• by Dan Mintz , August 5, 2008

China is in the spotlight as never before. Certainly that's because it's a huge marketplace, but also with the Olympics approaching, the world watches with fascination as a closed society opens itself to outside scrutiny. And what will be the biggest player of the games? The World Wide Web.

This will be the world's first "wired" Olympics. The on-the-track action takes place when many people are tucked in bed. However, they'll get all of the results and video online. The digital channel will showcase the technical capabilities of the new China as Olympic coverage breaks the online records set in Athens and Sydney.

This year's games will certainly showcase a country that now has the economic muscle to match its rich cultural heritage. Economic growth was at 11% in 2007 - the fastest rate in 13 years. With that, success in China remains transformative for global businesses.

A good example is that we've been working with Volkswagen since 2001, and its brands are nearly twice the size of General Motors in the passenger car market. It's on course to sell more than one million cars in 2008. As a result, China has become VW's biggest market worldwide.

For marketers wanting to do business in China (especially, but not only during the Olympics), there are some key rules. You need to approach this country with care, reverence for its traditions, and a thorough understanding of the right way to target these newly empowered consumers.

Wired to the World
Every market has its own distinct media structures, and China is no different. While its government controls TV and print, the Internet adds a new dimension to the mix, opening up fresh information to consumers. Most importantly, there is a surprisingly powerful connection point: one in every 30 Chinese people is blogging. This offers businesses a great place to research what people really think about everything from their personal lives through to real-world events.

Millions of Chinese consumers live their virtual lives via massively influential home-grown social networks. Forget Google. Think Baidu, QQ, Sina, Sohu and NetEase. For instance, when the five official Olympic mascots were unveiled in 2005, the traditional media was full of praise. But the blogging community was much more critical-and much more in tune with real public opinion.

Chinese Consumers
Despite the clichés about China's billion consumers, the truth is, they offer an amazing opportunity for Western brands. At the same time, despite the massive economic progress, many people in China remain poor. An annual income above 51,000 RMB (U.S. $7,000) is considered middle class, and this is where foreign brands need to focus. That may not sound a lot in the West, but in a low-cost market it's an impressive amount of spending power.

Understanding this market also takes new skills. China may seem fairly homogenous because the vast bulk of the population comes from a single ethnic group, the Han Chinese. But there are some 26 different ethnic groups in China, so the more one looks, the more complex this country becomes. Do you break it down by north versus south? Urban versus rural? First-tier versus second-tier cities? Rice versus noodles?

In fact, you need to analyze all of these factors. Traditional Western analysis will look at quantifiable social and economic groups based on income and social status, but not in China. You simply can't talk to someone in Chongqing in the same way that you would talk to them in Shanghai.

Chinese Culture
Time and again, we come back to culture as the core driver of brand success. Planning and strategy should employ ancient Chinese values. For instance, DMG's own marketing tool implements the ancient Chinese philosophy of Daoism and the 2,000-year-old Heaven, Earth and people matrix of balance-both are extremely essential in understanding consumers' motivations and making effective calls to action.

For example, the American brand Fruit of the Loom advertises with relevance to the Chinese culture through "Xian Guo Bu Yi," which loosely translated means "Fresh Fruit Clothes." Its "Wear Fruit" campaign added everyday Chinese fruits like mangoes to reflect its hip, fresh, comfortable, yet affordable clothing line. In addition, young faces and colors were used to appeal to China's new consumers.

Nike, another successful marketer in China, based a successful marketing campaign on the historical fact that old Beijing city was guarded by nine gates for centuries. This became the essential theme behind its three-on-three, basketball-influenced campaign called "Battle of the Nine Gates," which included a highly publicized tournament. More than 6,000 people competed for the right to represent their gate in a final held in the heart of the Forbidden City - never before a site for such an event.

The influence of tradition also extends to purchasing patterns. Image has always been important in Chinese society. As soon as they can afford it, consumers select the kind of car that will give them "Face" to send out a strong status message to friends, family and business contacts. Luxury brands such as Louis Vuitton and Fendi are doing very well in China for much the same reason.

The Chinese take brand names and new fashion just as seriously as anywhere else and seek out world-famous luxury brands to enhance their image. However, this is a market of contradictions. Consumers may drive a VW, but at the same time, will still scrutinize the price of a bottle of shampoo.

Time And Relationships
While ancient tradition and culture remain important, time also moves incredibly quickly. People who lived through the Industrial Revolution in the West most likely saw a significant improvement in their standard of living during the course of their lifetimes. For many of today's Chinese, the rate of change has been far, far quicker than that. A simple rule of thumb is that every year in China is probably worth five in the West.

China may be the world's most dynamic market, but it's all about building brand reputation and connections; without a thorough understanding of both, your brand cannot make it off the ground in this ever-changing and increasing market.

If you are hoping to do business in China, remember the word guanxi, which means connections, clout and the ability to deliver. Connections count for everything. Great ideas and cultural understanding are important; however, in order to deliver in China, it also takes strong relationships.