---
title: "30 Years of Reform and Opening-Up: Why Has Chinese Marketing Failed to Establish Itself? How to Break Through?"
description: "This article reflects on the 30 years since China's reform and opening-up, arguing that Chinese marketing has failed to mature due to a focus on low-end manufacturing and superficial tactics rather than genuine brand building. It calls for a shift from mass to niche markets, from price to value orientation, and from sales to true marketing, emphasizing the need to master game rules and establish pricing power."
author: "高建华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-01-20"
language: "en"
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# 30 Years of Reform and Opening-Up: Why Has Chinese Marketing Failed to Establish Itself? How to Break Through?

> This article reflects on the 30 years since China's reform and opening-up, arguing that Chinese marketing has failed to mature due to a focus on low-end manufacturing and superficial tactics rather than genuine brand building. It calls for a shift from mass to niche markets, from price to value orientation, and from sales to true marketing, emphasizing the need to master game rules and establish pricing power.

Preface:
Dedicated to the entrepreneurs and managers who strive tirelessly to realize the Chinese Dream!
From now on, we must become familiar with the rules of the game, master them, and set them, achieving a triple leap and gaining pricing power, so as not to be controlled by others.
01
**Chinese Marketing: Thirty Years and Still Not Established**
Over the 30 years of reform and opening-up, China has achieved remarkable accomplishments that have drawn worldwide attention, with greatly enhanced economic strength and improved living standards. However, in the past three decades, most enterprises have remained in an extensive development model, overdrawing the environment we depend on and the interests of migrant workers. This extensive model has reached its limits, and we must confront the challenge of sustainable development.
In the past 30 years, Chinese manufacturing quickly captured world markets, making us the world's factory. Unfortunately, this factory can export cheap, good-quality low-end products but fails to earn due respect, sometimes even becoming a victim of trade protectionism in other countries. **To put it bluntly, developed countries have gained advantages while complaining; they obtain quality products at below-cost prices, yet instead of thanking China, they criticize us.** There are many reasons for this awkward situation, and although we find it unfair, we must face reality because we cannot change others' perceptions or the environment; the only thing we can change is ourselves.
Although Chinese products have gone global and consumers in developed countries would find it hard without "Made in China," this is not something to be proud of, because Made in China does not mean Chinese brands. **The impression people have of China is that of a cheap processing plant, and Chinese brands have not gone global with Chinese manufacturing. The reason for this situation, I believe, is that many people take the easy way out, unwilling to do the hard, detailed marketing work, thinking that processing is the easiest—just make the product according to others' requirements and everything is fine.** As a result, Made in China has not brought added value to Chinese enterprises; instead, we remain at the lowest point of the smile curve, with no control over the market, and both upstream and downstream enterprises can bully us. To put it harshly, we are in a position of being exploited and squeezed. Made in China has not received its due rewards, and the price we pay is unbearable. If we continue this model, will China still have blue skies? Will our descendants have clean drinking water?
It can be said that in the 30 years of reform and opening-up, we have given the world far more than we have received, because we are in an unequal exchange with developed countries. We give them the good things we don't even eat ourselves; we give them first-class products that are many times stricter than domestic ones, while letting our own people consume second-class products; we reduce processing costs at the expense of our environment; and we reduce labor costs at the expense of migrant workers' interests. We have accepted all this because it is a necessary process. However, in a market economy, the weak are not sympathized with, so expecting others to understand is meaningless. We must become strong as soon as possible, because only the strong can set the rules of the game. **As we all know, as major customers, we are subject to upstream suppliers and basically have no pricing power; as suppliers, we are also subject to downstream customers and have no pricing power, so we are squeezed from both ends.** This is an important mission we have not yet accomplished in the 30 years of reform and opening-up, and it is an aspect we have not paid enough attention to. **From now on, we must set a clear goal: to master pricing power! To achieve this, we must become familiar with the rules of the game, master them, and set them, achieving a triple leap.**
02
**Misinterpreting Marketing**
**Creating new categories is the success of Chinese-style planning. Although the product itself has no differentiation, through concept conversion and hype, it becomes a new category, allowing enterprises to avoid fierce competition and become the leader in a specific niche market. This is a commendable aspect of Chinese-style marketing, a clever innovation in appeal. Although it is a superficial solution, it still has contemporary value under today's national conditions.** Representative works include Golden Throat Lozenge (fruit candy + throat medicine), Yake V9 (fruit candy + vitamins), Naobaijin (oligosaccharides + melatonin), and Yunnan Baiyao toothpaste (Yunnan Baiyao + toothpaste). Although Naobaijin has no unique value and its value is seriously inconsistent with its price, its understanding of the Chinese market and consumers is the best among all fast-moving consumer goods. First, they deeply understand that there is a huge gift-giving market in China, a unique phenomenon worldwide. The motives behind gift-giving are clear to everyone; second, they know that today's Chinese market is still primarily a subsistence consumption market. At this stage, due to market opacity, consumers are relatively ignorant and follow trends blindly, becoming collective unconscious.
