China market research and new distribution channel identification boost sales for water treatment system provider

A European company selling RAS (Recirculating Aquaculture Systems) in China wanted to improve its competitiveness in the market and grow faster.  At the time, they were only active with some inbound marketing activities and were employing a passive approach, responding to inquiries as they came in.

In order to find out what they needed to do to grow faster, the company contacted ARC Consulting to do a market survey to help them to better understand the customer base in China. The outlined inquires included: what is important to Chinese customers, how do the customers perceive the brand and what areas of improvement do customers wish to have. In general, the study was aimed at getting a better perception and comprehension of the market size, the various market segments, characteristics and the potential.

Engineer working with an aquaculture water treatment system

With business stagnant and not growing as fast in China as expected by the headquarters, ARC Consulting was asked to help to better understand the Chinese customers and market to make the adjustments needed in order to reach the sales strategy.

With a deeper understanding of the market, the company would be able to make better decisions on the investments in the organization, marketing along with positioning to improve the market position in China.

The case was designed to be qualitative, based on opinions collected from industry and academic experts in the subject. The project methodology followed the following sequence:

To ensure that a satisfactory level of expertise of the people interviewed was achieved, screening started with over 200 potential experts based on education and professional background. In the end, however, only 10 people were selected. The interviewed pool of people all had advanced degrees and work experience, either by being part of research institutions, being a RAS user, or as part of private equity firms investing in RAS solutions.

The conclusions from the information gathered from the interviews were:

  • The market for RAS is comprised of approximately 600 companies which can be segmented into 3 categories: Advanced, Standard, and Economical users.  Each segment is distinct by the type of RAS that is used, the type of companies in the segment (SOE, Private, Research Institution) and the typical product of the segment.
  • The players in the market are mainly either smaller local players or larger foreign companies. Each competitor group uses different pricing structures and targets different customer segments.
  • The panel of experts were asked to estimate the market spend per annum on RAS: the consensus result was that annual spend was about 0.5 billion RMB with a range up to 4 billion RMB.
  • Likewise, the market growth was estimated, with +10% growth having the most votes, followed by +20% growth. The highest growth estimation offered by an expert was +50%.
  • To better understand purchasing criteria, experts were asked to rank the following factors by their importance and influence: price level, performance, ROI, technical support, reliability, ease of use, operation cost, and performance. The Price level was rated as the most important criteria with Performance being the least important.  It was also concluded that expert recommendations were highly valued by purchasers and that the most frequent purchasing process was through tender events.
  • In regards to RAS consulting services, it was clear that consulting and educational services are required to be successful, but customers are not willing to pay for this service.

Summarizing all the data and information collected, ARC Consulting made the following recommendations:

  • The client should target advanced and standard users as these segments have performance requirements that are more relevant to the functionalities offered by our client’s systems.
  • It is very important to create a key opinion leader network in the market by establishing connection with key companies, industry experts, and building a pilot farm to showcase RAS.
  • The client should revise its pricing structure to make it more aggressive and include training services. It was deemed that charging for consulting services for advanced users may be possible but a basic training package should always be available at no charge.
  • A comprehensive overview of the current status of the Chinese market.
  • A detailed analysis of the various market segments and potential market position on the Chinese market in order to increase sales.
  • Collection and summary of up-to-date qualitative data from experts within the field in China.
  • Initial screening and identification of experts in China to ensure a high level of reliability.
  • A complete market overview of all companies, growth and detailed purchasing criteria.
  • Firm recommendations on how to proceed in China based on collected fact based data.

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