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Earnings Disclaimer: All income examples in this book are just that – examples. They are
not intended to represent or guarantee that everyone will achieve the same results. You
understand that each individual’s success will be determined by his or her desire,
dedication, background, effort and motivation to work. There is no guarantee you will
duplicate any of the results stated here. You recognize any business endeavor has
inherent risk for loss of capital.

“The typical result one can expect to achieve is nothing. The “typical” person never gets to
the end of this book. The “typical” person fails to implement anything. Thus they earn
nothing. Zero. No income. And perhaps a loss of income. That’s because “typical” people
do nothing and therefore they achieve nothing. Be atypical. Do something. Implement
something. If it doesn’t work; make a change…and implement that. Try again…try harder.
Persist. And reap the rewards.”

©2019 Simplify Online Technology Inc. 1

Table of Contents

Chapter 1

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“Best Buy to exit China sells 184 stores as it seeks to focus on
North America”
– Financial Post December 4, 2014, 11:41 AM ET

In 2014 Best Buy announced that they will sell all of its 184 stores to a domestic real estate firm Zhejiang
Jiayuan Group. The large U.S consumer electronics retailer has to struggle for all it’s 5 years of operation in
China.

So why did Best Buy fail in China?

Many critics were quick to conclude that Chinese consumers were “too cheap”, that they aren’t willing to pay
for premium products, and they’re always looking for discounts.

While I must admit there some truth to this claim but to say that it is the reason why Best Buy has failed in
China would be completely misleading. The truth is Chinese consumer love to buy the luxury brand and is
quickly becoming the largest of premium products consumer in the world.

What Best Buy lacked was something more fundamental, and it is, in my opinion, the reason why many of the
failures in China.

A lack of understanding of the Chinese people, culture, and market. They do what would have worked outside
of China, but not in China.

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Many Chinese consumers felt that Best Buy was too expensive. Local Chinese retailers were able to undercut
prices due to low wedges, rent, and utility fee. So why would anyone pay more for exact same Sony Bravo TV
at Best Buy when they can get it cheaper at a local retailer.

On top of that Best Buy stuck to opening large flagship stores like they do in the U.S. Which was a horrible
decision for them in China.

In the past 30 years’ urbanization was one of the biggest trends in China. Due to China’s hyper-growth,
hundreds of millions of people from smaller towns and village were flooding into cities looking for
opportunities.

And along with its 1.3 billion population, this created a mega-city clusters phenomena like nowhere else in the
world. And here lies the problem…

These megacities, which will often house 5 million to 14 million people are usually extremely high in traffic
congestion and contains little to no open spaces for parking.

And as a consumer shopping for electronic, it is actually much more convenient and cheaper to shop a local
store that was closer to their homes than to drive to Best Buy and try to find a parking spot.

But hey… maybe it’s just Best Buy. Maybe the people who were running the company were not the brightest.
Surely Best Buy is an isolated incident.

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Actually no…

Many giant corporations have tried and struggled in China. We’re talking about the who’s who companies of
the world like Amazon, Google, Yahoo, eBay, and Facebook.

And recently Uber... which is another interesting case to look at…

The ride-hailing giant enters China’s market in 2013 with Travis Kalanick (CEO of Uber) saying “we like to go
after the thing that seems impossible,” and by the summer of 2016 Uber China has thrown in the tower.

Uber decided to sell its China Business to its competitor Didi Kuaidi in return for a 20% stock in the company
which now makes Didi the largest ride-hailing business in China.

There were, of course, many reasons for Uber’s lack of success in China. The fierce subsidy battle to win
private car drivers, government regulations on ride-hailing in China, their inability to develop property strategic
relationship with local Chinese businesses, so on and so forth.

But beyond all these factors, there was something more fundamental that nobody seems to talk about and it is
something I’ve personally experienced.

Back a few months ago, in 2016 during my visit back home in Shanghai, China. I was able to ride in many
private cars driven by drivers who have worked as an Uber driver and Didi driver. And inevitability, I always get
into a conversation with them comparing their experiences ride-hailing for both companies.

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And as always, the 3-common topic that I always get into with these drivers are as follow. One, which
company had better bonuses (subsidies). Two, which company had more riders (more business). Three, the
functionalities of the Apps.

