Earlier trips to Shanghai already taught me that looking at China with an air of Western superiority is ill-advisable. While rural areas are still developing, urban areas are so far ahead in some aspects that at times, Shanghai felt like science-fiction. In moving from Amsterdam to Shanghai and started as a strategist at Seventy Agency, my biggest challenge has been a professional one; trying to understand the different media landscape.
One thing that hindered me is assuming that Chinese counterparts are merely different in appearance than the Western counterparts that are blocked here. Using examples and calling apps ‘the Facebook of China’ gives handles for understanding, but it’s troublesome because it hinders a deeper understanding. In fact, describing apps on a one-by-one basis fails to provide much context on how the Chinese market works, which is inherently differently than Western ones.
As a fresh foreigner, I’m still waiting on documents that allow me to open a bank account, so I’m part of a minority in Shanghai that carries cash. Modern citizens in urban China pay everything with their phones, thanks to WeChat and Alipay. Even street musicians and beggars have QR codes that allow people to donate.
One of the reasons for China’s mobile payment success is that its rising economy coincided with the advent of the smartphone, and that at the same time the country lacked usage of credit and debit cards. It thus jumped from cash to mobile payment instantly, skipping the step of plastic card payment, which most Western countries are going through now— and it also largely skipped email usage. Even in business environments, workers mostly use WeChat or QQ for instant messaging and file sharing.
Scanning QR codes to pay — coupled with functionalities of the smartphone — has created tons of new business models. It’s not just paying at counters for the things you’ve bought. In shopping malls you can scan karaoke booths, and the booths will know who you are when you enter, save your songs, or even broadcast them if you like. QR codes on tables in a restaurants will open the menu within WeChat, from which you can select dishes, order and automatically pay. Because it’s a unique QR code, it already knows your table number.
Through the smartphone, functionalities get mixed. Take the shared bicycles on every street corner. They open after scanning (some also adjust the saddle to the height you saved in the app), and after you made your trip, simply closing the lock will handle your payment. Thanks to your GPS, your trip is stored along with other rides you’ve made, and if you want, you can compare yourself to your friends.
Customer journeys in the West often involve a lot of switching between sites. You search Google, you read Buzzfeed’s gift guide and see a Beats Pill+ bluetooth speaker, you browse YouTube for an unboxing videos, you check Apple’s website on the speaker, but after seeing the comparison test on Wired you select on the UE Boom 2. On Pricerunner you check the prices, after you buy it from Amazon. Social media isn’t really for buying, but rather for awareness.
Dissecting China’s customer journey — at least for a Westerner like me — is much more messy. Take the behemoth that is the WeChat app. It’s an operating system in itself, as it’s used for instant messaging, (video) calling, paying, shopping, meeting new people nearby, games, file transfer, and it functions as a newsfeed. WeChat has over half a million mini-programs, for getting someone to pick up your dirty laundry, topping up your electricity account, or ordering a tax. You can follow brands such as Nike or Tommy Hilfiger and from their feeds instantly order their products. (Imagine doing that on Facebook.)
Through the conglomeration of functionalities, shopping experience are often a mixture of discovery and purchase, brands and platforms making full use of the two being much more seamless than in the West. Take Meipai, a video streaming app, that integrates shopping. You see your influencer put on a lipstick you didn’t even know you where looking for, you ask her to put on a more darker shade of red, you decide you like it and buy it instantly.
Or take Pinduoduo, an app that lets people group up on WeChat, shop together and order items in bulk, directly from the manufacturer. The app is so successful because people share the bulk order on their feed, and invite friends through instant messaging. There’s Tmall, a huge marketplace for brands to sell their products, which added lots of functions to ensure that consumer don’t need to leave the app to find information elsewhere. It includes reviews on products, video streaming, social networking, and easy payment through Alipay.
Data to consumer’s benefit
These practises generate tons of data. Scanning the restaurant’s table to open the menu provides the restaurant a ton of data on me, and if upon scanning I also choose to follow the restaurant on WeChat (they’ll often give discount when you do), they can also send me promotions directly.
