How to Leverage Chinese Ecommerce to Become a Top 10: The Rise of Zara
Some months ago, we identified some Insights on ZARA in the Chinese digital market that came to underline its first steps on Chinese Ecommerce and the main reasons which led the company to choose Tmall as its official flagship store.
Zara´s stay in China began ten years ago and would not be long before the Management decided to set up its own online shopping website The Zara China and publish an M-shop called Zara.
What has been the result of the policy undertaken in recent years?
The unstoppable rise of Zara
After its landing in Shanghai, Zara currently counts with 182 stores in China. The brand is undergoing a process of rapid expansion, but gradual: after settling in major cities, continues to expand its business model in medium-sized cities –Second and Third Tier cities-.
The expansion of Zara in China occurs while increasing its international presence; the company is already present in 90 countries with a network of 2.170 stores…and there are still much more worlds to conquer.
In a curious twist of fate, while Zara undertakes an ambitious international growth -focused on Asia-, some others Chinese counterparts are the ones which starts their landing in Europe. It is especially noteworthy the case of Chinese Mulaya. Born in a spirit reminiscent of Zara, it advances rapidly in the West as a flagship Chinese in women’s clothing.
Ten years to become one of the 10 most recognized brands by Generations Y & Z
It would be this August when the Chinese RTG Consulting launched its latest study 2016 RTG Brand Relevance Report. The Report comes to underline the relevance that some brands reach between so-called Generation Y and Generation Z in China, their consumer behavior and lifestyles.
Surrounded by Chinese –Xiaomi, AliPay, Wechat, Taobao- and some others well-known international brands –Apple, Adidas, Nike, Uniqlo, H&M, Converse, New Balance-, Zara has entered into the Top 10, after becoming the sixth Most Recognized brand in China for the generation under 36 years.
But results are better for the Spanish company when we dive into Clothing brands. If we look at the survey results, we find that young Chinese place Zara as the second most-recognized brand in their industry, just behind Adidas.
China is already the second most important market thanks to ECOMMERCE
Its huge success in China is due to the combination of three main factors we describe below more in detailed:
- Zara offers a constant renewal and an affordable luxury as concept.
- Zara decided to start playing at the Chinese ecommerce scene by the hand of Tmall.com, instead of trying to build its own infrastructure to cover the entire Chinese market.
- Its Electronic commerce policy not only supports the growth of its own Digital industry, but also the Company growth as a whole: it has become a safe way to promote the brand in places where physical presence does not yet exist.
After going through critical situations in its implementation process in China, the company has adapted to the specific conditions of the market to which it is addressed. Zara not only has understood that nowadays, any approach to the Chinese territory must have a policy consistent with the preferences of the target population and be brave and fast to react to local consumer tastes, but also that Ecommerce has become the board in which the battle occurs, an step into future and the key that makes the difference.
All we can we do for you
Inevitably, the present is already future and both are settle on the virtual world. Knowing the ins and outs of the digital industry, take advantage of Ecommerce for the growth of our business and not give up a proactive marketing policy are the keys for successful development in the country.
In the company, we have the experience of an expert team. We are used to deal with the constraints of the Chinese market and we seize opportunities.
Let us team together. Visit us in 2 Open.
Nutrexpa Experience in China: Business Tips
Nutrexpa was not only one of the first Western companies operating in China in the early eighties, but also a perfect example to explain the hurdles that any company faces in its landing to China.
Nutrexpa paved the way and others followed its footsteps. Its story is an example of tenacity and adaptability to a country that was not what it is today. Many of its experiences are likely to be applied to any company that considers China.
Keep reading!
Find the proper battle buddy. Be aware of market dynamics!
In the early eighties, it was impossible to land in the country without the assistance of a local partner and the Chinese authorities.
After over three years of negotiations between the company and the local authorities, the emergence of a suitable local partner –Li Bank-, contributed to the establishment of an alliance, and the subsequent creation of a Joint-Venture.
