What Does It Take to Break Into Global Markets?

Hal Conick
Marketing News
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Key Takeaways

​What?​ There are nearly 3.7 billion people online and very few of them are American. How can marketers reach the rest of the world?

So what? American marketers have nearly $182.6 billion in the advertising coffers. The opportunities to reach other markets are there.

Now what? Marketers must understand the issues, anxieties and technologies of each market they want to enter. 

​Aug. 1, 2017

A growing internet user base means a smaller world for marketers. How can marketers break into markets like Japan, China and Germany? Marketing News spoke with experts from across the world to find out.

 

The world felt larger when the internet was small. Twenty years ago, 33% of internet users were in the U.S. while less than 1.5% of the world’s population was online. American marketers lived in solipsistic times; other countries barely mattered if they mattered at all. 

Now, people from Cuenca, Ecuador, to Subang Jaya, Malaysia, to Chicago can reach into their pockets to instantly watch videos, read thoughts and order products from across the world. The internet’s population has watched the world shrink to a size small enough to fit perfectly in the palm of the marketer. 

The running count of internet users swells by more than 500 people per minute, according to Internet Live Stats. That number is clicking and ticking toward 3.7 billion people—nearly half of the world’s population. As of 2016, the 287 million U.S. users accounted for fewer than 8% of the internet’s population. This is all part of “Globalization 3.0,” author Thomas Friedman told Wired in a 2005 interview: “In Globalization 1.0, which began around 1492, the world went from size large to size medium. In Globalization 2.0, the era that introduced us to multinational companies, it went from size medium to size small. And then around 2000 came Globalization 3.0, in which the world went from being small to tiny.”

If the world shrunk from small to tiny in 2000, it may now be the size of a quark. The internet reached its first billion users in 2005, its second billion in 2010 and its third billion in 2014. Global Goals for Sustainable Development has set a goal for everyone in the world—a predicted 8.5 billion people—to have access to the internet by 2030.

Worldwide internet access is tantalizing for U.S. marketers, and the spending power is there to take advantage of markets, whether inchoate​ or fully formed. The country has the world’s biggest GDP at $18 trillion and​, per ZenithOptimedia, $182.6 billion in U.S. advertiser’s coffers. Where money exists, trade follows: The International Monetary Fund expects the global growth of trade activity to rise from 3.1% in 2016 to 3.6% in 2018

To take advantage of international markets, marketers must know each country’s top issues, rules and anxieties. Marketing News spoke with marketing experts in countries with the second- through sixth-largest GDPs—in order: China, Japan, Germany, the U.K. and France—to better understand the world’s marketing landscape.

China


Expert:
Val Kaplan, author of Doing Business in China Online and marketing director at Chinese marketing consultancy Sampi with 21 years of experience in Asian markets. 

China GDP: $11 trillion

Chinese advertising spending (per ZenithOptimedia): $74.4 billion 

Q: What’s the top marketing challenge in China? 

A: The complexity of the entry requirements for marketers who are unfamiliar with the local market. This is especially true for online and digital marketing, where most of the action takes place. For example, if an American company wants to advertise its product with a search engine in a German market, all it would need are a Gmail account and a credit card. In China, that company would have to first register an overseas advertiser’s account with search engines such as Baidu (Google has near zero market share and is blocked here), pass verification that can take several weeks, pay fees and place a deposit. Other marketing channels—such as the hugely popular WeChat—do not accept foreign advertisers at all. Therefore, registering a legal entity in China is often the first step before one can take advantage of the tools used by marketers. These regulations have to do with the fact that the internet in China is tightly regulated by the government and the grip is getting tighter every year.

Q: What is the top trend in Chinese marketing?

A: A general trend over the last few years has been continued domination of the mobile element of Chinese marketing. WeChat, the biggest social media platform with more than 900 million active users, is exclusively mobile. Most internet searches are done via mobile. More products are sold from mobile e-commerce apps than PC-based browsers. In fact, the smartphone was the primary device people used to get online in China a few years before it happened in the West. There is no doubt that this trend will continue for the foreseeable future.

As for the hottest trend in the past year, it would probably be live streaming. This market has grown at an astonishing rate, giving rise to an entirely new ecosystem of related technologies, services, platforms and an army of influencers who are called KOLs (key opinion leaders) in China.

