How Do International SMEs Achieve Branding by Guerrilla Marketing in China?

By 

Albert PK Lau, Vice-chairman, Hong Kong Small and Medium Enterprises General Association

 

Branding refers to the process of building an image of an organization??s brand or trademark or logo in the mind of its target market.  Before it embarks on its branding, it must first identify the target market and decide on the positioning of its product or service, be it up-market or low-market. For a successful marketing strategy, the organization??s product or service must fit into its target market in terms of price, quality and service. If the organization is a small and medium enterprise (SME), it has to meet a very tight budget and schedule for branding and therefore guerilla marketing is its silver bullet. 

What is guerrilla marketing?

Guerrilla marketing is executed via unconventional and economical marketing tactics to sell products and services. International SMEs not on their own turf must leverage their strengths to gain an upper hand over their major competitors in China as soon as possible because they are short of resources to engage their competitors in a war of attrition. Unconventional  means unexpected so that the competitors are caught off guard.  The tactics deployed might be unethical but must be legal. An advertiser could use a dog to carry a sandwich billboard but pet lovers in the neighborhood might frown at it.

The word CHINA is an acronym to summarize the tactics of guerrilla marketing to be deployed in China:

C: CEPA or Closer Economic Partnership Agreement (between China and Hong Kong)                                                                                   

Under CEPA, a HK-based service supplier or manufacturer enjoys preferential treatments when it exports its products or services to China. Therefore, an international SME is encouraged to take over a HK-based business as a shortcut to engage in China trade. Under CEPA III, the third phase for implementation effective on January 1, 2006, a manufacturer based in HK is entitled to zero tariff for all products if the products comply with specific rules of HK-origin. A HK-based company to supply service can now operate on its own in 27 sectors of services in China.  The service provider must be certified as a HK Service Supplier by HK Trade and Industry Department (TID) if it meets the following criteria: it is incorporated in HK; it pays profits tax and at least 50% of its staff are HK residents. The company must have fulfilled a minimum period of residency, from 3 to 5 years, depending on the type of industry.  To take advantage of CEPA III, a foreign SME is encouraged to take over a local SME through acquisition or merger and the former will be regarded as a HK-based company 1 year after its acquisition of majority shareholding. According to the latest statistics released by TID, 901 HK service suppliers were verified and approved as at November 30, 2005 in which 47% were engaged in transport and logistics services; 27%, distribution service and 8%, advertising, among others.

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H: Hosting events, such as seminars, PR, sponsorships and campaigns.                               

Event marketing is one of the most cost-effective marketing channels of communication in China. A business may sponsor sports event to promote health or environmentalism for the identity of good corporate citizen.  That is particularly important to an international SME, which may be denounced as a money-grubber by local Chinese.  Above-the-line advertising is exorbitantly and prohibitively costly from the perspective of an SME. A market leader is unlikely preempted via frontal attack by a small market challenger. The cost-saving tactic is to target a sales promotion at a market niche by hosting events.  A small wine dealer, for example, hosts wine-tasting parties for the Chinese yuppies who have studied aboard and returned for a plum.

I: Import image

International SMEs accentuate their import image to command a price premium and roll out their products in Pearl River Delta where the consumers are more western-minded. For import image, they should shy away from a Chinese translation for their brand names. If a Chinese translation is needed, it should be a transliteration, which is based on the pronunciation in order to retain the exotic flavor.  

N: Networking

Networking among all stakeholders is very effective in a closely-knit community such as China and word of mouth is to be created. Networking means guanxi in Chinese. Like Rome, guanxi is not built in one day and takes time to nurture.  Buzzword or word of mouth can be created through guanxi by opinion leaders and peer groups. A ladies' fashion dealer can shrewdly make the brand being talked about in the favorite spots for the prospective customers.  

A: Anything can happen in China

An international SME is advised to take caution in China and looks before it leaps as nepotism, cronyism, sweet-heart deals and legal loopholes, to name but a few, still take their toll on the Chinese economy.  

Apart from the guerilla marketing tactics mentioned above, an international SME which is keen in making inroads into China must appreciate cultural nuances, know the market environment, build up networking and others before it ventures its resources on the China market.