Multinationals still have their sights set on China
How can multinational companies (MNCs) expand their businesses in Greater China during a time of accelerated global change?
A June 2020 World Economic Outlook update from the International Monetary Fund (IMF) reports that China’s economy will actually achieve modest growth this year while most of the world’s other economies dive into negative territory. Additionally, data from the most recent U.S. Census shows trade between China and the United States remains strong, with nearly US$50 billion in trade every month this year.
Fueling the optimism, the Chinese government is encouraging investment by creating 21 free-trade zones to help enterprises grow. It’s a strong signal that large-scale foreign investment is welcome and that business in China is returning to normal. So, while the current situation remains challenging, China, with its robust economy and burgeoning domestic market, is re-emerging as a smart place to invest.
How can MNCs take that important first step?
Understanding the local market
To invest successfully in China, MNCs need to develop content and messaging that suits the unique culture and attitudes of Chinese customers.
The Chinese market is increasingly reliant on a few unique technology ecosystems known by the acronym BAT, which stands for Baidu, Alibaba, and Tencent – the tech giant responsible for WeChat.
Understanding the nuances of these platforms and how they relate to one another is important for raising brand awareness, successfully marketing products and establishing trusted connections with your customers.
Apps such as WeChat have become an essential source of information on everything from news, sports and entertainment, to dating and shopping. Its presence is enormous. In 2018, WeChat became the world’s largest standalone mobile app with an incredible 1 billion monthly users.
The sheer scale of these platforms is what sets China’s social media landscape apart from the West. Brands can target an audience large enough to constitute an entire national user base elsewhere.
The multitude of in-app services available also creates new opportunities for Western brands to explore.
Mini-programs, for instance, are sub-applications which run inside the larger WeChat ecosystem and don’t need to be downloaded to be used. Brands are using them to create innovative and dynamic customer experiences through its “easy to access and leave” feature.
Interactive programs (Mini-games) on WeChat, is another approach to reach your customers. Luxury clothing company Fendi recently launched a WeChat mini-game called Fendi Ways to Rome, where users can choose an avatar to journey through Rome, collect items (products) and learn about Fendi’s history.
As the first point of contact with the customer, a compelling website is also crucial for any company. This means providing a great customer experience that fully immerses the visitor in the company’s products and services. The constraints of COVID-19 have served as an important reminder that customers expect richer digital features in their interactions with brands.
However, getting a WeChat user to visit your website still requires local expertise. The Great Firewall of China is a hurdle MNCs often encounter when trying to get a foothold in the market. To market successfully, MNCs must play by local rules and understand the censorship, surveillance and regulatory requirements involved.
Partnerships key for thriving in China
Customer experience (CX) will be the single-most important factor for businesses that want to gain market share in the 2020s, according to the 2020 Digital Trends in Asia Pacific (APAC) report, by Adobe and eConsultancy.
For MNCs entering the Chinese market, partnering with established vendors and leveraging existing networks is an effective way to integrate with local ecosystems, grow market share and deliver exceptional experiences for your customers.
U.S. personal care products company Nu Skin relies on a distribution network to sell its products to customers across China. The company has set up an online media centre powered by Adobe to allow distributors to access, add and share content on social media in real-time.
Similarly, global IT giant HP has benefited from Magento, Adobe’s e-commerce platform, which has facilitated its rapid expansion throughout Asia Pacific, including territories such as Mainland China and Hong Kong.
With a vast range of products and services on offer, HP Asia-Pacific needed an agile e-commerce solution to get its goods to market quickly. In Hong Kong, they use Magento to integrate retail point-of-sale systems and allow customers to visit the website to book in-store demos – two key enablers of HPs ‘online-to-offline’ omnichannel strategy.
These are just two examples of multinationals taking full advantage of China’s greater consumer spending power due to higher standards of living, rapid urbanisation and development of infrastructure, all of which are essential pieces of China’s growth engine.
The rise of e-commerce will continue to present opportunities for these companies, though they will have to contend with increasingly sophisticated consumers demanding the best customer experiences, higher levels of compliance and regulation and increasing competition from local manufacturers and service providers.
Regardless of what happens over the next 12 months, China will be open for business. Chinese consumers will keep spending money in ever greater amounts, and multinational organisations will continue seizing opportunities within the region.