After concluding our first year back in Europe, I was reflecting on the difference in perspective that people here in Germany have of China. The perceptions here, logically, are mostly based on information received from the media, combined with information / experiences gathered in short (holiday) visits to China.

I guess, to many, China still feels like a faraway land, both physically as well as culturally and economically. This makes it difficult to understand what is happening in China and how this will impact our lives and businesses here in Germany, or Europe as a whole for that matter. As I don’t mean for this story to be an academic profiling of the differences between Chinese and Europeans, I will highlight my impression of the perceptions of China in Europe with several examples:

The Chinese Internet and Tech-Market 

The main thing about the Chinese Internet that people may know in Europe, is that Google, Facebook, Twitter, Youtube etc. are not accessible in China. They have been blocked. And usually this reality is associated with censorship and government control by the Chinese (as that is what they have read in the news).

But besides these political reasons, only few consider the argument of market protection. Why should this market of 1,4 billion people, of whom meanwhile more than half have Internet access, be ‘handed over’ to the American tech corporations, like we saw happening in the European market? Why not develop local Chinese solutions that provide similar, and meanwhile even better levels of convenience, service and access to information? The Chinese Internet market has always remained in the hands of the Chinese and if you ask me, that was been a very smart move about 2 decades ago when the first Chinese Internet companies started developing.

These companies are now dominating the market and setting global standards in the areas of mobile payment, m-commerce, new retail, AI and many more. Whenever I show WeChat or Alipay to people here, almost everybody asks: “How can it be that we don’t have a similar app here in Europe?!”. Unfortunately for us Europeans, the answer to this question, cannot be found in Europe, but lies with the American tech-companies on the west-coast of the United States, which, by the way, is just as away from Germany as China.

The Chinese Consumption Market

Every year there is a vast range of publications about the size and growth rates of the Chinese consumption market and in Europe these numbers are met with surprise, awe and maybe even a little envy. Yes, to a certain extent, the sales of consumers goods in China is indeed a numbers game. Many in Europe have already seen the numerous groups of relatively young Chinese tourists roaming the luxury districts of Europe’s major cities carrying bags full of luxury goods. Many have observed the same at the main European airports. Many have seen the news about the “Double-Eleven-Craze” and the billions of dollars in sales on just 1 single day.

But in my view, understanding the reason behind this kind of consumption behaviour is much more valuable for a European company’s China strategy. Take the Chinese one-child-policy from 1979, where ethnic Han Chinese couples living in urban areas were only allowed to have 1 child, combined with the spurts in economic growth of the past 3 decades. They have resulted in a situation where 6 working adults (2 pairs of grandparents + 1 pair of parents) spent practically all their energy and income on this 1 (grand-) child. Because it is the only child they are allowed to have and quite often the only chance they get to continue the family name and heritage.

Therefore, this 1 child, despite quite possibly longing for siblings, dealing with loneliness and the pressure of being the centre of attention at all times, often has little to no financial burdens of his / her own. These children are used to getting everything they want at any time they want it, and having money available to spend mostly on consumer goods rather than student loans, housing costs, pension or insurance costs etc. They have the highest demands in terms of service, convenience, speed and product quality. Knowing how to meet these demands properly is key for a successful marketing & sales strategy towards the Chinese millenials and “generation Z”.

The Chinese Decision-making system

As it is the year of the Football World Cup in Russia, I would like to take football as an example here: 

Statement: “the Chinese president dreams to win the World Cup in the next 2 decades.”

Of course, talking to German people about another country than they themselves winning the world cup, is pretty much like cursing in a church. Which I fully understand. However, if the Chinese government sets itself the goal of winning the World Cup sometime in the next 2 decades, there is actually a quite realistic chance that this could happen. Just like China realised it’s goal to win the most gold medals at the 2008 Olympics. Why? In great part because of the decision-making structures.

These structures make the following possible:

  • top-down spread of policy adaptation – if the central government prioritises football as one of the main sports to develop in the coming decades, then this also becomes the main priority of the provincial governments, the municipal governments and the county governments. Therefore, new-made policies can be rolled out effectively on all levels of government within short time-spans.
  • availability of resources – following the previous point, if football indeed is made a priority sports, then the required budgets and resources for facilities, training programs, development programs, equipment etc. do not need to come from private, commercial initiatives, but are also made available generously by the various levels of government.
  • political reward – one can imagine that a positive contribution to make the presidents’ dream come true, or, to keep it a bit more objective, a positive contribution to realise the central governments ambitions, can greatly boost one’s political career. This is highly motivating for the respective Chinese government officials who are put in charge of rolling out the newly developed policies in their county, municipality or province.

Of course, without the required sports talent, teamwork, vision and attitude, no World Cup can be won. But in a country with currently over 400 million people under the age of 24 (of which 240 million people are under the age of 15), chances are they can find 22 guys who could be up for the challenge in the next twenty years.

I am grateful to realise that China still fascinates and excites me the way it does. I also feel lucky that I now have a chance in Europe to narrow the gap with China and create more mutual understanding between these 2 worlds. And I strongly believe that the Chinese market is big enough for everyone who wants to be a part of the incredible development that China is going through. If you want to find out what your China Online Strategy could look like, you can contact me at any time via anna@kostenseconsulting.com.