A toothpaste with a smell of green tea and the success of Chinese companies.
According to the July'13 report of Bain & Company and Kantar World Group, Chinese market of consumer goods rose by 7.4% and totaled 1,15 million yuan ($185,31 million).
Both local and foreign companies target the same consumers on this very competitive market. The locals win most of the time: almost 2/3 of foreign brands interviewed lost a part of the market in China last year, as the report says.
The Chinese retail companies managed to reduce to a minimum the share of foreign rivals in Chinese market. Such "giants" as Coca-Cola Co., Procter & Gamble Co., Colgate-Palmolive Co. simply don't have the time to adapt their products to the Chinese reality. Local companies win their audience because they know Chinese consumers better. Western manufacturers just would never come up with an idea to make a toothpaste with a smell of green tea, which is by the way really popular in China.
Local companies also better understand how to present their goods in order to obtain the consumers' trust. For example, the advertisement of a preserved herbal tea made by Jiaduobao (JDB) says that this tea can help you put out your inner "conflagration" which is a reference to Chinese traditional medicine.
According to the data of a consumer consulting company Euromonitor, JDB, which is also a sponsor of a popular Chinese TV show "The Voice", takes 6.1% of Chinese soft drinks market. Coca-Cola takes 13.1%, while Pepsi takes only 3.9%.
Chinese company Lenovo has become a world leader in the PC production, leaving behind HP, Dell, Acer and Asus. Such a success was achieved in many respects due to the success on the local Chinese market. The company did its best to balance the price and quality.
It goes without saying that Chinese business culture is unique. A lot of foreign companies try to use the standard ways of running a business in China. They do not take into account the fact that Chinese business is developing by its own logic, the understanding of which is impossible without taking into consideration the history of the Celestial kingdom.
The deceit is a usual way of behavior on the market for the Chinese, especially when dealing with foreigners. The vivid example of this is a recent conflict between a local grocery company Shanghai Husi and McDonalds. The main reason of the conflict was that Shanghai Husi supplied McDonalds with tainted meat. That's why foreign companies should do business in China very cautiously.
Western companies have something to learn from the Chinese who think that the best way to survive in a highly competitive environment is to get better knowledge of customers' tastes.