China’s economy, after several slow years, is showing signs of rejuvenation with a 6.8 per cent growth in its economy in the third quarter. Chinese businesses may be breathing a bit easier now, but many have taken that sluggish period as a signal to diversify their markets overseas.
Last January, over 1,300 companies from China’s mainland exhibited at CES 2017, a nearly 20 percent rise over 2016. Innovative consumer applications of new technologies were boldly on display, covering everything from wearables, drones, and self-driving cars to baby items and healthcare.
Although large trade shows like CES are playing an increasingly important role for Chinese businesses seeking to expand their presence in U.S. markets, cultural and geographic differences often present obstacles.
Awareness of these challenges, however, is the first step on the path to success. Chinese companies must understand the potential roadblocks they may face, so they can develop strategic plans to overcome them.
Challenge #1: Concerns about U.S. vendor costs
Many Chinese brands see the appeal of using a U.S. vendor for events, but frequently worry about the expense. As it turns out, U.S. labor costs can indeed run more than 50% higher than what a company would expect to pay in China.
The best option for Chinese businesses is to choose an event partner that fully understands U.S.-based event management and can explain it with honesty, transparency, and accuracy. This eliminates hidden costs or unpleasant surprises and enables the business to plan and budget accordingly. What’s more, your U.S.-based partner should also understand your specific budget, goals, and expectations. With this in mind, they can tactfully navigate you to the best possible solution that optimizes your funds. When your partner has experience working in different parts of the world (not just the U.S.), they can better understand your expectations and align accordingly.
Challenge #2: Production standards and lead times
There are pros and cons when selecting a production company. On one hand, many Chinese companies prefer to fabricate locally in China, so they can touch and see the end product. However, shipping overseas may pose logistical and financial challenges. On the other hand, working with a U.S. firm tends to require a greater lead time and offers less flexibility for last-minute changes. Some American fabrication firms have liaison offices in China, but often only offer production services; in these cases, other vendors will still need to be sourced for creative, strategy, design, and logistics management. Chinese companies need to be sure to ask possible partners about important issues like lead time and logistical challenges, so they can accurately compare all available options.
It goes beyond just speaking a common language, though.
Challenge #3: Language barriers and cultural differences
When planning a trade show exhibit, communication is critical. Even a small misunderstanding can balloon into a major problem. Chinese businesses may prefer to work with U.S. vendors with local offices in China, so they can work with a team who understands and sympathizes with their needs, while also being able to flawlessly express and fulfill those needs in the U.S.
It goes beyond just speaking a common language, though. A U.S. partner that is based locally will understand the important cultural differences that will make the working relationship much easier, such as the importance of Mianzi and the fostering of guanxi to help the relationship succeed. The local team will also be able to help navigate project management challenges and deadlines more seamlessly on your behalf. These tasks can range across the event spectrum from conference calls to ensuring the 12+ hour time zone difference can be maximized in your favor rather than against it.
Leveraging strategic planning to maximize success
Clearly, there are nuances to Western events that Chinese businesses might not realize at first. It’s therefore important for businesses to address these issues when developing their event strategy by asking themselves the following questions:
- What will our U.S. labor costs be? What labor union issues do we need to be aware of to avoid unforeseen costs, delays, or difficulties?
- How many points of contact will we have in the U.S.? Are our lines of communication clear? Are there ways we can consolidate our contact points to improve communication? Do you have any local Chinese offices that can help support my team on a day-to-day basis?
- How exactly do our target events work? Do we need to pay more for a bigger booth or better location, or is it first come, first served? What are sponsorship or advertising opportunities? What are the best practices?
Ultimately, finding the right strategic partner can make all the difference. For example, DJI, a successful producer of consumer and professional drones and cameras, was planning to set up pop-up stores at nine shopping malls across six cities from the East to West Coast. Working with a partner like Freeman ensured DJI had a team both in the U.S. and in China working together seamlessly to tackle logistical challenges like site checks and venue booking. The earlier in the process that Chinese companies start their strategic planning, and the more comprehensive that planning process is, the stronger and more successful their event strategy will be. Doing the homework upfront by choosing the right partners helps ensure the exhibit experience at CES and other important American shows goes smoothly. The result? A successful expansion into the U.S. market. And that’s something that always translates across borders.