I think international companies are likely to neglect; namely, the welfare gap between urban and rural, as well as international cooperation.

Now I know what you’re thinking – surely the ‘international cooperation’ box is ticked by the very nature of the relationship – but it is a bit more nuanced than that. The keyword is ‘cooperation’, meaning that you can’t just enter China and do your own thing. You have to work alongside the government, work alongside Chinese investors, franchisees, and joint ventures. No one knows China better than the Chinese and setting up independently is almost certainly a recipe for failure. ASOS learnt that the hard way last year when poor research into competition and consumer behaviour resulted in them pulling out of the market with a £4m loss.

So how does an international company get around this? Typically we’re told that FDI (foreign direct investment) and joint ventures are the way to go.  FDI is flawed in that firms try to maintain their independence, changing the company they buy to comply with the rules that work abroad – which is not so smart. Joint ventures allow you to access people with the cultural, legal and economic knowledge to adapt your strategy and make it work domestically; however, after a few years they will have learnt enough from you to terminate the relationship and develop their own method moving forward.

If you want to remain independent, at least use a Chinese PR firm. So many foreign firms are misinformed about China overall and tend to forget to segment the market on a national level. This is often seen from a socio-economic standpoint, where the cities are separated into tiers. Tier 1 consists of Beijing, Shenzhen, Guangzhou and Shanghai, areas with dense populations and front of the curve when it comes to trends. Naturally, these cities are targeted for market entry, with the expectation that once success has been obtained, the brand can trickle down into Tier 2, and then Tier 3. This is just how it’s done, or so it seems.

As someone who comes from a rural area myself, I understand that certain things may be slower to catch on, but growing up in the middle of nowhere, I often coveted those products and services that weren’t available in my area. They would have made life easier, but instead, we had to look on as those in the cities that already had better opportunities were given even more. Even though I understand the safety of following the tried-and-tested tier system, I am interested in finding out if there are firms focusing on the lower tiers first. Is it feasible? If so, why and how does it affect future growth? This would, of course, be in line with the government initiative for balance and could potentially pose an alternative way to enter the market, even if it does appear riskier than following the crowd.

Following the presentation from Arthur, he was joined on a panel by Georgia Yexley who is part of the team exporting the Chinese company Mobike to the UK, as well as Zilin Wei (I think that’s his name) localises Chinese games for the foreign market. Mobike raised some very interesting issues both in China and abroad, but given how long this post is getting, I’ll write these up in Part Two, available tomorrow.