Q: What’s the biggest difference between marketing in the U.S. and marketing in China?

A: The most obvious difference would be a completely different set of tools. While Google and Facebook dominate the American digital advertising market, they are irrelevant in China. The largest search engine in China is Baidu, which holds about 60% market share, but there are others as well. In social media, WeChat dominates mobile space and Sina Weibo, a local hybrid of Facebook and Twitter, already has more users than Twitter. More than 70% of the e-commerce market share is held by Alibaba, which sells more products from its Taobao and Tmall platforms than Amazon and eBay combined. JD.com, another e-commerce giant, holds 25% of that market. The Chinese marketing landscape is completely different from what American marketers are familiar with.

 

 Marketing expert Val Kaplan on China's education market

 

Q: What’s the hottest technology in China right now? How do marketers use it?

A: WeChat is the hottest technology on the market right now. The sheer number of users, which now stands at about three times the entire U.S. population, is mind-boggling. WeChat offers companies a possibility to connect with an enormous user base via official accounts and, most recently, with mini-apps. On the downside, acquiring followers on WeChat is not as straightforward as other channels due to the private nature of the platform and limited advertising options. The quality of followers tends to be higher on WeChat versus other social media networks, which is what makes WeChat marketing an essential element of overall strategy for Chinese marketing. Today, it is hard to find a single company in China that doesn’t have a WeChat channel. Some new companies even forgo setting up a website altogether in favor of a WeChat official account.

Q: What’s the one thing an American marketer looking to launch or market a campaign in China needs to know?

A: The first thing to know is that the marketing tools at one’s disposal are going to be completely different: Baidu and Qihoo are the main search engines, Weibo is an equivalent of Facebook/Twitter, Youku is “Chinese YouTube,” and WeChat is a whole new beast without a direct equivalent in the U.S. market. In addition, none of those channels offers an English backend control, so unless you are fluent in Chinese and familiar with how they operate, you’d need to find experts to run them for you.

If you are planning to sell directly to Chinese consumers, keep in mind that the payment systems are different, too. Alipay and WeChat Pay are the dominant payment methods online, on mobile and increasingly offline as well. Practically no one in China has heard of PayPal, and very few use credit cards for online purchases. Localization takes a whole new meaning for the Chinese market compared to Europe or even Japan. 

Q: Would it be easy for an American company to roll out in China?

A: It won’t be as easy as entering other markets, but as long as they know what they are doing, they are going to be fine. Essentially, it comes down to committing a larger marketing budget up front. Setting up a local business entity would open marketing options that are unavailable to companies that are only registered overseas. Testing the market is almost impossible on a bootstrap budget: There are no options to run a Facebook campaign on $50 per day to “test the waters” to decide whether the Chinese market holds enough potential. Unless a company is committed to spend up front to register a company, set up local marketing channels and find experts and consultants to run them, there aren’t many options.

Q: What does the short-term future hold for marketing in China? Any guesses for the long-term future?

A: Short-term, it’s safe to say that WeChat will continue on its path to dominate the market by expanding its capabilities. One such trend has become evident since the launch of WeChat’s enhanced search function, which set the platform on a collision course with traditional search engines like Baidu and Qihoo. New functions are being gradually integrated within the app that will offer more advertising and analytical tools to marketers. E-commerce powered primarily by Alibaba will probably see more integration with other online properties that it owns in video, social and entertainment spaces.  

It’s much harder to predict the long-term future. If I had to guess, I’d say that the competition within the notorious BAT—the name for three Chinese tech giants Baidu, Alibaba and Tencent (the maker of WeChat)—is going to intensify. They would probably diversify into more areas, taking advantage of their unique strength: Baidu will start reaping benefits from its early investment in AI technology, Alibaba will consolidate its shopping and entertainment empire, and Tencent will connect people with technology through WeChat. One can only imagine what new marketing tools and possibilities we are going to see then.

Japan

Expert: Jeff Crawford, founder of JC Digital Consulting, has lived in Tokyo since 2004 and worked for Adobe Systems Japan and Microsoft KK.

Japan GDP: $4.4 trillion

Japanese advertising spending (per ZenithOptimedia): $41.8 billion

Q: What’s the top marketing challenge in Japan?

