Protecting Intellectual Property in China has been a challenge for… well… pretty much forever. Knowing this, a proactive strategy for protecting patents and copyrights in China is part of the service Avela Consulting provides for our clients.

It  takes government engagement to enforce IP protections, however, and this is one of the sticking points in current US-China trade negotiations. It becomes an even greater issue as the Chinese market opens to more foreign imports. China needs both US trade and imports to sustain the booming Chinese middle class resulting from its capitalist private sector economy.

Nevertheless, many have questioned how serious the Chinese government is going to be about enforcing IP protections in China. After all, knockoffs, copycats and other forms of copyright infringement have been a staple of some Chinese businesses for many years.

Well, a recent Beijing Chaoyang District Court decision suggests the China government is getting very serious.

In 2016 Jaguar Land Rover filed a lawsuit in Chinese court against China’s Jiangling Motor Corporation over the Jailing Landwind X7. JRL charged that the X7looked an awful lot like its compact SUV crossover Range Rover Evoque.

It did. And the X7 sold for about a third of the price of the Evoquein China.

Few thought a foreign company like JLR stood much of a chance in bringing the suit against any Chinese company in a Chinese court. Chinese copycat vehicles are the scourge of foreign automakers and most have come to consider the knockoff competition as an unavoidable business calculation. (Honda Motor Company failed in a 2004 lawsuit against Shuanghuan Auto for copycatting the CR-V.)

To the surprise of many, the court ruled in favor of JLR on March 22, demanding that Jailing cease all manufacturing and sales of the X7 and pay compensation to JLR. The amount of the compensation hasn’t been announced as of this writing.

This is huge and seen as a victory for both the foreign automaker and the Chinese consumer. (While their products are priced less, the makers of counterfeit products in China rely on spreading confusion and inferior goods among Chinese consumers.)

This is indeed a landmark decision, but there are some precedents involving IP protection in China.

On November 5, 2018 the LEGO Group, makers of the globally-known building sets, prevailed in the Guangzhou Yuexiu District Court in its unfair competition lawsuit against the manufacturer of copycat LEPIN building sets. In that case the counterfeit manufacturer was order to cease production and sale of 18 products and pay RMB 4.5 million in damages. Staunch in it defense of its intellectual property rights, LEGO Group has also prevailed in other Chinese copyright infringement cases.

Congratulations is due to these companies. Protecting intellectual property rights is good for global business, good for China and good for Chinese consumers. Basically, the only ones who don’t profit are the copycats.

Protecting IP rights in China will continue to be a challenge, however, and Avela Consulting will continue to advise clients on building safeguards into their strategies for marketing in China’s continually changing business landscapes.

Contact Avela for more information on how we can help you enter the China market with success.

You have probably been hearing a lot about Big Data and Small Data recently. Data mining is big business with all sorts of marketing potential. There is a multitude of uses for Big Data, but in the case of marketing, countless business transactions, social media posts and other sources are often sifted through to identify individuals who represent likely consumers of a product.

Knowing your customers’ habits is key to reaching your customer, so a profile of your likely customer is a critical tool in your marketing toolbox. Big Data looks at the totality of information out there… and it is daunting. Algorithms dig into the data and sort through it all to identify trends to create a customer profile. You get information such as where they live, their income, whether they shop online, viewing habits, etc.

This might seem cold and analytical, but it’s all good information to know, and can help you make some informed marketing decisions. For instance, should you advertise on broadcast television or online media? It represents the science of marketing, but not the craft of marketing or the art of marketing.

That’s where Small Data comes in. It works to understand why a customer buys your product or a competitor’s product. Say your competitor offers their product cheaper and in a variety of colors and the customer ultimately buys from them. What do you need to do to get the sale the next time? Maybe you need to lower your price—or maybe you simply need to offer your product in red. Small Data can help you make that decision.

Here’s a way to look at it: say you are a real estate developer contemplating constructing an apartment building in a certain city. You already have a good idea of what you think a successful building for your budget would look like: maybe 50-70 units, one and two-bedroom units, a mix of luxury and premium build outs, pool, exercise room. Big Data might tell you there are ten recently constructed apartment buildings that match your criteria in the city. Five of them are renting at the rates you need to get to make a profit, but only three of them are fully rented with wait lists. All this is important Big Data you need to know before entering the market, let alone deciding what to build.

