How does the “pride of domestic products” gain market share overseas?

Major domestic brands are collectively heading to Southeast Asia.

Whether it is the home appliance giant Hisense, the mobile phone giant Xiaomi, or the smart cleaning robot giant Roborock, they all have an irreplaceable "status" in the Chinese market. While deepening their presence in China, the three giants have all focused their attention on the blue ocean of Southeast Asia.

In 2014, Xiaomi saw the unlimited possibilities of the Southeast Asian market and has witnessed its start and development ever since; in 2019, Stone Technology still believes that this market is worth exploring and is far from saturated.

After changing the stage and “starting anew”, they still stand out in the Southeast Asian market and have become the first-tier brands in their respective segments. As typical representatives of Chinese brands going global to Southeast Asia, what is the secret of their second growth curve?

With multiple favorable factors, the Southeast Asian market has unlimited prospects

As a well-known domestic mobile phone brand, Xiaomi started its global development plan as early as 2014, and targeted Southeast Asia, the blue ocean market closest to China, as its first stop.

This is the result of careful consideration. "Southeast Asia has a good business environment, relatively complete transportation and logistics infrastructure, and it is relatively easy to find local talents with international backgrounds." Liang Jiawen, general manager of Xiaomi's international business department in Southeast Asia, pointed out that many markets in Southeast Asia are well-known for their internationalization, rapid economic development, and cultural tolerance. All these favorable factors show that this market has a good soil for development.

Unlike Xiaomi's "Southeast Asia first" strategy, Hisense and Roborock Technology entered Southeast Asia later; Hisense only started to spend more resources and energy on the Southeast Asian market around 2017, while Roborock Technology started in 2019. Although they entered the market later, both Hisense and Roborock Technology believe that Southeast Asia is still a blue ocean that is worth investing in by Chinese brands.

As data from the World Economic Forum shows, the overall consumption scale of Southeast Asia's population will reach 4 trillion US dollars in 2030, a 2.2-fold increase compared to 2020. This undoubtedly contains huge opportunities for Chinese brands that have geographical advantages in the Southeast Asian market.

Liu Fabo, general manager of Hisense Asia Pacific Marketing, said that as they are all in Asia, Southeast Asian consumers have certain feelings towards Chinese brands. Both the Malaysian and Thai markets have many Chinese people, who are more likely to accept Chinese elements, which is conducive to the export of Chinese products from an emotional level. At the same time, from the demand level, the demand of the Southeast Asian market is also more similar to that of China, that is, if the product can satisfy Chinese consumers, it will be closer to Southeast Asian consumers to some extent.

With consumers at the center, Chinese products have delivered excellent results in overseas markets

Domestic brands that have achieved excellent results in the domestic market have also delivered outstanding results in overseas markets.

According to the Canalys report, in 2021, Xiaomi became the third largest smartphone brand in Southeast Asia, with a market share increase of 42%, far exceeding other brands. At the same time, Hisense and Roborock, which entered the market later, also achieved gratifying results shortly after entering Shopee, the leading e-commerce platform in Southeast Asia. The former achieved a highlight moment of breaking through one million US dollars in single-day GMV on Shopee's "530 Super Brand Day" less than two months after entering the platform, while the latter also achieved a good result of annual sales of over 10 million US dollars on the platform two years after entering the platform.

Image source: Canalys report

"The success of a brand must be the success of its products, and the success of its products must be based on consumer demand." Liu Fabo emphasized that Hisense's current position is inseparable from its continued creation of value for consumers in terms of products, including product functions, performance, and prices.

Almost all successful overseas companies have reached a consensus on this point. "Xiaomi will put some more forward-looking technologies, or some more high-end and creative functions into its products, and adopt a fair pricing strategy to reach more consumers. In addition, under the influence of the 'mobile phone + AIoT' dual-engine strategy that was laid out three years ago, both smartphones and AIoT smart home product lines have achieved good results." Liang Jiawen said that Xiaomi hopes to allow more people to access and use advanced technologies earlier and more conveniently. With the popularization of technology, it will reach more users and allow fans to use or enjoy the good life brought by technology.

