logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

Western Companies Need to Adapt, Not Pander to China

By  +Follow June 30, 2014 6:00AM
Share:
Tickers Mentioned:

us stocks in china, best us companies in china, growth in china market, china consumers, chinese stocks in U.S.Time-honored investment theory dictates that markets are usually rational, limiting upside. It is when markets act irrationally that arbitrage opportunities surface, granting courageous, seasoned investors a window of unreasonable, but very real upside.

Western attitudes towards the Chinese market have been and will continue to be irrational, thanks to corporate media and the ingrained delusion that the Chinese constitute a monolithic, inscrutable, behind-the-times bunch. Those of us on the ground in China, who see the lines at Starbucks (SBUX) only two blocks away from another Starbucks, the middle-schoolers scrambling for authentic NBA gear from newly-crowned San Antonio Spurs, and most importantly, the epidemic quickness with which the Chinese have turned to their mobile devices and online shopping as an obsession, know better.

Chinese consumers are global consumers. Just like westerners, they define themselves by what they buy, and they want western quality goods whenever possible – be it apparel, furniture, even FMCG. Lacking physical upscale retail penetration into the 50 China cities with populations of more than two million, the online market will continue to be where such populations shop, driving big Chinese tech stocks, as well as the bottom line of western companies that manage the channel shift.

True, this market of which we speak is not an equity market, but is nonetheless tied intimately to equities through China’s Internet “BAT” troika: Baidu (BIDU) , Alibaba ($BABA), and Tencent (TCEHY) , and the many public western companies who rely on BAT to carve a larger share out of the market that will dominate our half of the 21st century.

The takeaway: western companies that communicate their brands authentically via BAT, rather than pandering to China by sino-fying their offerings, and getting squeezed out by China’s Internet consolidation, are positioning for long term growth and profits in the only country on earth right now with a consumer base already eclipsing the West’s largest, while still in its nascent stages.

Alibaba: Real Value Play

Another takeaway– Alibaba, by virtue of its property TMall, which owns more than 50% of China’s $300 billion B2C in 2013, is China’s value tech stock. Whereas Baidu has triumphed in no small part by contributing to Google’s (GOOG) excommunication from the mainland, whilst riding in the tail wind of Google’s R&D, Alibaba founder Jack Ma tamed the Wild East by offering consumers indelible comments, incorruptible ratings, and rock-solid return policies.

As a result, Alibaba’s brand equity is unassailable. Furthermore, its core mission of providing vendors the tools to position and advertise effectively against each other has proven effective enough that traditional online retailers such as JD.com and Walmart’s (WMT) 1mall are now forced to mimic them.

A quick case study: Pantone, the world’s leading color solution provider and a subsidiary of Fortune 200 Danaher Corp. (DHR) , has been laboring under the traditional mainland China distributor approach, with typically suboptimal results: diluted brand, and an ostensibly unbridgeable gap between brand and Chinese end user.

True, opening a Tmall flagship store was only the first step towards using the platform to advantage. After all, there were distributors - both quasi and official - already selling on Tmall. A flagship store is brand-verified, and grants privileges for positioning and advertising that must be exploited. If this sounds unfair, it does prevent brands from simply setting up and providing sloppy service, locking out more nimble vendors who can better serve shoppers.

In any event, Pantone is executing a full range of SEO & PPC style advertising within the Tmall ecosystem, as well as banner advertising on fashion sites. More importantly, however, it has taken steps to stamp its store with the imprimatur of brand authenticity, keeping design and offerings in line with that to be found on its home site. Even better, it has implemented the same color selector tool on its Tmall store that has simplified shopping on its home site, a step which instantly rocketed sales.

As a result, Pantone is implementing a slow, savvy channel shift away from its distributor model that will see higher margins, increased penetration, and sustainable growth in this must-win market.

Baidu Maintains Solid Revenues

As to Baidu, what it lacks in Google-esque depth of offering, it strives to make up in advertising revenue. It’s bad news for visitors, who lack the variety of organic results to browse, but good news for advertisers, upon whom visitors are therefore more compelled to click.

