This is a followup to the article: “10 things you must do to win in emerging markets.” China is still considered an emerging market, given that the majority of the people still live and work in areas outside the reach of technology (mobile phones being, or at least becoming, the exception). Therefore, we believe these 10 principles hold true in China as well.
But even though China is seen as THE market to target, given its population and spectacular growth, many companies that are successful in emerging markets find themselves either failing in China or “afraid” to approach it. A wildly successful, multibillion-dollar US-based The company avoided China initially, focusing first on India as they begin their expansion into emerging markets. They thought it would be easier to “crack” India first then bust their chops in China.
This trepidation is well founded. While China arguably has the most “untapped” market potential, the nuances and vagaries of doing business in China, due to its history, culture, and existing government structure, make the approach to being successful in China a unique and more challenging one.
First a caveat … emerging markets is a catch-all phrase to describe developing countries. It was coined by Antoine van Agtmael in the early 1980’s to replace the more negative term “third world country.” It is supposed to designate those countries in a transitional phase between developing and developed status.
But here’s the rub … China is considered an emerging market. But you wouldn’t call Shanghai or Beijing an emerging market because income levels, as well as PC, internet and mobile phone penetration are approaching levels found in developed countries. But a significant area of the country, specifically the 800 million or so people in rural towns and villages, would truly be considered an “emerging market.”
A company therefore needs a multi-tiered approach when targeting their product, market and business development strategies within an emerging market country, especially larger markets like the BRIC countries (Brazil, Russia, India and China). For example, Intel created five city tiers segmented by various demographics for China. Read More