Thus, "Chinese-style marketing" is based on the premise of the primary stage of the market economy. At this stage, the mainstream consumer group is subsistence customers who lack the ability to judge product quality; the consumption model is mass consumption—seeing what others buy and buying the same, easily following trends. **In the primary stage of the market economy, competition between enterprises is basically based on homogeneous products and differentiated appeals (though these appeals are pale and crude), winning with good quality and low prices.** To maintain this advantage, enterprises must continuously scale up and reduce costs, quickly turning themselves into stars and household names. This model has created many Chinese famous brands, well-known trademarks, and inspection-free products, but it has also left many sequelae, because stars are mostly packaged; once you get close, you find they lack substance and cannot withstand scrutiny. Enterprises without substance are destined not to last, hence the peculiar phenomenon of "each leading for three to five years." So, how should Chinese marketing be upgraded and break through bottlenecks?
**First, let's look at the hype and deception that we are most proud of.** Recently, I saw a TV commercial that says "Believe in the power of brands." According to the TV station's logic, advertising is brand building; if an enterprise advertises on TV, it will become a well-known brand. In China's immature market, this has some truth, but guiding enterprises this way is very dangerous because the logic is ridiculous. I don't know if the planner is ignorant or deliberately fooling corporate clients. If building a brand were that simple, everyone would just give money to the TV station and be done. What does such a marketing level mean? If this is "Chinese-style marketing," I can only say it is the tragedy of Chinese-style marketing. Media misinformation leads more and more enterprises to pursue the superficial rather than the essential, not working on brand connotation or personality, but preferring to do surface work. Enterprises become better at fooling people but worse at marketing, and over time, they reach the point of "self-destruction of martial arts."
**Second, to analyze rationally, we need to return to the origin of marketing.** Although the term marketing is well-known in Chinese business circles, very few entrepreneurs and managers truly understand its meaning, and even fewer follow the rules of marketing. This has led to the distortion and abnormality of "Chinese-style marketing," with the excuse of "Chinese national conditions." **Most enterprises' marketing work is not centered on creating value for customers, but on how to advertise, promote, and sell. Enterprises do not design products with unique value but stay at the level of copying, imitating, and concept hype.** Looking at the organizational structure of most enterprises, it is not hard to find that many have only a sales department and no marketing department (because many cannot distinguish between sales and marketing; some even call the sales department the marketing department). Even if there is a marketing department, it is mostly engaged in publicity and promotional activities, with no product marketing department responsible for product innovation, and few enterprises have a market development department responsible for marketing strategy design. Marketing work has become half-crippled, with everyone fighting at a low level.
