Chinese entrepreneurial firms stand out with some unique marketing approach, which entails both advantages and disadvantages. Some Lessons to be Learned.
Chinese Style Entrepreneurial Marketing ? Some Lessons to be Learned?
By Moti Blau *
On their way to success, entrepreneurs, regardless of their origin, share the fact that
they operate in an uncertain business environment, and lack many of the critical
resources needed. As such, marketing done by entrepreneurs is very different from
marketing of established firms. Established firms have accumulated market knowledge,
managerial experience and financial resources, thus having the luxury to choose from a
range of possible marketing strategies, and the ability to execute a variety of marketing
plans. On the other hand, entrepreneurial firms, mostly young and small in nature, are
short of these capabilities and resources, therefore resort to a different, less formal or
methodical, marketing approach and techniques.
Set on the above background, Chinese entrepreneurial firms stand out with some unique
marketing approach, which entails both advantages and disadvantages. Chinese
entrepreneurs utilize their personal social network (known as Guanxi), and leverage on
it quite significantly along their marketing processes.
At one end of the marketing process, this network is used to collect market information
and to learn about new opportunities, such as unmet customers? needs, which may lead
to new product ideas and additional revenues. At the other end, these trust based
relationships can be used cleverly to identify potential customers, as well as channel
partners (distributors, agents etc.), reducing both risk and time to market. Clearly,
doing business with someone you know is much easier than with someone you never met.
This leads to better responsiveness of the firm, reacting to market changes and finally
may very well create a competitive advantage over entrepreneurs that lack such a
network. Unlike other resources, such a network cannot be easily imitated or
Still, there are few distinct downsides to this entrepreneurial marketing approach of
reliance on personal relationship network. Firstly, it takes quite some time and efforts
to develop. Many of the Chinese entrepreneurs are young and their network is not very
well developed, especially on the international front. Most Chinese firms have been
starting to engage in international business only in recent years. Local relationships will
not provide much advantage for firms wishing to export their products.
Therefore, a not surprising fact (and well documents) is that Chinese entrepreneurs are
utilizing their connection network, of Chinese family and friends living abroad, in order
to have access into foreign markets. Interestingly enough one can find a similar
approach with Israeli business people, who are seeking and utilizing the Israeli / Jewish
connection. A distinct difference with Israelis is that they are building trust rather
quickly with other Israeli or Jewish people. This might be explained by the fact that the
overall Israeli / Jewish population is of fractional size of that of the Chinese, so ?points
of similarly? might be recognized quicker.
The most notable disadvantage of this approach is that entrepreneurs stick too much to
their existing network, and do not do enough to explore alternatives. They apparently
?feel better? at the comfort zone of their existing network. This means that possibly
some better opportunities, attractive target markets, efficient routes to market or a
more sustainable competitive position could be missed out. This may lead to potential
lost revenues, lower profits or smaller market share.
Until few years back this might not seem to be such of a problem to Chinese
entrepreneurs as they were very much sales oriented, focusing on having price
advantages by lowering costs and increasing production efficiencies. They were basically
reacting to western customers seeking for cheaper manufacturing outsourcing. This
however changes gradually (or rapidly, depends on who is being asked) but surely. China
is further opening up to foreign, in many cases very professional, firms and at the same
time costs within China are rising.
Therefore cost leadership strategy may not be sustainable anymore for Chinese
entrepreneurs, so they must seek out more sophisticated marketing strategies. This is
true for both entrepreneurial firms that operate within mainland China, as well as those
that operated internationally, where competition has always been fierce. Based on its
plans, the Chinese government is aware of these trends, and is putting much emphasis
on fostering innovation as a source of competitiveness, rather than on low cost
In order to better response to these environmental changes and better compete,
Chinese entrepreneurs need to embrace a more strategic and methodical approach to
marketing. This means that choices should be evaluated more thoroughly and a longer
term view of the market is to be taken (branding for example).
Analysing the market more objectively, having better defined marketing objectives, and
formulating a more sophisticated targeting and differentiation are few areas of possible
improvement for Chinese entrepreneurs. This does not necessarily mean that greater
financial resources are required, on the contrary. Smaller firms that enjoy inherent
flexibility are able to respond quicker to market opportunities, and do much more with
Better strategy means better utilization of existing resources, including social networks.
Chinese entrepreneurs may need to try and explore new markets and marketing
channels which are beyond their personal reach, as these may better fit their newly
formed strategy. Trust can be expanded beyond the existing network by having
professional processes in place and by improving quality of service for example. At the
same time Chinese entrepreneurs can expand their network in a way which is synergetic
to their strategy. This can be done by cooperating with seasoned, better connected
entrepreneurs or managers which relate stronger to the relevant target market.
Raising awareness and increasing marketing knowledge base, among Chinese
entrepreneurs, learning about new marketing methodologies and techniques, combined
with strong networking capabilities, will definitely pose a serious challenge to western
firms either in China or abroad.
Moti Blau ??? (MBA, MCIM). An entrepreneur and international marketer, is the
Managing Director of Proxy Marketing Solutions Ltd. Engaged since 20 years with
international marketing and business development with the technology industries. As
part of his activities Moti lectures on international SME marketing.
© 2011. All rights reserved to Proxy Marketing Solutions Ltd. No reproduction, copy or
transmission of this document, in whole or in part, may be made without the prior written
permission of Proxy Marketing Solutions Ltd.