A tip! This first stage requires flexibility and guangxi. Negotiations with local authorities and the Chinese bureaucracy are not always easy -although is improving every day! -, and finding a proper partner can be difficult.
Do not lose your patience and keep working on building a suitable partnership. It´s worthy!
Sometimes in China, your product will turn into another
After inaugurating in 1990 its factory in Tianjin, Nutrexpa would focus on prospecting of its target market, and also in adaptive demands that China demanded of its product. There, Nutrexpa started producing soluble and powder cocoa drinks.
Nutrexpa had all the ballots to fail on its arrival in China
The biggest pitfall were the eating habits: no milk or cocoa were consumed in China.
How to overcome such a hurdle?
– First, the company took advantage of an extrinsic condition: in the early nineties, the Chinese Government launched a powerful awareness campaign about the importance of milk intake in children. So, stay tuned! Opportunities come and leave!
–Second, Nutrexpa made a big effort to get a closer approach to the taste of their potential customers. To do so, they devised some specific tastes to their products: strawberry, banana and vanilla. Adapt!
–Third, Nutrexpa invested huge amounts on nationwide coverage advertising campaigns –around € 10/12 million per year- , especially on television. This effort managed to position the brand as a product fully recognized in big cities but also among Tier 2 and Tier 3. Now replace TV and imagine the endless possibilities of digital marketing on advertising nowadays!
–And last but not least, the company decided to create a Chinese distinctive brand. It dropped its popular brand name –Cola Cao– to become GaoLeGao, whose literal meaning is tall and jolly.
Choosing GaoLeGao was a marketing tool by itself: the election of positive attributes in a children’s product, makes easier its choice to the detriment of other similar products.
Years later, the company would challenge itself over again with the introduction of Nocilla… in a country in which bread was not consumed.
An another tip! Adapt your products and services to the market. If the name of your brand, colors or labeling are inadequate, change them!
Also never forget registering the name of your brand in Chinese and in your own language! Product customization, labelling and marketing are crucial!
success is sometimes highly unexpected
Despite being widely accepted, the product never reached another audience than children. Neither GaoLeGao nor Nocilla were the most successful.
Surprisingly, Nutrexpa discovered that its Star-product in China was… Phoskitos! Its commercialization never fit in with major purposes of Nutrexpa; after almost thirty years, they took the decision of selling the company and leave China.
What can we learn from the experience of Nutrexpa in China?
When Nutrexpa came to China, there were no previous examples. Fortunately, we are in 2016 and your company has the advantage of landing in the country in the hands of an agency specialized in Chinese business development.
Visit us and boost your sales in this giant we call China!
2Open on Spanish radio: Business in China?
Recently, we were invited to a local Spanish radio program called “Onda Cero” in Cáceres City. Vicente Pozas, the host of the show, asked some interesting questions to our colleague David González regarding Digital Business in China. For a lot of people in Europe, China is a far away land with a different culture, different people, and different ways to make business. People are getting interested in China, it has had a huge economical growth in the past few years and interest of foreigners has grown accordingly.
The talk mainly focused on China’s development in certain technological areas, the business opportunities it offers, and the considerations that have to be taken into account if one should intent to do business in China. David González talked about the differences in population of major cities in both countries and the way e-commerce in China has surpassed any other country in the world. He also stressed the way the Chinese middle-class people have gained more purchasing power and how all of this can be translated into a broader potential market for any business.
After throwing out some interesting figures about China, he talked about failure and success cases that foreign companies have had when trying to enter the Chinese market, the limitations and the room for mistakes that exists in the country, and the complexity of making business with a Chinese businessperson.
Although the talk focused mainly on China and the way they make business, David got the opportunity to talk about 2Open, our business values, and the way we carry out every project with passion and commitment. The complexity and the obstacles that a business in China could present and how a company like 2Open can make the whole process a lot simpler and successful.
Here is the audio of the interview with David González on the Spanish radio show “Onda Cero”, sadly the audio file is only available in Spanish, but if you have a particular interest on it please leave a comment and we will post an English translation of it.
This article was edited by Andres Arroyo Olson from 2Open.