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Product and Service Localization for Web Companies
Product and Service Localization for Web Companies
How web companies should localize their product and their brand to succeed in the Chinese market.
Many online businesses are refocusing their efforts on adapting their value propositions to reach new markets. China comes out on top in many cases: 710 million Internet users, 656 million mobile web users, 63% e-commerce penetration… it’s no wonder so many business leaders view it as an El Dorado for web companies. But as businesses including eBay, Facebook, Google and Groupon can attest, this El Dorado can often turn out to be a minefield. So, which is it?
Popular platform brands in 2017
Over the past year, a narrative around the impenetrability of China has emerged. Bureaucratic hurdles, stiff competition and divergent technical as well as security standards make it seemingly impossible for foreign players to have a fair shot at success here. We would argue that this is not only wrong in theory, but also proven wrong in practice by companies such as LinkedIn, Booking.com and Airbnb (all Labbrand Group clients), who continue to go strong amid increasing competition from local incumbents. Indeed, it’s not an easy ride, but with the right approach it is a navigable challenge.
Entrance into the Chinese market is notoriously difficult for foreign web companies
For years MADJOR - and its parent company Labbrand - have been working with foreign web companies on projects linked to China market entry and expansion. In this article, we share our experience and perspective on how foreign web companies can deploy a comprehensive approach - from UX to technology and branding to crack the Chinese market.
Underestimating the Challenge: Common Mistakes Web Companies Make When Entering the Chinese Market
Many businesses underestimate what is involved in localizing a product or service. Localization is a challenge that extends beyond sales/marketing functions; it also involves questioning how your business should refigure its offerings to achieve a new product/market fit. It’s your “back to school” moment, your chance to embrace a start-up mentality. There are many factors that have a stake in determining your success: technical barriers, regulations, behavioral changes, economic contexts, social norms, etc. A well-crafted marketing campaign won’t cut it. With that said, what are the key mistakes that tend to hold back progress?
Mistake 1: Copy/ paste to Success
Along the theme of underestimating the challenge, some businesses try to follow a sort of “lean” approach that involves porting an existing product/service over “as is” and seeing what happens. There may well be a short-term learning curve benefit, but to begin with you are selling yourself short by not readapting for a new audience with unique needs, plus by the time you actually get around to truly localizing, you will have already given local competitors a chance to adapt your hard-won innovations.
We understand it is not easy to change. It can be quite a challenge to get a talented product development team to listen to suggestions from outside sources, particularly if they are at the cutting edge in their own markets to begin with. Following the first assumption, you need to understand what local needs and behaviors are, and how you can realistically meet them.
Mistake 2: “Computer Says No” – Our Current Setup Will Not Permit the Necessary Changes
Numerous technical challenges stem from localization
This is another form of resistance that comes from the technical team. There are too many dependencies in the infrastructure, if anything is added/modified, the current system will not play nice. Despite being a fairly legitimate concern, there is always someone else out there who has encountered the same problem. Technical workarounds always surface eventually - localization is as creative as it is strategic. The biggest issues tend to stem from the original IT architecture (dealing with legacy systems) and security/ performance. Chances are, these problems are going to impact your local service eventually – the localization effort could reinforce the need for deeper changes.
In fact, from a technical perspective, minor adjustments to such things as the user interface can provide quick wins – the changes often sound scarier in theory than they are in practice.
Mistake 3: Build it and They Will Come
The first two mistakes relate to the product/ service. The third relates to the wrapping: the name, the branding, and the communications angle – everything that matters to your acquisition and sales strategy. This particular aspect is especially important in China where local web companies have been much more adept than their western counterparts at branding themselves and inserting their value proposition within the context of lifestyle and culture.
The name is perhaps the most obvious starting point: do you go for a direct translation? Or a new name with phonetic similarities? Or something entirely different? What about the messaging – do your Western tag lines and brand promises translate in the same way here? Having all your ducks in a row prior to launching may seem like a luxury given time pressure and budget limitations, but branding is something that is better addressed upfront than later down the road.