A: The top digital marketing issue in Japan right now is that too many companies, especially [small businesses], are not investing enough in digital marketing. Too many have dated websites with little or no effort to acquire customers online. E-commerce sites get it, but this is a major problem for traditional B-to-B services that rely on lead generation. 

Q: What is the top trend in Japanese marketing?

A: The biggest trend that will have worldwide impact is IoT. As you can guess, there are a lot of manufacturing and industrial companies in Japan, and many of them have embraced IoT and are investing accordingly. Companies like Hitachi, Panasonic and even the Japanese government are involved. I am seeing interesting stuff like smart sensors, connected instruments and factory automation. 

Another significant trend is the coming Tokyo Olympics in 2020. I see many Japanese companies preparing now for the Olympics. It’s going to be a big opportunity for the Japanese companies and digital marketers alike.

Q: What’s the biggest difference between marketing in the U.S. and marketing in Japan?

A: It’s hard to choose just one thing. Japan is a relationship-based business culture. Comparatively, the U.S. is task-based. Tasks are also important in Japan, but the Japanese will value their relationships with co-workers, partners and bosses over any given task. This fundamental business difference is reflected in their marketing approach. When seeking new business, Japanese will likely ask for introductions or referrals from someone they know rather than go online. I think this is a factor in why many Japanese companies are behind the curve with digital marketing today.

Q: What’s the hottest technology in Japan, and how do marketers use it?

A: In the last year, it seems marketing automation has arrived in Japan. Companies like Marketo and HubSpot entered the market two or three years ago with localized services. Their efforts appear to be taking off. All of a sudden, everyone here wants marketing automation for their B-to-B business.

Q: What’s the one thing an American marketer looking to launch or market a campaign in Japan needs to know?

A: For B-to-B, most American companies don’t factor in the massively long lead time it takes to go from qualified lead to closing a sale. In Japan, decision-making is much slower than in the U.S. Your sales staff will need time to explain your product to all the decision makers to get them on board.  Decision-making processes like “nemawashi” [consensus building] and “bottom up” take time. At very minimum, I would count on two- to three-time delay in closing a sale. [Sales] times measured in years are not uncommon here. On a positive point, once you have a deal closed, Japanese companies tend to be more loyal to their vendors, especially if you give good support. They will support you in bad times as well as good.

Q: Would it be easy for an American company to roll out in Japan?

A: Nothing is ever easy in Japan. You need to consider language challenges, as well as business customs and consumer demands for a high level of service. If you execute well, you can dominate your market. Companies like Starbucks, Apple, Google and Facebook have been a raging success here.

Q: What does the short-term future hold for marketing in Japan? Any guesses for the long-term future?

A: Per Robert E. Peterson’s Make It Happen, historically, Japanese companies have been good at sales or product development. Marketing has been kind of an afterthought. To be competitive in a global marketplace, Japanese companies need to be more aggressive about marketing—especially digital marketing. The need will facilitate the change in perception in Japan very soon, so I see some changes coming.


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Germany

Expert: Dr. Thorsten Hennig-Thurau, professor of marketing and media, University of Münster. He has been a professor or researcher since 1994. 

Germany GDP: $3.4 trillion

German advertising spending (per ZenithOptimedia): $25.8 billion

Q: What’s the top marketing challenge in Germany?

A: Digitization. This includes content marketing, how to create value through social media and how to do advertising on social media platforms such as Facebook. Many companies have little experience with how to do this and have a customer base that is divided between those who use digital media and those who still cling to the old media. 

Q: What is the top trend in German marketing?

A: Everything digital: content marketing, but maybe even more so artificial intelligence—[especially] on the product level and the communication and customer interaction level. For most companies it’s [a challenge] to combine both channels and compete—and sometimes cooperate with—the big platforms, predominantly Amazon. 

Q: What’s the biggest difference between marketing in the U.S. and marketing in Germany?

A: The similarities certainly dominate the differences, but that should not come as a surprise after 70 years of close collaboration. Differences result from the higher priority that German consumers assign to certain issues, mostly privacy—lots of us are very concerned about our personal data—and green qualities. Sustainability is a major concern, and product lines that violate it are having a hard time with the mass market. Diesel engines are not here to stay, for example. 