To my surprise, the majority of the drivers that I’ve spoken to told me that Didi had more functionalities suited
for them. For example, Didi allows the driver to complete their current trip before accepting any new ride
requests and Uber did not. Didi Taxi, which allows the local taxi driver to also use the app to pick up
passengers.

The point is Didi seems to have a better grasp of what the local people wanted.

You may be thinking to yourself right now…

“This sucks, marketing to China is hard!” And I’m not going to dispute that.

But despite these challenges…

It is Undeniable That there is a Massive Amount of

Opportunities in China Today Due to Its Rapid Growth
To put it into perspective. I was born in Shanghai back in the 1980s. It was known as “The Paris of the East,
the New York of the West" during the 1930s and was made to be a special city.

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But regardless of all the development during the 1920s and 1930s, by the time we got to the 1980s,
Shanghai was hardly developed and had virtually no improvement. I remember clearly as a child fortunate
enough to be able to travel to Tokyo Japan in the late 80s seeing Tokyo for the first time and just thinking to
myself “WOW! What a difference.”.

There were no subways, one maybe two shopping malls, no supermarket, no highways or freeways, about
90% of the cars on the roads were taxis, and if your family were able to afford cable it was a big deal. That
was Shanghai back in the late 1980s and early 1990s.

Fast forward to today there are high rises everywhere, half a dozen high-end shopping malls, 11 subway
lines, Maglev train that travels at 430Km/H, tons of high-end entertainment districts… all of that and more in
just 30 years of time, and remember Shanghai is only one out of a dozen megacities in China that have
experienced rapid growth.

It is undeniable that China has grown in the past that the world has never seen before in the past 30 years.
And undouble the reason why so many global giants want to enter the market of China.

While many of these giants were met with defeat. It will only be fair if I also tell you the…

Mega Success Stories of the Ones who Triumphed in China

KFC opened its first restaurant in China Beijing, in November 1987. It’s an initial strategy to enter China
marketing was to operate the business through a joint venture. KFC held 60% of the stake, Beijing Tourist
Bureau 27%, and Beijing Food Production held the other 13%.

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Right off the bat, we can note that KFC starts off on the right foot. They enter the China market slowly through
various joint ventures. And there is no double that KFC experience initial success in China quickly.

Its first restaurant averaged about 9,000 customers per day and was able to make back its investment in just
one year.

This success is no surprise. With the underdeveloped state of China, and a lot of excitement around Western
products back in the late 80s. KFC with its clean, professional, and air-conditioned restaurants was simply at
the right place at the right time.

But regardless of their initial success. KFC recognized that they’re far from being the most popular and
successful restaurant chain in China. To expand, KFC (at the time owned by PepsiCo) hired a man named
Samuel Su in 1989 as a regional marketing manager for North Asia and also acting General Manager for the
four KFC restaurants in China.

Sam was born in Taiwan and graduated with an MBA from Warton. He understood the unique culture of
Chinese consumers. Even though KFC had great initial success Sam knew that he had a lot of work to do.

Sam started to customize the menus to suit more for the local’s taste and begin to rapidly expand KFC in
China. He spent a lot of his time and money on finding good food supplies, building out warehouses, set
upping employee recruiting, employee training centers, and variety of other logistics to support the plan of
rapid expansion.

By 2015, KFC now operates 5,003 restaurants across China and is by far the most successful and the largest
restaurant chain in China.

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KFC is not alone in the success of marketing to China. There are many other stories we could share such as
Apple, Starbucks, Haagen-Dazs, Audi, etc. If we’re would share all of the stories this would be a full book.

And at this point, I’m sure you’re probably thinking to yourself…

“Enough with all these stories, tell me how to market to China successfully.”

I get it, you want to know to learn the steps to market to China. But the point that I was trying to make is this.

Marketing to China is not easy, but it is also not a mystery as many have succeeded and left behind clues for
us to follow…

So, without wasting any more of your time…

Here are the 4 Step Process to Market to China

Step #1: Understand the Chinese Culture and Environment.

The Chinese civilization can date back as far as 100 BC which means it is more than 5000 years old putting it
alone side with ancient Egypt, India, and Babylon as a great ancient civilization.

China is really old and it is embodied in age-old cultures, literature, and philosophy.

These cultures are at the heart of 1.3 billion Chinese man and women. They’ve been pass down from for
generations from mothers to daughters and fathers to sons.

