This article has been prepared by our partners from 1421 Consulting Group.
The general conclusion about business in China is that it involves a level of complexity and the high chance of failure. Many operations, big and small, fail in the Chinese market. However, there are many cases of very successful endeavors in the Chinese market. In this article we will try to show some examples of successful foreign companies in China, and explain why they are flourishing.
To highlight successful foreign companies in China, it is important to determine what successful means. Is it just about healthy finances and growth figures? Or is it about the strategy? For us, foreign companies are successful when they are "Chinable". These companies have adapted to the market, operating their business in a Chinese way with healthy financial figures and a solid strategy.
The success of IKEA in China is overwhelming. They are not just flourishing, IKEA has become part of Chinese culture. To understand the success of IKEA, one simply has to go to an IKEA, one simply has to go to an IKEA in China. Make sure you go there during the weekends. If you ever found a western IKEA to be busy, you are in for a treat.
Chinese people do not just visit IKEA to quickly find a Billy bookcase or a Kallax storage unit. Visiting IKEA is like visiting a theme park. People take naps on beds, snap wedding pictures in the kitchen and even go on first dates at IKEA. Besides Swedish meatballs, their Beijing noodles are renowned for their quality.
Big compliments to the Swedish giant for letting their Chinese stores become an experience. It gave them a prominent place within this list of successful foreign companies in China.
Eurobakery is a company founded in 2007 in Beijing. It is focused on baking all kinds of sandwiches, bread and cakes. Eurobakery is extremely successful and currently has a factory of over 2.500 square meter.
The factory is one of the few production facilities in China with the capability and resources to carry out independent R&D. Furthermore, the factory has a high production capacity, good quality standards and is able to distribute their products highly efficient.
The success of Eurobakerey is full adaption to the Chinese market. They chose to produce the western products in China, making them extremely competitive.
Describing the success of LinkedIn in China starts, unusually, with describing the failures of their Western competitors. Other social media companies are prohibited to enter the Chinese market. Despite Mark Zuckerburg learning Mandarin, Facebook is banned. Furthermore, Google plus, Youtube, Twitter, Tumbler and Instagram are all banned.
Why is LinkedIn allowed and successful in China? They are allowed in China, because they chose to follow the Chinese government rules. They are successful in China, because they adapted to the market. They have set up a local team to run LinkedIn in a Chinese way. What is more, they decided to collaborate heavily with local players.
Running a social media business in China remains very challenging. New rules are always around the corner, which makes life never simple for LinkedIn in China. However, the Chinese strategy of LinkedIn has helped them reach 44 million Chinese users in 2018 (Statista).
Dutch founded Buurtzorg is a company focused on providing care to people at home. After disrupting the Dutch market with self-managing teams, their focus shifted towards China. One of China's major concerns for the future is the aging population. China is in dire need of intelligent solutions fitting to the Chinese needs.
Buurtzorg fills a gap, which connects well to the Chinese values towards the elderly. By taking care of people at their own homes, Buurtzorg provides a service, which takes after informal care by family members. Although they are still at the beginning of building up their brand in China, it already seems they have adapted their strategy towards the Chinese market.
In 2017, they served over 1.000 clients in China. Their teams are established in Shanghai, Changzhou, Qingdao, Ningbo, and pilots in Weifang and Hangzhou will soon start as well as a pilot in Chengdu.
The most successful online note-taking app became successful in China through the a similar strategy as LinkedIn. Playing by the rules and adapting to the Chinese market. The foundation behind this strategy was formed when conducting a very thorough market research about the Chinese market. It provided them with a 156% increase of users.
Another strong point of their success was the adaption of their name. They adapted it to create an easy to pronounce Chinese name: Yinxiang Biji (or 印象笔记 in Chinese). The name means Memory Notes or Impression Notes.
What makes them successful foreign companies in China?
Although all have their own paths to become successful in China, the above organizations also share a willingness to adapt towards China. They acknowledge China needs a unique and different approach compared to other countries.
The same applies to any company looking to setup their organization in China. Establish key success indicators and combine them with the strengths of China. However, stay close to your business plan and do not include drastic changes just for the sake of adapting to China. Conduct research, be patient and invest your time in establishing your organization in China. This will improve your chance of becoming "Chinable".
If you would like to receive more information about setting up a company in China, or have questions about doing business in China, then feel free to contact us at firstname.lastname@example.org.
This article has been prepared by 1421 Consulting Group, a management consultancy firm active in Beijing and Shenzhen who have supported many foreign SMEs with doing business in China. To visit the original article and get in contact with 1421 Consulting Group, please visit the article at: https://www.1421.consulting/2018/06/successful-foreign-companies-in-china/