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. Since then, the market research industry 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 article, we discuss three of the biggest challenges facing companies looking to carry out market research in China.
1. Poor secondary resources: Secondary data cannot be fully trusted in China. The rapidly changing environment and fragmented markets mean up-to-date information is difficult to find. Therefore, analysis of new and existing data should be carried out often by experienced professionals. In a lot of cases, however, this data analysis is conducted by less experienced researchers. This can cause problems with data quality, especially when the full set of data is not available. On the other hand, an experienced international researcher can utilise multiple sources of data to ensure quality. For example, secondary data analysis is 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.
2. Unreliable primary data: 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 highly competitive environment means suspicious business people are often unapproachable. When they do agree to speak, conservatism kicks in and key information about their business or company is difficult to obtain. In-depth discussions (qualitative research) are therefore a must to establish the basis for further quantitative research. In our experience, we’ve found that the telephone survey is the most efficient and effective way of obtaining information. It is possible that face-to-face interviewing may be preferred, 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.
3. Lack of a creditable market research company: Setting up a market research company in China requires only a relatively small investment (100,000 CNY). The minimum needed is an office, a couple of computers, and some pens. Therefore, the professionalism and technical skills of market researchers in China is diverse. 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, a marketing list provider, or even a telesales company. It is also not unusual for a market research company to outsource its data collection activities to a “data collection agency”, posing a high risk to 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. With qualitative research being a key methodology for collecting data, frequent discussion between interviewer and analyst will ensure that the process is on the right path. It’s also important to bear in mind that cost is usually a good indicator of quality.
It is not an impossible task to carry out b2b market research in China. However, many challenges exist if the research methodology and the market research company are not carefully considered. Data quality, whether via primary or secondary resources, largely depends on in-house resources and the experience of an international market research company.