ABSTRACT

Marketing is not a subject that commands as much attention as some other aspects of doing business in China. Few recent books on China discuss marketing in detail, and many mention it only in passing, preferring to focus on issues such as organisation, managing people, regulation, ethics and the like. The reasons for this are quite understandable, as the cultural issues involved in organisation behaviour and human resources management are demonstrably huge, while for marketing they are arguably less so. Some even argue that there is no real difference between marketing in the East and in the West. When we discussed marketing in China with professors of marketing in 2001, they failed to identify any area of marketing where China differs from the West. With greater contact, consultants increasingly recognise that marketing in China is of course different, but some similarities and differences are in the eye of the beholder. The weakness of Western firms in marketing to China was reviewed

by Michael Backman and Charlotte Butler, who argued that in the future – perhaps the very near future – it will not be enough for Western companies to leave marketing to the locals.1 Backman and Butler do not go far enough. The Chinese government historically excluded Western firms from ‘distribution’ and thus encouraged this hands-off approach. But business in China is no different from anywhere else to the extent that the first priority is to identify and then empathise with the end users (consumers) of the products. That is where cash flows from. Most Western firms in China have inadequate knowledge of their consumers, including buying patterns and decision-making, competing local products and prices, and how the competition operates. That said, many Chinese companies are bad at marketing too.

Another observer, Martin Roll,2 commented on the number of Chinese

companies and managers who think that branding is no more than advertising and a logo. Branding, and marketing generally, are seen as cost centres, not value-adding exercises. Sophisticated Chinese brands, like Alibaba (e-commerce), Suning (home appliances), Huawei (smartphones), Haier (home appliances) and Lenovo (Legend Holdings – personal computers) do exist, but they are not representative. The vast majority of the biggest corporations are still state-owned and, in 2014, only three of the top ten privately owned corporations are consumer brands.3 Chinese managers, like their Western counterparts in China, often have little idea of who their ultimate consumers are, or what they want, and may have done little market research. Thus we have the paradox of a country where marketing is extremely important, and yet local managers are not very good at it. In fairness, as we will discuss in the following chapter, doing market

research in China is extremely difficult. Getting accurate statistical information of any kind is very hard in China, in a society where statistics are regarded with fascination – witness the streams of economic data pumped out by various ministries and state councils – but where, to paraphrase Peter Fleming,4 in any given situation there will be at least two competing accounts and the only verifiable fact can be proved conclusively to be wrong. We are not discriminating against the Chinese by saying this, by the way; Chinese friends are equally rude about Chinese statistics, and one economist friend cheerfully admits in private that his own bureau’s statistics could be out by as much as 10-15 per cent. That’s not so much a margin of error as an informational black hole! Turning marketing wholly over to local managers is unwise. Even

more than marketers in the West (no slouches in this respect), one should expect Chinese marketing specialists to be making it up as they go along. In other words, lacking accurate data, marketers in China are forced to do what they have always done: fall back on intuition and on trial and error. What follows in this and the next chapter is a series of observations, our own and those of others, on what is involved in marketing in China, and on where the differences and similarities lie. Our conclusion is that marketing in China does have quite a number of similarities with the West, and that the globalisation/localisation decision in particular is not so different from that made in other markets. But there are also some key market-specific issues. The attitude of Chinese consumers to brands is one. The problems of distribution are another, especially when moving outside the relatively well-developed coastal parts of the country. This chapter is structured as follows: