Making it in China’s Middle Market
Tuesday, September 8, 2009 2:08Entering the Chinese mid-market segment: key to long-term success?, by Heiko Gebauer, Thomas Fischer and Elgar Fleisch, is an academic report that I found interesting lately while studying a 2nd tier market plan, and as a followup to a recent conversation about firms moving into the 2nd/ 3rd tier looking for growth.
As part of their report, the professors highlight 5 major missteps groups take when trying to assess or enter China’s middle market:
1. Managers use their existing customer segmentation and transfer it to the Chinese market.
2. Managers fail to continually update their understanding of the Chinese mid-market
3. Managers assume that because mid-market consumers can’t afford top quality merchandise therefore they will accept products and service that aren’t customized
4. Managers overestimate the willingness of mid-market customers to pay a premium for international brands over locally made equivalents.
5. Managers assume that mid-market growth is concentrated in the first and second tier cities such as Beijing, Shanghai and Xian and that the third and fourth tier cities are restricted to the low-end market and do not experience accelerated market growth
Key factors for formulating the product strategy appear to be up-to-date market analysis, early market entry and moderate prices.
- Setting up separate organizational units targeting the mid-market is the key factor for implementing the product strategy.
- Localizing research and development, and adjusting manufacturing processes seem to present both major challenges and the key to success for the separate organizational unit.
- Only if domestic companies have already achieved reliable and constant product and service quality should they undertake the adventure towards the mid-market segment.
- A market entry that is too early and too ambitious can put the company at risk.
The report, while brief (email me for a copy), highlights some critical factors that firms should certainly consider ( there are certainly others that are firm/ industry/ product specific), but on a larger level where I liked this study/ report was that it had the potential to open smart dialogue.
Tarik says:
September 9th, 2009 at 8:26 pm
I am really interested in this topic and would like to have a copy of the report in case thats possible. Currently, I am doing some research myself on this. Thanks,
Tarik
Sven says:
September 22nd, 2009 at 4:17 pm
Does sound really interesting, my master thesis is about corporate strategies in China so could you send me a copy of the report, too?
Thanks in advance!
Sophiazou says:
September 25th, 2009 at 7:10 pm
It seems will help for my project, as i am doing reserach on middle-class marketing in China. It would great if you can send me a copy of the report. Hope to hear you soon.
Thanks in advance.
Sophia
Clo says:
November 10th, 2009 at 2:18 am
Really interesting!
Could you please email me thecopy of the report as soon as possible! (I need it urgently…)
Thanks a lot!
Clo
James says:
September 8th, 2010 at 2:02 am
Can mail me a copy too? I am doing research on chinese consumer market and it will really helps.Thanks inadvance! 🙂
Thomas Dehli says:
June 9th, 2011 at 4:28 am
I am really interested in this topic and would like to have a copy of the report in case thats possible. Currently, I am doing some research myself on this. Thanks, Thomas
Thomas says:
May 1st, 2012 at 10:01 pm
please could you send me a copy of the report. Thank you in advance
Jay says:
June 19th, 2012 at 6:31 am
Can I get a copy? Thanks!
Mikael Eriksson says:
October 9th, 2012 at 10:06 am
Dear Richard, I’m a PhD student in Uppsala University on my last year (on the 5th). I am doing research on a western MNC’s entry into the mid end segment in China for mining equipment. Your research sounds very interesting and I would really appreciate a full version of your report.
Best regards, Mikael Eriksson