3 min read

Nine years. From 2008 to 2017, to be precise. That was the time Marks and Spencer, one of the biggest British multinational retailers, held up its ground in China. Despite their success in Hong Kong, where they had been established since 1988, the light-speed shifts on the market have shown that making it big in Europe offers no guarantees when it comes to conquering the Chinese market. And since they are the biggest retail market in the world today, with an estimated value of $4.89 trillion according to retail forecast eMarketer, you might want to get it just right.

“The problem is not just that they know little about China, but that they never bothered to learn.”, stated Yang Dazhong, a retail expert from Zhongtian Yuanguang consultancy in Beijing.

But, what exactly went wrong here? Let’s go through five usual mistakes Western retailers often engage into when trying to conquer the Asian giant.

1.Building up an e-Presence on Chinese social media platfors is crucial. If you are big in the West, but unknown to the East, the first thing customers will do is look you up on Weibo, WeChat or TaoBao. They want to know if you are engaging with Chinese Key Opinion Leaders (KOL’s) and will take their opinion into account before making a purchase based on how much their favorite KOL loved your product. Or not.

2. The names of the products or services should be properly translated to Chinese. This was a big fault on M&S side. Even though Chinese consumers do fancy Britishness in the traditional sense, they won’t buy what they cannot understand at first glance.

3. For the fashion retail industry, acknowledging sizing is different depending on the market is mandatory. European sizes are usually too big and wide for the average Chinese consumer. Also, S, M and L aren’t measurements that speak easily to Chinese customers. More like 165–170/88–90, 167–172/92–96 and 168–173/98–102.

4. So, Chinese people look up for European brands? True. But, would they go for a local brand if their offer and marketing strategies is on point? Very much true. A recent study by Bain & Co said foreign retailers have been losing market share to their local rivals in recent years. Largely because they quickly lose sight of fast-changing consumer demands. In 26 areas studied by the consultancy, foreign brands’ sales shrank 1.4% in 2015, while for local brands, it grew by 7.8%.

5. Have you heard of the Hourglass Effect? Competition in the Chinese market is cut-throat, but particularly in the mid-ranked price area. If you try to sell to a middle-class consumer through a middle-positioning, you are most likely to fail. Anything that’s not great value, meaning it doesn’t give them prestige nor status, is something that Chinese don’t want unless it is dirt cheap.

A deep understanding of the Chinese customer, their aspirations and desires, are mandatory before diving into this market. They have rapidly evolved into mere consumers and admirers of the Western culture into a more demanding and refined customer that needs to be seduced over and over again.

If you wish to get further insights and key strategies towards understanding the dynamics of the Chinese market feel free to contact us at Retail Factory in Paris.

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