Some weeks ago Coca-Cola announced its Chinese ambition: triple annual sales of non-alcoholic drinks by 2020 in China alone. The number of cases sold will, in their plans, reach an annual amount of 30 billion. Coca-Cola's expansion plans target to double global revenues as high as 200USD billion annually in the next 10 years. The company expects that 60% of its new growth will come from China, India and other emerging markets.
It comes without surprise that China is an attractive play-field for companies of all shapes and sizes. China's almost 1.6 billion people represents Earth's largest consuming market in one big blow. It is very tempting to any businessman or woman to see the potential here. As one walks around the streets of Beijing, it is easy to see the dream of huge profits knocking at the door: teenagers with their eyes glued to their portable video games, hundreds of modern mobile phones been used for all sorts of tasks, famous western brands been dressed from tip to toes, modern and new cars parading on the spotless 6, 7 or even 11-lane roads. All these signs of prosperity and modernity are already in place and are just small examples of a much bigger universe.
Western companies have been trying and experimenting with ways of achieving success in China since its market reforms of the 70s and 80s. For some, it has been a profitable endeavor right up front, but for most, it has been a fiercely hard battle leading to many just dropping out or ramping down their Chinese investments at once.
What is the key to success in China? In one simple word: understanding. Many scholars have tried to explain the differences or similarities of the Chinese culture with the Western culture and, based mainly on its differences, a whole aura of mystery has been established. The truth is that this mist of mystery can be dissipated if business people take a step back and spare some time to really understand China.
Understanding does not come without immersion, without participation and lots of observation. In a business world were some still try to focus on quick wins this means bad news: you cannot rush to understand the Chinese
market. China is a 2.500-year civilization; they are not willing to rush. Accordingly, understanding is not only about spending enough time. It is also about immersing into their culture and, by doing so, also realizing our distinct, western-centric view of it.
Failing to perceive this point can be very embarrassing as has been the case with Nike. Nike is world famous for having aggressive and efficient marketing campaigns and therefore, has a huge budget to hire to most expensive marketing agencies available. Nike's marketers made a genuine effort to understand China's culture but ultimately failed. They combined all elements cherished by their target market: basketball, action, kung fu, ghosts and dragons - all marinated in fantastic visual effects. From a western perspective, the commercial campaign looked amazing: a perfect blend of eastern components with the modernity brought by sports and, of course, Nike as a cornerstone. The problem is that, from a Chinese perspective, the commercial looked as some obnoxious American had just disrespected Chinese Gods, symbols and values all in one blow.
Red Bull was a bit more successful during this understating process and has been enjoying partial success in China. The amazing fact is that this is not coming out of the traditional energy drink popularized by the Swiss-based company. At least not in the incarnation we are used to drink it. The company quickly realized that the Chinese had very clear opinions of what an energy drink should taste like: it should taste like tea. The market solution: remove the carbonated mix from the recipe and end up with a beverage that tastes like a blend of Red Bull and tea. Even the can's body art was localized to look closer to an eastern tea brand.
The valuable understanding required here also comes with the full awareness that we are tainted with our western vision and, it is through this stained glass that we perceive the Chinese market. This fact can be either a pain or a blessing. We just have to work hard towards making it a blessing.