Chinese hospitality industry [Case Study]

Partnership screening in China 

Case Description: Chinese hospitality industry

Daxue Consulting’s client was a multinational distributor of Point-Of-Service (POS) systems and LED lighting for firms in the foodservice industry. The company was successfully operating its business in Hong-Kong, but it was finding difficulties tapping into the Chinese Mainland market, due to the closed business connections nature of the industry (关系, “guanxi”). Therefore, the company approached Daxue Consulting for assistance in finding the right partners in Mainland China that will enable it to sell the product successfully.

The client was looking for answers to basic market entry questions such as:

• What prompts a Chinese Food and Beverage business to purchase POS systems and LED lighting?
• What are the characteristics of successful POS system integrations in the Chinese hospitality industry?
• What is the market potential for LED lighting design and implementation within the hospitality industry?
• What firms should our client target in the Chinese hospitality industry?
• How should the client market their products in China?

Phases of the market research: Development strategy

In order to answer and guide our client in its China operations, Daxue Consulting team created a tailor-made project for its client’s case and provided a full analysis of the market situation including analysis of potential partners and a marketing plan. The end goal of the project was a list of potential partnerships for our client’s LED lights and POS systems products as well as a marketing plan for each. 

Phase 1: Desk research

In the first phase, Daxue Consulting executed market research using a desk research and in-depth interviews with market insiders. Our team first conducted an extensive desk research in order to get an understanding of the Chinese hospitality industry, including a study of the size of the market and growth prospects, of the top players in the market ( top clients and competitors), and of the up and coming market trends. The data gathered online helped our client to have a better understanding of this industry market environment and highlight the main differences between Hong Kong and Mainland China’s markets.

Phase 2: In-depth interviews

The POS systems in the foodservice industry in China is a niche market, so, in order to gauge the segmentation of demand, our team then executed a series of in-depth interviews with market insiders, including potential clients, competitors, and potential partners. The goal of this step was to gain primary information from interviewing high-end restaurants, hotels, bars and cafes owners, all professionals with a long experience in China. This helped us to vet the information gathered through secondary research methods and fill remaining gaps in our knowledge.

 Phase 3: Market strategy plan

In the third phase, our team conducted a Go-To-Market Strategy for the client’s LED lights and POS systems, including a potential partner screening and marketing plan for each product. Daxue Consulting’s project managers provided the client with a list of potential partners (Top 10), with analysis of each, according to the data collected through the research phase. Daxue team also provided a recommended plan of action to help our client’s business thrive in the ever-evolving Chinese market and to become a solid high-end restaurant technology provider. This marketing plan included analysis of potential clients, company positioning, marketing strategy, and possible future offers and promotions online and offline.

The Market Opportunity

There are clear market openings for those who want to do business with emerging players in China’s Food and Beverage industry. This is because of the sheer size of the Food and Beverage market in China and because of the changing market landscape for the industry.

According to a survey by Unilever Food Solutions, over 85% of Chinese consumers eat out at least once a week. Recently, Western-style consumer food services such as fast food, cafés, bars, and take away have become more popular because of the convenience of these restaurants in an ever more modern world.

Although multinational brands such as KFC and McDonald’s have dominated the market until recently, consumers are now seeking out healthier food options and more a more comfortable dining experience. Thus, the growth of these multinationals has slowed in recent years as business moves to other sectors of the industry.