How to Launch Your Startup in China (Part 2)

As you can see in Part 1 of this short series on how to launch your startup in China, the process can be complicated. It can also be a success, as long as you play your cards right. In “How to launch your startup in China: Part 2” we look at other important things to consider. How should you adapt your product or service to the Chinese market? How do you research your target market in China? How should you conduct marketing and advertising for your startup in China?

Adapt your service to the Chinese market

If you want to adapt your product or service to the Chinese market, you need to understand the local culture and market trends. If you’re not in China yourself, and you don’t have connections in China who you are in regular communication with, this may be a very difficult, if not impossible task. At least visiting China is advisable before you consider launching a startup there. The Chinese may have many common traits as a nation, but there are also different characteristics that define certain regions. Just in case you hadn’t appreciated how big China is, it’s almost the same size as the whole continent of Europe! You should also think of those regions as having some distinct differences, in the same way you do the nations of Europe. This will be a great benefit to your learning curve and process.

Understand Localisation In China

You need to research the needs and preferences of Chinese consumers, understand the local regulations and laws, and customise the product or service to meet the needs of Chinese customers. Additionally, you may need to provide support in Chinese, both oral and written and provide local payment options and delivery services. Finally, you’ll need to think about how to localize the product or service, making sure that the language, visuals, and features are tailored to the Chinese market – the importance of these factors can’t be emphasized enough.

Why Did Amazon Fail in China?

To understand why these factors are important, it may be useful to look at a case study of a company that entered the Chinese market with high aspirations but ultimately failed. One such example is Amazon. Undoubtedly one of the biggest startup success stories of all time, but they didn’t succeed in China. In 2019, Amazon pulled out of China after 15 years of operation, occupying only 0.6% of the market at the time. But what went wrong?

Amazon’s failure to succeed in China all came down to a failure to adapt and really understand the needs of Chinese consumers – in short, they made too many assumptions that things in China would be the same.

One clear example was their system of charging for delivery. This was a completely alien concept in China – competitors such as JD.com and Alibaba always offered free delivery as standard. Amazon simply did a copy and paste of their existing and successful model from back home without much research into how things were working in China at the time.

Understandably, the no-free delivery policy didn’t go down well with many Chinese consumers. Why would they buy from the only provider in the market charging for delivery? Looking back, it now seems strange to imagine that such an oversight would be possible from the likes of Amazon, but it happened.

Another issue was Amazon’s minimalist website design. A quick look on Taboao or JD.com gives you an indication of what the preferences of Chinese consumers really are – jam-packed with lots of colours and ads. So it was ultimately a failure to adapt and properly research their target market in China that cost Amazon dear. So where do you start on doing this for your project?

Know your Chinese customer through market research

Researching your target market in China can be a daunting task because as we have already explored, the Chinese market is vast and complex. However, there are several methods that can help you gain insights into your target market. The first step is to clearly identify your target audience in China – know the persona of your target customer. But how can you go about doing that?

One way is to use market research techniques such as surveys, interviews, focus groups, and analysis of existing data to gain a better understanding of their needs, preferences, and behaviours. Market research is critical because it can give you an idea if your company’s product or service has the potential to succeed. You should study similar startups and see how they succeeded or failed, and see if there is a sufficient gap in the market for your startup to operate.

Location Segmentation In China

Depending on the product or service you want to launch with your startup, you may also need to segment this market research by geographical terms (by region, or by major cities such as Beijing and Shanghai) or by age group (Gen Z’ers, middle-agers, etc).

Once you have identified the key characteristics of your target market,  use online tools and services to track trends and gain insights into the current market conditions. Additionally, use social media platforms to get feedback from potential customers, analyze customer reviews, and research competitors in the market. Finally, it is important to monitor changes in the market over time to ensure that your strategy remains relevant. Things change fast in the modern world!

How to conduct marketing for your startup in China

When it comes to marketing for startups in China, there are several techniques available. One effective strategy is to leverage social media platforms like WeChat and Weibo to reach your target audience. Depending on the nature of your startup, you may want to focus on or prioritise one or a couple of social media platforms. Traditional Western social media is almost exclusively banned in China, but there is no shortage of domestic platforms you cvan access.

The Importance Of WeChat in China

WeChat is the king of social media platforms in China and is all-encompassing. Not only is it a social media platform, but it is also the primary messaging app for Chinese people, and shares the vast majority of the online payment market in China with Alipay. There are however many social media platforms that you could consider using to reach your customers.

Online Techniques For Offline Sales: 020

Another technique that you should definitely consider is “020” (online to offline) marketing. This is the concept of using online marketing techniques to bring footfall into an offline store. 020 is huge in China, and it’s definitely recommended to do your research on how you could implement it in your startup. This is where setting up things like WeChat mini-programs can become a key part of the customer journey, as they build up and maintain customer relationships before and after they have visited the offline store.

How to conduct advertising for your startup

To conduct advertising for your startup in China and to increase brand awareness, you may want to look at working with KOLs (key opinion leaders), leveraging search engine optimization, or using paid online digital advertising (you would want to look at Baidu Ads, the dominant search engine in China, as Google is banned there). You could also use traditional media such as radio and TV to reach your target audience, or look into having a presence at relevant industry events and conferences so that you can increase your visibility and reach new customers.

One thing to bear in mind is that Chinese advertising regulations can be quite strict, so you’ll need to make sure what you’re advertising and what you’re saying in your messaging adheres to the rules. Also, you want to make sure you track and measure the performance of your campaigns. It depends on the platform that you have used, but you may want to use analytical tools such as Baidu Analytics to track the campaign.

So, that wraps up our two-part series on how to launch your startup in China. Hopefully, this has given you some useful advice if you’re considering launching your startup in the world’s biggest e-commerce market, or it has even inspired you to do so! If you haven’t done so, you can check out part 1 here.

If you have a specific question about business in China, then leave a comment or drop us a message via our contact form.