China is a necessary market to acknowledge
I recently ventured to the People’s Republic of China. It was an educational opportunity allowing me to work with Chinese students and the Chinese business market. During my short stay in the beautiful city of Shanghai, I learned and experienced why China is a necessary market to acknowledge for the visionaries that wants to take their business beyond their own country borders.
Coming to China with trivial knowledge of the country, the vast cultural differences in cooking, architecture and religion were not astonishing experiences. They were instead differences that took time getting used to, some more than others (especially when I was served dishes with bones in. But the Chinese love gnawing meat from the bones). What shocked me on the other hand was learning how much the Chinese consumers, market and politics had developed, ever since their borders were opened up to the rest of the world. Their development was especially true within the recent decade. I summarized my learnings and experiences into three key points that shaped the notion that China is a necessary market to acknowledge. These three key points are; 1. The rise to the upper-middle class and increased consumption, 2. Almost half of the entire population are frequent Internet mobile users and 3. Doing business is about GuanXi (relationships).
The rise to the upper-middle class and increased consumption
China has generally been known as a collective working class population with lower income, and that is still true in major parts of the country. However, the past decades have shown the emergence of an increased consumer economy, as the Chinese consumers are starting to become more rich and are starting to purchase more. The purchasing behaviour have traditionally been about saving money and still is among the elders. However, with the new generation of young Chinese citizens, a trend is seen of more consumption of various goods together with the increased consumption economy. Money starts to mean less when it comes to quality and value-based goods. Consumption is especially centred around foreign brands, as China is arguably one of the most brand-conscious nations worldwide. The arguments lie in the cultural heritage and that the Chinese citizens wants to free themselves from the working class.
Almost half of the entire population are frequent Internet mobile users
It’s not a joke when I write that mobile consumption covers such an enormous part of the national population. Very close to 50% of the population are Internet users, and the vast majority of these are mobile natives. Ever since the smartphone’s “normalization”, the Chinese consumers have adapted swiftly to Internet usage through mobile devices, and they perform various actions that enables their media consumption. Having walked around crowds in the centre of Shanghai, I was astonished to see how many are deeply focused in their mobile devices, and how much the age range differed from young to elderly. This was whether they’re walking, waiting in queues or riding the metro, and activities typically included entertainment media. They were much more emerged than what I usually experience in the West.
The most important activities on mobile consumption to take notice of is social media and e-commerce. Social media is different in China from the West. Major social media channels such as Facebook, Twitter and YouTube are blocked (though accessible through a steady VPN), but in turn China have their own social media. The most notable are WeChat and Weibo which pose incredible opportunities for businesses and consumers to reach out to each other, as well as consumers to consumers.
E-commerce has never been as popular as it is in China right now, and it’s roughly estimated to make up 15% of the private consumption. It’s been estimated to surpass 20% over the next four years. It is therefore critical to acknowledge, as the Chinese consumers shop online far more than we do in the West. The e-commerce portals of Taobao.com (consumer to consumer and equivalent to eBay) and Tmall.com (business to consumer) are the most popular digital spaces to purchase from, and they offer rich opportunities to synchronize one’s business into in order to reach out the Chinese consumers.
The popularity of e-commerce is partly due to the great success of Alipay, that allows for secure payment through services that supports it. The Chinese consumers are not very fond of using their credit cards, and Alipay works as an alternative where they can use their mobile device and pay with.
What is important about all these aspects is that they are, almost frighteningly, inter-connected mainly through the usage of QR codes, that allows for consumers to connect with companies through different sites and medias. In my opinion, QR codes have never been overly successful for consumers in the West, but they are much more effective in China as they are integrated in so many different medias.
Doing business is about GuanXi (relationships)
I soon learned that going to China with trivial knowledge would never have lead me anywhere if I had strict business to do. Where business is a more formal thing in the West, the Chinese businessmen perform business through GuanXi, meaning that there has to be a relationship before any business can commence. If it’s not existing, there simply won’t be any business. You are expected to know the localization of the business, know the etiquettes and manners of how to do business, and you have to be someone. It’s your identity and others words that speaks for you; not yourself. Nurturing ones GuanXi with other businessmen is therefore just as important as doing the actual business. It’s a long process but a worthwhile once succeeded, as the risk of losing the business partners to others are less than in the West where other qualities establish the business.
Activities includes networking to get the right contacts, visiting China several times while inviting to one’s own country several times and spending the spare time in each other’s company such as dinner.
The three key points mentioned above constitute the most important learnings and experiences I had during my stay in Shanghai learning about the Chinese culture and market, and experiencing it first-hand. They explain why China is a necessary market to acknowledge, and why it’s important to consider them should you want to consider going global with your business. They’re all key points that should be researched in more depth, as this story scratches the tip of the iceberg of what there is to learn within each point
Regardless, they have been incredible experiences and knowledge coupled with a beautiful culture. I’m definitely returning and I encourage you do the same.
You are more than welcome to comment additions to this story as I’m more than eager to learn more on the subject.