When asked about their reasons for entering the Chinese market, many business executives answer “expanding sales” as one of their top three responses. Indeed, with China representing the world’s second-largest economy, international companies are eagerly seeking opportunities to grow their sales in this critical geography. Yet, meeting this objective requires more than just presence; it necessitates a keen alignment with ongoing local trends. One such trend is Guochao, which can truly make or break your sales trajectory in China’s dynamic landscape.
Guochao in a nutshell
Translated as a “national trend,” Guochao embodies the growing favoritism of Chinese consumers towards products that incorporate Chinese elements such as symbols, artwork, patterns, colors, and cultural characters into their designs. This phenomenon is a statement made both by consumers and brands, who wish to celebrate China’s cultural identity and homegrown pride.
A crucial distinction all international brands must acknowledge is the difference between a “made in China” vs. “Guochao” product. While the former often lacks cultural connotation, the latter—by definition—refers to Chinese culture, has a profound national sentiment, and carries symbolic significance.
Guochao applies to both B2C and B2B brands
There is a misconception that Guochao is primarily limited to consumer goods and the broader retail industry. This is wrong. Guochao encompasses much more than the aesthetics of a product or the “made in China” label.
Guochao applies to both B2C and B2B brands, and signifies a general approach to the Chinese market. Practically speaking, it involves actively demonstrating your commitment to investing in the Chinese market – and your new customers in China. It is an attitude.
For example, relocating some or all of your manufacturing operations to China not only reflects your ambition to establish a robust physical presence in the country, but also reduces your products’ time to market, resulting in an improved customer experience and shorter waiting periods.
Conducting sales in the local currency facilitates a more convenient shopping process. Hiring a local team enhances the confidence your clients place in you. Additionally, the visual language of your WeChat articles and the content you share can also help form stronger connections with potential customers, partners, and employees.
These are the “Chinese qualities” that empower your product/service with a more China-centric focus. As a result, these qualities can enhance your penetration capabilities.
Guochao is a China-centric approach
A 2021 survey by Daxue Consulting uncovered that 75% of respondents expressed a clear inclination towards products that include Guochao design elements. This is a testament to how Guochao can become a game-changer for brands aiming for local relevance.
Brands that fail to integrate Guochao features into their products risk potential disengagement with Chinese audiences. Notably, numerous Chinese consumers, particularly within the Gen Z demographic, explain that Guochao products resonate with them and fulfill their unique needs, as opposed to products that feel like foreign brands seeking for a foothold in an international market. The ability to speak to local audiences in their own cultural language is a cardinal rule of sales and marketing, especially when it comes to a foreign market – and China is no different. This is the very essence of marketing localization in China.
For more information, check out our 5-step guide for marketing localization in China.
Are Western brands at a disadvantage in China?
Considering that the Guochao trend centers around Chinese tradition and culture, it is unsurprising that international companies doing business in China face numerous challenges:
- A limited grasp or surface-level comprehension of local cultural nuances. Attempts to incorporate cultural elements without a solid understanding often lead to disastrous consequences – especially when they unintentionally convey offensive messages.
- Unfamiliarity with local customers’ shopping behavior and local e-commerce platforms, which are the preferred shopping avenue among over 50% of Chinese consumers. Projections by Statista indicate a user penetration rate of 76.8% by the end of 2023, surging to an anticipated 93.4% by 2027.
- Quality edge erosion. As China narrows technological gaps and advocates for innovation and quality, Western brands lose their once-distinctive edge of premium quality.
- Pricing. Foreign brands often command higher prices for their products, even those made in China, compared with domestic alternatives.
- Collectively, these factors intensify the competition from local brands, who can better and more easily appeal to local crowds. So, where homegrown brands thrive, international players have to work harder to stand out and build positive, long-lasting brand recognition.
How to join the Guochao wave
As Guochao becomes an essential element for sales in the Chinese market, international brands doing business in China must act to align with this rising cultural trend. Here are three strategies foreign-owned companies can implement to tap into Guochao and boost their sales traction in China:
Utilize online platforms strategically
As previously established, international brands cannot afford to overlook e-commerce platforms if they wish to fully capitalize on their sales potential in China. However, there is more to the digital landscape in China than e-commerce. Certain platforms and strategies are more relevant for B2C, and others for B2B companies. Either way, in today’s Chinese market, every brand must establish an online presence, and the correct application of Guochao could potentially usher in fresh opportunities for your brand.
Localize your key selling point
Brand storytelling is central to marketing localization in China. Specifically, since Western products are often associated with superior quality and luxury, they represent social status. However, within the Guochao realm, Chinese consumers seek products that represent social identity. This implies a preference for products that pay homage to national heritage, strengthen cultural confidence, and stir local pride. In terms of messaging, it is imperative to remember that local consumers prioritize shared identity over luxury and status.
Consult with an expert
While “infusing more Chinese elements into your design” might appear straightforward, it’s actually quite intricate, largely due to international companies’ unfamiliarity with local norms and cultural codes. The challenge arises from the fact that endeavors to leverage Chinese patriotism can sometimes be perceived by the local audience as disrespectful, for instance, by misusing Chinese characters or depicting China’s map. Consulting a local expert who is well-versed in the local mindset is the best way to tackle this specific challenge. An expert’s proficiency will ensure that Guochao elements are applied responsibly to empower national pride, and are not exploited in an insensitive manner.
To conclude, the adjustment of sales and marketing strategies is an integral facet of China’s market entry plans, serving as the key to unlocking the hearts and wallets of Chinese consumers. Guochao isn’t merely a trend, but a pathway to nurturing lasting connections with Chinese consumers, which could potentially lead to amplified revenue streams. Therefore, international brands should not feel intimidated by the heavy focus on “foreign” Chinese culture; instead, they should embrace the opportunity to learn and leverage it to their advantage.
For over 20 years, PTL Group has provided business support in China, helping international companies set foot in China and grow. We’d love to help you too. Get in touch today to start your China journey.