Hence, a smart CRM system is a necessity in China, especially one that stitches together from different apps. Interestingly, data collected from online behaviour isn’t only used for advertising purposes, but also the consumer’s benefit. For instance, search entries on Tmall (a widely used business-to-consumer marketplace) showed Chinese consumers were looking for dishwashers that easily cleaned chopsticks and had a high-temperature drying programme. Midea used that data to design a better dishwasher, which was an instant sales success. Similarly, Oppo designed a smartphone that charges in five minutes — after learning that consumers actively searched for that.
In a way, it’s similar to the QR code, which wasn’t a success in the West. Around ten years ago, Western marketeers used the QR code primarily to redirect people to their advertisements or websites for more information on their product, which nobody really did, because nobody cared. The QR code became a joke (The blog Pictures of People Scanning QR Codes is jokingly empty.) But QR codes in China are really useful. The principle — again — is that they’re used for the consumer’s benefit (such as quick payments), not just advertising purposes.
Speed of adapting
When the Chinese branch of Philips learned that consumers wanted to see the quality of their indoor air on their smartphones (through search data), it took them three months to design that feature into an air purifier and bring it to the market (which became an instant sales hit). When Alibaba launched Alipay, it took them six months to set it up across nearly every major shop in the country.
Leon Megginson, on the work of Darwin, famously said it’s is not the strongest of the species that survive, but the ones most adaptable to change. It sure explains why many Western brands fail in China. Compared to Chinese companies, most are extremely slow and indecisive — and even if they aren’t, they often misfire by failing to adapting to the Chinese market.
Take for instance the early 2000s, when eBay took the market by storm and became the biggest consumer-to-consumer marketplace. Chinese consumers were afraid to lose money on transactions to individuals, so Taobao quickly invented a transaction that holds funds until the product is actually send, massively gaining marketshare. Much later did eBay introduce a similar thing, but it’s marketshare had already plummeted from 70 to 10%.
And when Airbnb landed in China in 2015 it was the biggest, but it was quickly overtaken by Tuija who was much more adaptive to the Chinese market. Tuija partnered with real estate developers to rent empty houses (there are a lot of them in China) and function as custodians and rent the houses out. Their service even included cleaning, door lock installation and furnishing assistance.
Mattel launched an extremely expensive flagship store for Barbie in the middle of Shanghai, only to find out that Chinese parents saw Barbie as an utterly unfit role model for their children. Unilever spend millions on launching Rexona, only to find out Chinese men don’t have body odour like Western men, and they don’t perceive sweating as something bad (it cleanses the body). Proctor & Gamble tried to sell tampons, but they’re perceived invasive and unwanted, and Chinese women mainly use sanitary pads. Home Depot tried to get a foothold, but didn’t take in account nearly all Chinese consumers descent from farmers and labourers just two generations ago, and that the last thing they want is DIY.
There are also success stories. When KFC arrived in China, Shanghainese found it was too spicy, while in Sichuan they found it dull, so instead of treating it as a single market (which is suicidal for a territory twice the size of Europe), they now offer different levels of spiciness across five thousand restaurants in over a thousand Chinese cities. Wrigley successfully introduced their cucumber-mint-flavoured gum, and ice cream aside, Häagen-Dazs also sells mooncakes. Because China lacks a sport culture, brands like Adidas and Puma to successfully shifted their focus from sport to culture, fashion and celebrities. Brands like Apple, Chanel and Starbucks have succeeded by catering to Chinese who love to show they’ve made it.
Availability of active platforms
Then there’s sheer size. China has a population of nearly 1.4 billion people and over half of them use smartphones. Most numbers of Western social media fall flat in China. The most commented Instagram post is one by Diego Costa, with 3.9 million comments, but on Weibo, Lu Han received over a record forty-two comments on one of his posts.
Despite the widely used apps like WeChat and Alipay, due to China’s massive size there are plenty of specialised apps (it’s said that for every social media channel in the West, there are seven Chinese counterparts). There are four huge apps for parenting alone, with the biggest of them, Baby Tree, has over 200 million monthly active users (almost the size of LinkedIn).
All these challenges and possibilities — so far — have made my head spin, but my aim is to combine what I’ve learned in Amsterdam at KesselsKramer, with the expertise of Seventy Agency in Shanghai as well as the complexity of the Chinese market. Stay tuned.