After a decade of growth, China’s economy is starting to slow down. The world’s second-largest economy grew only seven percent in the first quarter of 2015—its weakest performance in six years. As a result of the weaker momentum in the country, some global brands—including Prada, KFC and McDonald’s—are struggling to find their footing in this market.
But not everyone is failing. A recent Ad Age article identified a handful of exceptional brands that are managing to thrive in China. Here’s a look at these companies and what they’re doing differently.
China is home to eight of Ikea’s 10 largest stores and has become the furniture company’s fastest growing market. In 2014, the company generated over $1.42 billion in sales in the country—a 25 percent increase from the previous year. Earlier this year, Ikea opened its 17th Chinese store.
The company’s growth is in large part due to the country’s rising middle class. The company’s stores have become a popular all-day destinations where customers are encouraged to doze off on display furniture.
“Ikea China is an experience, not just a place to shop, and that's something consumers are looking for,” notes AdAge.
The American coffee chain opened its first China shop in 1999. Since then, it has experienced rapid growth: Starbucks now has 1,600 branches in the country. In 2014, Wang Jingying, president of Starbucks Greater China, revealed that Starbucks has been opening one new store in the country each day, with plans to further accelerate growth.
Tweaking its menu for the Chinese customer is an important part of the company’s expansion strategy. Along with its classic menu, Starbucks also offers products with green tea or fruit in order to appeal to local tastes.
The company’s strategy also includes positioning its brand in the luxury market.
“We have established Starbucks as not only the leading provider in coffee, but also a brand of choice and luxury in China," Howard Schultz, CEO of Starbucks, told CNBC. "We now have 320 in Shanghai alone, which is the largest market in the world for Starbucks."
Adds AdAge: “It's not a place for grabbing a coffee on the run; people linger there with friends, sometimes posting selfies on social media. In China, where a grande latte costs nearly $5, Starbucks has successfully cast itself as an aspirational brand.”
In the first three months of 2015, Apple sold more iPhones in China than the U.S. “The progress we’ve made in China has been remarkable and we continue to make incredible investments in China,” said Luca Maestri, Apple’s chief financial officer. “The growth rate in China is significantly higher than most parts of the world.”
During a tour to China in June, Tim Cook, the company’s CEO, acknowledged that Chinese tastes have influenced the design of many of its products. For example, the company’s line of gold iPhones released in 2014 reflects the popularity of that color among Chinese users.
Expanding its retail presence is also a big part of Apple’s strategy in China. The company plans to have 40 retail stores in greater China by 2016—almost doubling its 21 stores currently open.
These three companies show that, despite China’s slowing economy, it’s possible to thrive in this country. The key is to learn the motivations and attitudes of Chinese customers—and to understand how they differ from North American customers. Winning in China and in Asia Pacific, a market of untapped potential, requires customer intelligence and a commitment to building a relationship with customers in this market.
To explore this topic further, join Scott Lee, Managing Director of ABN Impact Hong Kong, and Peter Harris, Managing Director for Asia Pacific at Vision Critical, in our upcoming webinar, Going Global: How to Make a Meaningful Connection with Customers in Asia Pacific.
Photo credit: Kyle Taylor (via Flickr)