Continuing on the topic of 4Ps of marketing (Product, Price, Place and Promotion) in Chinese market context, today’s post is about the Place components. The Product element was discussed in my earlier post here.
Almost every marketplace is defined geographically and going after the largest market or the one offering the most opportunities is one of the main priorities of any marketing strategy. Since China is a huge country that has been developing so rapidly, various areas differ significantly in terms of development level, income or population size.
When in comes to B2B marketing, the situation is further complicated by the phenomenon of industry clustering, i.e. tendency of an entire industry base to be concentrated in one area or around one city. Industry clustering greatly increases efficiency of the supply chain, local talent recruitment and, in effect, grows into a self sustaining ecosystem of interrelated companies and customers.
If a company seeks to expand its customer base locally it has to make sure to establish its presence within its industry’s cluster.
Industry clustering trend first began under directives of Chairman Mao Zedong in the early 1950s but then the phenomenon tool a life of its own and today, along with Special Economic Zones (SEZ), became one of the major engines of Chinese economy. In addition, intensive government support to industry clusters draws in more companies and investment capital. Even the universities around each specific cluster tend to adjust their courses to support developing local talent geared for that specific job market.
The implications of knowing exactly where a specific industry cluster is located are very important. If a company seeks to expand its customer base locally it has to make sure to establish its presence within its industry’s cluster. Moreover, in case of capital equipment, the service force location must also match the industry’s distribution. Planning your expansion in advance will optimize your costs and can save some surprises later on.
The following map from China Sourcing Blog provides an overview of major industry clusters in China (click to enlarge):