How to customise products for the Chinese market
Chinese consultants group Fiducia has published an interesting interview with a chemical industry specialist (he develops equipment for packaging) of one of the world’s leading companies (he did not want his name published) on how to adapt products successfully to the Chinese market
The basics
In comparison with mature markets he notes that development in China in his sector is not at this mature level yet and there are products being two generations behind those in Western countries. This does not mean that the company does not introduce the latest technology but the offering is products already developed 15 years ago and the market is also not demanding the latest technology. Chinese customers need equipment that meets their requirements and are easy to maintain, thus there is no need for a Rolls Royce and therefore the company tweaks the product and puts in it what is needed for China only and manage it easier and independently, especially for second and third tier areas with less skilled labour and where maintenance support is far away.
On the other hand the company offers advanced solutions and knowhow but again, the key is to rally understand what the customer needs respectively to find out what are the specific requirements of the customer’s customer.
Two examples
The interviewee gives two examples: when supplying paper to advertising magazines it requires an understanding of the readers’ tastes and paper is not the same everywhere, for instance in the States it is quite glossy and a bit yellow but in China it is less glossy and very white. Why the difference? Whilst wealth is associated with a tanned skin tone for Western readers, white is the synonym of wealth for Chinese readers. The second example: Manufacturers make use of equipment to print for global corporations having strict targets to reduce their carbon footprint. We go as far to see these customers and encourage them to tell their suppliers to use our equipment, because our products are environmentally friendly and support their goals.
The challenges
The interviewee continues and states that China is a price-sensitive market and cash flow is limited. It is a challenge to deliver high quality products to match the own companies global standards at an affordable price and this was successfully done by lowering the price through downgrading of the product to suit exactly what the customer needs. A local R&D centre in China hosts also the various business units under one roof leading to a great deal of synergy and information sharing. Industry boards (sales and marketing specialists work full time on these boards and are engaged in gathering business intelligence and market data) of each business unit work closely with the R&D centre to refine the product customisation. These specialists invite academics, customers and end customers to meet regularly and discuss findings, strategy, targets, new ideas, all to be passed on to the business units to enhance customer understanding, thus becoming the preferential supplier, namely by providing sustainable and environmental friendly solutions. This is an established global trend and therefore also lobbying at governmental level through associations and institutions is necessary to implement green technology as a standard. Therefore, it is not simple to understand what the customer needs, but also what China politically needs.
The solutions
And lastly, he recommends SME small to medium enterprises probably not capable to finance and support their own R&D centre, to hire a researcher in order to probably outsource R&D. According to him researchers at universities are eager to conduct market studies or to engage themselves in product development as part of their thesis papers. Professors are disposing of good connections with government bodies and other industry partners and this is how one becomes aware what is really going on in the different market segments of China.
A conclusion
TextileFuture voices the opinion that what this unknown chemical specialist is recommending comes very close what also textile machinery and textile sourcing companies as well as other chemical companies are practising to a higher or lesser degree in China.