Firstly, on a recent trip to Sanya, I was amazed bythe contrast between some of the beautiful resort hotels vs. the abysmal service offered in them. This example of hardware vs. software, to describe the bricks and mortar vs. the human element is often used to describe the service (or lack of) here in China, and Sanya was like five-star hardware combined with two-star software. It describes well how often the building or facilities can look the part, but that the service staff cannot always meet the high service expectations to match the superior building or brands. I have experienced this contrast in hospitals, restaurants, hotels and retail outlets all too often.

 The second experience was at a local hotpot restaurant chain. I had been disappointed so many times with service standards in restaurants, but to my delight I have discovered a beacon of Chinese service called Haidilao (???). The Haidilao chain of restaurants grew from a small soup stall in Sichuan province. It is now a well established chain of restaurants  that has made waves recently due to its consistency in delivering excellent service standards, based largely on the friendly, attentive waiting staff and innovative methods used to make waiting for a table more pleasant (such as nail painting, or a massage while you wait).

The most significant part of the Haidilao story is how fast the news of this service has spread. Haidilao has quickly become renowned for their service (even the foreigners know about it!). What this also highlights once again, is the power of innovation and novelty combined with word of mouth recommendation to create buzz and excitement around a brand. This is what has really made Haidilao so successful – it’s almost as if people go to experience the extras while waiting for a table! The service is also consistently true to the hype which means Haidilao actually follow up on the service expectations and deliver in terms of high service standards. I can personally attest to the higher quality service.

 Interestingly, I recently got to speak to some of the management at a local Haidilao, and their philosophy was quite simple. Its built around respect for the service staff, and making an effort to treat them well, or at least better than the average gig for a migrant worker who might be a long way from home, and have to live in a shared dormitory with all the other staff.

 It is recognized that high service standards can be very difficult to implement in China, but this case offers a good example that for those who train staff, treat them well and deliver improved quality of service, will ultimately benefit. More importantly it shows it can be done in China.

I read a great post about ‘System Beaters’, on Joel Rubinson’s market research blog. The post highlights how deals are increasingly guiding our path to purchase, especially in the advent of social media in its various facets, and I feel that this observation is particularly meaningful here in China.

 Social media is a dream come true for system beaters; not only do we find the deals we want for ourselves but now we get to share them with all of our fans, friends, and followers.  We retweet the deals we find, and we like them via Facebook so all our friends see them too.  And by the way, looking for deals is a main motivator to like a brand page in Facebook in the first place.

System beating is not necessarily something new, it’s an established shopper segment. The reason that I think it is interesting is firstly because that it is so relevant to reaching Chinese consumers, and secondly that we now have abundant tools to act upon this knowledge. From my observations, the system beating mentally is intrinsic in most Chinese consumers, there are many examples of this innate need to find a bargain, or a special deal and I would cite the Velo discount coupon machines that are found in many shopping malls in major Chinese cities as being founded upon this insight. Increasingly sophisticated social marketing techniques and the high levels of connectivity in China, now makes targeting system beaters a viable proposition, as demonstrated by Starbucks in their recent Christmas mobile campaign (Excellent summary here courtesy of China Observer).

Rubinson ponders if this is the end of branding, and I agree with his suggestion that it is definitely not, in fact I think that appealing to system beaters can instead be complementary to branding as part of a successful tactical marketing plan. I think it is fairly safe, across any category, to acknowledge that in order to succeed in China, understanding this need for Chinese consumers to feel that they have found a bargain should be recognised and acted upon, and incidentally, I don’t think these activities necessarily devalue the brand, as much as they might in other more developed markets. Why? Well, the appeal of this kind of tactic stems from China’s bargaining culture, in which the price of things is often a talking point, and where bartering for the best price is almost expected, often like some kind of endurance sport. Victory is of course prized, and in turn everyone likes to share their tales of victory, this is why this kind of approach can be so powerful.

Two things that consistently come up in market research here in China is the power of sales promotions and word of mouth recommendations. Whilst this is not unique to China, I think it has a much stronger potency in China, and campaigns that combine these two elements well in a manner tailored and targeted towards system beaters will see a significant positive impact on campaigns that are focused towards encouraging purchase intent and behaviour in this brave new age of digital and social media sharing.

The German market for solar panels represents a big prize for many of China’s burgeoning solar companies. German homeowners spent about US$6.7 billion on solar panels in 2010 according to recent reports, so it’s no surprise that the battle is intensifying. Interestingly, the marketing platform that has been chosen to play out this fight for market share in the lucrative German market is the Bundesliga football league. Major solar companies are queuing up to endorse German football teams, where could be better to win the hearts of German football fans, and more importantly homeowners?

Solar technology presents a great new opportunity for Chinese companies on two levels. Firstly in terms of moving up the value chain to prove themselves as leaders in the field of green technology, and secondly, to overcome the traditional weakness of poor branding and marketing of their products when ‘going out’ into overseas markets, in this case Germany. Competing with established local German companies such as Q-Cells and Solarworld AG will at last present the Chinese as brand owners, rather than just manufacturers. This tells us that these large Chinese solar companies are learning the branding game, and the move to endorse German football, is taking the battle right into German households.

