Starting a Business in China: How to Avoid Failure

China is an attractive market for many startup ventures. With more than 1 billion Chinese people and an annual growth rate of over 7%, it is easy to see why. Many startups have set China as their go-to destination when they are ready to expand abroad. However, it is not all roses and rainbows in the lands far East. The Chinese market is one of the most competitive markets on Earth. It is so much easier for local players to carve a niche for themselves than it is for a foreign company that is new to the Chinese market. This is the main reason why 99% of foreign startups fail to make it in China. However, fear not. This article will elaborate on everything you need to know when starting a business in China and get acquainted with some common problems faced by startup businesses and how to avoid failure. 

Understand the Chinese Market

The Chinese market is different from any other market you are used to. It is continuously developing, which means that the tastes, likes, and dislikes of the people who make it are constantly changing. There is also a rapidly growing Chinese middle class with a massive purchase power, which means that the new needs, expectations and general market behaviors goes hand in hand with their aspirations.

The fact that things are changing so fast in China is one of the main reasons why foreign companies fail. They simply cannot keep up or adapt to it fast enough. If you want to move your business to China, you need to consider hiring a workforce to help move your brand forward. If you are a company that is moving to China and need employees, you can contact the Professional Employer Organization and seek help. This is the fastest and most convenient way to build your workforce.

Understand the Consumer

Companies that succeed in China also bear in mind the average Chinese consumer. Chinese people are fiercely loyal to their brands. Plus, branded products have that extra prestige and authenticity value. A Chinese consumer would gladly buy a more expensive product if they believe it is of a higher quality.

Furthermore, what are their cultural, social and consumer differences? Many startups make the mistake of implanting western values and marketing strategies to their products in China, or more commonly, profiling the Chinese consumer as one entity, when in fact there are several different zones and regions with different behaviors in the country.

Chinese society is different from the west because it is more community oriented as opposed to being individually oriented. The people themselves comply with unwritten rules and behavioral standards that place the needs of the community above individual needs. This is why the opinion of peers is so important in China. Group mind and various social statures are important elements in the society. Word of mouth and social media are therefore very powerful marketing strategies in China.

Finally, there are a lot of counterfeit products in the Chinese market. As such, the consumers are very cautious and suspicious of everything. Therefore, they need a lot more convincing before they make a purchase. Which is why availing a product’s information can help speed up the decision-making process of the buyer.

Translation Mistakes

Standard Chinese Mandarin is not easy. However, if you want to work in China, you have to learn the language or team up with a native speaker. Online translators such as Google Translate will give you translations packed full of embarrassing, hard to understand or even offensive errors. Furthermore, since the Mandarin language structure is completely different from any other, direct translation is also a no-no.

Branding your product with the wrong translation can have a huge negative impact on your company. More companies that you can count have failed because of not setting up a good Chinese localization strategy. Chinese consumers can be very unforgiving, so when anything is misinterpreted, a bad buzz ensues and it’s all downhill from there.

Therefore, the importance of learning Chinese or hiring a professional translator if you want to do business in China cannot be overstated.

Distributors

You need great quality distributors if you want to make it in China. Finding a quality distributor is exceedingly difficult, and has even made China notoriously famous for it. If you are a new brand with a low reputation and low brand awareness, you better strap in because it is going to be a long, difficult ride. Chinese distributors can be incredibly selective because the Chinese market is horribly unforgiving. Your distributors will want to see a product with a tangible impact before they can even consider touching it.

Plus, when negotiating with distributors, the power is almost entirely in their hands. This is even truer if you have no brand history to show, or if you are a completely new entrant to the market. The only way you can counteroffer is by branding yourself and build a reputation online in China. Most distributors check out your ranking and reputation on Baidu, so you better focus on this platform and improve your rank.

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