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Made for china, Gianni Girolami, October 2014

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Made for China. Launch Your Consumer Brand in China in 3 Steps.

The Chinese consumer market surpassed Japan as the second largest consumer market after the USA in 2013. Chinese consumers look for quality and innovation and recognize these qualities in European brands. Large global mass consumer brands as well as smaller niche brands can profit from the growing purchasing power of Chinese consumers. Entrepreneurs approaching the Chinese consumer market start by making a market study first. Questions here are how much demand is there for the product, what about price levels, competition, how should I adapt my product to local market needs etc.

In my presentation I analyse different income levels, geographical income spread, growth in different consumer categories, 6 different consumer types based on income and social orientation, and important market trends. Next we discuss the advantages and disadvantages of physical presence and online sales channels, as well as some practical issues related to business registration in China. Then, I go in to detail on how to sell and promote your products through e-commerce channels like Alibaba's Tmall.com and m-commerce channels like Tencent's Wechat.

This presentation was given to an audience of students in Sinology and Applied Economics at the University of Ghent in Autumn 2014.

Published in: Marketing
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Made for china, Gianni Girolami, October 2014

  1. 1. Made LAUNCH YOUR CONSUMER BRAND IN CHINA for CHINAin3STEPS 为中国而造 1
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  3. 3. DOMESTIC CONSUMPTION •Research from the Economist shows China has surpassedJapan in 2013 as second largest consumer market after the USA. •Analists forcast a rise of private consumption levels in China from the current 35% of GDP to 45-50% of GDP in 2020.3
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  6. 6. APPROACHING THE CHINESE CONSUMER MARKET IN 3 STEPS Market Study & Product Localization Brick & Mortar vsOnlineProduct Promotion 6
  7. 7. CHINA‟S GOVERNMENT WANTS TO INCREASEDOMESTIC CONSUMPTION •Growing urbanization Increasing wages Better shopping environment (facilities) •Social security improves •RMB appreciates 7
  8. 8. 290 BILLION RMB2012 SPENDING OF GENERATION „90 670 MILLION MIDDLE CLASS 2022 1.3 BILLION CONSUMERS 30% YEARLY GROWTHCINEMA VISITS 1/3 LUXURY MARKET 7 TIMESAROUND THE GLOBE10% GROWTH FMCG MARKET 8 3.3 TRILLION RMB ONLINE SPENDING 2015
  9. 9. MARKET STUDY & PRODUCT LOCALIZATION •Income levels •Geographic income spread •Consumption categories •Consumer types •Market Trends 9
  10. 10. 10
  11. 11. 11
  12. 12. INCOME LEVELS SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); 12
  13. 13. INCOME LEVELS SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); CanbackDangelfor United States, Japan, Germany and Brazil data 13
  14. 14. GEOGRAPHICAL INCOME SPREAD SOURCE: Nielsen , “A New Era In Consumption 2014” 14
  15. 15. SHARE OF MIDDLE CLASSBY TYPE OF CITY, % SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); 15
  16. 16. CONSUMPTION CATEGORIES SOURCE: McKinsey Insights China –Macroeconomic model update (March 2011); 16
  17. 17. CONSUMER TYPES SOURCE: Jin LanDu, “From small mass to main stream”17
  18. 18. EARLY ADOPTERS SOURCE: Seth Godin, “Purple Cow” 18
  19. 19. INDIVIDUALISM 19 MARKET TRENDS
  20. 20. EMOTION = MONEY 20
  21. 21. THE HEALTHY LIFE 21
  22. 22. CRAVE FOR REST & HARMONY22
  23. 23. WOMEN ECONOMY 23
  24. 24. BRICK & MORTAR VS ONLINEB&M Shopping experienceQuality imageLimited geographical exposure High overhead cost Online Market reach Consumer convenience Marketing Logistic challengesLow overhead cost 24
  25. 25. ONLINE SALES •Own website Establish firm corporate/brand identity Reference for official product information, prices etc. Business registration ICP licence of Ministry of Industry and Information Technology (工业和信息化部) •E-commerce & M-commerce platforms No mainland China business registration needed for tmall.hk Business registration needed for tmall.com Retour service in China Customer service in Chinese RMB payments = Chinese bank account 25
  26. 26. E-COMMERCE26
  27. 27. FLAGSHIP STORE Owner of the store must be formal or exclusive representative of the brand SPECIALTY STORE Dealers with distribution rights without geographic restrictions in the Greater China region FRANCHISESTORE Franchisees with rights to distribute licensed product and valid license from Franchisor Set up Store Promote within Tmall Promote through other channels 27
  28. 28. TMALL BRAND PROMOTION Homepage ads •Center ads +/-80,000yuan/day •Sidebar ads +/-45,000yuan/day CPC (“Taobaotrain”) •Recommends products to users who have added these to their wish list, and works on bid-basis •Bids range from 0.1 to 100 yuan Free channels •Post your advertisement on Taobaoforum •E-mail your customers the latest catalog 28
  29. 29. CHATGAMES SCAN SHAKE TENPAY BUSINESS ACCOUNTS 29 CRM
  30. 30. MOST CONNECTED CONSUMER SOURCE: Geometry Global’s 2014 Connect Shopper 30
  31. 31. WECHAT BUSINESS ACCOUNTS Subscription Account •For individuals and business •Free of charge Service Account •For businesses •Verification = Set-up fee of CNY 300 WechatStore •For businesses •Set-up fee ofCNY 20,000 (TencentPay) •Part of WechatService Account 31
  32. 32. CONTACT GIANNI GIROLAMI MARKETING & BUSINESS DEVELOPMENT +32471 46 04 55 in/chinaconsumermarket gianni.girolami@chess-nv.com 32

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