THE FOLLOWING ARTICLE by Kat McKinnon appeared on marketmag.com.au and has proved a real eye-opener for the wine industry, and just about anyone else, planning to do business in China. Kat McKinnon is currently working on building eCommerce stores. She has been a director of Motive Media for 15 years and was a co-founder of McKinnon Group, AusCommerce and Verify1st.
With its growth in personal wealth, penchant for international travel and consumerism, and being on track to hit 600 million internet users this year, it would be negligent of Australian businesses to ignore China.
The size of its internet population alone is roughly double the size of the second largest online market (the US) and more than 30 times the size of our own market. When you consider that that’s less than half of China’s overall population, the capacity for growth is bearing on the ludicrous.
With all that in mind, the Chinese market represents a lucrative opportunity for Australian businesses – especially given close geographic, economic, and political ties between the two countries. But is it relevant for your business?
That obviously depends on what services or products you provide, but the verticals where we have most success are finance, real estate, luxury goods, travel and education. (Seventy-six per cent of Chinese search engine users search for information related to work or education; 58 per cent lifestyle (including wine); 45 per cent online shopping (more wine); and 43 per cent travelling abroad.)
To determine whether you should be playing in the Chinese digital market, use your analytics to see if you’re generating any traffic and or conversions from China. For one of our clients, it was a simple decision. In his own words: “Year on year more Chinese tourists rent our campervans, so targeting China simply makes sense.”
Doing business in China as a foreign company is far from simple, but the rewards can easily outweigh the input. In the digital space alone, the differences are enough to frazzle your brain. You think YouTube, they think Youku; you think Google, they think Baidu; you think Twitter, they think Weibo; you think Facebook, they think Renren (Facebook and Twitter were banned until September this year and will soon be accessible in the Shanghai free trade zone).
To enter the market you might need a locally based phone number for account verification, a company chop to accompany the required documentation or proof that you have the rights to sell the products or services you advertise on your site.
WHAT YOU NEED TO KNOW
Your best bet to start your China offensive is search marketing. Cost of entry is low, you can experiment and results are instantaneous. This will provide the insights you need to make an informed decision about the overall opportunity.
Even though Baidu is the market leader with approximately 63 per cent market share, this is falling quite rapidly with a 16 per cent drop since last year. 360 and Sogou are next in line with 18 per cent and 10 per cent respectively. (Google’s market share is 3 per cent.)
For now, however, it’s best to focus your efforts on Baidu and its 400 million users – keeping in mind its nuances and differences to Australian search marketing, which are highly relevant to all digital marketing channels.
Organic (SEO) or paid (PPC)? Unlike their counterparts in the West, the Chinese are more likely to click on a paid over an organic advert. Baidu continually warns consumers that SEO adverts are ‘unregulated’. That, combined with the rigorous set-up process to conduct PPC, almost guarantees the quality of the advertisers. Amazingly, if a consumer clicks on a paid advert through their Baidu account and loses money through a subsequent transaction, Baidu will refund any losses.
Campaign set-up. Businesses in Australia cannot work directly with Baidu, so you must either work through your Chinese office (if you have one) or through China Search International, which is Baidu’s certified partner here and in the US. The process takes many weeks and the forms are numerous, but a partner like CSI will safely navigate you through the pitfalls.
Think mobile. China has 13 per cent more mobile internet users than desktop users. Of the 22 hours per week Chinese users spend online, 10 of those are on their mobile – and they’ not afraid to use their phone to buy products and services. China outranks the UK and US in M-commerce user rates and Baidu itself attracts 130 million mobile searchers.
Payment. If you only accept payment via Amex, Diners, PayPal, Visa and MasterCard, you’ll be limiting your conversion rates. Union Pay, Alipay and cash on delivery are the most common payment mechanisms in China. Even Amazon.cn offers a cash-on-delivery service.
Language. Since the 1950s, ‘simplified’ Chinese has been used as the official script in China – a way of writing which greatly simplifies the 20- and 30-stroke characters of the traditional language. It is essential you use Simplified Chinese in ads and keywords when targeting the mainland. Simply translating an English campaign will not work as it will not encapsulate colloquiums, plus often the words do not exist in Chinese and the creative guidelines are totally different to an English language search engine. I would go a stage further and say you need a person born in China to produce your campaign – a ‘Gwai Lo’ who is fluent in Simplified Chinese will not suffice.
Landing page. If your landing page is in English, expect an 85 per cent drop-off rate. Simplified Chinese is again mandatory. Your site also needs to be designed by a Chinese national as the way they consume content is different. For a start, Chinese is made up of symbols, where concepts take their final meaning from a group of combined symbols, meaning you cannot scan content, you need to read it.
Geographical targeting. China is a huge country, with an enormous population. It may be worth trialling your campaign in the more developed areas of the country, such as Beijing, Shanghai, and Guangdong. Typically they are more affluent and if you’re in travel, those areas have far better connectivity.
Most importantly, don’t be daunted by the size and complexity of the Chinese market.
It is this size and complexity that makes it so attractive and lucrative for the early explorers.
Making digital marketing profitable in Australia is difficult – we run extremely advanced campaigns, targeting an extremely small market.
This has led us to having some of the highest global media costs. The size of the Chinese market and its relative infancy mean that the rewards are rich for the adventurous.