This is a common mantra of Western executives looking to increase revenues by accessing the massive scale of the Chinese market.
When looking at the China market from a simple statistical perspective, the scale is tremendous and the numbers excite economists and business people the world over when they think of plugging in their business to the returning power of the Middle Kingdom.
On a numbers level it seems simple, but there are many more aspects that need to be looked at when trying to tap into the Chinese market on any level – whether setting up business in China through a joint venture or a fully foreign owned enterprise, to offering services to Chinese tourists when they travel abroad, or selling to the Chinese consumer through a platform such as Alibaba.
Culture, History, Language
From a linguistics point of view, how many western executives know anything more than “nihao and xiexie”?
Most Chinese businessmen and diplomats can at least introduce themselves in English – how may Western businessmen can do the same in Chinese?
For a long period through the Western industrial revolution, China needed the West more than the West needed China; hence the Middle Kingdom had more impetus to learn the basics of Western culture and the English language. But now, make no mistake, many Western countries need China and it’s trade opportunities just as much as China needs them; the playing field has been leveled.
China is the first post – industrial revolution (now technology revolution) economy to experience exponential growth, millions are hungry for a better life and are climbing into the middle class, out of poverty.
Within Australia, since the GFC, companies have consolidated, cut costs and maintained dividends but domestically there is limited growth. The obvious source of growth sitting on Australia’s doorstep is China. Corporate Australia is finally waking up to the idea that there needs to be more than lip service to create prosperous trade with China post Mining Boom. And it needs to be more than “clipping the ticket” and selling off assets.
One obvious area is tourism. Australian business doesn’t need to pick up and relocate to China to benefit from the ballooning middle class that exceeds 500 million and growing from China. Hence many executives are repeating the mantra of “Our China Strategy” or “We need to focus on Our China Strategy”. But just what is a “China Strategy”?
If we focus on the inbound Chinese tourist market currently sitting at 1 million annually and expected to double over the next ten years the average stay is about a week and average spend is about AUD 8,000. There is AUD 8 billion entering our economy annually from China.
My advice for Australian executives would be to spend a week in China. Stay away from the 5 star Western style hotel and try and get about on a middle class travel budget to see the sights and sounds of Shanghai or Beijing or Hangzhou. Hang out at middle class local shopping malls, and dine at middle class restaurants – do some shopping at middle class local supermarkets and observe.
This may not be the most comfortable holiday you ever take but it will uncover far more about what is needed for a “China Strategy” than any red carpet business delegation visit.
Key lessons that will come thick and fast are: The feeling of isolation and frustration at foreign inconveniences when paying at the point of sale, not understanding menus, no internet access or login access platforms only in Chinese. Then the overwhelming relief of a familiar Western product or convenience like a coffee at a Starbucks or a hotel attendant who can speak some basic English.
From these observations we need only to elaborate on questions such as: what frustrated us as a middle class tourist? What made our trip easier, more comfortable? What about if we were travelling with children or elderly? What if we were travelling solo or in a big group? Further to our observations of middle class locals in China: how are they paying for goods and services? What systems are they using for goods and services payments? What platforms for communication do they use through their mobile phones? Are there any common themes when checking into hotels? What is different about your middle class hotel room? How are they consuming media and accessing information?
Some aspects that are quickly visible are the prominent use of QR codes, no website addresses but thousands of little coded boxes placed everywhere from giant billboards, to the corner of your TV screen to supermarket checkouts.Another is the “mobile first society”, hardly a laptop or tablet in sight!
Once we have identified Chinese local middle class service and system trends, we only need ask ourselves can we mirror this service or system and offer it in Australia? How do we integrate this into our current offerings for Chinese tourists? If they are only here on average 7 days should they really need to exchange money and carry cash? When they go for a coffee or tea would they rather use their mobile phone to pay than dig around in their pockets for strange foreign currency? When they are after a service in their hotel room do they really want to call hotel reception and hope they get a Chinese speaker to help or is there an alternate way? When there is a sale at a department store how do the Chinese advertise this, what signage do they use? Interestingly in China a discount sale is not marked as a percentage off but as a percentage of the original price.
If we make it easier for the Chinese when they come and stay by making it easier to “play and pay” then we stand to increase that AUD 8 billion annual injection to the Australian economy.
The fact of the matter, we in Australia have had it lucky, good and comfortable for far too long. If we want to continue to grow as a country economically, we do need to make more of an effort in embracing our key inbound tourist market, it comes down to communication, cultural awareness and attempting to see things from the perspective of a culture developed over thousands of years, in a different part of the world. English speaking Australians don’t need to become fluent in Mandarin, but a few basics at any level of business can make a world of difference. A “China Strategy” involves many aspects including some highlighted in this article, but a good starting point would be “Ni hao, wo shi ……. Wo laiziAodaliya, hen gaoxingrenshini” (Hello, my name is …….. I come from Australia, pleased to meet you). Try it at your next business meeting – a little effort can go a long way!