Even If Google Leaves China, You Shouldn’t
Today’s news that Google is defying Chinese authorities by no longer censoring search results leaves many wondering whether the government will simply force Google to cease operations in China. Even if that happens, China is still an important market to consider.
Google is not the first western company to fall out with the Chinese government nor will it be the last. Google is making its own decisions for its own reasons and my purpose here is not to delve into the politics nor analyse Google’s motives, but to guide others on how to gauge what this situation means for their own businesses and what aspects to consider when continuing or beginning to do business in China. Is this a lesson for us all and should we really be wary of China or, worse, all international expansion where local regulations can cause big business challenges?
You do need to bear in mind that I work only on international projects so don’t be surprised if this article proposes that international expansion and dealing with China still makes sense for many—but that it pays to research and understand local conditions. You need to gather a team of experts around you for guidance.
Most businesses which enter China do not have the same profile that Google has, and that means they also have less in the way of support and clout. US Secretary of State Clinton is unlikely to join the debate for a business gifts company selling mugs to the Chinese. But this doesn’t mean you shouldn’t have big-hitters on your side. In my opinion, this is one area which businesses frequently neglect despite that fact that it isn’t particularly expensive relative to the total investment plan.
In addition to specialist search marketing agencies, there are China export agencies, Chinese lawyers, Chinese accountants, Chinese distribution experts, Chinese specialist banks and government agencies who can help. All of this applies to a greater or lesser degree to pretty much any market you might want to consider. In fact, since there is a greater need for support relating to China and the market is so significant, it’s actually easier to find assistance for doing business in China than just about any other non-US or European market.
The main point is, if you’re planning to make a significant investment or expansion in any market you don’t yet know, then gather a team of experts around you now because they will ensure the whole process runs more smoothly—and are more likely to help you make the right decisions which results in a positive ROI for your efforts. If you’re already active in the Chinese market, but you don’t have as much knowledge as you think you should, then it’s not too late to create your expert support panel.
From a search marketing point of view, there are now plenty of English-speaking executives in agencies who are prepared to guide you through improving or starting your Chinese project. The best way to get to find them is to ask for referrals from people you trust. Don’t forget that the most important search engine in China is—and always has been—Baidu. So check that your agency has Mandarin Chinese speakers who are used to liaising with Baidu and ask how long they’ve been working in China.
The two biggest challenges of doing business in China are the country’s size, and dealing with money. Not only does China’s size pose large logisitical problems for the unwary, it’s also very tempting for the marketing team to calculate the potential market size and over-estimate the potential business that can be done—understandably, because the numbers are so staggering. When calculating the potential return, don’t forget to add significant scope for dealing with the cultural issues you’re going to encounter, and if you’re not sure then add a significant contingency fund. It is more likely that costs will be greater than you envisage than less.
Go international in the strongest opportunity market first
The first rule of international expansion is always to start with your strongest market—the country where you are most likely to succeed—to make your first investment. This might be stating the obvious, but many choose the largest markets often because they think they’ll have economies of scale that they can play to their advantage. I don’t agree with this approach. For me, it makes much more sense to take a small and relatively easy market to target first. I’ve often pointed people at the Netherlands because it’s a market which is very ready to buy from international companies. So even though it’s not one of the largest European markets, it can still represent a great first step.
I’m not saying, don’t ever choose to go to China first, but I am saying it probably isn’t the best market for new exporters to tackle first unless you’ve strong evidence that that’s where your greatest market potential lies. Many US companies choose to go to the UK as their first step outside of North America and that makes good sense too. Just watch out when choosing an English-speaking market that you don’t immediately drop into the search engine duplication filters and damage your home market site too.
Pay attention to how people buy
It will be no surprise to hear that Chinese people do not demonstrate the same behaviors as Americans when buying. For example, they don’t use the same payment systems, such as credit cards, to the same extent. Credit cards are becoming gradually more popular everywhere in the world but commercially it makes sense to look at different payment options to cater to specific market requirements.
Business-to-business companies, look for partners
Business-to-business companies have always had the option to create franchises or set up agencies to promote their business in a particular market. Not only does this remain true today, but online marketers have a great solution for working with local representatives around the globe by centralizing their website and website management. Why? The two big issues for companies working with partners are control and trust. How do you know what the local agency is actually doing to help your business and how are you presented to that market?
If you have centralized control of your website and can see exactly what is happening in terms of performance, you’ll probably find you will forge a stronger partnership with your local representatives based on confidence that would have not otherwise been possible. From tracking you can see what initiatives they take to promote you and in the worst case that you fall out with them, you can move to another agency with your shop window remaining firmly in your control.
Use keyword research to find out what customers want to buy
There are keyword facilities available in China using Baidu data and you can use this data to decide which products you should offer. Often keyword research is done as part of the SEO or conversion optimization process, but I think it creates a much stronger virtuous circle if you base your product selection on what folks in the local market actually want to buy. I think this used to be called “marketing” but in those days we didn’t have the search engine tools to help us with the decision-making. It’s much easier to optimize a site which is selling products the customers actually want to buy.
Test different pricing levels
Pricing is a hornet’s nest. If your potential customers earn less than you do, directly converting US dollars to the local currency is likely to look rather more expensive than you’re used to. Then you have the risk of cannibalizing other markets by offering incentivized prices in one country. But experiment with pricing until you find the optimum level. Remember, no amount of SEO or pay per click can make a product move that simply has a price which is too high for the market.
Look to the big cities for distribution first
Whatever you do, don’t stand in your office looking at a map of the world on the wall. The map market selection method is great fun—but it doesn’t work. China wins because it creeps right around Asia, but the customers you want to target are in the great cities. With China many marketers group the cities into categories and segment the market that way. There is more wealth and greater internet access in large cities than in rural areas and China’s top cities. Beijing and Shanghai can easily provide a solid jumping off ground in terms of market size for your business without quite the same logistics issues as going inland to smaller cities. By the way, the dominance of large cities doesn’t just apply in China but also in Russia, Brazil, India and many other nations.
Review competitor websites
In international marketing terms, competitors really are your friends. Often they’re struggling with the same issues you face. By reviewing what they do with their websites you can often gain some great ideas for tackling your own challenges. They’ll certainly be doing the same to you.
What to do if Google leaves China
If you’re currently doing search marketing with Google in China, especially if it is your primary vehicle, then strongly consider moving your campaigns to Baidu. This isn’t difficult to do, but it is a little tricky to do yourself and you would be wise to get an agency to make this transition for you. Many agencies have search engine transition services that will convert your Google campaign to one which is compatible with Baidu whether it’s a pay per click activity or focused on SEO.
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