Knowing this, Leica Microsystems, another subsidiary of Danaher’s, employs a synergistic SEO and SEM approach on Baidu to scoop up the opportunities that its competitors are missing. It speaks to theme of western opportunity that Leica Microsystems has no Chinese competitors in this exploding segment of the China market, as only international brands are considered for high-end medical devices. Leica fully satisfies Chinese target customer demand for add-value information with ongoing localization of its information assets and upgrading of its web presence in China, which drives organic SEO results for its keywords.

On the PPC front, Leica outflanks competitors with fast-loading landing pages hosted in-country, and custom dashboards to close the loop between form fills and sales, dramatically cutting lead times and boosting ROI on its campaigns into the 1500% range. Sales in this channel are robust enough that more resource intensive, less targeted channels are made unnecessary.

Conclusion: western companies who understand their brand advantage in China, and how to exist with China’s internet giants in symbiosis, are positioning for sustainable 21st century growth.

By Ernie Diaz, a director at Web Presence In China, a full service digital marketing agency headquartered in Beijing. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Liked What You Read? Join Equities.com and Connect With Your Favorite Financial Experts FOR FREE! Members of Equities.com gain access to our leading financial news and content, active social investment community, proprietary research tools including the 2014 Small-Cap Stars, E.V.A. reports and more.

