It’s becoming increasingly clear that a lot of valuable lessons have been learned by U.S. tech companies entering China.
The early Chinese Internet era was all about a copy to China strategy for American brands — whatever worked in the U.S. surely would work in China. But it didn’t. In the first wave of the Chinese Internet starting about 10 years ago, the American entrant lost out to a more nimble, faster-moving Chinese competitor that understand the market better.
Now a new group of U.S. companies — Evernote, LinkedIn LNKD -0.56%and Flipboard, among them — are trying new tactics to tackle the Chinese market. Localization is part of the formula. And it’s working, at least from early indications.
As an example, Evernote entered the Chinese market three years ago and now, China has become second only to the U.S. for number of users, noted Evernote COO Linda Kozlowski, speaking at a recent PingWest summit in San Francisco. “You can’t just treat China as another country. You need stand-alone sales and marketing operations in China,” she emphasized.
Evernote’s China General Manager Amy Gu outlined the strategy that’s working: adapt services and prices for the market, hire locally, figure out a Wechat marketing strategy, add payments on mobile phones and empower employees to feel part of the company.
In one recent effort, Evernote did a China-specific marketing research study to learn more about how to retain and engage its China user base. That led the company to introduce a mid-tier priced service for China. That special pricing for the Chinese market resulted in a 156 percent increase in users over the past few months, Kozlowski noted.
Flipboard too is figuring out tactics for entering China. What’s working is more localization, partnering with local companies and giving the engineering team more autonomy in China, said Jonathan Stull, head of business development at Flipboard.
Certainly, the days when marketers of American Internet brands rushed in blindly to the huge market with big ambitions are over.
At Dropbox, a “landing team” of two to four people helps to prepare an entry strategy in Asian markets but not yet China. The focus in on hiring, training and bridging communications with headquarters, said Oliver Jay, head of APAC and LATAM at Dropbox. “We localize as much as we can,” added Jay.
Starting in 2014, Dropbox has made its way into Australia/New Zealand and Japan. In Japan, Dropbox broke away from its traditional business model to forge a partnership with Softbank in Japan to resell its enterprise service. The next expansion markets for Dropbox are Southeast Asia and China.
As leaders of U.S. tech companies journey to China successfully, this new era of the Chinese Internet could actually prove to be more interesting than the first.
Text: Forbes by Rebecca Fannin 10-08-2015