With a population of over 1.4 billion people, China is an attractive market for businesses looking to expand their customer base. Thailand is ideally positioned to take advantage of the opportunities presented by the vast Chinese market. However, doing business in China requires a comprehensive understanding of the country's culture, business practices, and regulatory environment. To succeed in this dynamic and rapidly growing market, Thai businesses must navigate these challenges effectively.
In this article, we will explore the differences between the Thai and Chinese markets in terms of business and how can you develop entry strategies to help you succeed in expanding your business into China. Putting the entry process into actionable steps makes it easier to manage and increases success rates. Below are seven steps that you can follow:
1. Conduct Market Research
Before entering a new market, it is essential to conduct thorough research to understand the market's potential and determine any obstacles that may arise. Moreover, understanding consumer behaviour can help businesses identify the needs and wants of their target market and develop effective marketing strategies. Various methods can be used to conduct market research and study consumer behaviour, including surveys, focus groups, and data analysis.
In the highly competitive Chinese market where consumers can choose numerous product options, companies that frequently update their products and introduce new features are more likely to succeed compared to their counterparts in Thailand. Chinese and Thai consumer behaviours differ in several ways. Chinese consumers tend to be more brand-conscious and status-conscious than Thai consumers when making purchasing decisions. For them, brands are not just functional; they also reflect social status. In contrast, Thai consumers place a greater emphasis on affordability and practicality than status and luxury. In terms of product preferences, Chinese consumers value quality, durability, and innovation in their products, while Thai consumers prioritize functionality and practicality. Recently, increasing numbers of startups and a flourishing venture capital ecosystem have led China to become a leading hub for innovation and technological advancement. Consequently, Chinese businesses are generally more open to trying out new products and technology than Thai businesses which might still be techno-sceptical and cautious.
2. Define Your Target Market
Knowing who your target audience is will help you develop a targeted marketing campaign and better understand the needs and preferences of your potential customers which can vary depending on the specific products or services being offered.
For example, the Chinese market has increased interest in beauty products and fashion, with a large consumer base driving this trend. China's rapidly growing middle class makes it an ideal market for Thai brands. In particular, cosmetics and fashion items are in demand by these consumers who have more purchasing power. Because of our unique design, natural ingredients, affordable prices and quality, Thai cosmetics and fashion products have gained popularity in the Chinese market.
Additionally, Chinese consumers are increasingly interested in health and wellness products and services. It is likely that health-conscious consumers will be drawn to Thai brands offering natural or organic products, Thai medicine, or spa and massage treatments. As China becomes more interested in international cuisine, Thai food and beverage brands are gaining momentum. Chinese consumers are really into Thai chilli paste, instant noodles, and coconut milk. However, Thai brands need to be aware that beauty and food products require licensing in China before being able to do marketing or sell in the country.
3. Develop an Entry Strategy
After identifying potential markets, it is necessary to establish a market entry strategy that aligns with your business goals and objectives. This could entail setting up a subsidiary, joint venture, or franchise, or partnering with a local company.
Partnering with local distributors can help Thai brands reach customers in China and get access to established distribution networks, especially food products. Moreover, several cross-border e-commerce platforms, including Tmall Global by Alibaba, JD Worldwide, and Kaola, enable Thai businesses to sell their products directly to Chinese consumers, without the need for a physical presence in China.
Undeniably, doing business in China is driven by connections and networking, with guanxi - or social connections - being of particular importance. China tends to build trust and understanding through informal and personal connections. In spite of this, hierarchy and status remain important, and authority figures should be respected. While Thai business relationships are also highly valued, they are typically conducted in a formal manner. Consequently, Thai brands need to find a balance between guanxi and hierarchy to maintain proper behaviour.
4. Ensure Your Business is Prepared – Legally, Financially, and for Tax Purposes
Different countries have different regulations and taxes, so it is important to research and understand the legal regulatory requirements, and taxes beforehand. In addition, it can be costly and requires careful financial planning. To prepare, you must establish a budget that covers expenses including marketing, legal fees, travel costs, and hiring employees locally. To keep your business running, you have to make sure you have enough working capital. There is no doubt that seeking advice from professionals such as lawyers, accountants, and tax experts is crucial.
5. Develop Marketing Strategies
Thai businesses must develop a marketing strategy that takes cultural differences, language barriers, and local regulations into account. Pricing, branding, messaging, and market segmentation should all be part of this strategy. Here are a few marketing tips for attracting China's market:
Localize marketing materials, including messaging, content, product descriptions, etc.
In marketing, the Chinese language is usually more formal and straightforward, while Thai marketing tends to be more casual and indirect. This is why Thai marketing uses emotional appeals and storytelling to appeal to its audience. In turn, Chinese marketing focuses on the features and benefits of a product or service. Therefore, Thai businesses should adapt marketing messaging to fit the language, cultural norms, and preferences of their target audience in China. For cultural sensitivity, it may be helpful to work with a local translator or agency like Neat Interactive to ensure that it is done with care and accuracy. Marketing approaches that emphasize family values and social harmony may resonate well in the Chinese market, while those that emphasize individualism and hospitality may work better in Thailand. Furthermore, Chinese consumers tend to gravitate towards educational, informative and entertaining branded content because they place a high value on knowledge, expertise, and social status. Authenticity and trust are therefore important factors for Chinese consumers when they are making purchases and interacting online. It is important for them to perceive contents that showcase the brand's expertise, and value-add.
