Chinnovation and Why it Matters
to Western Brands

Chinnovation and Why it Matters to Western Brands

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Chinnovation and Why it Matters
to Western Brands

Written by Neil McCallum

Last month the Confucius Institute for Business London, part of LSE held its latest China Business Briefing on ‘Chinnovation and Why it Matters to Western Brands’. This forms part of its executive business education programme, which is also open to the public.

Dominica Di Lieto, CEO of Emerging Communications UK, and Rocky Chi, Head of Planning, held a presentation on the issues facing businesses when trying to break into the Chinese market.

This topic was also tackled by Martha Lane Fox, President of the British Chamber of Commerce last weekend in The Times. In her article she talks about how American CEOs, who normally spend their time at Burning Man and Davos, are now being found more frequently in Shanghai. They are aware that China is a critical market that requires lots of attention and time. UK business leaders need to have an understanding of what is going on in the China market to maximise their opportunities, while at the same time they need to be aware of the risks that such markets implies. The quote she ends on in her article hammered home the potential importance of this Chinnovation ‘I have tried to spend a lot of my career understanding Silicon Valley. Now it’s time to concentrate on understanding Shenzhen instead’.

What do brands get wrong when attempting to market their product in China?

Brands often forget that they need a China-specific strategy, and may attempt a one-size fits all approach to a market of 1 billon. Most companies that have been marketing their products and services in China since 2020 and are trying to implement marketing campaigns and strategies that worked in the 90s/00s and hope for the best. Dominica raised the point that often these brands have local China branches, but central offices aren’t keeping in touch with their overseas staff. They are hired, but aren’t cared for, or expected to work with the same values and mentality of their western colleagues. China is inventing new business models which have disrupted traditional industry. Emerging Comms aims for first choice positioning, best choice marketing, and the follow-through on final choice support.

Emerging Comms

Emerging Comms have devised campaigns for Great Ormond Street Hospital, KANTAR, the University of Dundee and Estée Lauder.

They aim for first choice positioning, best choice marketing, and the follow-through on final choice support.

The main focus of the discussion was how diverse the China marketplace is. Gen Z make up 20% of the population, but almost 40% of consumer spending. Their brand engagement is shaping thinking and creating new ways of shopping. These brands have to win the hearts of consumers. Chinese consumers know when they are being taken for a ride and treated like cash cows.

China’s different speeds

Rocky discussed the three key elements of sales growth in China: Strategy, Openness and Agility. China is a world unto its own, running on the so-called China-speed where brands can easily fail.

This was very clear even back in 2018, when I had the opportunity to live in China for several months. Back then KFC attempted to roll out Chuan Chuan (串串), something like “skewered food” and a sort of remix of the classic hot pot theme. Why attempt that when there are chuan chuan shops on every corner? KFC withdrew the scheme, but it had been enough to create a buzz. At the same time, having lived in Chengdu, I raised the point that Sichuan speed and Shanghai speed are not the same and so China speed cannot be taken so simply.

The Chinese digital landscape has recreated commerce. If brands want to learn what is the future of tech, they suggest not to look to Silicon Valley, but Shanghai. The digital landscape is complicated, and so context is king. I only use a handful of Chinese apps, and even then not knowing their full usability. The old narrative used to be that Chinese companies were just imitations of western ones, but that is an old-fashioned trope.

Like with Joe Wicks, Taiwan had Liu Genghong who was popular in the 00s as part of the band SBDW. During China’s Zero Covid policy lockdowns, he was able to use TikTok/Douyin, livestreaming his workouts and became relevant again. He gained 64 million followers in a month, becoming the no. 1 influencer during the lockdowns, with brands like FILA lining up to sign with him.

RED, the app you need to know about

China is fast coming up with its own apps, most of which are unknown to Western digital population. I personally use a handful of Chinese apps, not quite knowing their full usability.

小红包/RED is an underutilised app for Western brands who wonder why their projects fail when, they only use Wechat. RED, China’s fastest social sharing app is getting UK businesses on the radar of young adult audiences. Like TikTok, it is being used as a search engine instead of Baidu/Google. If hotels, cafés, clothing brands and even universities want to get better traction on their campaigns, they need to be on RED. With its Instagram-like display means that companies use it for fashion, travel and lifestyle tips. One audience member commented how he used it when travelling to Amsterdam instead of TripAdvisor. It may even become the future for travel recommendations, but it is also how Chinese students are finding education opportunities beyond Russell Groups institutions.

Back in 2016 scanning into the metro with your phone seemed innovative enough, now Tencent, one of the highest grossing multimedia companies in the world, has enabled palm payments in Beijing! Whilst such biometric payments, as with facial recognition software, have raised privacy concerns in recent years, western brands need to at least be aware that this is what is going on. Tencent/Wechat’s competitor Alibaba, China’s largest e-commerce firm, is now planning on developing similar technology. WeChat Pay and Alipay together account for more than 90 per cent of the mobile payments market in mainland China.

Rocky raised that we can no longer just say our brand is targeting women in their 30s. What does that even mean? Psychographic segmentations have taken the place of traditional demographics, it is all about understanding motivations and behaviours.

Rocky then went on to explain the 3 types of influencers in the Chinese market: Industry vertical Wemedia, Key Opinion Leaders (KOL) and Key Opinion Consumers (KOC).

 Industry vertical WemediaKey Opinion Leaders (KOL)Key Opinion Consumers (KOC)
TypeCredible WeChat channels with high readership, focusing on a specific industry/areaAffluent trendsetters Passionate to discover unknown brands and interpret in their own wayGenuine customers who have purchased previously and shared their experience and knowledge on social media
AudienceIndustry stakeholders, both B2B and B2C audiences.Mature consumers who are constantly looking for uniqueness and ‘hidden treasure’ products and brandsPeers and followers who are attached to the same interest tags in the community

I found the presentation and talk on this Chinnovation very interesting and a good learning opportunity for businesses that want to market their products and services in China, which most of the times so far have only managed to contribute to the PR disaster in the country.

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