​​
 

  Interview with Dr. Thorsten Hennig-Thurau

 

Q: What’s the hottest technology in Germany right now? How do marketers use it?

A: There’s hardly a single “hot” technology. For B-to-C brands, influencer marketing is certainly considered valuable. Finding a way to make use of the unprecedented micro-targeting options of digital channels for communication is another, probably even hotter one. 

Q: What’s the one thing an American marketer looking to launch or market a campaign in Germany needs to know?

A: Where the target customers are, through which channels they can be reached and with what kind of message. When it comes to the right message, American marketers might note that America is not the sexy brand it has been in the past, so that would probably not be the strongest selling proposition now. 

Q: Would it be easy for an American company to roll out in Germany?

A: Almost all markets are saturated and heavily competitive—or dominated by a powerful oligopoly—so rolling out in Germany is a challenge for everyone these days, and that includes U.S. firms. But like in the U.S., service standards and the level of customer focus in most industries leaves significant room for improvement, so if a new entrant finds innovative ways to use the marketing mix that increases customer centricity, there’s certainly a chance to succeed. Amazon is a great example of how to combine marketing skills and a customer-centric culture in a way that enthuses a lot of customers and wins market share from national incumbents.  

Q: What does the short-term future hold for marketing in Germany? Any guesses for the long-term future?

A: In the short-term, it’s about getting acquainted with the options provided by the digital environment and finding effective ways to blend offline and online channels. Long-term predictions are notoriously difficult, but let me dare: If one finds a way to collect, exploit and combine data sources in ways that provide value for consumers, that will be the major source of competitive advantage. Use data to provide solutions, not products. In combination with a deep understanding of fundamental customer needs, that’s the route to market leadership.

U.K.

Expert: Luan Wise, marketing consultant, speaker and author of Relax! It’s Only Social Media. Wise is a chartered marketer in the U.K. with more than 15 years of experience. 

U.K. GDP: $2.9 trillion

U.K. Advertising spending (per ZenithOptimedia): $26 billion 

Q: What’s the top marketing challenge in the U.K.?

A: The top issue marketers are concerned about right now is general data protection regulation. Data privacy regulations [in the U.K.] will change in May 2018. There are still low levels of awareness and understanding with regard to what this means and the actions that need to take place to be ready.

Q: What is the top trend in British marketing?

A: Customer experience is a hot topic. Marketers have recognized the importance of understanding the customer experience as critical to business success—particularly mapping customer journeys and content planning. 

Q: What’s the biggest difference between marketing in the U.S. and marketing in the U.K.?

A: The answer to this must be culture, and that will vary widely across both the U.S. and within the U.K. Marketers always need to understand people and their frustrations, plus the challenges and issues they face. The process of marketing doesn’t differ, but audiences and tactics will. 

Q: What’s the hottest technology in the U.K. right now? How do marketers use it?

A: AI. Marketers in the U.K. are starting to talk about AI, what it means, what capabilities it can offer and how we can best take advantage of the opportunities.  

Q: What’s the one thing an American marketer looking to launch or market a campaign in the U.K. needs to know?

A: Understand the marketplace and understand the audience.

Q: Would it be easy for an American company to roll out in the U.K.?

A: It depends on the product or service. Only a market analysis and research can identify if there’s an opportunity for a rollout in the U.K. 

Q: What does the short-term future hold for marketing in the U.K.? Any guesses for the long-term future?

A: Short-term, U.K. marketers need to focus on data and prepare for the new data privacy laws. Data is the key to effective marketing, but until we understand the full requirements of the regulations, the future is somewhat uncertain. Brexit negotiations will also have an impact for marketing in the U.K.

France

Expert: Dr. Clotaire Rapaille, author of The Culture Code and Seven Secrets of Marketing in a Multi-Cultural World. He is founder and CEO of marketing consultancy Archetype Discoveries Worldwide.

French GDP: $2.4 trillion

French advertising spending (per ZenithOptimedia): $13.3 billion

Q: What’s the top marketing challenge in France?

