Step 3: Localize your business model

*How do you prefer to pay for your coffee? Differences in culture and consumer habits mean that also business models vary.*
*Photo: Kirill Averianov / Pixabay*

Understanding the local market is pivotal for education firms taking their business to China.

That is why Lancy Jia advised Finnish companies and educational institutions to take a close look at what business models are working well in China right now, before entering the market.

Jia is the founder and CEO of Sumino Oy, a Finnish company specializing in educational content integration and localization into the Chinese market and other markets in Asia.

“When you understand the latest successful business models, you will be able to deliver your message to the market in a way that will be accepted, understood and well-received,” she explained.

Watch the videos to hear why Lancy Jia recommends that you localize your business plan to fit the Chinese market.

Adjust to the local culture

In this step-by-step guide to entering the Chinese education market, we have already touched upon the two first steps: finding the right partner, and localizing your product.

The third step, localizing your business model, is equally important, Jia said and gave an example to illustrate her point:

“In Finland, intellectual property rights (IPRs) are taken very seriously. Generally, in Europe, privacy is something we care about a lot, as you can see from the EU’s General Data Protection Regulation (GDPR). In China, privacy is not as emphasized as in the EU, and personal information is easily leaked. This means that selling of IPRs is not the best business model in China,” explained Jia.

“In Europe, you could for example make a business out of selling IPRs for the next five years for a price of 10,000 euro a year. That would probably not work in China at this moment.”

Jia noted that the attitudes towards IPRs are changing in China. Nevertheless, the example serves to show that just because a business model works in one country, it does not necessarily work in another, due to local culture.

“You don’t have to change your business model completely, but you will probably need to make some minor changes to adjust to the Chinese culture and consumer behaviors,” Jia said.

Understand local consumers

Lancy Jia used buying a cup of coffee in Finland and China as an example of different customers’ different behaviors.

“In China, it is common to purchase a member card with a big sum, that gives you an extra discount when you purchase a certain amount of coffee, and most people choose this model it. But it doesn’t seem to be so common in Finland or elsewhere,” she said. “It has to do with the culture, and how local consumers want to spend their money.”

To understand the local culture and consumer habits, Jia advised listening carefully to trustworthy China experts and local institutions. Your Chinese partner or partners can also help you understand the market mechanisms better.

“Listen to your local partner and make your own thoughts after that,” she said.

“The local partner knows China, but in the end, it is your company that is entering a new market, so you have to make your own decisions,” clarified Jia. “You don’t have to completely follow your partner. But it is good to listen first and then make your own assessment.”

This is part of a four-part series on how to get into the Chinese education market.
Find all the articles here:

Do not hesitate to contact us to learn more about entering the Chinese market!