Monday, September 28, 2009

Marketing in China in 2009

By Rodney Hiel

Writing this on a mid-September day from the vibrant city of Shanghai, China, there are a multitude of opportunities this market provides. So if your company is experiencing a difficult time in the throes of the western recession, why not try China? With the upcoming 60th anniversary celebration of the PRC in Beijing, the 2010 World Expo in Shanghai starting in May and drawing over 75 million people over a six month period, these events, among a variety of others, bring a multitude of reasons to be selling in China today.

With a 2009 national GDP growth rate expected to be around 8%, there are local markets such as Liaoning province that still today exceed double digits. In provinces that are focused on domestic production and consumption, these activities continue driving high growth rates and consumers of high end products such as McDonald’s and Starbucks have not faltered. Real estate continues to thrive in these areas, driving sales of a variety of industrial goods and building supplies. And by following these economic indicators, this will open many opportunities for downstream sales. In short, especially for small and mid size companies, targeting these tier 2 and 3 markets may provide quicker results and a calmer marketing environment. In addition, for a small company with limited capacity or inability to provide the demand output of the larger markets, targeting these markets may optimize your current manufacturing conditions without significant restructuring.

With the higher cost, highly competitive and noisy environment of the largest tier 1 cities of Shanghai, Beijing, or Guang Zhou, marketing your products in these conditions requires a precise and targeted message to penetrate the landscape of these markets. Although demographics here may signal a large market opportunity for your products, the cost of access to these markets may be more expensive and prohibitive. Therefore, a company should consider in its market entry strategy many of the large tier 2 and 3 cities which are the capitol cities in outlying provinces and have considerable disposable income that may generate immediate results at an acceptable cost.

With China having over 1.3 billion people, for B2B selling it only takes a few hundred customers, and for B2C selling it only takes a few hundred thousand units sold to significantly impact your bottom line. Why not target your customers that cost you the least to acquire? This provides the key to increasing your sales during this recession and a good foundation for future growth. Good luck!

Rodney Hiel is the Managing Director for Asia Business Consulting. Minnesota based Asia Business Consulting strategically researches, develops, and tactically executes a proven process to create cost effective strategies for market entry in today’s Southeast Asia and China.

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