According to KPMG’s China Outlook 2016 report, by 2018 Chinese digital consumers will be spending nearly one and a half trillion Australian dollars online, a number that will almost double from the AU$769.2 billion these consumers spent online in 2015. It is clear from these growth figures that there is a huge untapped market for Australian companies to sell goods and services to Chinese consumers through online channels. However, this market can be notoriously difficult to do business in. This market’s unique cultural difference and online ecosystems require specific knowledge and infrastructure in order for Australian businesses to successfully access them. One of the primary reasons for this is that for years internet access in China has been regulated by what we describe as the Great Firewall. Over years of digital seclusion, this confined environment has created a parallel online ecosystem which is completely unfamiliar to the West, aside from some of the big names – such as Alibaba – which are having an impact on our online habits. For businesses to capitalise on this opportunity through Chinese online channels, they must understand what drives Chinese consumers and the unique online ecosystem they occupy, and target their products and services accordingly. They must also navigate the complexities of the Chinese online market, where search engines, social media formats and mobile phone applications operate differently from those in the West. With China’s online population set to top 700 million internet users in the next few months, this is a once-in-a-century opportunity that Australian businesses cannot ignore. To tap into online Chinese demand, businesses need to do three things: Understand, Invest and Adapt.
- Understand the unique features of the Chinese online ecosystem to get the most out of it. Chinese social networks, e-commerce, search engines, video sites and forms of payment are different from those in the West. They must be adapted to; simply replicating what works in Western markets when marketing in China is a recipe for failure.
- Take advantage of the huge mobile phone penetration and its advanced features. In China, mobile phones are the main form of online access and a mobile targeted campaign can be a very cost-effective way of reaching your target customers.
- Decrypt the new generation of Chinese consumers. The Chinese Millennial generation are very different from their parents – more independent, adventurous and seeking quality and trustworthiness in brands and experiences.
- Invest in a locally-hosted website, optimised for Chinese search engines and accessible from China. The Chinese firewall means potential customers will have trouble accessing or using your site if it is not located in China.
- Invest in building trust. Chinese consumers value trust above all else so online reputation, good customer service and positive online reviews are essential.
- Invest in local expertise and infrastructure. The stark differences mean local people who understand the culture, online technology and regulations are essential to success. They will need an appropriate level of autonomy to adapt your product or service to the local market.
- Partner with someone you can rely on to adapt your marketing strategy for China. A one-size-fits-all global approach doesn’t work for China and Western entrants will need to have guidance from a trusted resource on the ground.
- Localise your revenue/profit model rather than adopt a universal global approach. What works in Western markets most likely won’t work in China. For example, Chinese consumers are not accustomed to subscription-based models but are very tolerant of online advertising.
- Respect and comply with local regulations and information monitoring. The control of information in China is very different from Australia and if you don’t comply with local regulations and requirements you will be shut down.
- Have a very targeted approach. China is vast and so are its differences – in dialects, affluence levels, behavior and rural versus city lifestyles. Work out where your product fits and go after that market.
This is an edited excerpt from Stoking the Dragon: Unlocking China’s new generation of digital consumers a whitepaper produced by Sinorbis, an international startup headquartered in Sydney that offers products and services for businesses looking to tap into the Chinese online market.
Nicolas Chu is the CEO and founder of Sinorbis and a global digital thought-leader with extensive experience in managing online businesses, from start-ups to large corporates in Europe, the US and Asia Pacific including Orbitz Worldwide and Expedia. He is an active investor (seed and early stage deals) and also serves as a board director of several online companies and organisations.