China’s transition market is different from Western mature markets.

Many senior managers of multinational companies can’t help but lament after being deeply involved in the Chinese market for several years: “The Chinese market is too big, too complex, and changing too fast. The Chinese market is in the process of transformation. The first is from the "planned economy" to the "socialist market economy". The end point is marked by the transformation of the relationship between the government and enterprises and the realization of a modern enterprise system. The second process is from the "closed market" to the "open market". The end point is China's entry into the WTO. A 1995 research report by the State Planning Commission stated that the overall marketization degree of China's economy is about 65%. In this process, China's market environment and market operations are constantly transforming. Obviously, the transformation of the market and Mature markets have various unique features, and this is the most basic key to correctly interpreting the Chinese market. In the two completely different environments of planned economy and market economy, closed market and open market, behavioral characteristics, ways of thinking and The value systems are far apart, and the interest distribution is also completely different, which directly affects and determines the different behaviors of enterprises.

The characteristics of the planned economy are: officials are the standard, the government has great authority; officials are greater than the people. ; Officials govern the people; enterprises seek government; enterprises and the people are subject to constraints (comprehensive approval system); the government allocates resources; the government is the referee.

The main characteristics of the market economy are: market (customer) orientation; the government serves enterprises. and consumers; the government is constrained; the market allocates resources; competition determines the outcome.

The main characteristics of China's transition market are:

●The power to appoint senior leaders of state-owned enterprises still belongs to the government. Xiang Jiugui (listed company), due to declining performance (net profit in the first half of 2000 dropped 56% year-on-year), the board of directors was replaced in February 2001. The new directors were all people with government backgrounds (3 retained and 6 new directors). Nagata Ieki is the former executive deputy governor of Xiangxi Autonomous Prefecture. More than 85% of local government revenue comes from this company.

●The property rights of enterprises are unclear, and many companies have local government shares (major shareholders). >●The interests of government and enterprises are intertwined, and business operations are not independent.

●The government's approval power is too extensive, and corporate activities are excessively subject to approval. For example, the 2% advertising fee regulation (2000), well-known trademarks are controlled by local governments. The government determined that the company's listing limit approval (resulting in the high price of listed company shells) ●The rules of the market operation game are changing and the regulations are incomplete and unclear, resulting in arbitrary implementation (such as the interpretation of the advertising law varies from person to person

This This difference cannot be ignored. In 1998, after in-depth research, Professor R. Fogel, the Nobel Prize winner in economics, once pointed out the huge gap in the development stages of China and the United States:

China’s actual per capita income is at . At the level of the United States around 1897. China's share of the agricultural labor force is at the level of the United States in 1880. In terms of the ratio of primary school students to relevant age groups, China has reached the level of China's middle schools in the mid-1950s. Education has reached the level of the United States in 1970, and based on life expectancy, China has reached the level of the United States in 1966. Compared with the proportion of urban population, China is at the level of the United States in 1890.

The market environment in the minds of Chinese entrepreneurs

The in-depth experience of Chinese entrepreneurs who struggle in the market every day is also one of the clear evidences of the transformation characteristics of the Chinese market: Changhong Ni Runfeng ( He has successively served as general manager, chairman and CEO): In the Chinese market, "those who walk straight are afraid of those who walk sideways, those who walk sideways are afraid of losing their lives", and "those who wear shoes are afraid of those who go barefoot".

Lenovo Liu Chuanzhi (Chairman): "It takes 37.5 to 39 degrees to hatch chicken eggs, but the Chinese environment is 40 degrees, so we can only adapt to the environment", thus advocating "paranoia in strategy and moderation in method" ( CCTV-22001.2 "Exclusive Interviews with Chinese Economic Figures in 2000"). The rules of the game in the Chinese market are "the timid wait for death, the bold seek death" (meaning that a company cannot survive if it strictly follows the policy regulations, and it will not survive if it is caught operating illegally). This sentence is recognized by a large number of entrepreneurs, and there is even a saying that "you must be able to skirt around the edges". Shi Yuzhu, the former president of the private enterprise Giant Group, bitterly complained about the "13 ways to die for Chinese private enterprises" (Guangzhou Daily, 2001.2.19), which reflected various problems in the marketing environment of the enterprise and the chaos of the market order.

Multinational companies: China’s localization is the key to victory

As China is about to join the WTO, global multinational companies are stepping up their efforts to enter the Chinese market.

