Lessons from the East: The Avoidable Mistakes

By Sean O’Brien

Shanghai East Meets West Landscape

The Chinese influence on 21st-century markets is too often understated. With 1.4 billion citizens and an annual economic growth hovering around 6 per cent, the far-reaching impact of the Chinese economy is tangible throughout developing countries and within preeminent economies of the modernized world. Yet, the Chinese economy is distinctly insular in contrast to the globalized markets of rival economies. Too often, Western countries fail in their entrance to the Chinese market due to the easily avoidable error of failing to customize a market strategy that resonates with Chinese consumer values.

China economy East meets West

The Chinese culture has always been distinctive in its values, style, and atheistic. As one of the central hubs of modernity, the Chinese consumer is technologically savvy and expectant of high-quality digital experiences. Given the Chinese state’s censorship of Western media giants Facebook and Google, Chinese businesses crafted massive digital media platforms customized for the Chinese populace. Embodying the intense scrutiny of business credibility in Chinese industries, Chinese e-commerce platforms have prioritized creating stability, credibility, and fluidity into a growing e-commerce market. Western businesses have frequently failed to implement effective marketing and commerce strategies when dealing with Chinese digital platforms. 

eBay in China

The failure of eBay in the Chinese market illuminates the need for Western businesses to localize practices in order to smoothly operate within Chinese society. eBay is the old man of the technology sector, a potent survivor of the volatile Dot Com Boom of the 1990’s.  Enabling person-to-person transactions, eBay established itself as a pioneer of e-commerce, generating a massive volume of transactions and monthly users. In 2002, founder Pierre Omidyar and CEO Jeffrey Skoll both became billionaires within hours of the company going public. eBay beckoned as a counterweight to the economic shortcomings of the Dot Com Boom, highlighting the fantastic economic possibilities encoded within the information age. 

Yet, eBay failed in China. After a short two-year attempt, eBay announced it would be leaving the market in 2006. Alibaba founded Taobao in 2003 as a response to the prominence of eBay in the USA, constructing a marketplace perfectly suited to accommodate Chinese consumer values. In contrast, eBay failed to understand their success in Western markets had a limited translation into a rapidly modernizing Chinese market. By 2009, Taobao had completely dominated the e-commerce market; by 2019 Taobao stood among Facebook, Google, and Apple as the most prominent companies in the world.

Chinese mobile payment apps

Guanxi

China’s business culture puts a high value on personal relationships, mutual obligations, and intimate connections; a feature termed guanxi. As a late adopter of the Internet, Chinese citizens had difficulty establishing credibility with the anonymous sellers of eBay. Taobao integrated an instant messaging feature into their platform, where buyers and sellers would converse for an average 45 minutes before a sale. The implementation of this e-commerce infrastructure adeptly broadened the concept of Guanxi into the digital marketplace; enabling Taobao to cultivate a broad user base across China. eBay failed to understand the gravity of Guanxi, and maintained a glacial messaging system that sat poorly with Chinese consumers. 

Cash Only?

The Chinese market’s dependency on cash throughout the 1990s and 2000’s catalyzed the average consumer to leapfrog the credit/debit card revolution into the age of mobile payments. Back in 2004, as eBay entered the Chinese e-commerce market, few people used bank accounts or credit cards, which vastly eliminated the number of individuals who could participate in e-commerce. While eBay failed to understand this, Taobao formulated partnerships with Chinese banks in order to enable consumers to make cash deposits in-store to top up their digital accounts. Taobao opened the doors to millions of consumers to the world of e-commerce, while establishing increasing credibility of the site and sellers therein.

Mindful Marketing

It is in the identification and integration of Chinese consumer habits into business practices that define a company’s success in China. While the prominent issues in 2006 were establishing communication infrastructure and creating entrances to the e-commerce market for a cash-only population, the primary current concerns of Western businesses are the necessity for hybrid social media-e-commerce marketing campaigns and adherence to the Chinese affinity to mobile payment structures.  

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