Welcome, Guest [Sign In]

June 2008 - Strategy Magazine
Biz

Roundtable
Chindia: What's working

by Mary Dickie
page 36

Over the past decade, both India and China have introduced major economic reforms that have significantly opened their markets to foreign investment. Both are seeing the rapid rise of a middle class with enormous buying power and a thirst for Western brands. And yet both are burdened with weak infrastructure, complex tax laws and abundant red tape.

For a Canadian company, entering the markets of these emerging economic superpowers is not to be taken lightly, or timidly. It's a massive undertaking that requires long-term investment, flexible business plans and skillful negotiations with local partners and governments. Still, a number of Canadian companies, including Research In Motion, Sun Life Financial, Bombardier and Bata, have made the effort and been rewarded with success. Is it possible that Canadian values like multiculturalism, tolerance, patience and respect help us to do well in these markets?

The fact that the Home Depot chose Canadian Annette Verschuren to head its Asian division might suggest that some think so. In 2006, the Vinings, Ga.-based big-box retailer bought the Home Way, a Chinese home improvement retailer with 12 stores across six cities in China, and tapped a team led by Home Depot Canada president Verschuren to guide its entry into China.

"We're still learning how to approach that market, which is very different from ours," says Peg Hunter, VP marketing and communications for Toronto-based Home Depot Canada. "Our heritage is do-it-yourself, and there's not a lot of do-it-yourself in China. If you can afford home improvement, you have enough to have somebody do it for you, and labour is cheap and plentiful. And when you buy a home, it's a concrete box that has plumbing and electrical and you finish it yourself. That's different from what we're used to, and it puts a new spin on our business."

Still, other parts of the business have translated well. "The Chinese middle class loves Western brands and eco initiatives, so we've introduced our Eco Options program there, and have had good results," says Hunter. "But we're really just building operations and looking toward the key consumer trends so we can redefine our business model. Because it's a very different consumer, and we have to learn to cater to it differently."

So far, the company's marketing has been based on public relations and flyers. "In China, retail is paper-based, so those are the most efficient ways of reaching people," Hunter explains. "From a PR standpoint, we've had connections with local governments and community groups, and the Chinese really prize the fact that you're part of the community."

Hunter maintains it's important to be able to rely on local partners. "I'm not trying to manage it from here," she says. "The marketing director is from that area, and she knows local media and PR and how to put events together."

Toronto-based Bata Shoes has been operating in India since 1929 and in China since 2004. Jean Zeng, the Canadian retail branch manager for Guangzhou-based Bata China, echoes Hunter's emphasis on local PR. "Bata has been a footwear retailer and manufacturer for over 100 years and operates in 50 countries, but the brand was almost unknown to Chinese consumers when it entered the market," Zeng explains. The company focused on strategic marketing efforts, including print advertising in magazines geared to urban white-collar workers, press coverage featuring the Bata family and visuals presenting Bata as an international brand with European heritage.

Quick Search