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Customized Strategy of Pricing Localization
Q: What is the difference between buying a silk scarf on a street shop and buying a technology product in China?
A: Technological products are more highly discounted. Much more.
Chinese companies are used to getting huge discounts, sometimes to the tune of 80-90% on their technology investments. In contracts, ISVs in the U.S. are used to offering much lower discounts, such as 20-30%.
Different discount strategies lead to different results. PC Stars works with you to formulate the product pricing strategy best suited to your business. Take a company as an example (name not disclosed). In their first two years of marketing operations in China, they provided channel customers with 40-50% discounts. The market response was not positive, placing the company in a terrible position when it came time to begin the negotiation process. In the following year, they took a new approach, raising prices to four times U.S. list prices. They then increased customer discounts to between 80% and 90%. This strategy allowed them to reach agreement with Chinese customers and succeed in the Chinese market.
Higher discounts are an effective tool when localizing prices for the Chinese market. They do not have to mean lower profit for ISVs.

Other pricing considerations for the Chinese market
Other pricing strategies may be completely unlike those in Western countries. An example of this is a software product that must be purchased in Western countries but is free for individual consumers in China, only charging enterprise users. Some software is also provided free to both businesses and individuals and is wholly supported through advertising or add-on services.
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