Thousands of small companies throughout Greater China can now enjoy round-the-clock promotion of their products and services before, during and after trade fairs in Hong Kong.
The Online Exhibitions concept recently introduced by the Hong Kong Trade Development Council (TDC) offers small- and medium-sized enterprises (SMEs) a non-stop online showroom that dovetails with Hong Kong trade fairs.
The innovative package utilises the proven strengths of the TDC's Sourcing Guide to allow buyers to view exhibitors' products anytime, anywhere.
Sourcing Guide's Online Exhibitions offers buyers three main advantages, letting them view exhibitors' products:
This hi-tech marketing approach enables advertisers to reap the benefits of additional cost-effective, 24-hour promotion that can be accessed by existing and prospective buyers before, during and after key trade shows.
TDC senior publications manager Henry Ng explains that the Online Exhibitions programme evolved from the highly successful Sourcing Guide at www.hkenterprise.com.
"We are continually reviewing SME needs and recently introduced a Greater China version of Sourcing Guide covering Hong Kong, Taiwan, Macau and the Chinese mainland," he says.
"This has only been running for a few months but has already proved a runaway success, so we developed the Online Exhibitions package to further deepen and strengthen our SME offering."
Sourcing Guide currently hosts 537,970 registered buyers, has retrieved 34,341,143 company records according to leading accounting firm Deloitte Touche Tohmatsu and receives more than two million hits a day.
Equally important, 57% of Sourcing Guide registered buyers originated from the major markets of North America and Europe, while overseas visitors in general spent an average 18 minutes each time browsing the website.
"This translates into serious exposure for local companies that take advantage of the Online Exhibitions offer during, before and after local trade fairs," Ng adds.
The TDC alone runs 20 major trade fairs a year and offers preferentially priced packages to exhibitors at these shows who also promote their goods and services via Online Exhibitions.
"The combination of exhibiting physically at a trade show and in cyberspace at Online Exhibitions gives local SMEs the best of both worlds at an extremely competitive cost," Ng maintains.
Online Exhibitions packages range from HK$9,860-39,600, which Ng believes are "exceptional value" for the sheer range and promotional scope they provide.
"I think it is fair to say that this is one of the most attractive promotional packages in the market today, and one that maximises the enormous advantages of the TDC's huge database of international buyers," Ng says.
He adds that astute SMEs will combine Online Exhibitions, Sourcing Guide and advertising in the TDC flagship publication Hong Kong Enterprise to create a one-stop promotional shop.
"Sourcing Guide is convenient, can be accessed whenever and wherever the buyer is and is also efficient, as just one click provides access to banks of information," Ng explains. "It is also very cost-effective as buyers enjoy free access once they have registered online."
Sourcing Guide also features popular specialties like enquiry baskets, a message centre, new product alerts and recommended categories.
It is a key component of tdctrade.com, which was recognised by ACNeilsen as "The Best Trade Promotion Portal in Asia" in May 2003 and won CMP Asia's fourth "Annual Intelligent20 Awards" in November that year, as well as a "Standard of Excellence Web Award" from the Web Marketing Association of the US in 2002 and 2003.
"Hong Kong Enterprise, meanwhile, offers the advantage of high visibility, in that the magazine can be accessed by anyone in an office without the necessity of going online," Ng concludes.
"Add Online Exhibitions and you have a seamless promotional package before, during and after trade fairs!"
WRITTEN BY JAMES PALMER
Sourcing Guide profile
* Figures audited by Deloitte Touche Tohmatsu
BY JAMES PALMER
Branding has become the logical long-term market development strategy on the Chinese mainland. According to data compiled by the National Bureau of Statistics, the top 10 best-selling brands commanded an average combined market share as high as 65% in more than 80 major consumer goods categories nationwide in 2003.
They exceeded 70% for products with an emphasis on quality, such as household electrical appliances and cleansing agents.
Brand appeal continues to grow in trendy merchandise with a relatively strong sense of individuality and image such as garments, despite the relatively scattered market demand. For instance, more than 25% of the market for men's suits and T-shirts is taken by the top 10 brands.