And whenever a western company dreams of selling their products or services to Chinese super consumer we
always tell them to start with a deep understanding of Chinese culture and history.

But of course, the inventible answer we always hear as a result is…

“Why!??? We’re here for strategies and learn how to sell in China, do we really have to learn the culture and
history of China?”

And our answer, as always…

“Yes, absolutely!!!! As Chinese culture & history are integral of how most Chinese people make purchase
decision”

We’re not asking you to learn to speak the Chinese language, and you don’t have to be a scholar of China’s
culture and history.

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But at the very least, we believe that you should take some time to understand the driving force of the very
people you’re trying to sell to regardless of which country you’re trying to market to. While many businesses
can appreciate the differences in culture, law, and tastes when entering a new country. But very few can truly
(pay attention) to the profound and myriad differences that exist between China (especially mainland China)
and the western countries.

The Story of Bite the Wax Tadpole

On the official Coca-Cola China website, there is a blog post dedicated to the story of how they screw up the
translation of their name into Chinese to mean “bite the wax tadpole” (蝌蚪啃蜡) when they first enter China
back in 1979.

It sounded right “ke kou le la”, but the mistake was that Coca-Cola and its millions in marketing spending
didn’t pay attention to the vast homonyms of Chinese characters. Later it was renamed by a Chinese
Professor living in England to “Ke kou ke le” which means “Happiness in the Mouth”.

Of course, this story of Coca-Cola is just one of many international business screw-ups that we’ve heard due
to a lack of understanding of China’s culture and history. An easily avoidable mistake with just a little bit of
homework.

Step #2: Understand the Chinese Market

China is huge.

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I’ll admit, in a way the title of this little book is a bit misleading. The truth is there is not such a thing as
“marketing to China” as China is not a market.

To market to China is like saying I would like to market to America or Europe. And any sophisticated
businessman would know that there is no one size fits product, service, advertisement, branding, that would
be able to market to an entire country.

China is not a market!! It is made up of clusters of smaller markets with different culture, beliefs, traditions
and spending habits.

For example, an average consumer living in a mega-city (as mentioned above) would have a much higher
disposable income, more likely to purchase luxury goods, more sophisticated with brands, and probably
bombarded with advertisement 24/7.

In comparison, a consumer living in the western areas of China also known as Inland will have way less
disposable income, cares more about price per value, not likely to have access to the internet, and are not
going to be sophisticated consumers.

But China’s market clusters are only one problem that a global business owner should consider when trying to
expand their business to China.

The second and one that is often overlooked is that… China is changing fast...

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For example, In the early 1990s, an average Chinese consumer had roughly about $500 to $600 USD a year
of disposable income, no credit cards, and very little access to information. By mid-2000s, there were more
products, more information, more media, more advertisement, and an average disposable income of $1,500.

Today, an average Chinese consumer in a mega city would have 10x the disposable income they once had in
the early 90s and would do most of their shopping online.

All of this makes China and its clusters of markets a very interesting plus in the next 10 years for business
owners all over the world. But it is important for brands, retailers, and services provider to understand the
variety of markets, and sub-markets China has to offer and find the right distribution channels to reach these
markets.

Step #3: Marketing Through Online Channels

There more than dozens of different channels in which you can reach your market in China. Department
Stores, Street-Level Stores, Hypermarkets, Specialty Retailers, etc…

We simply do not have time to get into each and every channel in details in this short guide. So, we decided to
only choose one, and a very important channel and that is…

The Internet (World Wide Web)…

While the internet, by all means, is not the only way to market your business to China as stated above. It is,
however, the fastest growing one and a mega growing trend in China and the world for that matter.

A wise man once told me that you market where their attentions are and for now it seems to be on the
internet.

With that said, the internet in China is vastly different than the rest of the world…

There is no Google in China, there is no Facebook, YouTube, or Twitter. Amazon is not the largest e-
commerce platform in China, and you cannot even get access to most of the western world’s platform without
the use of a VPN (Virtual Private Network).

This makes China special… it has its own ecosystem.

Instead of Google, you’ve Baidu, Instead of Facebook you’ve WeChat, instead of YouTube you have Toudou,
Instead of twitter you’ve Weibo, and instead of Amazon, you’ve Alibaba, Tmall, Taobao, JD and dozens of
other e-commerce giants.

