No, this is not a post that suggests that just because China has a bizillion people you will make tons of money just by entering this market. If only it were that easy. Let me take that off the table from the outset; don’t misconstrue the point of this post.

I recently listened to a very good and interesting podcast interview by Christine Lu of the China Business Network with Tom Doctoroff, Greater China CEO and Northeast Asia Director of JWT, and top tier marketing and advertising firm. Check it out (a mere 10 minutes in length).

Then a few minutes later, I opened up the NY Times and saw the following related article about the Olympics and China’s marketers, that extensively quotes Tom: For Olympics, China’s Marketers Are Showing Their Pride. Check it out (has a cool picture at the top, by the way).

Well done, Christine and Tom. Some good information and insight for MBA students on marketing, markets, connecting with customers, and all in the context of cross cultural differences. And now I better understand some of the differences between Confucianism and Daoism, per Tom’s discussion, and how some of those foundational beliefs relate  and apply to marketing strategy.

Then several days later, I came across this very good WSJ Op-Ed piece, Capturing China’s Middle Market, which notes:

Historically, multinationals have focused on China’s premium market. But the playing field over the last few years has changed rapidly. Multinationals sticking with a premium-only strategy are increasingly under attack from emerging Chinese champions with a compelling offering: fairly reliable products at prices low enough to attract China’s growing ranks of mid-level consumers. Indeed, China’s middle market is growing faster than both the premium and low-end segments. In some categories, the “good enough” space already accounts for nearly half of all revenues. Eight out of every 10 washing machines and televisions now sold in China, for instance, are “good enough” brands.

The op-ed piece goes on to note how Gillette, Anheuser-Busch, and Colgate-Palmolive purchased Chinese companies so that they could gain access to China’s middle tier market:

Gillette was extremely careful to protect both Duracell’s and Nanfu’s brands — a crucial part of the strategy as Gillette continues to sell premium batteries under the Duracell brand and has maintained Nanfu as the leading national brand for the mass market. Dual branding, cost synergies, a broadened product portfolio, economies of scale, and distribution to more than three million retail outlets in China have paid off for Gillette, which has seen significant increases in its operating margins in China. In 2004, for instance, Anheuser-Busch outbid its competitor SABMiller to acquire Harbin, the fourth-largest brewer in China. That acquisition allowed Anheuser-Busch to reach the masses while preventing Harbin from moving upmarket. The next year, it increased its stake in Tsingtao Brewery, to 27% from 9.9%. Both moves enabled the global brewer to rapidly increase its share among China’s current mid-market beer drinkers.

Colgate-Palmolive made similar moves in China. It entered into a joint venture in the early 1990s with one of China’s largest toothpaste producers, and it acquired China’s market leader for toothbrushes a decade later, allowing it to scale up and then leverage its production processes to compete in other parts of the world. As a result, Colgate more than doubled its oral hygiene revenues in China between 1998 and 2005, and it now exports its China products to 70 countries.

The above also relates to Ashley’s recent blog post and comment discussion therein, Government Promises and 2008 Olympics.