Fresh Data Blog
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Going Global: Direct to China in the Year of the Horse
Date: February, 2014 --
This year in
the last week of January, January 31 to be exact, much of China and Southeast
Asia stopped work to celebrate the Lunar New Year, which in the Chinese calendar
is the Year of the Horse. In China, people will be returning to the “ancestral”
homes of their relatives and parents to celebrate, much as we in America drive
ourselves to distraction for Thanksgiving reunions with family! And the Year of the Horse is one of speed,
fast victory or defeat, adventures appearing out of nowhere, and possible
unanticipated romance. Decisiveness is rewarded, as is travel.
celebration let’s take a look at the state of direct marketing in China, a
country whose development from a village-based agricultural country to an urban
middle-class economic powerhouse, in one generation, has been breath-taking.
Marketing Grows from Nothing…
in this country of over one billion people, the most populous in the world with
19% of its population, recall that until the mid-80’s there was no marketing. There
was no private enterprise or competition in the economic realm, which gives
rise to the need for marketing. It was only with the economic and political
opening under Deng Hsiao-ping in the 1978-82 period that foreign investment and
private economic activity became possible.
then, urbanization and economic growth have been spectacular, and a
middle-class consuming public has appeared. The numbers are staggering.
of China’s 1.3 billion people live in cities
moved from the country to a city during 2013 alone, slightly fewer than the
population of the entire State of New York
of its population is under 30
of the population regularly goes on-line, and 43% of those buy goods and
2012, there were 7 million more online shoppers in China than in the US
of the population have a mobile phone
people access the Internet via mobile
Direct Marketing Challenges
economic growth and development, marketing has grown, but direct marketing did
not grow significantly until the digital era. The postal system has no
preferential rates for direct mail, for example, and it has discouraged the
private sector development in this area by offering its own lists, creative
services, and letter shop services.
China Post’s B2C list offering is a
survey-based database of people who return a questionnaire. While this is a technique used with some success in New
Zealand and Australia, consumer populations which are avid distance buyers, it
is questionable whether the Chinese consumers are widely inclined to compete
questionnaires, given that they are increasingly well-served by retail chains
and eCommerce merchants.
the other hand, China Post’s own promotions claim response rates as high as 4%.
In addition, their inventory is claimed to include comprehensive industry
specific B2B lists for much of China. There are also a number of reputable
private sector list managers with industry lists drawn from attendance at industry
fairs and conventions. For B2B marketers these offerings may be of interest.
picture is made cloudier, especially for B2C lists, due to the lack of clarity
in laws regarding privacy, data protection and personal information. This has
discouraged database development and contributed to list owners’ reluctance to
release data to the market. These owners are also naturally suspicious of the
likelihood that their competitors would obtain their customer lists, a
well-founded suspicion since employees are generally not loyal to their
of which helps explain why the average consumer in China received 0.3 direct
mail letters last year, against the 226 which an America consumer received, and
why they are more responsive to mobile messages.
is not to say that in the long run direct mail will not have a more lucrative
future. In some businesses has an actual promising life. Banks are successful
in marketing new services to their house lists and luxury brands and automobile
companies are assiduous with database creation. But it must be borne in mind
that price is a critical marketing factor to consider, and like the
localization, requires finding the right balance between extremes.
China’s Per Capita ($USD) GDP is $6,076,
compared with Australia’s $67,723, United States’ $49,922, and United Kingdom’s
$38,589. Companies new to the Chinese market, excluding luxury brands, must
adjust prices to levels that their targets can afford. Another nuance is that
there are significant income disparities in different regions of the country
and among cities, which are (unofficially) classified as Tier 1, Tier 2, Tier 3
and so on, based on size.
is going be the most effective marketing opportunity for most marketers. Aside
from penetration and on-line presence of potential customers, recall that 82%
of Chinese netizens have credit cards which they use on and offline. In 2013,
the express industry in China delivered over 9 billion parcels, or 6 to 7 parcels
per person. These numbers indicate that China probably became the largest
on-line shopping market in the world in 2013.
If you are marketing
into the Chinese market from abroad or from within the country, look to Data
Services to assist with all your Chinese data management and data quality
needs, regardless of whether you utilize English-language or multi-byte
mandarin character address data. Good to note that China Post’s addresses are
UPU standard S-42 compliant, so hygiene is much easier than in the past.