Direct Marketing in China

The direct marketing industry in China, including telemarketing, direct mail, catalog marketing, and direct-response advertising, is in its infancy. It has been mainly developed by foreign advertising agencies and direct marketing companies, primarily based in Hong Kong, which are looking for cost effective and efficient ways to reach Chinese target audiences. For example, direct mail campaigns by Leo Burnett for Procter & Gamble have been very successful, and they have shown that Chinese consumers are very receptive to direct marketing efforts. With 1.3 billion people, and soon to be the world's largest economy, China has great potential for direct marketers. Today, however, the vast majority of the Chinese population has little money, no credit cards, no telephones, and no direct way to get merchandise. Few lists exist in China, and those that are available are limited to such specialty areas as women's magazine subscribers. Nevertheless, new methods of delivery are being developed each day. Agencies and companies are constantly forming new alliances with the China Postal Service, banks, newspapers and telephone companies. With improved postal facilities and publicity, China could become the world's biggest mail order market. Direct mail promises to become an attractive and economical alternative to print and TV, which is relatively popular with direct-response advertisers in China. However, to date, direct mail has primarily been used for informational purposes and on a very local basis, where a mailer in a specific district of a city might announce a new store opening. The most common methods of delivery today include the China Post Office, hand delivered door-drops or on-street distribution, inserts into newspapers, and monthly telephone statements. Very few companies have developed appropriate databases or mailing lists - but that is rapidly changing for the better. Direct mail activities are most common in China's leading cities, particularly in Beijing, where the direct mail industry has more delivery options. In Shanghai, where newspapers have a relatively high reach, free-standing newspaper inserts are the most widely used method. In the rest of China, direct mail is virtually non-existent, making truly national campaigns essentially impossible. In spite of the difficulties, there are many examples of successful direct marketing activities in China. For example, this year, the U.S. China Investment Company will mail more than 100,000 McCall's catalogs in China. Also, the success with McCall's prompted the U.S. China Investment Company to create a program for bringing established U.S. catalogers to China. According to U.S. China Investment, while there are obstacles to mail order sales, the economy, especially in southern China, is booming, making it a primary direct mail market. The firm also notes that the price of postage is an added incentive to market in China because a mail piece of any dimension weighing a pound or less costs only 15 cents to mail. Meiller Druck and Verlag GmbH, a printing and publishing house that offers a wide palette of direct marketing services, is also active in all aspects of direct marketing in China. This was prompted by some of Meiller's clients moving into the Chinese market - Otto Versand, the world's largest mail order house, Quelle, the largest in Europe, and media giant Bertelsmann. Western TV shopping program makers are entering Asian countries, including China, to grab a share of the population's growing disposable income. The international home shopping specialists interested in China include HSN Direct from Florida; International Shopping Network in San Diego; Interwood Marketing Group from Ontario, Canada; London-based Regal Shop International and Quantum International; and Australia's International Media Management. They create or invest in TV programs or 10- to 30-minute infomercials that market products ranging from cosmetics to kitchen accessories. The programs are usually prerecorded in the United States or Europe and later dubbed into Asian languages. The response to Toronto-based Interwood Marketing's TV offers in China has been surprisingly good. Payments are made by international credit card or by check payable in U.S. or Hong Kong dollars. Many responses have come via fax, which is ahead of mail and phone as the ordering medium for Interwood's products. Titone Communications President Thomas Wong is optimistic about the prospects for his $2 million company in China. Despite sending 18,000 catalogs to residents of Shanghai and getting barely a 1 percent response rate, he is implementing another campaign using 100,000 new and improved catalogs aimed at consumers in Shanghai and Guangzhou. Wong thinks there is a huge market for U.S.-made products in China. However, virtually no U.S.-based catalog companies have a presence in China. L.L. Bean, Nordstrom, and JC Penney have yet to establish a presence in China. The Chinese Market The Chinese economy has become more market-oriented, and disposable incomes have significantly increased. The emergence of a Chinese middle class, which pursues material wealth, reflects China's growing integration into the world economy. The Chinese population has evolved into a discerning group of consumers, with clear preferences for quality products and fulfilling specific consumer needs. Apparently, the good life appeals to many Chinese, who aspire to become rich and display their wealth. This imagery isn't lost on savvy direct-response advertisers who are preparing direct marketing campaigns with success and achievement themes. It is unwise to view China as a single market because it is fractured by weak transportation and telecommunications links between regions (particularly between the coastal areas and the interior), the growing independence of state and local authorities, and the emergence of internal trade barriers. National aggregates, averages, and stereotypes also shouldn't mislead firms. The stereotype of 1.3 billion, low-income, largely rural people living in poverty isn't relevant to most foreign business decisions in China because that country now has the largest urban population in the world. By the year 2000, China's urban consumer base should reach 50 percent of the total national population due to an easing of restrictions on movement and a slowdown of population growth in the interior rural areas. The result is that the Chinese market is really a set of urban centers along the coast where nearly 400 million people live. China has tremendous market potential, but it is still a rural, underdeveloped, and poor country, with the emerging areas for direct marketers in urban enclaves along the Chinese coast. However, order fulfillment problems are a major concern for direct marketers in China, even within the major urban areas along the coast. Although China's postal service