( based around an interview with Sam Fischer - Managing Director of Diageo China, published in China Daily with added content from Adrian Allen)
Diageo are the world’s leading beverage company with brands such as Johnnie Walker,Guinness, Smirnoff and Baileys. They have a strong presence in the China market and the interview provides an insight on what it takes to be successful in the Chinese market.
Whilst companies have the resource to really invest heavily smaller companies can do well to consider the way they approach their business because it is a proven model.
Fischer states that " I can never spend enough time learning about what the Chinese want"as a result Diageo have a clear understanding of the Chinese consumer and the changes that they need to make to modify their existing product offering and the way they approach China as a market.
Often it is a case of modifying existing brands to suit the Chinese taste. This may be based around changing packaging – Diageo now sandblast the Chinese Zodiac onto bottles of Johnnie Walker Blue Label and recently Weetabix have announced that they will create a Green Tea flavoured version of their very traditional product.
Diageo have realised that the way to really break into the market is to base the effort around education. Chinese people are often reluctant to try new things when they have no experience on how to use them or get the best out of them. Only a short time ago it was common to see people drinking really expensive Chateau bottled red wine from a glass that was fullof ice. This is not common any more as people learn about the product.
The younger generation in China is much more likely to try new things because they are often much more open to new ideas and “don’t feel the burden of tradition” Fischer said that “This is a new consumer – one that feels unconstrained and experimental. One that tries different things. As a result Diageo need to do much more of that providing more opportunities”
Companies such as Twinings and McVities are developing strong brand awareness by organising “afternoon tea” events in big stores.
Fischer also stated that “We will develop the brand. We want to modernize the brand and make it part of the new Chinese consumer. So it is not part of the old China but very much part ofthe new China and what we see is this new China consumer coming into play”
But you may ask" how can I do what big companies like Diageo do?" Well if you don't have the resources they have you cannot do things on the same scale. However this does not mean that you cannot do well in China. Remember that for many companies China is not the real target in the early days. It is a huge and very diverse country and so you can start bylooking at a single city. If you take Guangzhou and the surrounding cities you have a potential market of over 100 million people - almost twice the population of the UK. OK your product will not interest them all but say you hit the top 10% - or even only 1% that is still a big number.
Marketing in China is beginning to get dominated by social networking which is a real game changer. Sites such as WeChat are hugelypopular and are becoming more than just a place for people to chat to each other. They are places where people swap experiences and so are great places to discuss products. Setting up relatively simple experienced based tests in the market does not carry a huge cost and once you begin to get established you can then look to expand into other cities.
If this all seems a bit too much then you should really ask yourself if China is the market for you. Remember that as one of the fastest growing economies in the world, China is a market that everyone wants a slice of. That means competition is intense and companies are investing budget to get a share. You have to have a "China Strategy" and that needs to include for an investment in resource. Diageo see this as a medium to long term market and this seems to be typical of almost every industry. It all seems a daunting prospect and "dipping a toe" will rarely show you if you will be successful or not. So China has huge potential for UK companies to do really well but you have to be there and you have to be very serious about it.
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