One of the major reasons underlying Chinese consumers' surging brand consciousness and predilection is their tendency to rely on word of mouth and their feelings towards the brand to make purchase decisions in the face of an ever-widening product selection and a rising level of product homogeneity.
In other words, when consumers choose a product, they are in effect comparing brands. Hence, to ensure sales, famous and influential brands have become the natural pick of department stores and shopping malls.
Building a brand does not simply mean registering a trademark. A brand of depth has to satisfy customers' psychological and social needs and be able to manifest the users' personality and taste, apart from meeting the required quality standard.
With rising incomes, mainlanders' consumption demands have shifted from the materialistic to the spiritual plane. In deciding which product to purchase, Chinese consumers will consider the buyers of the product and whether they wish to join their ranks.
Effective brand building therefore necessitates segmenting the consumers, followed by selecting an appropriate positioning and designing the right products for each segment according to their characteristics. Aspects including product packaging, advertising image design and pricing have to match target customers' preference and receptivity.
Mainland consumers from different age groups and regions vary in their psychological demand, self-image and life focus according to their social and economic environment and lifestyle.
Meanwhile, as a market in transformation, the mainland is experiencing more, and faster, changes than Western markets where the status of development, including consumer mix, commodities distribution channels, and distributorship and agency systems, is comparatively stable.
Success in brand building requires an enterprise to continually adjust and adapt, be it in product development or sales strategies. Objective market surveys and analyses are also essential to get an accurate grasp of market changes and the consumption mentality and habits of target customers.
The emergence of a mainland middle class in recent years has been a key factor in terms of consumer mix. The Chinese Academy of Social Sciences estimates that middle-class consumers with household assets ranging from US$18,000-36,000 currently comprise 19% of the entire population, are growing at a rate of 1% per annum and will constitute 25% of the total population by 2010.
In addition, the first generation of children born during the one-child policy has now reached the age of 26. These young people are financially independent and their consumption power is not to be underestimated.
Both the middle class and the one-child generation are relatively open-minded in terms of consumption mentality and seek fashion and personal style.
The mainland is also not a single homogeneous market and, as such, resembles Europe more than the US. Therefore, to enhance its brand's chance of success in a regional market, a company should introduce products that suit that particular region, targeting the local people's living habits, preferences and affordability.
Equally importantly, the mainland's distribution sector is still immature. In order to help distributors understand and practise the marketing concept, strategy and mechanics of their brands, many foreign-funded enterprises are deeply involved in their distributors' operations.
Thus, while some big mainland cities, in particular those in Guangdong Province, have a group of competent and sizeable distributors capable of performing a full range of market development and promotion tasks and operating on a national or trans-provincial scale, such distributors remain limited in number.
Hence, most enterprises still opt to establish intensive regional distributor networks or set up branches in major sales territories to directly manage their distributors. They believe that such arrangements can better adapt to the domestic market environment than having big distributors.
As for brand propagation, enterprises can enhance brand image and recognition among the target audience by advertising, public relations, sponsorship, news coverage, sales promotions and image ambassadors.
For small- and medium-sized enterprises, advertising is probably an extremely expensive option. An effective yet low-cost form of brand propagation is event-driven marketing, such as organising innovative promotional activities and introducing novel management or technological ideas to generate positive media coverage. Guangdong-based Vantage Company serves as a good example of event-driven marketing.
Generally speaking, the mainland market is developing rapidly and is expanding both in terms of overall capacity and degree of segmentation, with ample room for brands with different positioning.
However, irregularities also abound. Counterfeiting, lack of credibility and cross-region parallel goods are just some of the difficulties frequently encountered in the process of brand building on the mainland.
Based on the experiences of enterprises with different backgrounds and scales in different industries, success in building a brand on the mainland hinges on a number of factors.
These include offering quality products meeting market needs, correct market positioning, effective advertising, publicity and sales promotion, extensive distribution networks, well-planned distributor management systems and brand protection measures.