This is not a case of just one Chinese solar brand choosing the Bundesliga to reach the German market, but of many solar companies piling into the Bundesliga to get their brands known. No less than seven global companies have chosen to align themselves with different Bundesliga teams, in a copycat marketing push that will make Germany the centre of the European solar energy battle.

Suntech Power Holdings Co., based in Wuxi has recently signed a three year sponsorship deal with 1899 Hoffenheim, the team that won promotion to the to the Bundesliga last season. Suntech already exports about a fourth of its products to Europe, with Germany being the leading market.

Yingli Green Energy Holding Co. from Baoding will back Bayern Munich this season. Some football fans with recall Yingli from their bold stadium banner advertising at the 2010 World Cup in South Africa.

Jinko Solar Holding Co. from Shangrao will place banner ads at the stadium of Bayern Leverkusen over the next three years.

Shanghai Chaori Solar Energy Science & Technology Co. has signed an agreement with FC Schalke to advertise at games and have players endorse their products.

Meanwhile, Q-Cells, the biggest German solar cell maker, sponsor the reigning champions Borussia Dortmund, whilst Bonn-based Solarworld AG backs Cologne.

The battle lines have been drawn in this unprecedented race to win share of the German solar energy market. It will be interesting to see who comes out on top in the Bundesliga the season, both off the pitch as well as on it.

Luk Fook are a successful brand and well established Jeweller, with hundreds of outlets in mainland China. It feels like they are trying something new with this ad. They appear to be trying to bring gold jewellery to a broader audience in China, along with their partners The World Gold Council. This makes sense as the limited investment vehicles open to Chinese people, mean that  gold and gold jewellery can be seen as credible alternative investment optios by many Chinese, so jewellery brands such as Luk Fook and Chow Sang Sang are both understandably pushing for gold jewellery sales.

The main reasons I struggle with this particular execution are:

1)      Whilst it is very striking and eye catching, it is not immediately clear what this ad is for when walking past on the busy subway.  So you’ve grabbed people’s attention, but failed to deliver your message. I was surprised to finally discover that this was for a jewellery brand.

2)      I think that there is a potential lack of understanding towards this ad. Traditionally jewellery should have an element of glamour to it, and whilst the model in this ad is no doubt attractive, I think that showing her carrying the groceries is totally lacking glamour and makes her seem very ordinary – as if she’s doing her weekly shopping run (if like me, you don’t make the immediate connection with Italian food). This ultimately devalues the brand, and the value of this jewellery, and as I recall the high street jewellers back home in the UK were always trying to look as glamorous as they could in all of their adverts. Culturally, I would expect that need for glamour to be even more necessary in China, where some consumers often want to stand out more for what they are wearing , even if the purpose is to bring gold to a broader audience 

3)      You could argue against my second point that it is the Italian link in this ad that brings the glamour, but I fear the Italian associations might be lost on many (i.e. the Fiat car in the background, the Peroni style beer bottle, and the fresh Italian food and vegetables). The text translates loosely as ‘Graceful butterfly, dancing to the flavours of Italy’, which make this sound more like an advert for food.

Ultimately, this is a brave attempt to try something different, and that has to be admired. But I feel that more stylised ads are much better suited to selling jewellery, such as those featuring actress Zhang Ziyi beautifully photographed by the Platinum Guild Intl (see pic below).

There seems to have been some negative reaction to this ad, mostly concentrating on the fact that it  was not appealing to a US audience; 1) because it was introducing such a large number of new Chinese people in such a short time, and also 2) because it did not allow an introduction to many of the famous Chinese faces on display (not easy in 30 seconds). Furthermore, it was criticized for generally not offering up a more engaging creative execution than a bunch of well-known Chinese figures smiling for the camera.

Personally, I felt that the brief was a pretty tough one given some of the anti-China sentiment that is whipped up in the US. I agree that the ad lacked a bit of punch, and given the importance of US-China relations these days, there is an obvious necessity for the two sides to get a bit more acquainted. Obviously, this effort will have been aimed at emphasizing the softer side of China, and offering a platform for US citizens to learn more about who these people are and what they’re famous for.

David Wolf offers a more in depth analysis of the ad on his blog, he also speculates that it may have ultimately been aimed for Chinese audiences, via an ‘Echo Effect’ as suggested below:

We have to entertain in our critique of this campaign the possibility that the real audience for this campaign was actually Chinese.

It is a not uncommon practice in China to say something to overseas audiences or do something in overseas that is actually done with a view to the effect the message or the action will have when it echoes back into China. This is called “chukou zhuan nei xiao,” or exporting something to sell it at home.

Read more here.