has been working to improve its support for direct marketing activities, a poor transportation infrastructure and a reliance on bicycles hamper parcel delivery. Challenges and Opportunities in China As it has for more than a hundred years, the Chinese market continues to attract, fascinate, confuse, and disappoint Western businesses. Although China has 1.3 billion people, that doesn't necessarily mean that it is on the verge of becoming a hot new market for American direct marketers. How do list-conscious direct marketers do business when there are no lists or virtually no postal infrastructure? How do direct-response print advertisers reach their target audience when relatively few Chinese read magazines? Chinese cultural biases involve negative associations between product promotions and the perceived value of that product. The Chinese think that aggressive promotions cheapen a product and that cheap products are never good. Chinese consumers do want to buy American made products that are associated tastefully with events and people, particularly celebrities, in the United States. Among the hot sellers are cosmetics, jewelry, and entertainment products. Like other countries with developing economies, Chinese consumers are also expecting better customer service - which is something relatively new in China. Nevertheless, the level of service expected by U.S. customers from the direct marketing industry is a revelation to the Chinese. Typically, Chinese companies don't provide customers with services like guarantees. Among consumers, China is primarily a cash economy. Nevertheless, the use of credit and debit cards is growing rapidly. One Chinese bank has 25.1 million cards outstanding, with three others having more than 19 million in circulation. The total number of cards is estimated at 54 million, with the Peoples Bank of China expecting a massive increase in credit card usage by the year 2000. Direct marketers also need lots of patience in China because of cultural differences and governmental restrictions. However, while the postal system is miserable, with lots of late deliveries and lost mail, and while the Chinese government continues to manage large portions of the nation's commerce, the consumer climate is Changing dramatically. Retail markets are blossoming due to the easing of governmental import regulations, leading to the increasing availability of more foreign goods payable in local currency. China's citizens are tired of their low quality domestic goods and are hungry for anything western, whether its a McDonald's hamburger, Estee Lauder cosmetics, or Calvin Klein clothes. The DMA is working with the Chinese government to build a transportation and business infrastructure to support direct order and delivery of U.S. products. While strapped with a still-developing transportation network, China is nonetheless in a position to support a direct marketing industry. The country is investing heavily in telecommunications, an essential channel for marketers to advertise products and for customers to order them. During the next several years, the Chinese government will be paving the way for better telemarketing efforts by investing $14.4 billion to increase the number of switched phone lines from 41 million to 140 million. There are 23.4 phones per 100 household nationwide, but, in Shanghai, it is 70.5 phones vs. 49.2 in Guangzhou, in Beijing phone penetration is 54 percent. China started a toll-free 800 service in 1995 and now has nine cities along its eastern coast involved. China expects to have 30 cities with 800 numbers by the end of 1998. AT&T has a contract for developing a call center in Shanghai to handle 800 numbers, telemarketing, and order-processing. The network will also have an Internet capability. However, the number of people on the Internet is still small - less than 1 million. For direct-response TV ads, China has 500 TV stations and more than 280 million sets. Star satellite TV currently reaches about 40 million Chinese homes. In urban areas, TV set ownership has gone from 15 percent in 1985 to more than 90 percent today. In all, some 50 million people are on cable in China. This huge TV market is boosting an interest in goods that can't be purchased in local stores but could be ordered from catalogs or direct-response TV if fulfillment problems can be addressed. Guthy Renker and Interwood, among others, are showing infomercials in China. The Chinese economy is the fastest growing in the world, with incredible potential for U.S. business. In order to penetrate this dynamic market, however, Americans need to adapt to the distinct business culture in China. American companies are attracted to China by a rapidly expanding class of urban residents with middle-class incomes. This class of consumers has displayed a strong preference for Western goods, particularly from the United States. The competitive base in China is still at a developmental stage; there are advantages for direct marketers who enter the market now during its early development stage mapbig company is a professional cross-border direct mail companies. The company has 40 million records in corporate databases, including Europe, the United States, almost all enterprises in China's information, if you want to do direct mail, please contact us. msn: mapbig#hotmail.com Targeting - Historically, the most important aspect of direct mail was its ability to precisely target previous customers. If a suitable list was available, it could do a good job of targeting prospects. Personalization - Direct mail can address the customer personally and be tailored to their needs based on previous transactions and gathered data. Optimization - Because of its direct accountability, direct mail can be tested to find the best list; the best offer; the best timing (and many other factors). Then the winning tests can be rolled out to a wider audience for optimal results. Analysis - The bulk mailing is large enough to allow statistical analyses. For example the results can be analysed to see in detail the performance of individual offers in say a squinch report which shows sales per square inch. With suitable media or source codes, the performance of lists can be captured. These enable better selection of offers and lists for future mailings. Accumulation - Responses (and non-responses) can be added to the database, allowing future mailings to be better targeted. Advocates make the following arguments ...Efficient use of advertising dollars .Highly selective, targeted and personalized Flexible High quality reproduction Response easily measured 87% of consumers are either “very” or “quite” satisfied with the products they buy through Direct Mail 56% of consumers said that value for money was the main benefit of buying through Direct Mail, whilst 63% said convenience. Article Source: http://www.Mapbig.com/ 2008 ,mapbig us to china direct mail.