The recent troubles faced by Groupon shows us that you don’t make business in the largest market in the world whithout a sound and well planned strategy. China now represents 385 millions users, a fifth of the Internet users worldwide. A “must be” market for any international company.
The Super Bowl Ad from Feb11 made lots of people angry in China and marked the begining of Groupon’s troubles. Groupon clearled lacked common sense:
“The people of Tibet are in trouble, their very culture in jeopardy”
The video was broadcasted nationwide and internationally through video sharing plateforms. I can imagine the kind of reactions the Chinese had. When i was studying in Shanghai, i mentioned a few time the situation of Tibet with local Chinese. For them there is nothing to discuss. Tibet has always been and will always be part of China. To locals, the Chinese government is bringing modernity and education to the “peasants of the west”. This is a all positive transition to (most of) them.
In marketing terms, it makes sense to mention Tibet. There is a lot of Tibetan supporters in the USA that would find interesting to enjoy exotic food and agree to the statement that the “People of Tibet are in trouble”. But the campaign was launched without understanding and measuring its global impact. You cannot say that the people of Tibet are in trouble in China cause this is very insulting to Chinese. There have a very different understanding of the situation and this is something that has to be respected if you intend to make business there. If not, Chinese would start hating you, along with your brand and what you represent. This is what is happening to Groupon.cn
TUANBAO.com (Groupon China) is not doing so well despite massive investment, international experience and entering the market through GaoPeng.com The very dense Chinese market has already more that 100 significants actors
So Groupon is having a hard time penetrating the Chinese market, along with the other Big G company, Google.
Google is outpassed by Baidu that now enjoys a 70% market share in China.
So what is really the problem?
1/ The cultural problem
The Feb11 Super Bowl ad hurt thousands of Chinese. The marketing guys behind this probably never tought of the millions of people that could be exposed to it. In China you don’t mess with Taiwan neither with Tibet. You don’t need to mention it and to discuss it. It’s a cultural thing and we, westeners, shouldn’t judge Chinese for receiving a different approach to education neither we should use it as a marketing argument. I remember once a Chinese telling me: “We do not support and agree with International Human Rights because we never wrote it”. The differences between the West and the East are often under estimated.
2/ The Lack of adaptation and the copy paste phenomena
When Google launched its services in China they also tought that Chinese would adapt to Google instead of Google adapting to China. The homepage of Google.cn is a simple translation of the normal Google.com. There is not a real adaptation of Google’s services to the market. The western and eastern way of thinking can be sometime very oposite. You don’t tranlate a web page, you adapt it, you have to re-think everything single aspect of your plateform.
It took almost 2 years for Google to organise search in Chinese, while Baidu was already way more advanced. Google who is at the forefront of inovation in the western world is still strugling to catch up with Baidu in China.
3/ Structural problem
From my experience in big american companies (MS), there is a marketing decision process issue and a lack of understanding locally. This is what companies such a Groupon and Google are facing. They do try to adapt, using local actors but in most american companies, the decision takers are in the headquarters in their office, in the USA. The don’t brainstorm neither consult smaller markets.
They do an excellent job locally but often miss global understanding. This is a very straight forward anglo-saxon aproach: it’s a “Let’s do it” instead of a “Let’s re-think it” or a “Let’s start over”
There is a real problem evaluating the consequences of Marketing campaigns launched internationally. It doesn’t make sense for marketers in the US to take decision for the Chinese market neither it does for them not to brainstorm with other countries while launching a campaign with international exposure.
4/ Lack of understanding of local policies
In China you have no access to Youtube, Twitter or Facebook. In 2009, Google was about to stop its operations and in 2011 accused the Chinese goverment for suporting hackers looking over the Gmail accounts of people classified as “Problematic”
So the chinese goverment can close your service and even ban your songs but you have to deal with it. You don’t fight the government. Especially in China it’s above everything. For every service banned, there is a successful Chinese alternative. RenRen or 51.com allow you to connect with you friend just like a Facebook does
So making business in China is probably harder that it’s commonly thought. Also in retail the French giant Carrefour is struggling those days. Chinese people are proud and they do prefer local companies. The right option is probably to expand your business making locals think that your company is 100% under the control of Chinese.
The French Touch in cuisine or fashion works well along with the American lifestyle in China. They love the NBA and would definitely buy the new fragance from Channel. But if you go mass market in retail or services, you have to act and think just like if you were Chinese. Adapting is not even the solution, you have re-start over your business.