Top 3 Mistakes Western Crypto Projects Make When Entering China

China boasts the world's largest internet user base, with 1.092 billion netizens and a 77.5% internet penetration rate as of late 2023. This massive, highly digitized market holds immense appeal and strategic value for Web3 and blockchain projects. Despite stringent regulations on cryptocurrency trading, interest in blockchain and Web3 technologies remains strong. For instance, Chainalysis reports that Chinese crypto investors earned approximately $1.15 billion in cryptocurrency gains in 2023, ranking fourth globally. Moreover, China leads in blockchain innovation, accounting for over 84% of global blockchain patent applications, reflecting significant governmental and corporate investment. Forecasts predict China's blockchain technology market will grow from $474.2 million in 2022 to $71.899 billion by 2030, underscoring its vast potential.


However, "opportunities and challenges coexist" is particularly true in China. Many Western Web3 projects fail due to misconceptions. Below, we analyze three common pitfalls for Western crypto projects entering China and offer strategies to navigate this unique and massive market effectively.


Pitfall 1: Underestimating Regulatory Complexity


Many Western teams mistakenly assume China's crypto regulations are superficial or can be bypassed with guerrilla tactics. In reality, China's regulatory environment is stringent and constantly evolving. Without a deep understanding of policies, projects risk violating red lines, leading to setbacks or market exit. Since September 2017, China has banned ICOs and fiat-to-crypto trading. In 2021, the People's Bank of China and other agencies declared all crypto-related transactions illegal financial activities, including services provided by overseas exchanges to Chinese users. These policies aim to curb speculative trading and mitigate financial risks, as unchecked crypto volatility could destabilize society, conflicting with the government's goal of preventing systemic risks. Additionally, China cracked down on crypto mining in 2021 to reduce energy waste and carbon emissions. Compliance is the baseline for survival in China.


In short, respecting regulations and planning for compliance are prerequisites for Western projects to establish a foothold and thrive in China.



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Pitfall 2: Relying on Western Strategies, Neglecting Localized Marketing and Community Building


Many Western teams rely on Twitter, Discord, and Reddit for community engagement, assuming these platforms work globally. This is a major misstep: China's "Great Firewall" blocks most foreign social media, making them inaccessible to most Chinese users. China has its own robust ecosystem of platforms like WeChat (1.3 billion monthly active users), Weibo (598 million monthly active users), Zhihu, Douyin, and Bilibili. Crypto users in China rarely use Twitter (see detailed data). Failing to localize operations means losing visibility and trust in China.


Some international crypto projects have faced issues due to a lack of Chinese-language channels. For example, a DeFi project announced a major upgrade solely on Discord and in English, leaving Chinese token holders confused due to language barriers and information gaps, resulting in rumors and price volatility. Such cases, though not widely reported, are common in the industry, highlighting trust gaps caused by information asymmetry. In contrast, projects like the Ethereum Foundation, which supported volunteer translations and engaged in local tech forums, and Polkadot, which employed Chinese community managers for regular Weibo and WeChat updates, have built strong reputations in China. Notably, 88% of U.S. companies in China use WeChat for marketing, underscoring its importance for reaching Chinese audiences.


To succeed, Western crypto projects must adopt localized marketing and community strategies tailored to China's unique digital ecosystem:

  • Provide professional Chinese translations to avoid misinterpretations and align content with Chinese culture and trends, such as launching campaigns during festivals like Chinese New Year to show cultural respect. Engage with credible Chinese blockchain media and influencers for coverage or educational content, within regulatory boundaries.
  • Leverage KOLs and community leaders: Partner with influential Chinese crypto KOLs and communities (see notable KOLs) for AMAs or online events to amplify reach. Word-of-mouth is powerful in China, and endorsements from trusted figures build credibility. Participating in local industry conferences or online events also fosters direct engagement and demonstrates commitment.

In summary, "good wine needs no bush" doesn't apply in China. Western projects must immerse in local social ecosystems and actively build communities to establish brand trust and user loyalty, laying the foundation for business growth. Learn more: How to build a Chinese community from scratch.



Pitfall 3: Insufficient Localization and Local Partnerships


Many Western teams view entering China as simply translating content and opening channels, but true localization goes far beyond. Without deep integration, even the best products may fail. Language and cultural barriers limit adoption—Chinese businesses and developers prefer Chinese communication, and English-only whitepapers or documentation struggle to gain traction. Product and user experience localization is also critical: Chinese users expect intuitive UI, complex super-app experiences, and high performance to handle massive user volumes. Ignoring these leads to products misaligned with local expectations. Finally, lacking local partners is a significant barrier, as relationships and networks are vital in China's business landscape. Without trusted local collaborators for distribution, technical integration, or institutional support, projects struggle to scale.


To avoid superficial localization, Western crypto projects must fully integrate across operations, products, and partnerships:

  • Comprehensive product localization: Offer fully translated products, including UI, user manuals, FAQs, and SDK/API documentation in Chinese to lower adoption barriers. Optimize network infrastructure, such as deploying nodes or CDNs in mainland China, to address latency and throughput demands.

In essence, true localization requires holistic integration—from language and technology to business relationships. Western Web3 teams must shed the mindset that "foreign monks chant better scriptures" and prioritize Chinese user and partner perspectives to create effective strategies. Deep local engagement and partnerships are key to long-term success in China's competitive crypto market.



Conclusion


China's market offers immense opportunities for Western B2B Web3 projects but is fraught with hidden pitfalls. To succeed, projects must avoid the three common missteps: Respect regulations by operating within policy frameworks to ensure compliance and stability; communicate locally by engaging China's social and community ecosystems to build trust; and embed locally in teams, products, and partnerships to earn credibility as a "local player."

As data shows, China's crypto user base is rapidly growing, with potential to lead globally. Western projects that navigate these challenges wisely can capitalize on this growth, while those clinging to outdated approaches risk missing out. The key to success lies in respecting differences, adapting proactively, and committing long-term. By doing so, Western Web3 teams can thrive in China's unique market and achieve true global success. Schedule a meeting to discuss your China market entry.



FAQ


Q1: How to evaluate a Chinese KOL or media for collaboration?

A: Assess audience authenticity (avoid fake followers), content quality, past collaborations, and industry reputation. Prioritize influential figures or vertical media like Lianbutou or PANews on Weibo, Twitter, or WeChat.


Q2: What are the advantages of partnering with ChainPeak for Chinese influencer campaigns?

A: As an agency, we offer bulk pricing, significantly lower than direct negotiations. Long-term partnerships provide customized packages and annual discounts, saving over 30% in costs.


Q3: How should YouTube and Twitter be used together?

A: Use YouTube for in-depth educational, gameplay, or product content, and Twitter for real-time updates and traffic funnels, creating a cohesive promotional strategy.


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