Myths in Business-to-Business Marketing to Chinese Businesses

`

Many western companies are unable to effectively market their brand to local Chinese consumers or adapt business approaches to fit local preferences. Best Buy just recently announced that they will be selling its Five Star business to the Jiayuan Group, a prominent China-based real estate firm led by Chairman Yuxing Shen. Considering how difficult it is for highly successful firms to penetrate China’s economic market, the task is even more daunting for U.S business-to-business firms looking to supply Chinese businesses with their products or service. Marketing and Selling to Chinese Businesses is an online article aimed at dispel some of the myths propagated about Chinese business, and explore the reasons behind both successful and unsuccessful marketing and sales approaches in China. Although many foreign organizations are retreating from China, there is no reason why a company with a flexible, patient and ‘listening’ approach to marketing and sales should not succeed in the Chinese market.

For example, Chinese organizations in contrast to some Western markets, the salesperson and more broadly the principle of selling are more widely respected in China. Two issues perhaps lie at the core of this fact: firstly, the entrepreneurial spirit of the Chinese people, and secondly the great importance placed on relationships in business decision-making. A good salesman must be adept at forging not only relationships, but also friendships with potential customers. The importance of relationship-building tends to imply a long sales process, requiring of salespeople patience, continual learning and an on-the-ground presence. Given these attributes many businesses in China don’t focus very much on marketing to other businesses and truly only focus on one P; promotion.  Next, the salesperson and more broadly the principle of selling are more widely respected in China. Two issues perhaps lie at the core of this fact: firstly, the entrepreneurial spirit of the Chinese people, and secondly the great importance placed on relationships in business decision-making. A good salesman must be adept at forging not only relationships, but also friendships with potential customers. The importance of relationship-building tends to imply a long sales process, requiring of salespeople patience, continual learning and an on-the-ground presence. Finally, Two of the top four requirements of Chinese buyers and business owners – the need for Western companies to prove that they are ‘established’ in the market, and the need for them to demonstrate experience of dealing with similar companies (preferably in China), illustrate the difficulty many Western companies have in gaining the trust of their target audience. As previously noted, ‘business’ trust in China is often developed through relationships. However, important as these are, the first thing any Western company should do is prepare and present comprehensive case studies and client lists for the potential Chinese customer. These should be leveraged to the absolute maximum, and from the earliest possible stage in the relationship. This is in contrast to many Western markets, where past experience is often mentioned in the vaguest terms and references are rarely followed up.

Exact: Winner of the 2014 Markie International Marketing Campaign

Exact is a business solutions company that develops software to support many major business processes such as production, logistics, finance & administration, HR, sales and marketing. Ranging from manufacturing, wholesale & distribution to professional services and accountancy, Exact’s software products are designed to efficiently help businesses manage and access their digital information from anywhere and in real time. The Exact Online platform currently has more than 130,000 companies across five countries doing their accounting in the cloud with extended functionalities for wholesalers, manufacturers and professional services companies. In October of this year, Markie announced Exact as the winner for their International Marketing Campaign category. The Markie Awards is an annual event hosted by Oracle Marketing Cloud that recognizes outstanding achievements in marketing across 12 categories, including IT-marketing collaboration, social marketing, content marketing, marketing metrics and campaign creativity. A good question to ask is what factors does Exact believe are the critical keys to its international marketing success? Mark Appel, Global Marketing Director Cloud Solutions at Exact, took to his LinkedIn page to explain what factors he believes will help B2B companies excel in the ever growing cloud business software industry.

For example, Appel writes that most companies today don’t fully understand the benefit of digital marketing although there are dedicated digital marketing teams formed within these firms. “Especially in somewhat larger companies it seems that specific marketing teams are created to practice so called ‘digital marketing’. Talking with those people digital marketing is about online marketing, marketing automation, SEO, SEA etc. This tells me that senior marketing management still needs to be convinced about the value of the things just mentioned. The only thing at that moment I think is ‘digital marketing’ IS what we currently and only do,” says Appel. This is a very interesting way of perceiving digital marketing and suggests that most firms are still too slow in adapting contemporary marketing strategies. A possible key to success here is that if a firm wishes to internationally market a product, a heavy digital marketing focus is mandatory.

Furthermore, Appel continues to suggest that firms wishing to realize successful international marketing campaigns should start with having a ‘do’ mentality. In order to have a ‘do’ mentality, a marketing team needs to be fully confident that their marketing strategy is going to be well accepted by their customers. Appel explains that the marketing budget him and his team receive for a project is treated as if it is their own money and make well informed decisions based on this belief. Entering new foreign markets are extremely risky and usually require large amounts of spending on marketing efforts. In order to see global success, marketing teams need to conduct proper market research and make sure their financial forecasts are extremely accurate.