Oh… and in China’s mobile usage greatly exceeds that of desktop or laptop, Apps are far more important
than websites, and emails are rarely used outside of businesses.

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To give you a better idea of internet usage in China…

Currently, 40% of all China uses the internet, while 80% of all U.S uses the internet. However, 40% in China
is equivalent to 735 million users where 80% in the U.S is only 245 million users. Of that 735 million users
60% have only recently started to use the internet within the last 4 to 5 years.

The Internet is a mega growing trend in China and the Chinese consumer is addicted to it in various ways. In
fact, the Chinese internet user spent so much time online shopping, chatting, playing video games, and
gambling that the Chinese government has designated Internet Addiction as a disease.

Here is another remarkable statics of e-commerce in China…

On Single’s Day (Nov 11, 2016, similar to Black Friday), Taobao (E-Commerce platform owned by Alibaba)
was able to reach 120.7 billion RMB revenue in just 24 hours. That is approximately 17.3 billion in USD of
sales in one single day. And this is just one single platform out of dozens of other e-commerce platforms in
China.

The bottom line is, in China the online activities are different. Chinese consumers don’t search and write
emails, they use instant messages, shop online, and watch a lot of videos. They can order a toothpaste online

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in the morning and get delivered to their door by afternoon with no shipping cost; they can pay with their
phone at any restaurant, shopping mall, transportation or wherever phone payment acceptable.

The ever-growing relying on technology and being online in China also implies there is a fast-paced and
complicated marketing environment that gives marketers both opportunities and challenges.

Step #4: Strategy, Planning, and Implementation

Before we end this book with this final step. It worth mention that while in this book we’ve boiled down the
processes of marketing to China into these 4 simple steps. In reality, there are many other factors that are
equally important.

These can be broken down to Government Permit and Endorsement, Regulatory Support, Partner
identification, Supply chains, and Government relationship management. We’re not going to cover these
topics in details as it will make this book much longer than we intended it to be.

Our goal of this book is to reduce overwhelm and provide a simple yet clear process as your guide to market
to China.

Anyway, let’s finish up with a strategy, planning, and implementation.

Strategy

The strategy is one of those buzz words that you’ll hear a lot. People use this word loosely to sound smart and
pretend to know what they’re talking about.

It is also a word I’ve thought deeply about.

To me, the word strategy means to come up with an overarching process of achieving a specific goal.

Let’s use marketing to China as an example. If you're planning to market your wine business to China. Then
there are many, many ways which you can accomplish this goal.

Your strategy could be to saturate the Chinese market as quickly as possible with low prices and decent
quality and gain economy of scale as your competitive advantage.

To accomplish this strategy, you will need to plan out your distribution channels, supply chains, suppliers, and
marketing tactics all to meet your overarching strategy of low prices and fast saturation.

With strategy, out of the way, the next thing on the list is…

Planning

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But first, let me explain what I believe the purpose of planning is for…

Planning to me is more of a guideline, the purpose of planning is to refine your ideas and thoughts. Planning
is there to prevent you from acting randomly without a focused goal, or a purpose. And any time should reality
disagree with your plan, it is always wise to go with reality and abandon your plan.

Needless to say, once you’ve decided on your strategy and draft up you plan the next logical thing to do is to
execute and implement your plan.

Execute

It is hard for me to write this section, as there is no one right way to execution, especially considering that I do
not really know what your goals, strategy, and plan will be.

We DO NOT believe in a one size fits all marketing plan or strategy.

We take a “beginner’s mind” philosophy and approach to marketing. We recognize that every business is truly
different, and approach all our clients with a beginner’s mind, we are always learning and implement the best
strategy that is specific to your business.

Which probably leaves you wondering…

“What should I do now…? How do I get all of this started and implemented?”

Well. While I cannot tell you exactly what you’ll need to do to get started with marketing your business to
China right now.

By now you’ll agree, as of right now marketing your products or services to China is an enormous opportunity,
but it also comes with lots of challenges, and holes to fall into if you’re not careful. And besides while this
“China Dream”, is booming and WIDE open right now, it will eventually slow down… as with anything growing
this fast and this furious.

[To Be Continue, This Guide is a Work in Progress, We’ll Notify You With Updated Version As We Make
Changes]

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