New research from global marketing consultancy LEWIS shows that while the Chinese market remains a priority for most, a perception of overconfidence among U.S. senior marketers is leaving brands open to risk in the world’s second largest economy.
The research is the next iteration in the LEWIS Bay to Bay series, referring to the dual centers of gravity in the San Francisco and China Greater Bay areas. The series was launched in 2018 to explore global innovation, entrepreneurialism and leadership culture while supporting dialogue and conversation between the two regions.
The results reveal that China is still a key market for the majority of brands:
- 71 percent are currently marketing their products or services in China
- 80 percent feel their marketing has been extremely or very successful
- 62 percent are increasing marketing and communications budgets in China
- 55 percent are planning to increase budgets next year
Marketing and measurement savvy
While 80 percent of respondents believe they completely or mostly understand marketing practices in China, and 88 percent are very confident in their ability to accurately measure campaigns in the country, 77 percent cite a lack of transparency in the marketing industry as a barrier to their marketing efforts.
The survey reveals that 23 percent of respondents feel it is either extremely or very difficult to market in China—highlighting wasted marketing efforts and investment and exposing knowledge gaps in two key areas:
Market understanding:
- 41 percent of respondents apply the same marketing plans in China as they do in the U.S., despite the vast difference in platforms, demographics and culture between the two markets
- 19 percent feel they have little-to-no understanding of marketing practices in China
Technical knowledge:
- Almost a third (30 percent) are not at all or only somewhat familiar with Chinese social media and e-commerce platforms
- The highest proportion (69 percent) of respondents use Bing as part of their search marketing efforts more than Baidu, another popular search platform (59 percent), while omitting other platforms that are actually most used by Chinese audiences
“The results of the survey present a stark contrast between the success U.S. marketers feel they are having in China, versus their understanding of the market,” said Matt Robbins, vice president of insight and research at LEWIS, in a news release. “This speaks to general overconfidence among U.S. brands and, in a market as complex and rapidly evolving as China, this has the potential to present unnecessary risk.”
Which brands are making an impact?
When asked about marketing priorities for the future, 88 percent of respondents believe expanding their marketing and communications programs outside of tier-one cities is very or extremely important.
However, the current focus remains on the upper middle class, with 90 percent targeting this group and 80 percent feeling that Chinese consumers are still more influenced by marketing of luxury or internationally renowned brands than lower-tier brands.
Of those respondents whose companies are working with marketing or communications agencies in China, 67 percent are working with local Chinese agencies headquartered in China, and 77 percent are working with global agencies that have Chinese offices.
“While the global headlines may paint a sense of tension between the U.S. and China, it is clear that at a business level, China continues to be a priority for marketers,” added Robbins. “However, gaining a clear understanding and good guidance at a local level is key to avoiding missteps and reaching untapped audiences.”
LEWIS surveyed 351 U.S. marketers on their perceptions of and priorities for the Chinese market.