Among the multinational companies that entered the Chinese market early, there are winners and losers. The winners have a unique slogan: "We are Chinese companies." Yazhou Lai, President of Motorola, said: Motorola "takes China as its home", is "more Chinese than a Chinese company", and is determined to be "caring, patient and sincere"; Bu Shaochang, President of Philips Electronics Group, said: "Please don't treat us as Considered a foreign company, we are an authentic Chinese company." The marketing strategies of the winners of multinational companies are: attaching great importance to localization in China; making foreign brands "local"; attaching importance to the relationship with the Chinese government and high-level public relations, etc., so as to adapt to China's transforming market environment. Electrolux refrigerators, Procter & Gamble's "Runyan" shampoo and desensitizing toothpaste "Shuminling", Coca-Cola's "Heaven and Earth" and "Jingjing", and Amway's transformation are all winning through localization.

Characteristics of China’s market environment

Can be described in 5 words

Big: vast territory; huge prospects; a paradise for making money

Changes : Rapid development; rapid change; changeable policies; imperfect laws and regulations

Chaos: chaotic market order; serious counterfeiting and infringement; many abnormal and strange things; serious lack of credibility (business ethics)

Dry : Short-term orientation; ups and downs; excessive competition.

Differences: regional differences, institutional differences, industry differences, marketing level differences, and generational differences are all significant.

China’s consumers, businesses and government all show immature market performance. For example, consumers are extremely sensitive to prices, lack awareness of rights and interests, and are superstitious about advertising; entrepreneurs are obsessed with officialdom, short-term behavior, and excessive price wars; the government is obsessed with corporate power, local protection, and arbitrary interpretation or change of market game rules. . Corporate behavior is deeply constrained and restricted by government behavior. Government behavior is sometimes influenced by power, interests and even corruption, making the entire market more complex and irregular

The main singularities of China's transformation of marketing

1. The hard-to-avoid access trap

In 2000, the competition for access in the Chinese market was fierce. The complexity of channels is one of the most prominent differences between China's transition market and mature markets, so even experienced multinational companies will inevitably encounter traps. Because the access road cannot be moved in from the outside, sometimes "a strong dragon cannot defeat a local snake". Some of the problems are listed below

●The payment will not be returned: A businessman who does not owe debts is a stupid person.

● Cross-region channeling: a penny earned is a penny earned.

●Mutual bargaining: Expand sales and get high rebates from manufacturers

●Big players dominate: bargain and control your sales policy.

●Middlemen are looking for job hopping: They are only interested in profit, "If you have breasts, you are a mother"

●Competitors poach: Professional managers are more powerful than the boss

●Middlemen bargain : “If you don’t give me a profit, we won’t do anything for you

●Obstacles for new market entry: I own this mountain, I drive this road, if you want to live on from now on, leave money to buy the road

●The cost of network construction is high: the rent of office buildings and cargo warehouses is more expensive than the goods

●Internal loss of control: the salesperson is "in the Cao camp but in the Han", so he can get some kickbacks, Multiple part-time jobs are better than hanging on a tree

●Gray deals: Good deals under the dining table, green light on the mahjong table

●Store cheating customers: Lying to you without negotiation, even Get a "demon mirror" to monitor you.

●The competition for shelves is cruel: What is "first come, first served"? If you are not around, I will put my products first.

●The cost of distribution is high: "Sorry, if you want to enter my store, you have to pay a distribution fee of 300,000 yuan first."

●Irregular management: few companies have established Access management documents and specification manuals.

●Information communication is blocked: information communication is not timely, communication methods are backward, and information is distorted.

There is also local protectionism. For example, Sucheng District, Suqian City, Jiangsu Province once charged foreign beer stickers of 0.2 to 0.5 yuan per bottle to protect the local high-priced beer, making it unprofitable (CCTV-1 Focus Interview, June 24, 1999); the Hubei market raised the price of Shanghai Santana cars by 7 The Shanghai market has raised the price of Fukang cars from Hubei by 50,000 yuan.

2. The proliferation of counterfeit goods and the nightmare of intellectual property rights

International brands P&G, NIKE, Microsoft, etc. feel that one of the most difficult problems in the Chinese market is that there are too many counterfeit goods, which is confusing. Hard to guard against.

