Successful market entry depends on getting the right information in advance, but what information do you need and how do you access this for overseas markets?
When bringing a new product or service to our home (UK) market, we may not be aware of all the knowledge we are drawing on – not just from formal market research – the who, what, where and when information, but also what we inherently understand about our own culture. We ‘know’ for instance that in the UK consumers regularly undertake their own home improvement projects and will happily go to a DIY shed to buy what is required. We don’t need a market research survey to tell us this information – we just ‘know’
But what do we really ‘know’ about the home-improvement culture in other countries?
Being a bit impulsive, my own tendency when it comes to home-improvements is to look at the next room that "needs a bit of work", think of an idea, then run off to the local B&Q and start shopping. Back at home about an hour later I'll be straining at the leash, ready to either dismantle something or put something up – or both. The bigger the project, the more excitement I feel. My father-in-law, who is an experienced joiner/decorator, has had to step in more than once.
If only companies didn't fall that kind of trap too!
How many otherwise sensible businesses have been drawn in by the exciting promise of China's massive market (1.3 billion customers!), and attempted the equivalent of "a bit of DIY" in terms of international expansion? And how many have got in up to their elbows, before wondering how they can get out again with minimum embarrassment? Ironically, both Home Depot and B&Q's exploits in China provide striking examples.
Companies who don't fully investigate the culture of their industry before entering each new foreign market run the risk of becoming seriously unstuck. And in the case of China I'll guarantee they will. Which is a shame, because the Chinese market is a great opportunity for sales and business growth – hundreds of UK businesses, from the big brands right down to sole-traders, will testify to that.
Understanding Chinese business culture is far more than learning to give and accept business cards with both hands. And understanding China's home-improvements culture is far more than asking "what colours are in this year?"
To illustrate this, here are some facts that might interest you about the Chinese middle-class ...
They are almost exclusively urban dwelling and by far the majority live in high-rise flats which are all concrete construction. A 20-year old property is considered old. At 30 years the owners start to wonder when it will be demolished and redeveloped.
They do not like DIY stores, engage in DIY or make first-hand purchases of building materials, tiles, paint or tools. Instead they leave it to a contractor
They love IKEA, not least because it has a restaurant and sells snacks at the exit
They almost never carpet their floors, and in some provinces rarely use rugs either
They have barred windows, unless they live high up, and in some provinces may leave those windows open in the winter to avoid mould and condensation.
They are, like their UK counterparts, struggling with property inflation. Though 9/10 households in China are home-owners, rocketing prices over the last decade now mean that less than ¼ of college-educated professionals aged under 35 have been able to buy.
They will, if they do buy a home, often gut it completely to almost to bare concrete and pay a contractor to refit throughout before moving in – new tiling, kitchen, light fittings, even doorframes and skirting sometimes.
They may have either a western-style toilet or a Chinese "squattie", or both.
They will, if they live north of the river Huai (which runs east to the coast at Shanghai), often have district heating in their homes. That means the heat arrives in those homes on a fixed date in the autumn and stays (with no control) until it's turned off one day in the spring.
And those are just a few examples which will have serious implications for a British company selling, say, kitchen furniture, heated towel rails, tiles, paint, bathroom fittings etc.
Some British KBB brands are making a mark in China; they are far outnumbered by continental European brands, but that shows it can be done - you can get established and be successful there.
But don't rush into a DIY bodge of it - get expert help right from the start.
Since summer 2015, Grandage Consulting has been working in partnership with home-improvements industry experts J M Blake Associates to provide high quality market intelligence and insight for UK businesses looking to break into new markets in China.
This article also appeasrs on J M Blake Associates blog.