What Types Of Studies Are Being Conducted?

By Matthew Harrison, Director of B2B International China

Across industries, it is noticeable that the type of research commissioned is markedly different from the situation in Europe and North America. In the West, research reflects the objectives of companies operating in mature markets, who want to establish customer loyalty, achieve differentiation through branding, monitor the satisfaction of their employees, develop new concepts or segment their target audience. Typical research projects are therefore customer and employee satisfaction studies, branding studies, concept tests and segmentations.

In China on the other hand, a high proportion of research projects (over 60%) are focused on market assessment studies, in which clients (often foreign companies) are asking for a comprehensive explanation of how markets are structured, who are the key players and what is the market size. The following paragraphs discuss the type of business-to-business research being conducted in China:

Market assessment studies

Market assessment studies make up around two thirds of all business-to-business studies conducted in China, whether by Chinese or foreign research agencies. The profile of the companies commissioning this work varies hugely:

• Medium-sized foreign companies are responsible for a high proportion of market assessment projects, as they seek evidence-based advice on whether entry into the Chinese market is feasible for them, and if so, how they go about making the most of this opportunity.

• Larger Western companies often have a relatively limited presence in China (perhaps just a rep office in one of the largest cities) and seek advice on how to become really serious players within the market, in terms of routes to market and potential geographical locations in particular. Most of these projects are commissioned by Western headquarters, who often seek a cross-check to the information they receive internally.

• Chinese companies typically commission Chinese agencies to identify diversification and export opportunities.

Customer satisfaction

Customer satisfaction projects are far less frequently commissioned than in Western markets; nevertheless a significant minority of Chinese and foreign companies are commissioning this type of work. In business-to-business markets, most customer satisfaction work is conducted in product rather than service markets, with engineered machinery the main sector currently requiring this type of work.

This reflects the fact that this sector is relatively mature in China, with established channels to market and a competitive environment requiring companies to gain an edge over the competition. The second key sector in terms of business-to-business customer satisfaction research is the IT sector, another competitive industry with scope for differentiation and high end-user requirements. Providers of software packages such as CRM systems are a key audience. However, whilst most of the machinery companies commissioning business-to-business research are foreign, the IT companies tend to be Chinese.

Acquisition studies

Acquisition studies are extremely popular amongst foreign companies seeking to establish themselves in China. A couple of drivers are behind this trend. Firstly, foreign companies recognise the necessity to obtain local staff and knowledge in order to fully understand their target markets, and to be convincing to local buyers. Secondly, market entry regulations in many industries require foreign entrants to access the market only through joint ventures with Chinese partners. To many Western companies therefore, acquiring a stake in a Chinese company, or setting up a completely new company with them as a partner, is the only viable way to enter the Chinese market. For this reason, pharmaceutical companies and foreign banks are particularly likely to commission acquisitions studies as a prelude to a possible due diligence process.

Pricing studies

Pricing studies are commissioned largely by foreign clients, either as part of a wider market assessment project or in their own right. The difficulties of conducting pricing research in any geography are well-known – asking a respondent how much they will pay for a product or service is extremely unlikely to result in a reliable response, and techniques such as conjoint analysis and SIMALTO can be confusing to many respondents. This is particularly the case in business-to-business markets, which tend to involve more complex value propositions than consumer sectors, and is certainly the case in China. As a result, most pricing research involves a combination of mystery shopping with suppliers and projective questioning to target markets. A mixture of foreign and Chinese businesses commission this type of work.

Segmentation studies

As foreign companies with a presence in China seek to build on this presence by refining their marketing strategy, segmentation studies are starting to be conducted in business-to-business markets. Companies in businesses related to the petrochemical and pharmaceutical industries are most likely to commission this type of work, due to the fact that they tend to deal with relatively homogenous target markets, and are experiencing severe difficulty in differentiating their products, and therefore making adequate margin, in China.
 

Matthew Harrison, Director of B2B International and B2B International China. B2B International is a business-to-business agency headquartered in Manchester, UK.  The company has a subsidiary office – B2B International China – in Beijing and an American office in New York.

This is the first part of the B2B international article Business to Business Market Research in China, next week we will publish the second part. Here you can find the full article.