Guangdong's Magic Cleansing (Zhongshan) Co Ltd's Enear brand of shower cream targeted women aged 20-35 who were career-minded, fashionable, mature, self-confident, had their own opinions and were attentive to personal care. Based on these attributes, the company appointed Hong Kong movie star Maggie Cheung as the brand's ambassador and shaped an elegant, trendy and tasteful image through TV commercials. Enear was on the National Bureau of Statistics list of top 10 best-selling shower cream brands in 2003.
US-based Procter and Gamble took positive steps to ensure effective enforcement of its marketing strategy when it made its mainland debut in the early 1990s. The firm stationed sales managers directly at its distributors' offices to carry out network building, logistics management, product display and sales promotion jointly with the distributors, and even train and manage the distributors' sales and promotion staff.
The Ting Hsin Group used market visits to identify the mainland's northern region, where people eat noodles habitually, as its priority market in 1992. The company began by concentrating its resources on establishing a foothold in this region before extending to the eastern and southern mainland, the southwest and finally the whole country. Appropriate adjustments were made in its products every time the company entered a different regional market. For instance, plain-flavoured and seafood-flavoured noodles were introduced in the southern market, while hot and spicy noodles were launched in the southwestern market. Consequently, the Ting Hsin Group captured more than 40% of the mainland instant noodle market in 2002.
Vantage separated the management from ownership of the company in 2002, hiring professionals to run the organisation in a bid to raise its management standards. The company distributed 21 press releases to six websites and 14 large newspapers and magazines nationwide in less than a month, giving its name a big boost and increasing awareness of its gas burners among distributors and consumers.
Source: Hong Kong
Trade Development Council
Best-selling brand names by categories
Business 2003 Supplementary
Microsoft founder Bill Gates predicted there would be two kinds of business this millennium: those online and those out of business. While it hasn't reached that stage yet, the time is fast approaching when an Internet presence will be essential to a company's operations, and those without a website will be at a severe competitive disadvantage.
Fortunately, getting online can be a relatively easy and inexpensive process - particularly when compared to the costs of printing thousands of brochures or advertising in traditional media.
The level of sophistication of a website can also be tailored to meet specific business needs and budgets, but there are many potential pitfalls and professional advice is definitely needed if a Web presence is to help rather than hinder a business.
One company with plenty of experience in building websites for organisations large and small is CiF Solutions Ltd, a Hong Kong-based IT solutions provider with a dedicated Internet team.
"You'll often find Web companies with either good design or technical skills but not both," claims general manager Chris Chan. "Our Web design and portal development team has designers, editors and programmers, so we can offer our clients a complete service, including e-marketing."
Chan, who also has experience on the client side managing websites, has identified four levels of corporate Internet activity:
Level 1: the ability to access the World Wide Web and send and receive email
Level 2: an online presence with a website
Level 3: the ability to carry out business over the Web
Level 4: conducting sophisticated e-commerce that allows interaction with business partners as well as customers
According to Chan, most small- to medium-sized enterprises (SMEs) in Hong Kong and the southern Chinese mainland are still moving from level one to level two.
Although many companies want to go straight to level three, he recommends taking the process in stages, with a well-structured basic website as the first step.
A well-designed level two website enables an SME to introduce itself, showcase its products and services, build an instant international presence, initiate customer contacts and generate orders.
Chan advises keeping things simple, clean and precise. "All sites should have a homepage that quickly defines what the company is about, pages that outline the products and services on offer, and have a contact point."
Similarly, a website appears to provide unlimited space for great detail about a company but this is a common mistake: "People don't want to spend time reading lots of information online," he maintains. "Simply copying the corporate brochure onto a website is a mistake many companies make."
He says getting clients to decide how they want to structure their products and services is one of the most difficult and time-consuming parts of the development process. "But, done well, this can be the foundation for moving to the next level of actually doing business online."
The look of the site also says a lot about the professionalism of the company, as well as contributing to the clarity of the information and ease of navigation.