Results for BIDU
moderneconomist.com
1 Sep 14 19:01:48
RT @1nvestor: "@EdmondLococo: Three #China billionaires partner to take on #Alibaba. looks at the Wanda, Baidu #Tencent deal http://t.co/Vh…
Derald Muniz
1 Sep 14 18:44:17
"@EdmondLococo: Three #China billionaires partner to take on #Alibaba. looks at the Wanda, Baidu #Tencent deal http://t.co/VhMueN3EKo $BIDU"
Market Monitor
1 Sep 14 18:08:05
$BIDU: Alibaba, Tencent Vie For China Web Rule http://t.co/e3agxrdEQI http://t.co/wSRHo0VQB4
strader55
1 Sep 14 18:04:23
nlightn: $BIDU, $QIHU, $SOHU,...Data from CNZZ showed that Baidu http://t.co/kU8WSoaM4Z
Yi Jone Li
1 Sep 14 17:45:08
RT @EdmondLococo: Three #China billionaires partner to take on #Alibaba. @BloombergTV looks at the Wanda, Baidu, #Tencent deal http://t.co/…
Eric Jackson
1 Sep 14 17:26:41
RT @EdmondLococo: Three #China billionaires partner to take on #Alibaba. @BloombergTV looks at the Wanda, Baidu, #Tencent deal http://t.co/…
Mediakeys
1 Sep 14 17:25:24
RT @EdmondLococo: Three #China billionaires partner to take on #Alibaba. @BloombergTV looks at the Wanda, Baidu, #Tencent deal http://t.co/…
Edmond Lococo 罗孟德
1 Sep 14 17:24:55
Three #China billionaires partner to take on #Alibaba. @BloombergTV looks at the Wanda, Baidu, #Tencent deal http://t.co/5bffPewTtp $BIDU
Perfor Mance
1 Sep 14 17:21:20
Option Millionaires: nlightn: $BIDU, $QIHU, $SOHU,...Data from CNZZ showed that Baidu http://t.co/zBwqIcEeCY
Patrick
1 Sep 14 17:00:05
#SENTISHIFTDOWN $HD $TSCO $FORTY $EXEL $DIS $IBM $SWKS $NFLX $BIDU $WFC #quantheta
12Stocks.com China
1 Sep 14 16:46:38
#China #stocks $BIDU Baidu, Inc. Daily:0.34% Weekly:0.16% YTD:20.6% Trend:50 / 100 http://t.co/8SNPZ52Mle
12Stocks.com Tech
1 Sep 14 16:31:02
#Tech #stocks $BIDU Baidu Daily:0.34% Weekly:0.16% YTD:20.6% Trend:50 / 100 http://t.co/F4kBufvfXf
Market News
1 Sep 14 16:07:52
$BIDU: Qihoo Beats Earnings, Stock Price Down Over Margin Concerns http://t.co/Xzrz84pjP4 http://t.co/4l0Bl2Igz0
Patrick
1 Sep 14 16:00:05
#SENTISHIFTDOWN $HD $TSCO $FORTY $DIS $EXEL $IBM $NFLX $BIDU $WFC $AXP #quantheta
Pacifico619
1 Sep 14 15:47:13
stocks on watch for 9/2 $GWPH $FB $FEYE $bidu all acted well on fri. close.
Christopher W. Haick
1 Sep 14 15:23:05
Alibaba U.S. IPO Near, But Will Tencent Rule China? http://t.co/6IDiFg4axP #IBDNews via @IBDinvestors $TCEHY $BIDU $FB $YHOO $JD $V $AMZN
Wall Street Monitor
1 Sep 14 15:07:55
$BIDU: Rumor roundup: a billion dollars worth of explosive tech mergers and acquisitions http://t.co/op1Xgz0D4y http://t.co/vhuy7YZUC2
Patrick
1 Sep 14 15:00:04
#SENTISHIFTDOWN $HD $TSCO $FORTY $DIS $NFLX $IBM $WFC $AXP $BIDU $T #quantheta
Wall Street News
1 Sep 14 14:08:06
$BIDU: 2014 Fab 50: Asia's Tech Takes Over The World http://t.co/YV1cEh7i5D http://t.co/eZy82R2g03
Learnstocks101
1 Sep 14 14:05:37
$BIDU still like it long but needs to continue to hold 214 on closing
12Stocks.com Tech
1 Sep 14 14:04:57
Alibaba Group IPO comes with unusual structure.. http://t.co/vtb83xfxYB $BIDU #tech #stocks
Stock Haven
1 Sep 14 13:49:53
See $TSLA $GPRO $NFLX $VIPS $BIDU $FB $GMCR $GILD and countless others...
Dan
1 Sep 14 13:45:08
$BIDU OI for maturity 09/05/2014. 220.00 Highest put. 220.00 Highest call. http://t.co/eKf3ctVQAh
Dan
1 Sep 14 13:41:16
$BIDU Max Pain is 217.50 for maturity 09/05/2014. Last close = 214.52. http://t.co/RxWClKAWCQ
Hector Hernandez
1 Sep 14 13:20:25
RT @SeekingAlpha: China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
CallaLilly101
1 Sep 14 13:15:53
RT @BoF: From The China Edit | “Wanda, Tencent and Baidu Take on Alibaba with $814M E-Commerce Deal” http://t.co/TUr81kMn0q $BIDU $BABA