Of course, you want your building to fit among the 30 percent that are profitable, fully occupied apartments, so you want to know as much as possible those three competitors. That’s where Small Data comes in.

With Small Data, you may find that the three successful buildings are near public mass transit stops, offer great views or are in walking distance to office centers. That can help you decide where to build. Or, perhaps there is no similar property available so you may choose instead to put a different style of apartment building or select a different city. You may also learn about their renters. How many own cars? That may tell you whether building a parking deck is important. Are the two-bedroom units most often rented by singles? That may suggest they often sublet the extra room, which may be good information to know when designing floor plans. If some of the competition has ground level retail and dining venues, do the tenants patronize them? If so, they may be a draw you want include in your building. If not, you may have more profitable uses for the space.

So you see, the Big Data gives you the overall, big picture—the basic questions you need answered before considering going a step further. Small Data gives you the details you need to know for success.

You must have both when considering entering the China Market. Avela Consulting has the expertise to collect the data needed for informed decisions. Having worked in China for 17 years, we have the cultural wherewithal and networking to leverage the data for maximum success.

Perhaps this is obvious for those familiar with the Key Opinion Leader phenomenon, but it deserves some careful consideration.

Today’s consumers are deluged with marketing from all corners in our digitally dominated world. Advertisements, some of which are cleverly disguised, appear alongside our news, our entertainment, our social interaction and even our work. The age old solution for those wanting to cut through the clutter of conflicting messages has always been to consult an expert when making a decision.

But what is an expert in today’s digital world? As our institutions become increasingly digitized, it is perhaps inevitable that the public’s concept of an expert becomes—for better or worse—digital, too.

KOLs, to whom consumers today often turn to in decision making, may be (or seem to be) actual subject matter experts. This is particularly true when consumers are making intellectual purchasing decisions. An expert KOL can be a source of useful data when making fact-based or information-based buys.

Very often, however, KOLs can be the equivalent of the popular kid in high school—the one everyone wants to be like. Their followers want to wear the same clothes, drive the same cars, have the same hairstyles, buy the same products and eat the same food. Clearly this is the case when making emotional purchasing decisions, and we all know emotion-driven purchasing is the case in more transactions than we may care to admit.

This phenomenon has affected marketing worldwide, but it is especially in-play with the digitally connected market in China, where middle class consumerism is in hyperdrive.

The Chinese market is, of course, huge. Millions of new consumers are seeking to stake out their own identities and latching onto KOLs to help them do it. In a pool this big, KOLs can appeal to relatively small niche markets and demographics that still deliver appealing numbers to advertisers.

Of course, with a market this big in this much flux, having the right KOL delivering the right message on the right platform to reach your target audience is key.

That’s where Avela Consulting comes in. While based in Houston, we have maintained an office in Shanghai since 2002 and have built a network of proven partners who are experts in reaching target audiences in China.

Of course, China’s KOL industry is extremely competitive and advertisers must be wary. While a KOL’s appearance, personality and platform must synch with target audiences, their fees vary making some better bargains than others. In addition, fake social media followers are a problem in China and elsewhere. Avela provides due diligence with small data and large data dives backing up informed strategies for foreign businesses entering the China Market.

An Avela Consulting Marketing Component White Paper

This paper will discuss the title topic as it applies in the China Market and will explain how Avela Consulting responds with strategies custom-structured for individual client needs.

Backstory

With some 1.4 billion people, China holds great potential as a consumer market… but this potential comes with complex  and varied costs of doing business. Of course, these costs are driven by a multitude of factors, including the product, vendor expectations, intellectual property concerns, logistics and geography just to name a few.

Impacting all these factors is the Chinese culture, and the costs cannot be accurately weighed without a calculation of how the product will be received. Associated with this is an understanding of the cost involved in making sure it is well received on levels needed to generate the desired return. There are significant regional cultural differences that render single “one size fits all” approaches to nation-wide marketing ineffective.

