The breakneck speed at which the Chinese market is evolving, consumer sophistication and cultural nuances make it an incredibly difficult market to navigate. Without the right partner, it is almost impossible to be successful. What criteria does GED take into account when evaluating the partner brands that you want to help develop and evolve in the market?
First of all, the brand has to be a little different in design, formulation and ingredients. If it’s a “me too” brand, there’s no point; the Chinese don’t need it, and it won’t work. Second, the brand must be established and have achieved a certain level of success in its home market. Finally, we like to work with brands with a bit of vision, who are patient and understand that China is a very different market, brands that listen to the consumer and will play the game for the long haul.
China and speed are often synonymous in the minds of many people, but some brands may be launching earlier and faster than they perhaps should. GED’s philosophy is to reduce the risks of entering the market and to play for the long term. Can you unpack what this means?
GED has been building global brands in China for over a decade, staying one step ahead of the ever-changing consumer. This foresight helps us plan successful growth strategies for our brand partners and minimize investments in costly PR campaigns, avoid relying on overly promotional sales strategies that damage the brand image and manage carefully pricing and distribution channels across multiple social commerce and content channels, while expanding and segmenting our ecosystem of avid Gen Z and Millennial consumers for beauty and wellness.
Because everything is going incredibly fast in China, we believe it is best to start even if you are not quite ready or what you would consider quite ready in your home market. It is better to find the right partner and take positions in China and grow from there. Nothing will ever be perfect, so you better start and grow, don’t wait. Waiting is probably the worst thing to do in China when things are going so fast. It will only be more competitive. Use time to create something, learn something, build something, no matter how small. Get followers on your social networks, get reviews in the press, start building your brand before Tmall launches.
The alternative is to get started by investing heavily and making a splash. Keep in mind that a massive investment is temporary and will only last a few days and it is impossible to reach everyone. Unless you can maintain that level of investment, you are not establishing a long-term presence.
We recommend that you take the plunge and learn from the experience you gain as you grow older. We do not believe in the big launch because it is impossible to be massive in China by definition, the brands are too small. There are 50 cities as big, as big as Hong Kong in mainland China. Are you going to cover all these 50 cities? No you can not. To be big in China requires a huge and sustained investment. None of the brands we work with have this level of financial resources, so we need to be flexible in finding imaginative solutions and ways to build brand awareness in the market.
Developing omnichannel strategies is the foundation for success in most markets today, but every market is unique, so this is not a plug-and-play scenario. What are the elements to build an omnichannel strategy with a long-term vision of growth in China? How have the requirements evolved?
China is different from Western markets where offline distribution is well established with online penetration following and happening slowly. This is not how the Chinese market was built. We have extensive experience building brands in a physical environment, but we believe in starting online first, that’s where the consumer is.
Additionally, I am skeptical of the word omnichannel when applied in China. Omnichannel is probably a word that was created for brands that were offline and then moved online but are unwilling to go fully online. Here in China, online penetration is extremely high: everyone has logged in at the same time, and offline distribution is minimal. There are a few stores, including a few Sephora stores, and new stores are being built, but there isn’t a large offline presence. In China, you need to be successful in e-commerce first, then expand offline. But don’t expect offline sales to be as big as online.
Some of the high-profile missteps in the Chinese market should give brands a healthy respect for cultural nuance. What advice do you give to brands on how to balance localizing and maintaining their brand’s DNA?
Finding the appropriate balance between personalization around tent events and specific shopping festivals versus using existing packaging is an art form and the brand partner should advise. All personalization is not welcome: too much personalization and the consumer may not trust the origin of the product; likewise, if it is not culturally sensitive, brand image may be tarnished; conversely, too little, and the mark may appear deaf.
I’ve seen so many brands make packaging red just because they’ve learned that Chinese people love red, or take advantage of Chinese zodiac signs. The Chinese are not stupid; they know why brands are doing this. For a localized product to be effective, it must be done with subtlety and appear authentic and culturally relevant. Some decisions made by Westerners in Chinese taste simply miss the mark, with unintended consequences.
We have our ear to the ground. We are constantly listening to the evolution of the market. Consider that Alibaba didn’t exist 15 years ago and TikTok didn’t exist two years ago. A lot of these platforms are new, so if you don’t constantly keep an eye on what’s going on on a daily basis, you might get lost quickly. It’s a bit like surfing: if you don’t surf with the wave, it’s over, we’ll take you to the bottom of the sea.
We stay close to these platforms and distributors, monitoring where they are going, what they want and how they will market the products. Changes can happen very quickly, and if you don’t follow what’s going on closely, your brand could disappear just as quickly. Most of the distributors that were exclusively offline no longer exist because they have not adapted to the new market conditions.