Pedro Morales
1 Sep 14 13:09:12
RT @SeekingAlpha: China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
Companies in News
1 Sep 14 13:07:52
$BIDU: Baidu, Tencent, Wanda Poised To Join Forces On Web http://t.co/zW4X04nz1s http://t.co/wBZb9PNpb7
gordon gekko is god
1 Sep 14 13:03:17
Tencent In M&A Overdrive With New Tie-Ups http://t.co/cTcXn1S6GN $TCEHY, $SHI, $BABA, $BIDU, $JD
gordon gekko is god
1 Sep 14 13:01:52
China Search Engine Market Share - August 2014 http://t.co/CxIpQ3h1TK $BIDU, $QIHU, $SOHU
Patrick
1 Sep 14 13:00:04
#SENTISHIFTDOWN $HD $NFLX $TSCO $FORTY $SPX $DIS $BIDU $IBM $AXP $A #quantheta
Kristin
1 Sep 14 12:26:10
Please visit this charity website http://t.co/q7J9I4CKxv .Any amount is appreciated,these Beautiful children needs your help.$SPY $IBB $BIDU
Patrick
1 Sep 14 12:00:04
#SENTISHIFTDOWN $HD $GDX $NFLX $TSCO $FORTY $DIS $BIDU $IBM $AXP $WFC #quantheta
Kos
1 Sep 14 11:52:27
RT @StockBuz: "Unleash The Hounds. Alibaba Frenzy Month To Begin" http://t.co/59fV9FDUUX $BABA $AMZN $BIDU $EBAY #IPO
Justin
1 Sep 14 11:47:54
RT @kunal00: Here is the game plan and focus list for this week! -Bulls on Wallstreet http://t.co/OrO3hcIIM3 $spy $gmcr $tsla $gwph $bidu…
Kunal Desai
1 Sep 14 11:43:13
Here is the game plan and focus list for this week! -Bulls on Wallstreet http://t.co/OrO3hcIIM3 $spy $gmcr $tsla $gwph $bidu $fb $twtr
Ravi Romo
1 Sep 14 11:20:08
Alibaba U.S. IPO Near, But Will Tencent Rule China? http://t.co/v50luJ2RU2 $TCEHY $BIDU $FB $YHOO $JD $V $AMZN $WUBA $CMCM $WB $TWTR $YOKU
Bruce Tarleton
1 Sep 14 11:15:19
RT @stock_coach: Want to trade like this? http://t.co/bimGBz5zBE $AAPL $V $MA $AXP $SPY $NFLX $TWTR $AMZN $GOOGL $FB $TSLA $BIDU
Bulls vs Bears
1 Sep 14 11:07:32
$BIDU: Apple Inc. (AAPL), Autodesk, Inc. (ADSK) and Baidu Inc (ADR) (BIDU) – Tech ... http://t.co/QsLbyDKdba http://t.co/ZEsJ3zCAfG
TopFlight Trades
1 Sep 14 11:04:31
Leaders w/ Strong Relative Strength: $BITA $GBX $PEIX $SWKS $EQM $TRN $UHS $FB $BIDU $CNI $AAPL $ODFL $ITUB
Clive Jones
1 Sep 14 10:37:18
RT @SeekingAlpha: China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
Alysia Sarkisian
1 Sep 14 10:36:58
RT @SeekingAlpha: China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
Evener Investment
1 Sep 14 10:36:48
RT @SeekingAlpha: China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
Quantpost Technology
1 Sep 14 10:34:28
$BIDU News Alert: http://t.co/ipf4UtRk5Q Updated options view: https://t.co/GIgqR0bJT1 All options views: https://t.co/gu71urtdg5
Seeking Alpha
1 Sep 14 10:34:25
China Search Engine Market Share - August 2014 http://t.co/V2k8LMU9gr $BIDU $QIHU $SOHU
12Stocks.com China
1 Sep 14 10:30:54
Alibaba Group IPO comes with unusual structure.. http://t.co/UEPNuMHiM7 $BIDU #china #stocks
WinningStockCoach
1 Sep 14 10:30:01
Want to trade like this? http://t.co/bimGBz5zBE $AAPL $V $MA $AXP $SPY $NFLX $TWTR $AMZN $GOOGL $FB $TSLA $BIDU
YourPersonalTrader
1 Sep 14 10:20:37
$CMCM best YPT top 40 Shadowlist performer in August +60% max gain http://t.co/y5W5hfKaXD | YPT #China inc. $BIDU $QIHU $YY $CTRP #stocks
PtheGr8
1 Sep 14 09:23:03
$BIDU 4hr http://t.co/Y3nOLwQSBK 161.8%BC & 38.2%XA of possible CD leg down trgt, xactly inline w 127%XA and 113%XA prior leg up.
Thiruvar
1 Sep 14 07:30:29
RT @Williamj54: Weekend Review 8/29: $JD $GPRO $TWTR $CAVM $ANET $MBLY $GMCR $AMAT $NFLX $HCLP $EMES $LNKD $PANW $LNKD $CMG $FB $BIDU http:…
				
				
By  +Follow June 30, 2014 6:00AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.