French firm has China's number

Market research giant says it has had great success guiding foreign companies in Chinese market, and at the same time helping Chinese firms expand abroad

A company that started off in the 1970s, selling information on the effectiveness of French billboard advertisements and the reading habits of French executives has grown into a global behemoth that now advises companies on the idiosyncrasies of Chinese consumers.

Ipsos SA, a leading global market research company with headquarters in Paris, says it has grown into the fastest-growing and largest market research firm in China after entering the country in 2000.

Ipsos has offices in five Chinese mainland cities: Shanghai, Beijing, Guangzhou, Chengdu and Wuhan.

It has expanded from 120 full-time employees in 2003 to 1,200 people today. Revenue from Ipsos' China business increased to more than 1 billion yuan ($161 million; 149 million euros) last year, and company officials say they expect it to continue growing.

In 2012, Ipsos won bronze in the revenue growth category of the French Businesses in China awards, sponsored by the Paris Chamber of Commerce & Industry, just behind L'Oreal and Air Liquide.

"The majority of foreign companies I deal with regard China as the most important market in the world. For them, it is not about whether to enter China, but having the right China strategy," says Liu Lifeng, Asia-Pacific CEO and China chairman for Ipsos.

China offers great business opportunities for foreign players because of its rapid economic growth and huge market, Liu says. However, companies often run into challenges such as inadequate market information, an inappropriate entry strategy, lack of access to sales channels, difficulty in finding the right partners and cultural differences.

There are many angles for China neophytes to consider that they may not have even thought about, Liu says. Just because something sells well in Boston or Berlin, that doesn't mean it will sell in Beijing.

"For example, if a Western cosmetics brand wants to open factories in China, they cannot just follow their product formula or copy marketing models from their home country. It needs to study Chinese people's skin type, the quality of local water and many other factors."

If companies are unable to easily get such answers by themselves, Liu says, "we offer them detailed studies of what they need to help them accurately locate target consumer groups, find the best way to promote their products in China, and inform them of users' feedback." That, he says, saves them time and money.

Ipsos officials say they have developed practical and systematic approaches to help its clients reduce these risks and maximize the return on their investment in the Chinese market. The company's services include research in advertising, marketing and customer loyalty; media and public affairs measurement; and relationship and survey management.

Liu says Ipsos researchers assess market potential and interpret market trends for foreign companies, helping them understand market, develop brands and build long-term relationships with customers, as well as testing new products, concepts, advertisements and studying audience responses to various media and measuring public opinion.

"China is a huge, fragmented market. Thus, firms may need to utilize more than one of the above strategies to adequately penetrate the market," Liu says.

The company's customers in China are largely Fortune 500 firms in the automotive, information technology and telecommunications, finance, consumer goods and health care sectors, such as L'Oreal, P&G, Unilever, General Motors, Volkswagen and China Mobile.

At the same time, Chinese firms are increasingly seeking advice from market research firms for their own global moves, says Zhang Jian, secretary general of the China Marketing Research Association.

"Given the concerted national effort to boost China's overseas investment, Chinese firms have an increasing ability to conduct business at a global level," Zhang says.

Chinese outbound direct investment grew from $2.7 billion in 2002 to a stunning $102.9 billion in 2014, a nearly fortyfold increase in only 12 years, according to data from the Chinese Ministry of Commerce.

But she says if Chinese enterprises do not make good use of market research tools, they will run into problems when they test the waters abroad. Many Chinese enterprises, particularly small and medium-sized enterprises, have no clear market positioning and a lack of knowledge about local demand, Zhang says.

"To better promote China's Belt and Road Initiative, Chinese enterprises and governmental organizations need to make good use of the service offered by market research companies, to maximize their investments overseas."

China's Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, which would use trade and investment to boost ties along ancient trade routes and elsewhere.

Ipsos also has helped many Chinese firms in their global expansion projects, including Huawei, Lenovo and Haier, Liu says.

"It is very difficult for them to make correct decisions without a good analysis of local markets, so an increasing number of them, even some small and medium-sized ones, are willing to use survey data provided by multinational market research firms," Liu says. Chinese companies account for 30 percent of Ipsos' total revenue in China, a figure that the company expects to grow.

Liu says Ipsos has a well-established global network that can help companies gain a good understanding of overseas markets.

"It is typical now for Chinese clients to conduct global studies. We have had clients for whom we have conducted research in more than 60 countries out of all 87 countries where we have operations."

Liu predicts with the fast development of Internet and mobile technologies in China, Ipsos will have more clients from related businesses such as e-commerce, gaming, digital communication and mobile technology. The company expects such services to be a future growth engine.

"With digital migration being faster in China than elsewhere, our local staff is turbo-charging the move to digital-based research."

As more and more international market research companies like Ipsos enter China, the industry has experienced rapid development, including the emergence of specialized local research enterprises, the speedy expansion of foreign capital and the extensive implementation of technological applications.

At the same time, competition in the industry is becoming fierce. But Li Rongjie, manager at MIMR, a market research consultancy in Guangzhou, says China's strong economic growth and large market mean there is ample room for development of both local and international market research firms. That also creates more jobs.

"Highly qualified and trained staff are important for enterprises in this industry to conduct data collection and analysis activities," he says.

Localization of Ipsos' China operations has been crucial to the firm's success in the world's second-largest economy, Liu says. Establishing strong partnerships was decisive, and Ipsos also put strong emphasis on transferring and developing skills and respecting cultural specificities, he says.

Liu says China, already one of Ipsos's most important markets, will occupy an ever-larger position in the research firm's business.

"Our vision remains intact: to make research one of the primary means of understanding contemporary society, and to make Ipsos the strategic partner for those who wish to better understand the world."

liulu@chinadaily.com.cn

(China Daily European Weekly 07/24/2015 page21)