That's why it is important to keep the style clear and consistent throughout the website, says Chan. "For some clients we will adapt the look and feel of their off-line marketing materials for the Web," he explains. "Others want to take the opportunity of a new website to completely revamp their corporate identity, which we can also help with."
Web surfers are notoriously flighty, so key factors in holding their attention are making the site quick to download, easy to read and navigate, and relevant to the audience - which can involve multiple languages.
Contact should also be user-friendly, and Chan recommends an e-form that defines fields for users fill in. "The e-form has the added bonus of simplifying the administration of enquiries at the company end," he adds.
Costs for a website vary enormously depending on the complexity and the level of integration with other systems and e-business infrastructure. However, according to Chan, a basic two-language site with 5-10 pages and a contact e-form can be had for less than HK$20,000.
Increasing the complexity of the design elements, number of pages and sections - as well as programming to enable, for example, a search function or a smart content updating tool that does not require html knowledge - will also add to the production cost.
"Although it is possible to have a website up and running much quicker, I would recommend that a company allow 2-3 months," Chan adds.
He also warns that the project isn't finished once the website has been completed, and the next task is encouraging people to visit it. "Getting a site listed on the leading search engines, directories and industry websites is often overlooked, but plays an important role in driving traffic to a home page," Chan advises.
Tracking usage provides valuable information on how many people are visiting the site and which parts work best. "But don't be tempted to put a site visit counter on the front page as these look outdated and low numbers can prove an embarrassment," Chan adds.
Another mistake seen regularly is an outdated site, and he warns companies not to include a "what's new" section or time critical information unless resources are available to keep them current.
"Done properly, however, a website will prove an immense asset and over time it can evolve to become an integral part of a company's overall business strategy," Chan concludes.
WRITTEN BY ALISTAIR WADDELL
Gathering the strands
A recent CiF Solutions Ltd project for one of Hong Kong's largest laundry companies illustrates the typical timeline taken by professional website design companies.
CiF's client wanted the website to extend its new corporate identity online and provide a comprehensive overview of the company, its services and facilities.
The first step saw CiF conduct extensive background research on the company and its industry before meeting the client to:
Within one month CiF had returned to the client with the project scope and a site map broken down by development phases. Then it began developing a design prototype showing the look and feel of the site while the client set about preparing the content.
One week later the design prototype was ready for review by the client, and two weeks after that all the comments and refinements had been incorporated and the layout was ready for confirmation.
One month after the client had submitted all the content and approved the prototype, a complete 10-page, bilingual website designed to talk directly to the target audience was available for proofreading by the client.
A week of fine-tuning later, and just under three months after the initial meeting, the website went live in the first phase of an ongoing process.
CiF and the client still work together on the website, conducting statistical analyses of site visitation counts to aid future improvements and ensuring that the look and content of the site remain fresh.
WRITTEN BY ALISTAIR WADDELL
Saudi Arabia may conjure up images of vast expanses of oil wells, but many small- to medium-sized enterprises could "strike oil" in their respective fields in the Middle Eastern kingdom.
The oil-rich country has a large consumer population of about 24 million, including six million expatriate workers, Hong Kong Trade Development Council economist Edwin Lee notes. "As the largest economy in the Middle East, Saudi Arabia offers great potential for imports of consumer goods," Lee observes.
Saudi Arabia's economy is booming, with gross domestic product (GDP) up 6.4% in real terms last year - the highest level in more than a decade - as the world's biggest oil exporter enjoys a surge in revenue from high oil production and prices.
Lee adds that this year's increase is expected to be close to that of 2003 on the back of high oil revenues, while consumer prices are stable and inflation is "not an issue".
In addition, the government and private businesses are flush with cash from high crude prices and the booming stock market, the biggest in the Arab world, is also likely to boost consumption sentiment.
However, while Saudi Arabia's major industries include petrochemicals, cement production, steel, fertilisers, building materials and textile fabrics, the country is not a strong producer of consumer goods.
"They rely heavily on imports of light industry products," Lee explains, "and there is great potential for imports of consumer goods, such as watches and clocks, electronic goods and furniture."
