With increasing consumer incomes in China–not to mention more miles of highway constructed every year, US brands like McDonald’s, Starbucks, KFC and Pizza Hut are exploding in China. In fact, McDonald’s has over 800 restaurants in China and has plans to open 5,000-10,000 outlets total.
“The opportunities are endless,” says Jeff Schwartz, CEO of McDonald’s China. A blue ocean of opportunity for sure, but McDonald’s should be very wary of seeing Malan Noodles or Lihua Fast Food in its home markets in the near future.

China, it seems, isn’t content to simply be the factory to the world. In fact, Chinese companies have ambitious plans to move up the value chain and reach past providing the physical products behind global brands.

Case in point, a recent New York Times article mentions Taiwanese company Asustek’s efforts to build its own global brand. Asustek laptops are currently built under their own brand name and also under those of acquired brands Gateway and Packard Bell. In addition, Asustek is no stranger to innovation as the NYT article notes the company practically created the netbook category with the launch of Eee PC.

Chinese brands are also coming alive in B2B markets. According to a Business Week article on top 20 Chinese brands, Huawei Technologies is giving Cisco Systems all they can handle competitively.

The article mentions that Huawei “is spending heavily on research and development–in the global market for routers and other telecom gear. So far it has made great strides in developing countries, and it’s going after more developed markets such as Western Europe.” Broad Air Conditioning in China is also another brand to watch as they penetrate markets with natural gas powered air conditioning and are also testing solar powered units.

To be sure, a brand is much more than just a nameplate. Chinese companies wishing to compete in Western markets must not only create awareness and adopt a customer mindset, but also match very sophisticated operational (i.e. packaging, sales, customer service, daily routines etc) and strategic processes (i.e. brand management) already in place for most Western companies. In addition, talent management will also play a significant role in whether Chinese brands can successfully penetrate Western markets.

A final consideration; flush with cash, some Chinese companies are forgoing organic brand building and instead buying global brands such as Thinkpad and possibly Hummer.

Chinese brands are coming to a market near you–in droves. Meanwhile, complacency is no longer an option for Western brands.
Sun Tzu once wrote, “Invincibility lies in the defense; the possibility of victory in the attack.” Brand managers in Western countries would be wise to heed his advice.

Questions:
* Chinese companies are moving up the value chain and building global brands. Should Western companies worry, or is this much ado about nothing?
* Brand experts, other than those listed above, what processes must Chinese brands adopt to fully compete in Western markets?
* What global brands–perhaps on the decline–are fodder for Chinese purchase and invigoration? Which Western brands should be wary of Chinese brands?

In the United States, many shoppers dread the Christmas holiday season. Stores are packed with merchandise, the parking lot is full of autos, and shoppers bump elbows and carts on a regular basis. The panic and pandemonium are palpable.

In China, a Westerner walking into a Carrefour or Lianhua superstore might feel the same way as shoppers jostle for position around tanks of live crabs, clams and eels. Managing down store aisles, shoppers are often accosted by aggressive vendors pitching the latest skin care or food product. And the meat section may contain some surprises as well–to ensure freshness, many Chinese like to “touch and feel” before they buy!

While the Chinese retail market is still dominated by domestic giants such as Lianhua, Gome, Suning and Vanguard, some multi-national companies such as IKEA (Denmark), B&Q (UK), Tesco (UK) and Carrefour (France) are discovering they must, to borrow a phrase from Apple, “think different”. And this includes a back to basics approach for marketing. Everything from products, channels, partners, suppliers, market conditions, consumer mindsets, messaging–must be considered and reconsidered in China.

For marketers tackling the Chinese retail market, the marketing mix is as relevant as ever. Pricing is dictated by tough competitive conditions, market segments, location and tight consumer wallets. Promotion strategies might skew more towards in-store displays and merchandising tactics to capture impulse buys rather than broad based advertising or circulars. Placement strategies must consider myriad supplier networks and their proximity to stores, local customs, demographics, government regulations and possibly utilization of local partners. And stocking the right products (sizes, quantities, locations in the store etc–) to meet changing needs of the Chinese consumer is definitely a science.

Localization–or adapting the marketing mix to meet regional or customer segment needs–is a key strategy to success in Chinese retail markets. Urban stores in larger cities may carry a completely different product mix than rural locations to accommodate different tastes and incomes. Pricing strategies must consider the wide discrepancies in incomes (urban dwellers usually make 3X the income of rural denizens). Promotions might include more personal selling in urban vs. rural locations, and placement strategies must reflect that it’s more difficult to get goods distributed to rural locations at a reasonable cost.

New Marketing Ps vs. the traditional 4Ps–is an argument that can be left to others to debate. What is clear, however, is that the traditional marketing 4Ps are alive and well in the Chinese retail market–and more relevant than ever for marketing decision making in the middle kingdom.

Questions:
* One marketer and author suggests that the traditional 4Ps should be supplanted with, “Preference, Premium Price, Portion of budget, and Permanence of relationship.” Are these suggested new 4Ps applicable to emerging markets? If so, are they applicable now, or in the future for Chinese marketers?
* In China, online communities are forming around B2B and B2C products. What online (social media) tactics might you suggest for Chinese retailers to share, engage and communicate with consumers?