Why 70% of FMCG Product Launches Fail in China and How to Succeed

In China’s competitive landscape, a frequent challenge discussed with CEOs, R&D, and marketing professionals is the difficulty of launching successful products in the Chinese market. Despite having excellent products, many brands struggle to realize their potential in China. A surprising 70% of product launches in China fail to meet expectations. After monitoring new product launches for over 10 years, we have identified some common pitfalls and recognized the strategies that successful brands employ to succeed.

Common Pitfalls of Brands in China

Lack of Insight into Chinese Consumer Behavior and Needs: Many new products fail in China due to a fundamental misunderstanding of the Chinese consumer. Understanding the nuances of what Chinese consumers truly value, the problems they seek solutions for, and the specific benefits they desire in products is crucial.

Overgeneralization of the Target Audience: A common pitfall for brands is the oversimplification of their target demographic. Frequently targeting broad segments like 'Gen Z', 'Millennials', or 'health-conscious consumers in Tier 1 cities with high disposable income' often leads to misguided marketing strategies.

Misalignment in the Marketing Mix Elements: A critical reason for product failure in China is the incorrect application of the marketing mix elements. This can include setting an inappropriate price point (either too high or too low), packaging that fails to appeal to Chinese aesthetics or values, and highlighting USPs (Unique Selling Points) that don't align with the Chinese market.

Slow Adaptation to Market Speed: Another significant challenge is the slow adaptation to the rapid pace of the Chinese market. Chinese competitors often bring products to market much faster, allowing them to quickly capture market share. Brands that are unable to match this speed find themselves struggling to keep up, missing out on crucial early adoption phases and losing momentum in a highly competitive landscape.

The Importance of Customer Discovery and Marketing-Mix Optimization

?To overcome these challenges, brands must focus on thorough customer discovery and marketing-mix optimization, working closely with R&D and marketing specialists.

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Customer Discovery

1. Social Listening:

By using platforms like Weibo and XiaoHongShu, brands can quickly gather insights into consumer preferences and complaints. This method provides a broad overview of market sentiments, helping identify common pain points and emerging trends.

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2. Customer Interviews:

Direct interactions with potential customers offer deeper insights into their needs and challenges. These interviews help uncover the real issues consumers face, allowing brands to understand the 'why' behind their preferences and behaviors.

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3. Online Surveys:

Surveys are essential for validating findings from social listening and interviews on a larger scale. They offer a comprehensive view of customer preferences and behaviors, combining both quantitative and qualitative data for deeper analysis.

?Marketing-Mix Optimization

In China’s fast-paced market, speed is crucial. That’s why the marketing-mix optimization process is done in a lean way, allowing brands to test value propositions without developing the full product. Instead, mock-ups or minimal viable products (MVPs) are used to validate ideas quickly. This lean approach ensures that feedback can be gathered efficiently, allowing companies to refine their offering before committing significant resources. Testing with mock-ups provides valuable insights without the need for full-scale production, saving both time and money while still ensuring consumer alignment.

However, for many companies, legal departments may raise objections when testing products that do not officially exist yet. To overcome this, brands can use a fake brand and test through a third-party shop on platforms like Alibaba—such as Chaoly’s shop—where consumers are unaware they are part of a small-scale experiment. This allows companies to gather genuine feedback from real customers without any legal complications, providing a more authentic read on consumer behavior compared to traditional paid panels.

We typically follow a structured approach during the marketing-mix optimization phase, executing several steps that build on each other. Each experiment provides critical feedback, allowing us to iterate and refine the product and strategy based on real consumer insights.

Case Study Nestlé: Launch Products 2x faster than its competitors

Nestlé, aiming to launch a new nutritional product in China, initially targeted millennial women in tier-one cities who are health conscious and have a higher disposable income. Many brands assume this target audience is the most promising. However, through our customer discovery process, we identified that urban professionals with certain care needs and who neglected their health were a far more interesting audience. This insight allowed us to shift the focus of the product concept, tailoring it to meet the specific needs of this demographic. We then tested various value propositions and optimized the marketing mix through digital experiments on the Alibaba platform. By continuously refining the product based on real consumer feedback, we ensured that it resonated with the target audience. As a result, Nestlé was able to bring the product to market twice as fast as their competitors, achieving a stronger market position and a compelling value proposition that truly connected with their new audience. This approach not only accelerated the launch timeline but also significantly improved the product's chances of success in the competitive Chinese market.

Conclusion: Achieving Success in the Chinese Market

To succeed in the dynamic Chinese market, brands must move beyond traditional market assessments and adopt a data-driven approach. By involving key stakeholders such as R&D and marketing specialists and understanding the specific needs and preferences of Chinese consumers, brands can significantly increase their chances of a successful product launch.

I’d love to hear your thoughts on these industry trends and your experiences in the Chinese market. What challenges have you faced, and how have you addressed them? Let's exchange ideas and learn from each other's insights in the comment section.

Message me, Daphne Tuijn personally if you'd like a more in-depth conversation regarding launching a new product in China!

PS: Here's a more detailed description of the results achieved for Nestlé .

Disclaimer:The Nestlé case study is for illustrative purposes only. To protect confidentiality under the Non-Disclosure Agreement (NDA), specific product details, target audiences, and methodologies have been fictionalized. The product category and demographic described are examples, and any resemblance to actual products, demographics, or strategies is purely coincidental.