Translartion. Region: Russians Fedetion –
Source: State University Higher School of Economics – State University Higher School of Economics –
© Mikhail Dmitriev / Higher School of Economics
By 2035, China will overtake the United States in terms of GDP and become the world’s largest economy. Today, there are over 108 million entrepreneurs and 50 million industrial enterprises in this country. Last year, economic growth was 4.8%. This opens up unique opportunities for Russian companies. HSE experts explained how to enter one of the most promising markets.
The HSE Expert Club “Eastern Perspective” held a business session “China: Five Steps to Entering the Market That Will Bring Profits”. The club was created by HSE experts to discuss tools, trends and insights on cooperation between Russia and the countries of Southeast Asia, the Near and Middle East, and North Africa. The participants were addressed by experts with successful experience in the Chinese market. The meeting was moderated by Deputy Director Marketing Communications Directorate HSE University Dmitry Chubarov.
Sergey Mikhnevich, Managing Director of the Department of International Multilateral Cooperation and Integration of the Russian Union of Industrialists and Entrepreneurs, Coordinator of Russian Business Participation in the Business Twenty, Executive Secretary, Member of the Presidium of the Business Council of the Eurasian Economic Union, spoke about a possible strategy for working with the Chinese business community and GR. First of all, he noted that China is the largest trading partner for Russia, but the volume of trade is quite concentrated and is mostly tied to one or two large projects. At the same time, there is currently a shortage of good experts in China in our country. Even the number of Russians who know Chinese and study this country has noticeably decreased in recent years.
The speaker noted a number of markers of the Chinese approach to the market, related to the consideration of national characteristics, that is, the adaptation of foreign experience to their own realities and capabilities. He assigns a key role to the government of the PRC, since certain attributes of socialism are preserved in the country, which affects, among other things, the system of development of the Chinese economy and various methods of managing it. First of all, the Chinese market is a market of tough competition with directive management methods.
“Despite the fact that for 10-12 years the PRC has been placing a big bet on increasing the role of the domestic market as an economic driver, exports also play a colossal role. At the same time, many companies enter the Chinese market not to sell their products, but to use the country’s production capabilities and then export goods to the target market, be it the Russian Federation or the countries of the Asia-Pacific region. There are quite a few such examples in a variety of economic sectors, because China’s import needs are really very high,” he said.
According to the expert, China currently has a need for such areas as green development, ensuring the sustainability of supply chains for goods and raw materials, and the formation of new dynamic and stable sales markets.
Professor Faculty of World Economy and World PoliticsNatalia Guseva, head of the HSE educational programs “Business with the East”, presented the educational programs “Eastern Perspective” for entrepreneurs working with countries of the Near and Middle East, North Africa, and the Indo-Pacific region.
The flagship five-month program “Eastern Perspective: Strategy and Tactics for Building a Business” combines the experience and practices of entering new markets in developed countries of the Global East. Intensive three-month program “Eastern Perspective: The Basics of Building a Business” is aimed at obtaining practical knowledge on business development, launching international projects in various sectors of the economy with countries of the Global East.
Three-week program «Eastern Perspective: The Practice of Building a Business in China“focuses on knowledge, strategies and practices for building a successful business in this country.
“We want to give listeners new knowledge and share successful cases, and sometimes failed cases, when a company loses tens and hundreds of thousands, or even millions, due to mistakes. It is very important to understand what strategy you are going to use to enter the Chinese market and how you are going to compete there,” Natalia Guseva emphasized. “For example, why do they only talk about how to export products? Why not create a local enterprise? Why not make direct foreign investments? Why not think about licensing or franchising, depending on the specifics of the product or services provided?”
Anastasia Nasedkina, founder of a Chinese marketing agency, spoke about the peculiarities of the Chinese market Matessa, author of educational courses on Chinese advertising platforms Baidu, WeChat, Weibo, Douyin (Ocean Engine). According to her, there are a number of significant differences from the Russian and European markets that need to be understood. For example, the Chinese in most cases trade and conduct business via mobile phones, not from a desktop computer, so to enter the Chinese market, a company does not need a website: its functionality will be replaced by the official WeChat account. For the same reason, social networks are serious tools for business development there. Analogues of WhatsApp, FB, Inst and VK, which are used in China: WeChat, Weibo, Douyin, Kuaishou, QQ.
A foreign company must register a legal entity – this will allow it to promote the brand without strict restrictions. In addition, having a legal entity increases audience loyalty. A verified WeChat account will provide a credit of trust even for a young company: legal entity accounts are strictly checked, and this takes up to six months.
One of the most popular online platforms for watching and sharing short videos is Douyin, the Chinese version of TikTok. Its audience is very diverse: about 60% of users are between the ages of 18 and 35, followed by the audience of 35-50 years old. The platform is popular in various regions of China, with a significant portion of users coming from first- and second-tier cities, that is, developed and wealthy provinces. The platform has a built-in Douyin Shop, where you can sell products if you have a registered trademark.
In addition, live broadcasts conducted by the brand’s official account are popular in the country. In 2021, they already accounted for 57% of all broadcasts on the Douyin platform. The content on these accounts consists of simple and short videos, the editing of which mainly comes down to adding background music and effects.
Entering the Chinese market should always begin with research, notes Anastasia Nasedkina. It is necessary to analyze the demand of the target audience, competitors, as well as the economic and political landscape. It is also important to assess the brand’s presence in the digital environment, the adaptation of the product and service to local preferences, the ability to ensure fast and hassle-free payment for purchases through local services.
It is also important to pay attention to national rules of negotiation. Here, the strict hierarchy of age and position, the Chinese desire to “not lose face,” as well as cultural differences with Western views on topics such as worldview, relationships, family, etc. are important.
“When you enter the Chinese market and hire employees there, you need to somehow build interaction with them, and it is important to either have a person who understands all these cultural differences and peculiarities and can build communication, or to immerse yourself and thus build a team in China. The Chinese market is quite complex, but with proper preparation and understanding, with the right strategy, you can enter it and gain a foothold in one or two years,” she summed up.
In conclusion, the moderator of the event, Dmitry Chubarov, once again invited the business session participants to take the HSE educational programs dedicated to the East. He emphasized that the expertise and cases that will be discussed will not be based on abstract textbooks, but on the daily successful practice of both Russian and international companies.
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