Back to an MVP Mindset – Your 5-Step Plan to Success
The exercise of localizing a product/ service may be just the thing your team needs. It is an exciting, energizing process that involves a lot of discovering, planning, hypothesizing, testing and re-learning. It can even lead to new innovations that apply to the domestic product/service, generating value for global.
Start with Insights:
It’s no surprise that we begin with a rich internal and external analysis to learn more about the status quo. When it comes to research, there are different dimensions web companies should tackle to ensure a comprehensive picture is built. These include:
- Assessing use case relevancy: start with your existing use cases and see how much they apply to the Chinese market.
- UX prototyping & testing: test a translated version of your platform with Chinese audiences to get their gut reactions. This will highlight issues early on and help you to prioritize necessary changes to your acquisition and monetization strategy, product features and experience design.
Wire framing allows you to map out and test your product’s UX features in the local market.
- Competitor analysis: study your local competitors. Keep in mind that your competitors might not be who you think they are. For an online luxury retailer for example, your biggest competitor may be individual Daigou (代购) resellers on WeChat or Weibo who are selling direct to personal networks.
- Technology check: your CTO will need to map out the necessary changes to your IT stack, including servers, security, social APIs, map tools, analytics and more. A whole step of the process is dedicated to this, but it begins with auditing and research.
- Legal check: identify any potential regulatory barriers that could hinder progress if not factored into your market entry timeline. Note that these barriers can be subtle, for example, in one case a business offering travel products had to wait six months for a pending license to start sales, after formally entering the territory and staffing up.
These approaches will allow you to quickly perform an “acid test” that can give you an accurate idea of the complexities that lie ahead, forming a part of your initial due diligence.
MADJOR’s “product/market fit” model, which we regularly employ as part of our 360 Web Product Localization solution. By raising these questions, a brand can easily assess the complexity and potential of market entry.
Client story: we worked recently with a major online luxury retailer who sought to accelerate its growth in the Chinese market. To kick-start the process we worked with the client on 2 fronts:
- Use case analysis: luxury purchasing behaviors differ widely between China and western countries and the luxury purchasing occasions targeted by our client abroad were not all relevant to local audiences. Using a mix of qualitative and quantitative methodologies we identified a cluster of luxury purchasing occasions most conducive to e-commerce. These targeted use cases were then used as the basis for future brand communication and product adjustments.
A luxury e-commerce experience should align with consumer expectations
Craft Your Product Localization Roadmap:
Research clears the path from a theoretical standpoint, but now we need to focus inwardly to figure out how we take the core offering and roll it out to provide the most value at the lowest cost.
Creating a roadmap is a key component of localization success
- Start with an MVP, a lightweight star product that is going to deliver value incredibly well from day 1. It is okay to leave some features behind, and to build them into the future development plan – particularly in the case where tangible technical obstacles stand in your team’s way.
Your team can ask a few simple questions to get at a basic requirements list. For a given system element/ feature:
- Is it indispensible to the service being provided?
- Can it function in China without further modification?
- In such a case, will performance need to be compromised?
- To what extent will the cost of investing in modification or redevelopment be offset by performance gains that add value to the customer?
- Create a 1-2 year development plan around a feature backlog that prioritizes your team’s resources according to difficulty x value. Perhaps user feedback and requests can help you hone your priorities list further - in fact this is one key advantage to releasing an MVP rather than a bloated full-feature product; you avoid over-engineering.
Difficulty x Value backlog matrix
- The development plan is important but only part of the equation. The roadmap itself will include your strategy to success, and contingencies that can be brought into play according to anticipated competitor behaviors and market changes. A variety of stakeholders should be involved, and enabled to rigor test the roadmap to ensure your milestones and goals are well defined, follow a logical path, and most importantly, are realistic for the given market.
Not to be forgotten: it is also important for brands to set alternative plans in the event of failure. KPIs relating to technological products or services – apps in particular – should be established carefully through collaboration with a variety of stakeholders across the organization. They should also be rigor tested using findings from competitor research and feedback from local specialists. Do not work backwards from financial projections to establish KPIs – this regressive approach often leads to inflated expectations that are hard to meet.
