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LEWIS

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LEWIS

Published on

January 17, 2020

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bay to bay, China, Research

New research reveals US marketers face new challenges and increasing competition from homegrown brands


LEWIS, the global marketing consultancy, today revealed the findings of its “Bay to Bay” research campaign. This surveyed 351 U.S. marketers on their perceptions and priorities in the China market. The findings reveal that, while the market remains a priority for most, a perception of overconfidence amongst U.S. senior marketers is leaving brands open to risk in the world’s second largest economy.

The research is the next iteration in the LEWIS Bay to Bay series – referring to the dual centres of gravity in the San Francisco and China Greater Bay areas The series was launched in 2018 to explore global innovation, entrepreneurialism and leadership culture while supporting dialogue and conversation between the two regions.

The results reveal that China is still a key market for the majority of brands:

  • 71% are currently marketing their products or services in China
  • 80% feel their marketing has been extremely or very successful
  • 62% of respondents are increasing marketing and comms budgets in China
  • 55% are planning to increase them next year

Among those not marketing in China, reasons include political relations between US and China (29%), regulation (24%), intellectual property rights issues (17%), lack of expertise or experience among internal marketers (14%), and lack of China/Chinese consumer specific knowledge (12%).

While 80% of respondents believe they completely or mostly understand marketing practices in China and 88% are very confident in their ability to accurately measure campaigns in the country, 77% cite a lack of transparency in the marketing industry as a barrier to their marketing efforts.

The survey reveals that 23% of respondents feel it is either extremely or very difficult to market in China, highlighting wasted marketing efforts and investment and exposing knowledge gaps in two key areas:

  • Market Understanding:
    • 41% of respondents apply the same marketing plans in China as they do in the US, despite the vast difference in platforms, demographics and culture between the two markets
    • 19% feel they have little-to-no understanding of marketing practices in China
  • Technical Knowledge:
    • Almost a third (30%) are not at all or only somewhat familiar with Chinese social media and ecommerce platforms
    • The highest proportion (69%) of respondents use Bing as part of their search marketing efforts, more than Baidu (59%), in stark contrast with the platforms that are actually most used by Chinese audiences

“China is a giant and constantly changing market. Whilst it offers great potential for overseas brands, it also demands a deep understanding of local habits and channels in order to successfully reach audiences. As the survey reveals, it is easy for overseas brands to waste effort and budget on campaigns that offer limited ROI. This means that marketers need to look beyond market data, to understand the drivers of their competition and be able to connect with Chinese audiences culturally and emotionally. By working with experts in China, these marketers can gain greater insight into local practices and what success truly looks like in this vast economy,” comments Emma Jenkins, Senior Vice President, APAC, LEWIS.

US marketers are increasingly looking beyond Tier 1 cities, with more now marketing in Tier 2 locations than any other segment. When asked about marketing priorities for the future, 88% of respondents believe expanding their marketing and communications programs outside of tier 1 cities is very or extremely important.

American brands are also seeing domestic brands as a threat to their business. When asked about the biggest challenges their company faces when marketing in China, competition with Chinese brands (35%) was second only to local regulation (44%).

“These findings are in-line with growing incomes and government strategies that are attracting talent to new locations. The survey findings reveal that emerging tier 2 and 3 cities are proving to be key drivers of China’s growth. This presents great opportunity for brands that are looking to grow beyond Tier 1 markets and build up a presence in less competitive locations.”

“Favourable talent and business policies combined with increasingly sophisticated consumers have also given rise to nationalism and ever-increasing pride in China’s home-grown brands – both consumer and B2B brands. Companies looking to compete in China now require a far greater knowledge of the local landscape and competition if they are to gain traction among local audiences.”

To download the full report, please visit: lws.co/baytobayreport

As part of the continuing Bay to Bay series, LEWIS will also be hosting a series of podcasts designed to address key questions U.S. marketers have when operating in China. Visit  www.baytobay.com to learn more.

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