This potential is further underscored by economic forecasts that predict the nation's import spending will grow 2.75% in 2004 to US$31.2bn, partly reflecting the demand for consumer goods.
Hong Kong exporters and traders are already benefiting handsomely, as Hong Kong's total exports to Saudi Arabia rose 6.9% year-on-year to US$104.81m in the first five months of 2004, after easing a marginal 0.9% to US$265m in the whole of 2003.
A number of Hong Kong export segments, such as watches and clocks, AV equipment and accessories, clothing and clothing accessories, furniture, gift and premium items, household electrical appliances and toys feature prominently among Saudi Arabian imports.
"Some 40% of the Saudi population is under 14 years old, while those aged 15-24 and 25-39, account for 18% and 24% of the total population respectively," Lee advises. "Hong Kong's toy exports are therefore in great demand."
Similarly, stylish watches, AV equipment and fashion are much sought-after by local consumers, while IT products such as computers and computer peripherals and accessories are widely used.
"Traditionally, Saudi families are large, therefore there are bulk purchases of family-based products," Lee says. "But, as more newly-wed couples are moving into new homes, there is also demand for household products for younger people."
These various factors have seen imports of AV equipment from Hong Kong soar 128% in the first five months of 2004 year-on-year, after rocketing 149.1% last year.
Similarly, imports of Hong Kong watches and clocks rose 14.4% in the first five months of this year after surging 32.7% in full-year 2003. Imports of household equipment of base metal from Hong Kong also climbed 40.4% between January and May from a year ago.
Imports of Hong Kong footwear climbed 0.1% in the first five months of 2004 following 8.6% growth last year, while imports of unknitted women's clothing from Hong Kong rebounded 23.2% in the first five months of this year, after falling 9.7% last year. Photographic apparatus imports from Hong Kong also climbed 31.3% in the first five months of this year, after declining 10.6% last year.
Some categories have not fared as well, with imports of toys, games and sporting goods from Hong Kong sagging 18.6% in the first five months of this year after 12.9% growth in 2003. Imports of furniture and parts from Hong Kong also fell 4.0% in the first five months of 2004, after falling 44.4% in 2003.
However, Lee remains confident that Hong Kong companies have a bright future in the Saudi market, thanks to their superior design capabilities, prompt delivery, global networks, business integrity and English-language proficiency, as well as their ability to meet growing demand for high-end products.
"Consumers in Saudi Arabia generally prefer quality branded goods," Lee observes. "Hong Kong exporters may consider selling mid- or higher-end products with innovative designs."
Normally, importers with their own brands buy from Hong Kong exporters through ODM or sometimes OEM arrangements, and carry out promotional campaigns to boost brand image.
However, Lee believes Hong Kong companies should speed brand promotion by selling products in the medium price range. "They should produce special designs and features that are not already available," he adds. "They could also consider cooperating with European designers, because the Saudis like European designs."
Lee advises that Hong Kong suppliers can also tap lower-income Saudis who have limited purchasing power. "Many Hong Kong companies have close connections with mainland companies, which could offer goods at low prices,"
Lee explains. "Hong Kong companies are well positioned to capitalise on the demand for low-end items by acting as brokers to facilitate this mode of trade."
Whatever the approach, Hong Kong companies should be aware that Saudi Arabia bans imports of alcohol, alcoholic beverages, pork, non-medical drugs and non-Islamic religious materials. Weapons and weapon-related electronic equipment are tightly controlled.
Also, advance approval or import licences are required for a few categories of imported goods. Most goods must be imported by Saudi nationals, and foreign firms should enter into joint ventures with local enterprises in order to operate in the country.
However, Saudi Arabia will allow foreign exporters more access to its market after its anticipated entry into the World Trade Organization in the near future.
WRITTEN BY LIZA LEE
Several factors make Saudi Arabia a great potential market for Hong Kong consumer goods:
There are several areas of opportunity for Hong Kong companies including:
However, there are also other factors that must be borne in mind:
WRITTEN BY LIZA LEE