The user journey and acquisition / retention strategy will need to be carefully rethought by your team. There are numerous differences in the approaches that will need to be taken to win over users in a new target market. In some cases, these will be difficult to judge from afar. Take programmatic buying as an example – while in the west there are many automated marketplaces (DSPs) that handle programmatic buying, in China the majority of media buying is relationship-driven - particularly in online video where demand is very high. This puts new entrants at a disadvantage.
A go-to-market plan allocates resources effectively, according to the dynamics of the local market
- Your channel strategy should carefully distribute resources according to the local reality. What are your key touch points? Are you trying to build a community around your web service? Is it a service that fits into a user’s daily routine? Is there a longer usage cycle around an irregular activity, such as travel? It goes without saying that social will be a key part of the mix, but there is a low ceiling for organic growth. How are you going to scale? How are you going to ensure the right incentives are in place to drive habituated use?
- If anything, a localized content strategy is likely the one over-emphasized aspect of product/service localization. Content needs to be impactful, and more importantly to trigger the right responses. Great content plus great distribution are foundations of any successful localization.
- User acquisition comes at a cost. When launching your service, sign-on incentives and trialing are a must. There is a proviso however – in China, people are very used to getting free gifts, free service usage tiers and coupons. If the gap between the free trial and the full pricing plan is too great, it may be hard to convert users at a later point. Don’t allow promotional pricing and incentives to undermine your own business model. If users don’t perceive value in your service, they won’t pay.
Client story: MADJOR is currently working with an American wearable tech and mobile photography brand on their China entry strategy. Our work process included localizing the brand positioning and value proposition to fit local audiences and use cases, as well as projecting the implications of different positioning directions on various dimensions of the brand's market entry including pricing, distribution, communication targeting and partnerships with local applications. Our work allowed the client to successfully adapt to a market environment radically different from its home base and to efficiently allocate budget during the early stages of market entry.
Sign-on incentives can range according to the products offered in the brand’s portfolio
Localize Your Technical Platform
The capacities of your current physical infrastructure (e.g. IT, hardware and custom plant equipment) and intellectual resources (development processes, communications, staff and customer support) will, in part or whole, end up being partitioned and shared with the new market within the immediate term. This is – if managed wisely – a great boon for your business, as it means current staff get to have a more hands-on experience, internalizing new skills rather than simply offloading everything to a freshly minted local team.
- Infrastructure localization - your CTO will need to complete an internal audit to identify where key dependencies lie. With a web-based platform, there are things that can be “copy/ pasted”, and there are things that will need to be technically localized – or perhaps created from scratch. One simple example is navigating the firewall – you can host servers from abroad and use a CDN to get your content over into China, or you can host inside China. This simple decision requires due diligence, as you may be compromising data security for performance.
- An appropriate level of investment - it makes sense to stagger your market entry. “Going big” will only pressurize the effort and undermine more time-intensive organic processes like seeking strategic partnerships, marketing and distribution. The technical team needs to work in sync with other functions according to your roadmap, to ensure a balance between getting the service right, and getting it out there.
Tip: The Complexities Involved in Simplifying the UX. Social login is a common feature that reduces friction when trying to attract new users to a service. Registering for a service with a social account is often more straightforward and familiar than a sign-up form. If your team believed that they could simply port the same signup form over to the Chinese service, they would be mistaken. Of course, Chinese users will be using totally different social platforms, so this small feature needs to be adjusted. Luckily, social login forms are in common use, so your developer can simply copy the necessary code from an online library, and deploy the form without making any radical changes. Or at least this is the ideal scenario – your team needs to get it to look right, to follow the right security protocols, and to capture and store the right data in the right format. A small value-add can indeed, imply great complexity.
Tip: Technicalities Don’t Begin and End with Tech.
There are often many legal roadblocks that need to be navigated. We have seen cases where – after staffing up and adding incorporation expenses, rent and IKEA furniture to the mix, complex regulatory procedures (such as the need for an ICP license) have prevented businesses from selling their products/services, turning market entry into nothing but a rather expensive acclimatization exercise.