**Third, in a sense, the vast majority of Chinese enterprises are still in the sales promotion stage, not at the marketing level.** Take the first P of the 4Ps—product. How many enterprises develop new products based on customer problems? How many products provide customers with unique experiences and value? Which enterprises develop new products according to product definition rules? Most enterprises are still at the stage of copying and imitating; they haven't even done the first P well, let alone the other three Ps. **So, on the one hand, we should recognize the great progress Chinese enterprises have made in recent years; on the other hand, we must clearly see the gap between Chinese enterprises and the world level in marketing. Personally, I think the gap is at least 30 years.** Of course, the ignorant are fearless. Those planners who don't understand multinational marketing systems think they can win with clever tricks, which is why so many enterprises rush forward, flourish for a few years, and then die, because few care about sustainable development. In fact, more than 10 years ago, I published the first set of CDs in China's marketing circle, "Marketing Strategy and Sustainable Development," with marketing and corporate sustainability as the main line. Unfortunately, only a few enterprises understood it, and very few practiced it.
**Finally, to achieve a breakthrough, we must be willing to deny our past successes, because the environment has changed; past successful experiences may be the root of tomorrow's failure.** So I say, "Success is the father of failure." The more successful an enterprise, the more stubborn it tends to be, and when the environment changes dramatically, this stubbornness becomes a stumbling block. I firmly believe that under the guidance of many planners, "Chinese-style marketing" has gone astray. Many enterprises package homogeneous products as differentiated ones, hype products without characteristics into personalized ones, and use specious concepts to fool customers. **To prove this, just look at the "famous sayings" of the Chinese planning circle: simple and crude! Is this the core concept and essence of "Chinese-style marketing"? Is this the pursuit of many planners? In my view, fooling and deception are only a line apart.**
03
**Understanding Marketing**
Traditional marketing in China has actually just begun. Why do I say this? Because the basic theories and frameworks of modern marketing are based on niche markets. Whether it's market segmentation, consumer behavior analysis, or product positioning, many things have not yet started in China, let alone achieved breakthroughs. **In a sense, China has remained at the sales promotion stage in the past 30 years and has never entered the marketing stage.** **Why do so many Chinese enterprises find it difficult to differentiate? Because their focus is on themselves, not on customers. They think about how to make money, not how to solve specific problems for a customer group. Once the starting point is wrong, there is no chance to reach the destination.** Therefore, I believe Chinese marketing should return to the origin, seriously learn what modern marketing is about, and not play with it half-understood, otherwise, you'll go around in circles and have to return to the starting point.
So, how should we proceed? Finding problems is important, but solving them is our ultimate goal. Let's explore from several dimensions of marketing.
**First, Chinese enterprises should shift from focusing on mass markets to niche markets.** Enterprises should not only look at large-volume, wide-coverage common products but also pay attention to those superior, special, and specialized niche markets. Because only a few enterprises can compete in mass markets; most small and medium enterprises are not qualified to compete there. As we know, the modern marketing system was formed in the 1970s in the United States, when the "baby boomer" generation became a very important consumer group. When this group entered the mainstream consumer stage (around age 30), the market landscape changed dramatically. People no longer lived frugally like their parents, nor were they conservative in consumption; they pursued individuality and uniqueness. Similarly, today's China bears striking similarities to the United States in the 1970s. The counterpart to the "baby boomers" is China's "post-80s" generation. So, as the post-80s gradually become the mainstream consumer group, the era of niche markets in China will soon arrive. Enterprises that fail to recognize this trend may be eliminated. Because the post-80s don't watch TV but use the internet; they don't believe in propaganda but trust themselves; they don't want indoctrination but equality; they don't want education but guidance; they don't want to be passive but active; they don't want mediocrity but individuality. Therefore, enterprises' marketing thinking must be upgraded, from selling products to selling ideas. In this regard, China Mobile's "M-Zone" is a successful case. They cleverly captured the hearts of the post-80s, seized the mainstream market, resonated with customers, and achieved the goal of grasping the fundamentals.
**Second, enterprises' target customers should shift from subsistence to moderately prosperous.** Over the 30 years of reform and opening-up, we have successfully completed the task of producing good-quality, low-priced products so that many subsistence consumers can enjoy various products. But with the rapid rise of the middle class, moderately prosperous consumption will become mainstream. At this time, the most significant change is the shift from price orientation to value orientation. Because moderately prosperous consumers have considerable economic strength; they need to continuously improve their quality of life, pay attention to taste, food safety, environmental protection, and health, so they are fundamentally different from subsistence consumers. Take Beijing's "Deqingyuan Eggs" as an example. In a few years, their revenue increased dramatically. Although they are more than twice the price of ordinary eggs, the middle class loves such guaranteed products, especially in a market like China with serious food safety issues. **I believe China will see a large number of brands targeting this moderately prosperous consumer group. Although sales may not match mass-market products, their brand influence and connotation are incomparable to mass-market brands. These Chinese brands with substance will lead Chinese brands to the world.** Besides branded eggs, there are many market opportunities, such as industrially managed pig farming brands, vegetable brands, etc.