In order to make sound business decisions, vendors contemplating competing in the China consumer market need a rigorous analysis  of these costs with an understanding that the unexpected is always a factor to be anticipated. This information drives a host of decisions such as pricing, market segmentation, campaign strategies, launch timing and after sale service, to again just name a few.

The Avela Consulting Response

Understanding the complexity of the China market, Avela Consultants has leveraged our network of business relations that we have been building since 2002 to create a pool of experienced, China market professionals. Businesses and individuals with appropriate talents and skills are drawn from this pool to provide our clients with the information and tools needed to access Chinese consumers.

Before our clients commit to the cost of setting such a team in motion, we request they commission an Avela Consulting Feasibility Study custom fitted for their goals. Avela’s Houston office will consult directly with the client and serve as the conduit for communication with our China network of marketing expertise. For this study we draw from our pool a group of consultants germane to the project to provide a realistic appraisal of what is involved in helping our clients meet their goals in China.

This appraisal begins with a basic assessment of the market for the product in China, with recommendations on targeting niches to maximize the probability of success. This will include advanced Big and Small Data assessments of the market in China for the product, identifying probable consumer niches within the country. Cost projections will run the gamut from procedural costs such as the necessary government filings for smooth operation and intellectual property protections (to the extent possible within the evolving Chinese bureaucratic environment), to the costs associated with marketing strategies of the recommended scope to realize client goals and tax considerations.

Personnel from Avela’s Houston will present the resulting Avela Consulting Feasibility Study Report to the client, providing the data necessary to make informed decisions on whether to proceed with entry into the China market. If the decision is to proceed, the client is armed with recommendations, including rationales, costs and benefits, for strategies to maximize the probability of successfully achieving client goals.

At that point, the client may choose to continue working with Avela Consulting to refine and implement a marketing strategy resulting from the study. In that event, Avela will again draw from its China network for a culturally targeting campaign augmented with the necessary support services such as fulfillment and customer relations.

Case study

To come

China represents a remarkable export opportunity forWestern businesses. It is a country with 1.4 billion people and an emerging middle class of eager consumers, and many are captivated by the United States. You see it in streets of the largest cities (Shanghai alone has over 24 million people), where everywhere you look you see young people with English language messages on their t-shirts and other apparel. Advertisements for Western productsabound.

Chinese culture, however, is thousands of years old and anyone attempting to conduct business successfully in the country needs to be sensitive to its nuances. At the same time, just like everyone else, the Chinese are living in the modern world with modern wants, needs and perceptions of themselves. Further complicating things, China is big country with various regional dialects and differences. While they are by and large eager for western products, a cultural misstep could doom a brand’s prospects in China.

The Chinese Marketis now opening up to medium and large companies in the West, creating unparalleled opportunity. The challenge for exportersis determining where they fit in this vast market. From our experience, it is virtually impossible to do this without leveraging in-country relationships. Much of US business is relationship-based: mutually beneficialtransactionsnaturally lead to opportunitiesfor more transactions and more profitability, leveraging the strengths of the familiar parties involved.

It is much the same in China—only the cultural and official landscapes represent unique terrain that must be thoughtfully navigated. Avela Consultingexists to help Western companiesfind the right path to their market niche in China.

The potential for profitis huge, but having the right team is essential. This can involve both Big Dataand Small Data Market Research to identify and define the most profitable segment within an enormous market. In-country marketingcan build a culturally sensitive program to effectively reach that segment, assembling components such as social media, traditional media, key opinion leadersand others as warranted. These components, it should be noted, come with their own sets challenges in China. For instance, while social media is key to any campaign, it is in state of constant flux as technological enhancements and new networking options ripple across the countryside.

On the administrative side, we can make sure the proper boxes are checked and the paperwork filed to protect intellectual property, facilitate logistics, minimize tariffs, smooth the customsprocess, handle warehousingand provide customer service.

This is what we at Avela do: we have been building business relationships for the benefit of our clients in the West since 2002.  As China opens up to import trade with small and medium-size businesses, we are putting those relationships to work for exporters willing to dare to succeed in a land and at a time of unparalleled opportunity.