Client story: a Spanish online paneling solution provider approached us to help figure out how the team could cost-effectively deploy the platform in China using its current skills, resources and infrastructure. Of course the technological considerations were simply a starting point for a more comprehensive strategy that included:
- How to prioritize the team’s feature backlog according to the cost, complexity and necessity of each item.
- UX for China, with a focus on the registration procedure, notification system and user center features.
- Referral scheme – how to scale the audience by appropriately incentivizing current members and building a frictionless invitation mechanism.
- Planning for an incentive structure built around things that truly appeal to Chinese respondents, plus prize redemption drawing on WeChat and a familiar storefront model.
- Community engagement to guarantee higher monthly active user numbers and positive relationship building with and between users.
- UI design best practices.
The client team found it immensely valuable to frontload all of their critical questions, and to work in such a way that they could problem solve on a technical and user level in parallel to fulfilling the broader business-level requirements involved in establishing in China.
Adjusting a service/product for a new market may require compromises in design collaterals and copy. This compromise doesn’t need to be seen as a negative – indeed, it could be the perfect opportunity to hone your positioning against local incumbents, and to truly differentiate your offering. What do you want your brand to be in the new market? Does the messaging connect in the same way? Can users pronounce the name?
- Positioning the value proposition as well as the brand itself is crucial, as there could be untapped opportunities for your business depending on what segment of the market you target. On a more tactical level, consider who your early adopters are, and whether they are going to help or hinder wider adoption. LinkedIn was originally envisaged as being a fairly accessible platform for professionals to connect and grow their careers. However, several rounds of qualitative research in China revealed that to cut through here, they would need to position with a more “premium” offering to stand out against local players. They decided to rally up high profile executives in their ad campaigns to really emphasize the “elite” dimension. Another product called Chitu (赤兔) was crafted to target a more scalable, younger professional audience.
- Naming is a lot of fun, but is also fraught with hidden dangers. We recently worked on a naming project with an online paneling platform, and discovered that the client’s favorite option – despite being well received across the mainland – was interpreted as “death to your father” by Taiwanese and Guangdong users. This humorous anecdote highlights a very real issue: your users need to be able to pronounce the name, and the multi-layered meanings need to be consistent with your intended message. Going back to LinkedIn, the Chinese name not only has phonetic similarity to the English, but also captures a sense of prestige and leadership in the meaning of the characters.
- UI and design are yet another frontier for your localization endeavor. It is quite rare to completely overhaul a brand for a new market, but there are small details that should be taken care of. For instance, in China there are a very limited number of system fonts that work effectively online. A brand might be tempted to create and launch a special Chinese font for its new .cn website, however, the burden of loading tens of thousands of characters will cause website performance to drop. This creative decision has practical implications on user experience that need to be thought through. There are many other such details that involve a tug of war between your brand’s needs and local user expectations.
Client story: the Labbrand naming team worked with LinkedIn to create the right Chinese name to communicate the brand’s desired positioning as the go-to meeting place for business leaders and elite managers. The final name 领英 [lǐng yīng] combines characters that convey the ideas of leadership and prestige while also staying phonetically close to the original English brand name.
Getting Started: Reduce Uncertainty
To summarize, the benefits of taking product/service localization seriously are many, but the key overarching theme is being able to reduce uncertainty to make better decisions. The cost of failing in China can be enough to cripple a business that is looking to rejuvenate itself outside of contracting developed economies. Everyone is under pressure to move, but there are questions that must be answered upfront.
Market localization is meant to be cost effective. It’s a process that helps you to identify and demystify your own assumptions. It is a chance to listen to your target market, and to approach an answer to the question “will they buy it?” Why find out the hard way, when you can simply frontload your research, launch a pilot and gather feedback in advance of the big move?
Finally, it gives your teams some runway to skill up and learn. Market entry doesn’t need to be a binary “in/out” challenge. Stretch your teams, and let them begin to problem solve in partnership with locals – don’t simply offload the challenge to a new team of local recruits who lack experience with your business and global team. Exposure to new markets can lead to novel solutions, and even innovations that would not have been discovered otherwise.
Adopt a start-up mentality, and begin work on the challenge of product/service localization now, with an effective approach.