**Third, enterprises' business model should shift from sales promotion to marketing.** This is simple in theory but difficult in practice. So far, China's scarcest resource is marketing talent. We have tens of millions of salespeople but only tens of thousands of marketing personnel, a serious mismatch of resources. **Without the marketing department as the special forces, enterprises can only rely on the infantry of salespeople to fight, often suffering heavy casualties.** We should know that modern warfare is no longer the era of infantry; there is no chance for bayonet charges or blocking machine guns with bodies. Although everyone knows "the marketplace is like a battlefield," when it comes to actual work, everyone seems to forget and returns to the infantry tactics they are most familiar with. In the past 30 years, many enterprises succeeded by luck, but few summarized the reasons behind their success. What caused success? Can it be sustained? What is the inevitability behind success? These are the main tasks of the marketing department, allowing enterprises to move forward clearly. As we know, in the toothpaste market dominated by foreign brands in recent years, Yunnan Baiyao toothpaste emerged suddenly and caught up. They did not engage in low-price competition like most Chinese enterprises but seized the high ground by positioning the product at the high end, several times more expensive than foreign brands. The reasons are mainly two: first, they have clear target customers, namely moderately prosperous consumers; second, they innovate in product, using better raw materials than imported brands, so innovation brings premium pricing power.
**Fourth, enterprises' positioning in consumers' minds should shift from star to expert.** Not by hype or advertising to create stars, but by deep understanding of target customers and innovative products with unique value to become experts in the minds of target customers, using professional language that customers can understand and rational communication to move them. **In addition, the sales force must be upgraded from begging-style sales to consultative sales.** Salespeople should understand customer problems, or the problems of "customers' customers," become experts in the customer's industry and applications, have the ability to communicate with customers on an equal footing, and win their respect and trust. In this regard, manufacturing enterprises might learn from Amway's sales training system, which turns employees into experts in customers' eyes in a short time, using standardized, unified language to persuade customers, because this language is a logic that withstands scrutiny, a product of rational thinking. Stop staying at the so-called "relationship marketing" level, doing low-level work like "eating, drinking, and playing" with clients, and having to watch their faces, becoming more humiliated as you go.
04
**Constructing Commercial Civilization**
As we all know, the Industrial Revolution did not originate in China, nor did we invent the market economy. So, in today's world market, we are still beginners, elementary school students. **We must have a humble heart, endure hardships, bide our time, learn and borrow from others earnestly, and expand cautiously. We must not become proud after small achievements. Only then can we obtain the true scriptures and conquer the world with strength. Otherwise, we will be exploited by the Wall Street sharks. Remember, "those who drown are often good swimmers."** Once Chinese enterprises let down their guard and think they are knowledgeable, they are close to being deceived. Several large domestic airlines, encouraged by investment companies, tried to reduce costs through hedging, but ended up paying losses of over ten billion yuan. It can be said that Chinese enterprises lacking strategic design always lag behind developed countries' enterprises in controlling the future, being led by the nose. They see what we don't, leading to repeated high buying and low selling, and the hard-earned money is "washed away" legally by developed countries' enterprises. At the end of 2007, Ping An Insurance bought 4.2% of Fortis Group for $2.7 billion, but if bought today, it could get 75% of Fortis. Why? Because we can't see far; they already knew what would happen next year, while we were still in the dark. Are there not many such examples?
