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A Fast Boat to China:  Notes on Marketing

February 7, 2012

The CMO Survey reported that China will be the focus of the most dramatic increases in U.S. company sales revenues in international markets during the next 12 months. When asked to list the top three international markets for sales growth, approximately 20% named China.

Here is a list of some of the strategies that seem to be paying off.

• Localize products (somewhat). KFC, which gains almost a third of its revenues from China through its 2000 outlets across the country, is an excellent example of this strategy. In addition to its core recipes, KFC continuously innovates by introducing dishes that match the Chinese customer’s tastes. Two examples are the Beijing Chicken roll with sea food sauce (similar to the Beijing duck, a traditional Chinese dish) and Spicy Diced Chicken (resembling a popular Sichuan-style dish). As another example, Pizza Hut, also a division of Yum! Brands, positions itself as an upscale restaurant in China by offering an expansive salad bar and even serving snail in red wine sauce. On the other hand, too much localization can harm marketing strategies in China. Global brands bring status, quality, and exclusivity. When deciding whether and how much to localize, global brands should weigh the costs and benefits of this decision. For example, Coke introduced a type of tea to the Chinese market under the Sprite name. However, customers associate Sprite with fun and refreshing drinks and did not intend to buy a traditional drink from Coke.
• Translate with care. Brand name choices in China can be a little tricky for foreign firms, as they need to choose a word that delivers the core message, sounds phonetically similar to the original name, and builds an image the company wants to deliver. Microsoft had to rebrand their Bing search engine in China since the definition of the mandarin characters pronounced Bing implied “diseases”—probably not the best meaning for a computer product. The name was then revised to Bi ying, which means “response without failure.” Similarly, Carrefour chose the name Jia-le-fu, which means “happy and prosperous families” because the sound “fu” has an auspicious meaning in Chinese.
• Collaborate with established vendors. A partnership with an established vendor can also lead to marketing success in China. To capture the attention of consumers in Shanghai and Beijing metro stations, DuPont partnered with several brands in China to promote its Teflon fabric protector. For the promotional program, DuPont chose domestic active-outdoor brands Anta, Semiar, and Qiaodan, which already had a strong retail presence. This DuPont partnership created customer interest in DuPont, increased store traffic for the partners, and led to more purchases of apparel with Teflon brand hangtags.
• Jump in early when demand is new. McKinsey’s report “The Products Chinese Customers Want” argues that many companies can make substantial early gains by offering products that are novel or unfamiliar to Chinese customers. As they note, “Fabric conditioners and pure fruit juices were rare in China a few years ago, but about half of all urban households regularly buy both now. Similarly, vitamins and mineral supplements, almost non-existent before America’s Amway launched Nutrilite in the late 1990s, has grown into a $6.5-billion business.”

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