Utilize social media platforms that are popular in China, such as WeChat, Weibo, and Douyin.
In comparison to other countries, Chinese consumers rely heavily on social networks. Similar to Thailand, Chinese consumers are more influenced to buy a product if it has been positively reviewed on social media, especially by friends or acquaintances. However, Chinese consumers may be more receptive to influencer and celebrity endorsements. Verified accounts are more trusted by most Chinese than non-verified accounts. For Thai brands looking to expand their presence on Chinese social media platforms, verifying their authenticity and ownership can build trust among Chinese audiences and helps Thai brands comply with the complex regulations and laws of China, which can vary according to the industry.
Although social media marketing is highly effective in both China and Thailand, the platforms used to achieve this goal differ significantly. Chinese consumers use social media communication and entertainment. In China, for example, social media sites such as WeChat and Weibo are the go-to platforms for marketing, whereas, in Thailand, Instagram and Facebook are the dominant social media platforms.
As China is a mobile-first country, Thai brands that wish to reach Chinese consumers must utilize mobile marketing. Platforms such as Douyin (TikTok in China) and Kuaishou have seen explosive growth due to short videos and live streaming. It is attractive for Thai brands to reach a large audience on Douyin, one of China's largest social media channels. We can use localized content on Douyin to appeal to Chinese audiences by creating videos containing Chinese-speaking employees or adding subtitles in Mandarin. This platform also has a variety of interactive features that allow us to respond to comments and messages in order to build a community and encourage user engagement.
By the way, China has established laws and regulations that oversee social media marketing to ensure it adheres to ethical standards and is transparent. To conduct social media marketing in China must be aware of these stricter regulations and comply with them to prevent any legal consequences.
Consider partnering with Chinese influencers or celebrities to promote Thai brands to their followers.
In the past few years, it has been shown that influencer marketing works, especially in China, where social media dominates people's lives. Chinese influencers who know the local market can help Thai brands tailor their marketing messages to Chinese preferences and culture. This results in increased brand visibility and credibility among the local audience. However, Thai brands should carefully select influencers or celebrities who are trustable and align with the brand's values and target audience. Additionally, influencers' reach and engagement rates should be considered to ensure that the message is seen by the desired audience.
KOLs (Key Opinion Leaders) are crucial in China's marketing industry and are used in various ways including product endorsements, brand collaboration, and public relations. The opinion of key opinion leaders (KOLs) is seen as unbiased and reliable by their followers. KOLs are culturally relevant in China and frequently reflect consumer preferences and trends, leading to helping brands stay current and relevant. For instance, a KOL might be able to identify an upcoming trend for a certain type of product. This might help its partner brands create appropriate product lines and capitalize on the trend. Using live streaming has become a common way for KOLs to interact with their fans and promote products in real time. Thai brands can consider sending Chinese influencers products to try them out and share them with their followers. This can be a cost-effective way to reach a large audience and build brand awareness.
6. Establish a budget
To establish a budget for expanding into Chinese markets, companies should start by researching the costs associated with the expansion, such as market research, legal fees, human resources expenses, and advertising costs. Once you have a clear idea of the expenses, you can create a budget that is realistic and feasible for your company. It may also be helpful to consult with financial experts and business advisors to ensure that your budget is well-informed and aligned with your overall business strategy.
7. Monitor and Adapt
After expanding their businesses, Thai brands need to continually monitor their performance, adapt to changes in the market, and optimize their growth strategies. For instance, They should keep close tabs on their customer feedback, market trends, and competitors’ actions in order to ensure they remain competitive and successful.
References
- Deloitte (2023). 2023 China Consumer Insight and Market Outlook White Paper. [online] Available at: https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/consumer-business/deloitte-cn-cb-consumer-insight-en-230118.pdf [Accessed 9 Apr. 2023].
- Mani, D. (n.d.). Why it’s important to expand into global markets quickly. [online] www.airswift.com. Available at: https://www.airswift.com/blog/expand-into-global-markets-quickly [Accessed 9 Apr. 2023].
- Viivue_manager (2018). What Should Thailand’s Marketers Know About Working With Chinese Companies? [online] Vero. Available at: https://vero-asean.com/thailands-marketers-chinese-companies/ [Accessed 9 Apr. 2023].
- Zipser, D., Hui, D., Zhou, J. and Zhang, C. (2022). A Time of Resilience 2023 McKinsey China Consumer Report. [online] Available at: https://www.mckinsey.com/cn/~/media/mckinsey/locations/asia/greater%20china/our%20insights/2023%20mckinsey%20china%20consumer%20report%20a%20time%20of%20resilience/2023%20mckinsey%20china%20consumer%20report%20en.pdf.