Besides being willing to be students, **I believe that for Chinese enterprises and brands to stand in the world, they must complete another arduous task: exporting values. Exporting only good-quality, low-priced products cannot conquer the world.** So we must spend time studying what values we can export. This brings us back to: What are China's core values? Can we give our values operational and measurable standards? Behind values is a belief and persistence. Whether we can export values and make the world identify with them is a difficult problem that Chinese enterprises urgently need to solve. Although Confucius Institutes have flourished around the world in recent years, this prosperity is based on subsidies. How long can our subsidies last? Also, what role do Confucius Institutes play in China's economy and enterprises? Are they promoting Chinese language or Chinese culture? How can Chinese culture integrate with modern commercial civilization? If Confucius Institutes prosper, will our business also prosper? How can culture and commerce be combined? Like Korean TV dramas, culture goes first, commerce follows; sell ideas first, then products. Their dramas are not isolated artistic creations but integrated with commerce and economy.
**Speaking of values, we must mention integrity, because integrity and contracts are two of the three key elements on which a market economy depends.** Simply put, integrity means not lying. But for some reason, Chinese people are tolerant of lying, as if it is not a big mistake. In multinational companies, lying is an unforgivable mistake; messing up work is acceptable, but lying is absolutely not. Look at domestic enterprises that cover up problems; their first reaction is to lie, which led to the "Sanlu incident." SARS did not teach us a lesson; lying is becoming a culture.
Why can Made in China go global, but Chinese brands find it hard? **Because manufacturing requires capability, while branding requires substance. The former is hard power, the latter is soft power.** I believe Chinese brands without substance are doomed not to go global. Where is the breakthrough? When Chinese people talk about innovation, they must be self-reliant. But self-reliance involves funds, talent, and experience, and when it comes to talent and experience, we hit a dead end, as if it's an unsolvable problem. In fact, there are three ways to achieve Chinese innovation: first, self-reliance; second, ODM, relying on foreign designers for design solutions; third, hiring foreign designers with talent to work for us. Maowang Furniture is a successful case. They hired European designers for original design, and all intellectual property rights belong to Maowang. This achieves world-class original design, ensures sustainable development, and improves the company's own design team—a win-win-win.
**Chinese people are definitely not lacking in innovation ability; they just haven't used it in the right place. In the past, innovation was applied to systems and management, not products.** Chinese enterprises can start with improvement innovation to optimize existing products, provided they understand the dissatisfaction and confusion of niche groups with existing products. The popularity of knockoff phones is a good case. Knockoff phones have varying degrees of innovation compared to original phones, providing unique value to customers. Unfortunately, they engage in shady activities, borrowing others' trademarks and names. Why do we demean ourselves? Why can't we use our own brands to fight openly? Why can't knockoff phones take the high-end route? People complain about policy and environmental restrictions, but I think the key is ideological. I firmly believe: knockoff phones + confidence = success. Knockoff phones already have some innovation; with confidence, they can find a bright path.
**In short, Chinese enterprises must proactively change, not passively respond. Without long-term thinking, there will be short-term worries.** Similarly, in manufacturing, Foxconn has found a successful path: First, their production capacity and processes are world-class, so top brands like Apple can only be manufactured by Foxconn; others cannot even imitate. Second, they are not simply OEM; they continuously move upstream, designing products for more and more brand enterprises, transitioning from OEM to ODM, with product innovation and supporting design capabilities. Third, as Foxconn's capacity expands, their bargaining power increases, both with upstream suppliers and with clients. It can be said that our Taiwanese compatriots are at least 10 years ahead of mainland enterprises in marketing and management. This is a fact we must face. Taiwanese compatriots always walk ahead of mainland enterprises, seizing opportunities because they understand the rules of the game and are willing to play by the rules of marketing, rather than relying on hype to win temporarily. **Therefore, in marketing and management, we must strive to catch up and master the rules of the game as soon as possible. Only then can we seize the initiative in competition and not be controlled by others.**
Author | Gao Jianhua, former Assistant President and Chief Knowledge Officer (CKO) of HP China; former China Market Director of Apple Computer; currently Chief Consultant at Beijing Yangweizhongyong Management Consulting Co., Ltd.
**Source: Gao Jianhua's Winning at Top-Level Design (ID: gjh16880)**
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