Fighting against counterfeiting not only requires a lot of manpower and material resources, but what is even more worrying and embarrassing is that a large-scale crackdown on counterfeiting will deter consumers and seriously affect the sales of genuine goods. Counterfeit P&G brand products on the Internet have accounted for more than 15% of the market share, and P&G loses as much as US$150 million in sales every year due to such counterfeit products. Anti-counterfeiting has therefore been listed as an important task of P&G's market management. "Goldlion" is a well-known brand from Hong Kong that entered the mainland. Later, it declined. The main reason was that there were too many fakes. Zeng Xianzi said helplessly: "In the past 10 years, the more we have cracked down on counterfeit goods, the more fake money we have been seeing." Penshibao Group's agricultural fertilizer "Penshibao" is a key national science and technology promotion project, but due to fake products Lose market. Wang Xianglin of the group said: "For more than 10 years, the company has been forced to invest manpower and material resources to crack down on counterfeiting (it has spent more than one million yuan every year since 1996), but it has been unable to fight. So far, there are at least three times more fakes than genuine ones on the market. In 1993' The sales revenue of "Penshibao" in Shijiazhuang was 20 million yuan. In 1995, fake products entered the market at very low prices and the real products were squeezed out of the market within six months. In 1997, the genuine and fake "Penshibao" were all gone in the city because farmers were harmed. If you don’t believe it anymore, you won’t buy it.” According to the Southern Metropolis Daily (2000.11.24), the output value of counterfeit and shoddy products in China has averaged about 130 billion yuan per year in recent years, and the annual tax revenue has exceeded 25 billion yuan. A survey of 146 companies affected by counterfeiting showed that: 23 companies had sales of fakes accounting for more than 50% of genuine products; 11 companies had sales exceeding 100%; the most serious ones were as high as 568 times

Why are counterfeit products Hard to control? The reasons are complex, but have a lot to do with government law enforcement. According to CCTV's Focus Interview (2001.2), private salt sales in Huanghua City, Hebei Province have been banned repeatedly. The reason is that the local Salt Administration regards this as an important source of "income generation" and even sets revenue targets in groups. Therefore, when reporters went to the scene to investigate, officials from the Salt Bureau were the first to tip off private salt traders.

3. Market segments are very different

One of the most significant features of the Chinese market is its vast territory, obvious differences in economic, cultural and folk customs in different regions, coupled with the difficulty in implementing policies by local governments. Differences result in different geographical market segments. Because Chinese society is undergoing rapid changes, compared with the stable social structure of European countries, the contrast between tradition and modernity is greater. The difference between the younger generation of consumer groups and the older generation of consumer groups is sometimes very different. Some researchers divide Chinese people into three generations, and some multinational companies focus on the future generation. Many studies have shown that the gap between rich and poor in Chinese society is expanding (policies also encourage "some people to get rich first"). The resulting difference in purchasing power and its changing trend have created dynamic income market segments and different Market opportunities must also be identified in detail. Some multinational companies focus on the middle class.

4. Market research error is high

The role and status of market research in mature markets is very important, but in China's transition market, it seems to be in a lukewarm state. On the one hand, local companies are indifferent to market surveys, and only 0.24% of them are willing to do formal market surveys (Guangzhou Daily, 2001.2.2). Market survey customers are mainly multinational companies, joint ventures, and private enterprises, and there are also some highly competitive industries (such as IT, Home appliances, health care products) are more important. On the other hand, the validity and credibility of market survey results are not as good as in mature foreign markets in China. A consumer products company controlled by overseas funds, its executive general manager (Harvard MBA, with experience in managing large multinational companies) relied entirely on data from a well-known international research company to make decisions in the office without visiting the actual market. As a result, he failed miserably and was forced to leave. The main reasons why market survey effectiveness and credibility are relatively low in China's transitional market are as follows

●Market survey methods are basically Western, with insufficient localization research and large errors;

●Poor business ethics and morals in the execution of market surveys, and large human errors

●Chinese people are not used to and do not fully accept Western-style surveys, and the psychology and behavior of the respondents lead to large errors;

●The professional quality of market research personnel is not high enough

●The "ranking list" based on hype lacks credibility, thus ruining the reputation of the industry

5. Marketing obstacles for state-owned enterprises and monopoly industries

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The marketing awareness and level of various industries and enterprises in China vary greatly. Generally speaking, competitive industries are better than monopoly industries; private enterprises are better than state-owned enterprises.

In contrast, some large state-owned enterprises, banks, and public utilities are still in the "no marketing" stage. The senior management lacks marketing awareness and has no marketing functional department, let alone market research and marketing strategies. Marketing obstacles are huge.

6. High failure rate of strategic planning

7. Confusion about advertising operations

Since Chinese consumers are even more superstitious about advertising and powerful media than foreign consumers, Advertising has been given a greater role. In addition to foreign brands using advertising as an important weapon, advertising plays a decisive role in establishing the popularity of new consumer goods brands of local companies or launching new products into the market. However, there are obviously many irregularities in China's advertising operations:

●The "Advertising Law" implemented in 1995 has principles but lacks detailed definitions, and the interpretations of implementation vary from place to place

●Enterprises and local governments join forces to support huge advertising expenses (such as Qinchi)*** Same gambling market ;

●The common channel-changing advertising breaks on local stations interrupt the normal link between programs with high ratings and advertising effects

●Although the media strategy in mature markets is quantitative, in However, its effectiveness in the Chinese environment is greatly challenged

●The mature agency system in the international advertising industry has been violently impacted by the special relationships and gray operations in the Chinese market;

●Multinational advertising companies It is difficult to adapt to local customers and is often out of touch with the market because it cannot quickly reflect the urgent needs of local enterprises in the transforming market and cannot grasp the rapid changes in competition.

