Coffee is something that traditional China would have hated: bitter and not particularly healthy – neither of which are appealing in China. But then why has the  mainland market for retail packaged coffee grown at a compounding rate of 18% per year since 2007, and is potentially rising another 75% to Rmb16bn -US$2.5bn- by 2017? (Source: Mintel). The main contributing factor that has made coffee a success in China has not been the actual beans but the culture surrounding them.

While coffee as a product did not seem like a good fit for the Chinese market, brands like Starbucks took a slightly more roundabout approach. They built a community and culture around their product that was more appealing and inviting than the actual product. They focused on elements from traditional Chinese culture – like the tea house community and social aspects it provided – and mixed those with a western coffee house vibe. They made their coffee shops a place to relax and meet friends more than a place to buy coffee. And the free wifi probably didn’t hurt.

Other examples of western culture and traditions that have created new market segments in China include:

  • Buying engagement rings before getting married — Before De Beers (the world’s largest diamond company) started marketing diamonds in China in 1993, there was no Chinese tradition involving an engagement ring or diamond wedding band. In 2010, De Beers reported record sales of US$5.9 billion, credited to “extraordinary growth in China and India”. Today China is the second largest diamond market in the world behind only the U.S. And it is estimated that by 2016, China will surpass the United States to become the world’s largest diamond consuming country.
  • Outdoor Adventure — In China, the countryside still has the negative stigma of poor rural life. But “outdoor lifestyle” brands have been nurturing the outdoor culture in China through encouraging Chinese consumers to escape the pressures of hectic city life by enjoying the freedom and renewal that comes with spending time outdoors. Many brands such as Padagonia and Columbia have sponsored trails and educational events about wilderness activities such as hiking, skiing and mountaineering to arouse interest. And it seems to be working: the market leader, North Face, is currently growing China sales by over 50 percent a year.

So when entering a new market, it is important to consider not only how your product fits into the lives of foreign consumers but the experience you can provide. If your brand can bring the customs and culture of your product into China then you can build your own market and demand.

I can tell you one thing for sure: the Chinese are certainly not flocking to Starbucks for the coffee.

– www.thenetworkone.com 

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