A: The big issue is fear of terrorists. When I go to take a coffee outside of a café, I cannot stop thinking about people driving by with a Kalashnikov and killing people. This is a big issue because it’s a tourist destination. The image of Paris is romance, but many of my American friends today say they are going to come to visit me in Normandy. They say, “We don’t want to go to Paris. We don’t want to go to London. We don’t want to go to any of the big cities. It’s too dangerous.” The big issue right now is security. 

Q: What is the top trend in French marketing?

A: There is a tension here. On one side, there is a trend of decline and depression in France; [people think] we’re never going to be what we used to be. The young people go to London or try to go to California. When [former French President François] Hollande said, “We’re going to tax everybody at 75%,” everybody else said, “OK, let’s leave.” On the other hand, there is the notion of some hope with [new French President Emmanuel] Macron. … There’s that dichotomy. When I speak with my friends in France today, they are surprisingly optimistic, which is very new. This is why there is still a little bit of light at the end of the tunnel.

Q: What’s the biggest difference between marketing in the U.S. and marketing in France?

A: I want to say one word: sex. In French culture, sex is an art like food. There is no shame to have about it. If you are invited to a dinner in America, you can speak about money all the time, but you cannot speak about sex. In France, this is the opposite issue. If you speak about money, you’ll never be invited again. “You’re so vulgar.” But you speak about sex? “Hey, tell me more.” 

For example, if you have an advertisement in France with a beautiful naked woman running on the beach for a yogurt, well, you can’t do that in America. … This is the American Puritanism, but in France in terms of sensuousness, this is something that resonated very much with the culture. If you want to market a product in France, it has to be sexy. When I say sexy, it doesn’t mean sexist. I mean it’s appealing. It’s stimulating. It’s something you need to have. 

 

 Dr. Clotaire Rapaille - The Culture Code

 

Q: What’s the hottest technology in France right now? How do marketers use it?

A: The major force in France is hardware. We have many companies that are already quite successful. You have a company like Digifood, which sells hot dogs and hamburgers and they deliver to arenas, stadiums or on the beach. This is a brilliant idea. 

Q: What’s the one thing an American marketer looking to launch or market a campaign in France needs to know?

A: Again, I can go down to one word: pleasure. After a meal in France, we don’t say, “Thank you, I’m full.” I’m full? Is that like filling up the tank of a car? This is so vulgar. No, [in France] you say, “That was delicious. I really enjoyed it.” If what you’re selling doesn’t bring pleasure somewhere, you are out of the picture. 

Secondly, never speak about work. Work is vulgar in French culture. It’s illegal to work more than 35 hours a week [without earning overtime pay]. It’s illegal to send work-related e-mails after 5 p.m. … Your mission in the French culture—it could be regarding food or fashion or jewelry—is to bring sophistication to the world. You have to do it in a subtle way, but this is what works there.

Q: Would it be easy for an American company to roll out in France?

A: No, it’s not easy. You are an American, and the relationship between America and France is that [the French] love to hate Americans and they hate to love Americans; but that goes to both sides. There is this tension that we have to understand. An American company should never come to Europe, especially in France, and say, “We’re going to educate you, we’re going to teach you, we’re going to bring something you don’t have.” But if you say, “We learned from you,” then there is an interaction between you and I that [can work]. 

Q: What does the short-term future hold for marketing in France? Any guesses for the long-term future?

A: I hate to be pessimistic, but I think it’s going to be more difficult. A lot of people have already left or are leaving. The people who had a lot of money left when Hollande said [there would be] a 75% tax. … So rich people are not there anymore. … I talk to many heads of major American companies, and when they try to do business in France, they say, “My God, this is so complicated. Let’s get out of it as soon as possible.” Unfortunately, this is not an ideal situation. … But I did work during the big depression in France, after the 1970s. We had the big oil crisis and Shell asked me to study how the French people will react if there is a big economic crisis. The answer I found was very surprising: When the French are desperate, they drink champagne and eat caviar. The attitude is, I might be dead tomorrow, this is maybe the end of the world, so let’s enjoy it. They’re ready to spend the rest of the money they have to enjoy it because they don’t know what the future is going to be.


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Author Bio:

https://auth.ama.org/PublishingImages/hal-staff-photo.jpg
Hal Conick
Hal Conick is a staff writer for the AMA’s magazines and e-newsletters. He can be reached at hconick@ama.org or on Twitter at @HalConick.
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