The Chinese Market Is More Than Just Its Urban Centers (Harvard Business Review)

• A key difference between these two examples was not geopolitics but their choice of market-entry strategy. Best Buy chose to concentrate on China’s wealthier but hotly contested urban centers. When AMD entered China in 2004, it focused on selling cheaper products to attract price-sensitive consumers in rural markets. In this way, it could avoid competing with Intel, then the market leader. And as AMD’s senior executive in China, Pan Xiaoming, noted, even if only 10% of the 200 million households in the countryside wanted to buy a PC, that that would result in 20 million sales of PCs, along with the chips that went in them. AMD also participated in a government program called the “Appliances go to the countryside” which spurred its sales in these locations further.
• Consciously or not, in entering China through the rural market, AMD was copying a strategy that was behind the success of many of China’s current champions. Pinduoduo, the largest interactive e-commerce platform in China, founded in 2015, is a case in point. Founder Huang Zheng initially focused on serving China’s less affluent cities or villages, thereby avoiding competition from the likes of Alibaba and JD.com. READ MORE

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