In the early 1980s, almost no market research companies existed in China. By 1998, following the open door policy in the country which encouraged a great influx of private investment, there were 850 market research companies registered in China. These are made up of both Chinese and joint-ventures. Since then the market research industry in China has boomed and currently more than 4000 market research companies are registered in China (2014).
Despite the high number of market research companies, conducting market research in China is difficult. In this blog post, we discuss three of the biggest challenges facing companies looking to carry out market research in China. These are poor secondary resources, unreliable primary data and a lack of creditable market research companies.
Poor secondary resources: Secondary data cannot be fully trusted in China. This is due to many reasons. The first reason is the rapidly-changing environment and fragmented markets in this massive country. Up-to-date information is therefore crucial to ensuring the availability and reliability of secondary resources. To achieve this, analysis of new and existing data should be carried out by experienced professionals. However, in a lot of cases this data analysis is conducted by less experienced researchers. This causes problems when being reused by others and the full set of data is not made widely available. On the other hand, an experienced international researcher can utilise multiple sources of data: secondary data as a reference, followed by primary data analysis to verify the findings. This helps to reduce data errors and ensure the research output is based on real market data.
Unreliable primary data: So, what are the issues facing primary data collection in China? China is the second-largest country in the world by land area and the business market is changing almost every minute. New businesses are emerging and unsuccessful businesses are disappearing on a daily basis. The brutal competitive environment means suspicious business people are often unapproachable. When they do agree to speak, the conservative culture kicks in and information about their business or company is difficult to obtain. While they may provide certain information, the full truth is usually kept secret, especially to foreigners. Qualitative research is a possible solution to this, alongside a quantitative survey. In-depth discussions, be it face-to-face or telephone, is a must to establish the basis for further quantitative research. In our experience, we’ve found that the telephone survey is still the most efficient and effective way of obtaining quantitative information. It is possible that face-to-face interviewing may be preferred by the client, but this will depend on the geographical coverage and investment budget. Business-to-business online panels are still at the early stage of development with data reliability being a major concern.
Lack of a creditable market research company: With more than 4,000 market research companies across the country, how do you pick the right company to do business with? Setting up a market research company in China requires only a relatively small investment (100,000CNY). The minimum that you will need is an office, a couple of computers and some pens. Therefore, the professionalism and technical skills of the pool of market researchers in China is diverse. This has led to a misguided perception of market research in the country. It is quite common for the public to think that a market research company is equivalent to a data collection agency, a recruitment agency of interviewers, a focus group service provider, marketing list provider, or even a tele-sales company. It is also not unusual for a market research company to outsource its data collection activities to the ‘data collection agency’, therefore posing a higher risk on data quality control. A market research company with its own in-house fieldwork operation guarantees strict quality control and a reduced risk of poor quality data. As discussed before, with anecdotal (qualitative) research as one of the key methodologies to collect data – frequent discussion between the interviewer and analyst will ensure that the data collection process is on the right path. It is therefore crucial to have a clear research objective in mind that will define the selection of the market research company. It’s also important to bear in mind that the cost normally reflects the quality.
It is not an impossible task to carry out b2b market research in China. However, many challenges and risks exist if the research methodology, and especially the market research company, is not carefully considered. Data quality, whether via primary or secondary resources, revolves largely around local in-house resources and the experience of an international market research company. Therefore, a careful review of a market research company before conducting market research in China is the crucial first step of the process. Read more on business-to-business market research in China by clicking the link below.