Some thoughts on how to do B2B Market Research in China

Why do Market Research in China? To understand and plan the growth of your business.

 China is now the world’s second-largest economy by nominal GDP. Until this year (2015) China was the world’s fastest-growing major economy, with growth rates averaging 10% over 30 years. During this period, China became the largest manufacturing economy in the world as well as the largest exporter of goods in the world. China is also the world’s fastest growing consumer market and second largest importer of goods, China is a net importer of services. Since its economic importance has grown China has focused on structure and health of the economy. China has plans to shift to more advanced industrial development with high-tech, low carbon emissions with better allocation of national resources as well as to innovation and R&D for sustainable economic growth.

Xi Jinping, President of the People’s Republic of China, uses the term “Chinese Dream” to describe the great rejuvenation of the Chinese nation.  The “Chinese Dream” incorporates the aim to achieve the “Two 100s”: the material goal of China to become a “moderately well-off society” by 2020, the 100th anniversary of the Chinese Communist Party, and the modernization goal of China to become a fully developed nation by 2049, the 100th anniversary of the founding of the People’s Republic of China.

Over the last decade at Business Advantage our clients have increasingly requested Market Research in China and as our experience in China has developed we’ve identified many notable differences between doing market research in China vs Western countries and other Asian countries.

The purpose of this Blog post is to share some of that learning.

Here are some suggestions on what to consider when conducting market research in China….

  • As this Forbes article explains, first confirm that the business you plan to do in China is legal before spending time and money on market research in China.
  • Decide whether you will do the research yourself, commission an international market research agency (such as Business Advantage) or a local Chinese agency. It is important to understand the deliverables that a local agency will provide. Some local agencies may not provide information in a format familiar to western clients. Actionable recommendations and conclusions may not form part of the standard deliverable for example. For a more consultative approach to research, it is often better to work with an international agency.
  • Prepare carefully and thoroughly:
  • Understand the scale of China. China has over 1.3 Billion people and over 100 built up areas of over 1 million people.
  • What will be your geographic and industry focus? The more industrialized parts of China are along the coast, mainly in the Guangdong province and Shanghai.
  • How will you conduct secondary research? It’s important to remember that Google may not be the most relevant search engine. By using Baidu.com for example, you may find much more information. Secondary research is often out of date in any geography but in a country such as China where growth and rate of change are rapid, it can become outdated very much more quickly.
  • Which spoken or written languages and dialects will your research be conducted in? Mandarin is the most used dialect and is the official language of the Republic of China, it is also used in Taiwan. Cantonese is used in Guangdong province, Hong Kong and Macao. Consider whether it is appropriate to use ‘Traditional or Simplified’ Chinese. The Simplified form is the standard employed in mainland China.  Traditional Chinese is more common in Taiwan, Hong Kong and Macau.  Whilst the majority of the populace use Simplified Chinese there has been a trend towards a return to the use of Traditional Chinese in recent years.
  • How will you contact people? Email addresses are hard to obtain and usually very different from what you might expect, for example, it is a common practice of individuals in business to use their mobile phone number as part of their email address along the lines of 123456789@mycompany.com. Expect to have to go to greater lengths to justify contacting respondents.  For example, in one channel recruitment research project we conducted in China we could not speak with any senior personnel until we had established our Bona Fides and proof that we represented an important and potential opportunity. Only then could we speak with people.
  • Which research method/s will you use? Phone, face-to-face meetings, focus groups, online survey, online video, mobile research can work very differently in China in comparison to western countries. For instance, before you will be able to have a phone or face-to-face meeting with a senior executive you will need to exchange credentials (possibly by fax) to prove your Bona Fides and most likely, you will need to provide an incentive for their time. Phone conversations tend to be short and succinct. For research, they are often not as successful as face-to-face meetings, which are often the expected method. Similarly, web surveys and focus groups can be less successful than a westerner might expect unless the research is being done for a large, well-known company. We have found that small focus groups of 2 or 3 colleagues can be very successful.
  • Observe cultural differences. We think the observed behavioural differences are partly related to the communication, monitoring and censorship in China but also relate to cultural differences, for example, timing is critical because long ~3 hours ‘lunches’ are common (many people have ~2 hours sleep in the middle of the day because it’s also common to do business at midnight), video calls are rarely taken at work but can be arranged at home, often very late at night, personal face-to-face meetings are expected, people are reluctant to even give out their manager’s name, etc. With the rise in the use of mobile handsets to access the internet, a mobile survey can be effective in China.  In China the use of experts from government, academic institutions and industry associations can be a helpful introduction. Experts have gained the respect of others over time and if a reference is made to them or research is conducted in conjunction with them it is often easier to create a more constructive environment for research.
  • Write your questions very carefully. Be very specific about what information you are seeking, how the question is written and test translations. For example, we once researched the bridge design and building market in China and got back some answers referring to ‘paper bridges’ – which yes, do exist in China. Various past studies have reported the tendency for questions being susceptible to culture related responses resulting in more extreme results in China. For example, answers to Likert scale questions are often more extreme and company representatives are less likely to speak negatively of their organizations and less likely to speak positively of their competitors than westerners.
  • When doing market sizing research, expect to approach it very differently. Data from the National Bureau of Statistics is very helpful as well as the published 5 and 10-year government plans that break down provincial expenditures, for example, on planned infrastructure spending. Using these resources was very effective in some infrastructure and education research projects we conducted.  Researching non-governmental business is much harder since far less data is typically available than in western countries. Often company’s websites will not mention their revenues but will include long lists of staff along with their mobile phone numbers and job titles – this can be a very good way to find the people you need. In one research project, these lists enabled us to locate senior executives in highly specialized design centres.

So far China accounts for about 15% of world GDP but in some markets, such as commodities, it has had a huge impact over the last decade.

According to EIA data, China accounted for 55% of the increase in global petroleum consumption between 2005 and 2013. IMF economists Arezki and Matsumoto note that China now accounts for about half of global consumption of iron ore, aluminium, copper, and nickel.

You need to decide how important China is to your company as a market now and in the future. If you need market research to help you make that decision, then we hope the information in this blog post has highlighted some of the many differences between doing market research in China vs western countries and other Asian countries. Good luck with your market research in China and if we can be of any assistance please email us (blogquestion@uk.business-advantage.com) to discuss it.

Lastly, if you’d like to share any other differences between market research in China and elsewhere, please add a comment below.

 

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