By having a mix of high volume within B2B, cloud, ‘digital marketing’ and do-mentality Appel believes these factors set Exact apart from many of the other globally marketed companies. Exact feels the company and the way it market’s itself appeals to many others who want to hear from them and how they operate.

Online video advertisement:

12 Megatrends in B2B Marketing

In 2007, the Economist conducted an experiment to discover new environmental challenges and opportunities that B2B marketers could expect to see in the near future. The objective research was conducted by sending surveys to businesses around the world; the sample size for the experiment contained 136 businesses with many of these businesses currently having international operations. The Economist concluded that there are 12 megatrends in the B2B market from the data gathered from the completed surveys. In addition, researchers felt the intelligence gained from surveyed advertisers could help B2B marketers reach their promotional objectives in the global market place.

Specifically, The Economist research survey revealed that sponsors and advertisers are:

  • shifting dollars away from single-media promotion in favor of integrated thought-leadership programs featuring print ads, sponsored research, publications and conferences;
  • improving return on investment (ROI) measurement techniques to track lead generation and new business;
  • seeking much closer collaboration with partners to find new ways to achieve unique marketing objectives;
  • going higher and deeper into organizations, targeting not just decision-makers but also key influencers;
  • pursuing a broad range of target company sizes;
  • more closely integrating marketing strategy, messaging and media
  • still relying on advertisers and public relations (PR) firms—but expecting their capabilities to evolve to meet their changing needs;
  • placing greater emphasis on selling globally, particularly in emerging markets—and to companies domiciled in emerging nations;
  • exploring new media—with high growth from Web 0 initiatives on the horizon;
  • increasingly outsourcing their research and conference activities.

Mega Trends in B2B Marketing:

  1. The shift to 360 thought leadership
  2. The ROI imperative
  3. “Me too” sponsorship on the wane
  4. Going higher and deeper into organizations
  5. One size does not fit all
  6. Integrated marketing on the rise
  7. The changing role of advertising and PR
  8. The allure of emerging markets
  9. A new marketing opportunity: Domcoms
  10. The global decision matrix
  11. New media poised for rapid growth
  12. The growing appeal of outsourcing

This blog post will focus on the 8th mega trend, the allure of emerging markets, and shed light on if the Economist prediction of China becoming the largest economy in 2017 holds true. Case studies on Disney and Universal desiring to penetrate the emerging Chinese marketplace by creating theme parks are prime examples of domestic firms trying to become global. However, these studies have proven that entering a foreign market is extremely difficult considering complex government regulations and differing cultural negotiation styles. Furthermore, the Colgate Max Fresh case provided insight that significant market research on Chinese consumers tastes and preferences and adapting these attributes to fit a product (in this case toothpaste) won’t fully eliminate the risk that the promoted product won’t be a success.

However, is the Chinese environment different for B2B industries? And can B2B marketers realize and capture value by tailoring their marketing strategies to fit the Chinese emerging market? 66% of the companies surveyed in this research experiment feel the emerging Chinese market is the perfect environment to start increasing their firms’ profits. A research study about B2B supply chain management conducted by Spekman, Kamauff Jr, and Myhr could possibly help B2B marketers face this emerging mega trend and create immense value for the supply chain partners. The data suggest that buyers and sellers have very little in common, and their “world views” tend not to converge. While some differences are expected, the divergence in motivations and beliefs relative to supply chain management is quite stark. This suggests that it is not surprising that supply chain management practices are difficult to implement. For buyers and sellers to achieve a common goal there must exist a level of consensus (Spekman et al., 1996). At the very least, buyer and seller must have a shared perspective of the merits of such close ties within the supply chain (Spekman, Kamauff Jr, and Myhr). If B2B marketers were to figure out a method of creating a shared global perspective throughout a given supply chain, penetrating the Chinese market would see significant decreases in risks associated with adaptation strategies and FDI. The whole chain would see value creation from reduced costs from operations and differing ideas on how all the firms involved could create profit. Furthermore, this reduction in global operation costs could help elevate the damage firms could receive from unpredictable hick-ups with cases such as Disney, Universal, and Colgate.

If you would like to learn more about the 11 other mega trends affecting B2B marketers please refer to link provided. The Economist B2B Mega Trends

References:

Speckman, Robert E., John W. Kamauff, Jr., and Niklas Myhr. “An Empirical Investigation into Supply Chain Management : A Perspective on Partnerships.” SupplyChainManagement 3.2 (1998): n. pag. Web. 27 Oct. 2014.