Strat­egy is key to suc­cess in China: mar­ket­ing chiefs

China Daily (Canada) - - FRONT PAGE - By ZHANG YUWEI in New York yuweizhang@chi­nadai­lyusa.com

China’s emerg­ing mid­dle class — grow­ing and strong — cre­ates nu­mer­ous op­por­tu­ni­ties for in­ter­na­tional businesses in all sec­tors. These op­por­tu­ni­ties, how­ever, also bring com­pe­ti­tion, and mar­ket­ing strate­gies are key for these businesses to grow and sus­tain in China, ac­cord­ing to a panel of chief mar­ket­ing of­fi­cers (CMO) from dif­fer­ent global firms.

“There are so many op­por­tu­ni­ties, but the ques­tion re­ally is: ‘Where to go next’?” said Miguel Pa­tri­cio, CMO of An­hey­serBusch Inbev, the world’s largest brewer, at the Big Re­think 2014 US con­fer­ence on Thurs­day.

“It’s not about whether we should go to big places — where oth­ers go — it’s about iden­ti­fy­ing where you have more chances to suc­ceed,” Pa­tri­cio said.

An­heyser- Busch Inbev, which has about 25 per­cent of the global mar­ket, de­fines China and Brazil as the “right mar­kets” where they are strongly po­si­tioned. The Bel­gian-Brazil­ian multi­na­tional bev­er­age firm be­lieves those two emerg­ing mar­kets, to­gether with the US, help it keep a “bal­anced foot­print” in long-term growth of prof­itabil­ity in both de­vel­oped and emerg­ing mar­kets.

In China, one of the next big steps for ABIn­Bev is in­vest­ment in build­ing brew­eries.

Among the six new ones the com­pany will build in China, “one of them is on the coast, the other five in­clude Yu­nan and He­nan prov­inces”.

While the gi­ant brewer is bet­ting big on China’s mar­ket of 1.3 bil­lion people — with some 300 mil­lion mid­dle class — the com­pany re­al­izes the chal­lenges. “The chal­lenge is re­ally the fierce com­pe­ti­tion and the still frag­mented mar­ket,” Pa­tri­cio said.

More than 75 per­cent of China’s ur­ban con­sumers will earn $9,000 to $34,000 a year by 2022, ac­cord­ing to con­sult­ing firm McKin­sey & Com­pany.

But for many multi­na­tional com­pa­nies, which are in China, the long-term strat­egy is brand build­ing, es­pe­cially for con­sumer goods.

China has be­come a top mar­ket for many for­eign brands. It’s now the big­gest mar­ket for Gen­eral Mo­tors, which sells more ve­hi­cles here than in the US, its home base. About 60 per­cent of cur­rent sales for Chevro­let — one of GM’s global mar­quees — are in emerg­ing mar­kets.

“For sure, China is an im­por­tant part of our strat­egy, and it’s still a mat­ter of build­ing aware­ness,” said Tim Mahoney, the head of Chevro­let’s and GM’s mar­ket­ing op­er­a­tions.

Aware­ness-build­ing cam­paigns help Chevro­let — the 103-year-old brand — to reach more con­sumers in China, which be­came the brand’s No 2 mar­ket glob­ally last year, said Mahoney.

“So it means some­thing’s work­ing over there,” he said.

The brand’s $560 mil­lion spon­sor­ship of the Manch­ester United soc­cer team — where the brand’s logo is em­bla­zoned on sports jer­seys — is ex­pected to be well-re­ceived in China, which, to­gether with other emerg­ing mar­kets, has nearly one-third of more than 300 mil­lion fans in the Asia-Pa­cific re­gion.

“It’s a chance for us to get people that you couldn’t buy nec­es­sar­ily on TV,” Mahoney said.

Amway, an Amer­i­can com­pany that man­u­fac­tures, mar­kets and dis­trib­utes con­sumer prod­ucts, saw its global sales grow by $500 mil­lion last year to $11.8 bil­lion, with about 40 per­cent com­ing out of China — the com­pany’s the No 1 mar­ket.

Can­dace Matthews, Amways’ CMO, said their strat­egy is to “work to­gether with the govern­ment”.

On the main lead­er­ship team, Matthews said, it’s crit­i­cal that they have some se­nior lead­ers who know the govern­ment very well.

“Sev­eral of our top lead­ers have worked in the Chi­nese govern­ment be­fore and were very in­stru­men­tal in let­ting us un­der­stand how strong it was to build that re­la­tion­ship (with the govern­ment),” Matthews said. “It’s that part­ner­ship that re­ally worked very well for us.”

Among the ob­ser­va­tions from these top global CMOs is that Chi­nese con­sumers are will­ing to try new things, which cre­ates op­por­tu­ni­ties for their businesses.

“It’s hard to make a gen­er­al­iza­tion about Chi­nese con­sumers,” Mahoney said. “But there seems to be a greater ten­dency to ex­per­i­ment and try new brands where in the past it was more tra­di­tional, con­ser­va­tive-ori­ented.”

Chris Hos­mer, man­ag­ing di­rec­tor (Asia Pa­cific) of Con­tin­uum, a leading ser­vice de­sign firm, said sus­tain­abil­ity is vi­tal for these global firms to think long term.

“It’s not enough to be the first, the fastest or the big­gest in the Chi­nese mar­ket,” said Hos­mer.

“That’s not sus­tain­able any more, you have to be rel­e­vant in a way that con­sumers will care a year or two years from now,” he added.

ZHANG YUWEI / CHINA DAILY

Tim Mahoney (left), chief mar­ket­ing of­fi­cer of global Chevro­let and global GM mar­ket­ing op­er­a­tions leader at Gen­eral Mo­tors Com­pany, and Can­dace Matthews, CMO of Amway, speak on a panel about mar­ket­ing strate­gies for China at the BigRe­think 2014 US con­fer­ence on Thurs­day in New York.

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