8. Chinese characteristics of relationship marketing

Relationship marketing has received global attention since the 1990s, but it has a special meaning in China's transition market. In the West, the focus is on strengthening customer relationships, including using IT to establish customer relationship management (CRM). In China's current corporate environment, because too many companies are controlled by the government, relationships with relevant government departments are crucial to the survival and development of companies. Therefore, government-business relationships are more important than customer relationships.

Foreign-funded companies cannot bypass this approach when entering the Chinese market. In the West, people usually sign a cooperation treaty first and then toast, but in China, they always toast first and then discuss business.

9. Chinese-style new product development

Some unique products may appear in the Chinese market, such as VCDs, cabinet air conditioners, etc.

10. Chinese culture-oriented brand building

Because the Chinese market has a profound cultural history, brand building in China must be more localized than in other countries.

Injecting Chinese cultural values ??into brand management has become a very important strategy. For example,

●There is a neutral principle in the naming strategy of international brands, that is, names have no meaning. In the Chinese market, a more effective strategy is to learn the naming of Chinese time-honored brands and create good associations with Chinese cultural connotations.

●To establish brand value in the minds of Chinese consumers, it is more effective to also pay attention to the values ??of Chinese culture. For example, Mai's Coffee has established its brand value in Taiwan with the slogan "good things should be shared with good friends", which has achieved better results than in the United States.

Marketing Characteristics of China’s Transformation Market

1. Transformation Mixed Marketing

Perceptual marketing is the marketing characteristic of Chinese local enterprises. They first pursue “feeling the right way” , although there are reasons in the transition market, there are also big risks. The "ups and downs" and "meteor flashes" phenomena in China's business world are the price.

It is worth emphasizing that local companies are stepping up their studies to improve their marketing level. The proportion of mixing is changing. The direction of development is that the proportion of "scientific" is constantly increasing, and they are gradually moving towards the marketing model of international multinational companies. Get closer. Some excellent companies (such as Haier) have made rapid progress and have demonstrated strong learning, competitiveness and innovation capabilities.

2. Promotion-led

A large proportion of Chinese local companies are still sales-oriented, treating sales as marketing and with sales as the purpose, so they engage in endless price bargaining. War, promotion war. In fact, since the mid-1990s, the main theme of competition in the Chinese market has been price competition. Although the non-price competitive advantage of brand has been widely praised, not many actually work.

Quite a number of companies are facing a life-or-death crisis in the market, lacking competitive advantages and core competitiveness, and can only resort to helpless short-term marketing and simply pursue sales.

Companies in better shape often have no sense of crisis, are limited by the inability to improve their sales concepts, or are unable to break through the solidified sales-oriented concepts and performance systems within management.

3. More planning than strategy

The prevalence of "planning" is a unique phenomenon in the Chinese market. Many local companies ask for planning when they have problems, just like when farmers are sick, they ask for help from local doctors. It can also cure diseases and even have miraculous effects, but most of them are experience-based and non-professional.

The accompanying phenomenon is that there is more market hype than market research, or a single marketing method (such as advertising bombing) is used extensively without sophisticated integrated marketing operations.

Such short-term behavior will inevitably lead to failure after competition escalates. The color TV price reduction war led to industry-wide losses and the collapse of the thermal underwear war in the autumn and winter of 2000 are painful lessons for local companies.

4. Lack of professionals

Marketing professionals are in very short supply in China's transformation market. People with practical experience and former marketing managers in well-known companies are very popular in the talent market, and their worth is also increasing. high. The lack of professionals is also the basic reason why the marketing level of Chinese enterprises is not high. In the increasingly popular MBA education, there is an urgent need to strengthen "Marketing MBA" education.

5. Primary school level

The marketing level of different industries and companies in China varies greatly. In some industries and companies, marketing majors have improved rapidly and performed well. But judging from international standards, China's large-scale marketing is still in its infancy, or the "elementary school stage." A low starting point is what most companies have in common, and a large number of companies must start learning from the basic ABC.

In short, in the general trend of global marketing, Western marketing theoretical methods have universal significance, and China is no exception. Just because China's transition market is different from mature markets in the West, our mission is to achieve the adaptive docking of international marketing theories and methods with the Chinese market. This requires a thorough understanding of Western theoretical methods and an in-depth interpretation of the local market to achieve localized innovation of Western marketing theoretical methods in China.