Global strategy, local operations

However, even with high-quality products, Chinese brands still face a lot of homework if they want to maintain growth in the complex Southeast Asian market.

Southeast Asian countries are scattered, and the languages, religions, and consumer preferences vary greatly from market to market. "This is an objective challenge that always exists, and the logistics and service issues caused by it are also a major pain point for our overseas brands." Liu Haibo said frankly that these problems can be solved by themselves in the Chinese market. When entering a new and unfamiliar market, whether for small and medium-sized sellers or large enterprises, if they do not want to make too much investment in the early stage, "partners who can serve as sales channels and provide complete services and logistics capabilities are our first choice in overseas markets, and Shopee platform is one of them."

Over the past five years, Southeast Asia has been one of the fastest growing regions for e-commerce in the world. Relevant data show that the scale of e-commerce in Southeast Asia has exceeded US$120 billion in 2021, a year-on-year increase of 62%. More importantly, under the influence of the epidemic, Southeast Asia's digital transformation has driven significant growth in e-commerce. According to a report released by Google, Temasek and Bain in 2021, the market size of Southeast Asia is expected to reach US$234 billion in 2025.

"The Southeast Asian e-commerce market has great potential, and our basic strategy is to first draw on some of the more mature experiences and methods in the Chinese market, such as our product planning capabilities, store operation capabilities, etc. In this process, we will identify the differences in each overseas market, and use local partners' deeper insights into the local market and localized services to integrate a set of full-link capabilities that are in line with local e-commerce, achieving the effect of 1+1>2." Liu Haibo believes that it is crucial for Chinese brands to leverage the right partners in overseas markets.

“For example, after joining the Shopee platform, the service team was able to provide us with analysis of local consumers’ cognition and demands from all dimensions from the consumer channel end, and give us some suggestions on specific focus points, ranging from how to optimize our customer service work and how to adjust the responsibilities of each customer service staff, to planning and executing large-scale marketing events such as the ‘530 Super Brand Day’ with us, helping Hisense better integrate into Southeast Asia.” Currently, Hisense ranks first in the TV and refrigerator, air conditioner and washing machine categories on Shopee.

Image source: Hisense

Similar to Hisense, Roborock Technology, which is growing rapidly in the Southeast Asian market, has also fully leveraged the power of local e-commerce platforms to deeply understand local users and markets.

"Robotics are an emerging industry, which fits the rhythm of e-commerce very well. E-commerce is also a powerful channel for us to directly reach local consumers and receive feedback from local consumers in the first place. Therefore, we chose Shopee, which has a very good consumption scale, number of users and user activity, to cooperate with them to enter the Southeast Asian market." Hu Haijiao, head of sales for Asia Pacific at Roborock, said that Roborock had previously added personalized voice package services to its products for the Southeast Asian market based on local user feedback, using English in Singapore and Malaysia, and launching local voice packages including Filipino, Vietnamese, Thai and other languages ​​in other markets where English is not so popular. "Although it is just a simple action from user feedback to product localization and customization, the effect on sales and brand improvement is very obvious."

Image source: Stone Technology

In addition, based on the data and feedback received in actual operations, Stone Technology broke some of the original inherent labeling of the Southeast Asian market and adjusted its product strategy. For example, Hu Haijiao and the team originally thought that Singaporean users have strong spending power and are more suitable for promoting mid-to-high-end products, while Malaysian and Thai users are younger and therefore prefer technological products. However, after a period of market research and platform testing, it was found that in the current Thai and Malaysian markets, the high-end product Ultra, with an average GMV of around RMB 10,000, also has good sales performance.

"Go to Southeast Asia to make money" is no longer just a slogan. More and more Chinese companies are extending their tentacles to this blue ocean and reaping continuous growth through careful cultivation. We believe that whether it is for domestic big brands or every small and medium-sized seller with a dream, Southeast Asia, a hot land for making money, still has a lot of room for imagination.

Shopee Platform