Is culture the recipe for business success in China?

IN China, customer preference for foreign products is an interesting phenomenon. The experience of foreign brands appears somewhat different from what is often addressed in research studies, due largely to the complexity of the market, cultural characteristics of contemporary Chinese society and consumer behavior — which in itself is closely related to a combined experience of generations of Chinese.

Harnessing awareness of Chinese culture may well propel foreign brands to success beyond their wildest expectations.

One company who has successfully traversed cultural labyrinths across the globe is Starbucks. Their presence and success in China has positioned the company as less of a foreign brand transplanted to China and more a seed from a Western tree that has been carefully planted and patiently nurtured within.

How did the organization do this? It meticulously organized its efforts in China around three key pillars of Chinese society: family, community and status.

From the beginning of Chinese civilization, family has been the key source of security, education and spirit for the Chinese people. The society’s Confucian values entwine children and parents in a bond of shared responsibility that stretches throughout all stages of life. Starbucks fully understood this and made engaging parents a cornerstone of its people operations.

Chinese highly value their community, traditionally labeled as their “inside circles.” Be it their homes, schools or companies, they turn to these circles for loyalty, information and approval of their choices. With this in mind, Starbucks designed its retail spaces to facilitate these “circles” coming together. Unlike in the US, where Starbucks chairs are often the quiet haunts of solitary laptop users, China’s Starbucks are laid out to welcome crowds, noise and lounging.

Chinese place a premium on gaining and upholding reputation and status, especially for their family and community. Consequently, they want to be associated with brands and products that portray prosperity, success and upward mobility.

Starbucks positioned itself as the premium coffee brand in China. It has to develop relationships with families and communities, which inevitably make it more attractive to and successful in local partnerships.

Apple, the leading international brand, is also a great success story in China.

There is general consensus across the globe that conducting business in China is really difficult. But Apple shocked markets and proved that with time and effort, it is possible to crack the Chinese market, despite the odds. “All the stars aligned for Apple,” said Craig Elimeliah, director of creative technology at marketing agency Rapp. But getting those stars to align took a lot of work.

As the number of rich people in China balloons, so will the number of consumers who are ready to buy luxury goods and status symbols. “Apple has a premium product in a country that is doing well economically,” Elimeliah said. “It is the premium Western product that people are going to pay for.”

Case in point: When the company tried to market the lower-priced 5C, it was a bust. If the masses want premium, Elimeliah said, then give it to them.

Moreover, Apple did something else that was uniquely appealing to the Chinese consumer — it introduced the iPhone 6 Plus in a country where bigger is better. The Chinese also love big, beautiful flagship stores, where they can touch the products and try them out.

Coca-Cola is celebrating 39 years in China in 2018. One of the world’s fastest-growing markets today is the third-largest market in the Coca-Cola system.

A huge part of Coca-Cola’s success in China comes down to its understanding of the important cultural concepts of face and relationship.

Coca-Cola’s continued commitment to investing in China, as well as pouring funding into local community projects and environmental causes, has helped them to build trust and show their dedication to Chinese consumers, their culture, and their country.

Since setting up the first McDonald’s in China in Shenzhen, south China's Guangdong Province, in 1990, the US restaurant chain has been expanding steadily and successfully. Equally, KFC has also done pretty well since its first entry into China.

What kind of magic has brought them such success in China? How do they sustain growth rates? Their standardized business operation apart, the key is excellent inter-cultural management.

KFC and McDonald’s have absorbed the Chinese cultural elements of showing respect, recognition, understanding, assimilation and amalgamation, while maintaining the substance of the Western culture. This inter-cultural management mode, with American business culture at the core, supplemented by Chinese traditional culture, provides reference for international enterprises which need to adjust, enrich and reconstruct their corporate culture to enhance local market flexibility.

Foreign investors desiring to enter the China marketplace have need to be aware of having a solid strategy in place - of building one’s brand image. It is important to understand the symbolic values of prestige as perceived by the Chinese consumer.

Placing the consumer and their culture at the heart of one’s marketing campaigns and adapting their product and business methods to suit them will be of great value for those inspiring entrepreneurs and others who are ready to venture into the marketplace of China.