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Disruption, Sustainability and how brands can adapt to the China market

UMS CEO Jessica Miao recently joined a panel discussion which explored the impact of digital innovation on industry and business and how brands can be more sustainable.

 

In this blog, she shares her thoughts on how businesses can ensure they establish and maintain sustainable strategies in China.

 

In China, we define a “sustainable” business as one that can first survive in the digital age, and, more importantly, one that can grow and prosper in this rapidly changing market.

 

When foreign brands come to China, they often need to adapt to the market in order to survive, for many brands they need to adopt new digital tools and different ways of thinking in order to thrive.

 

There are quite a few examples of big F&B and FMCG brands that have transformed their businesses to adapt to the ways that Chinese consumers engage with brands, and in doing so have been rewarded with good revenue growth in the market.

 

 

Starbucks is a great example of this. The coffee giant embraced Chinese platforms such as WeChat and Alibaba and ensured its customers could engage with the brand in the ways that they wanted to. Clearly, it has been a great success with Starbucks holding more than 50% of the coffee market in China, where it opens a new store about every 15 hours!

 

However, while big businesses have been able to create sustainable business models, this challenge is certainly much harder for small to medium sized companies. However, it is not impossible.

 

At UMS we advise SME businesses to create a consistent business strategy which works hand-in-hand with digital and e-commerce strategies to ensure they have strong set goals. Then they can apply some fast turn-around test & learn programmes to better understand their customers and the marketplace, work with local partners, hire local managers, and co-brand with local businesses all of which will provide greater ways to adapt and ensure a sustainable business in China.

 

It is fair to see that transformation is different for all companies and the challenges for one business and always going to be different for another. However, clearly embracing digital technologies and preparing your business to adapt to the rapid pace of China, will help to ensure you are set up for success.

 

Starbucks once again provides a great example. Last year Starbucks began to feel the pressure from a new Chinese competitor called Luckin Coffee. The start-up business was winning over fans with its digital model enabling customers to order coffee online, watch it being made via a live stream and have it delivered to them within 30 minutes.

 

 

As Luckin’s success grew, Starbucks reported its first dip in sales since entering the China market, so it quickly adapted. Within months, Starbucks had partnered with Alibaba and launched an online store on Tmall as well as a delivery service via Alibaba-owned delivery company Ele.me.

 

As the Starbucks example shows, even being number one in the market does not mean you should stop transforming and adapting your business if you want to remain on top. “In China, it is the brands that embrace technology and continue that will prove the most sustainable and survive the longest.”