Whatever the reasons behind this campaign, it got me thinking about the ways in which many countries try to position themselves for audiences here in China. Perhaps not using TV advertising so directly to present themselves, as in this example. But often trying to sell themselves, either based on the strong associations already held about their country in China (e.g. romance and France), or trying to create completely new associations… but that’s a topic for  another post.

As we approach Chinese New Year (or Spring Festival) and the forthcoming year of the rabbit, the next few weeks are always a fascinating time to observe marketing overload here in China. Many FMCG brands see a huge spike in sales at this time, and campaigns are created especially to tap into to that special Chinese Spring Festival feeling.

This is a time when the Chinese genuinely open their wallets and consumption patterns change significantly from normal. Spring Festival is like a Chinese equivalent of Christmas in many ways, although notably the celebration lasts longer and is not built around one single day, instead the celebrations continue for a number of consecutive days. Also during this time the gift giving often includes sharing various food or beverage products. If you walk around any Chinese supermarket during these next few weeks you’ll see examples of FMCG products in special multi pack formats and gift packaging designed specifically with the Spring Festival in mind. It seems to me that the products that are acceptable to be given as gifts at this time are continually broadening in scope, what was traditionally maybe fruit, eggs or cakes in the old days, now include products as diverse as gift packaged milk for those with kids, or perhaps red wine for the growing ‘middle class’.

This is a time when the Chinese return to their families, often travelling long distances to see loved ones that they haven’t seen for a long time. Advertising taps into two specific themes at this time:

1. The general good feeling of return home and spending time together with loved ones and;
2. The more specific need to exchange gifts with those loved ones.

One thing is sure, there will be at least one huge meal cooked, if not many, and the whole family are likely to tune into the Spring Festival Gala show on CCTV. Many campaigns for relevant FMCG products might include a TV spot focusing on the whole family at this time, which is always a winning theme in China (Coca Cola usually do this very well). Furthermore print and outdoor extensions might focus on specific multipacks available for gifting; again this tactic is frequently used soft drink, instant coffee and confectionary categories. Furthermore the battle for floor space within the supermarkets will also intensify. It should be noted that whilst Spring Festival offers a great opportunity for marketers of FMCG goods especially adapt their products and packaging, it is also offers equal potential for advertisers of consumer durables to get in on the act, make their brand relevant to the Chinese audience and put themselves in front of consumers. This is demonstrated nicely by Shanghai Volkswagen running a simple TV spot around the theme of driving home for Spring Festival.

For me, I’ve spent a few years comparing Christmas and Spring Festival, I find that the premise is basically the same, with families reuniting around the television, and dining table. I find that the build up to Christmas starts very early in the UK, with some advertising beginning in early November, a full two months before the big day itself, which then always seems to pass too quickly. Whilst in China the Spring Festival seems to feature a much shorter yet more intense burst of promotional activity, but we then have a more days to enjoy with family and to over indulge.

Either way, like Christmas in the west, the potential for brands to ride on the back of the excitement and optimism at Chinese Spring Festival cannot be ignored.

It’s approaching my fifth anniversary of living here in China, so I thought I’d use this milestone to write about what I have seen in the development of social media marketing in my time here. It’s a unique and powerful area for all brand owners in China that has grown so fast over recent years, yet still seems to pose something of challenge in terms of the best way to 1) engage social media users with brands and; 2) measure the impact of that engagement. The timing of this post coincides with the release of the OgilvyOne ‘Connected’ report that was made available last week. It provides an excellent summary of how social media has quickly become mainstream in China and what this means for brands.

Three years ago, social media did not exist in any meaningful way in China. Today, things are vastly different.

From a marketing perspective a massive opportunity exists for brands to be nurtured online, simply because of the staggering amount of young people in China who conduct many facets of their life online. This means all that chatting, gossiping, sharing, working, gaming, relaxing, entertainment, shopping and even dating that is done online. Whilst this is happening everywhere, it is definitely a more prominent in China. This is to some extent cultural, as Chinese tend to be much more comfortable communicating in an online context for certain things, and it offers a great way of connecting and building networks or relationships which is so important to Chinese.

I recall when I first arrived in China back in 2005. I was intrigued by the high usage of online tools such as MSN and the ubiquitous QQ. At that time there was no Facebook (or Chinese Facebook clones), no Twitter, no LinkedIn and much fewer people were actively blogging. As I look back now, the arrival of each new social media development has been so well suited to the way that so many Chinese people spend so much of their time living their lives online. Whilst this is also true in any other markets, the scale and therefore the opportunity is larger in China where the development of the internet has created a whole new world of digital escapism. One’s digital existence is an online party in which they choose the music and decide who’s invited.

As a market researcher and a general observer of trends in China, I see how this race towards a digital promised land should surely be offering brand owners unlimited ways of reaching and communicating with netizens, as well as measuring their behaviour. For example, the OgilyOne Connected report identifies ‘Frands’ as a notable development.

Social media users are no longer discriminating between ‘brands’ and ‘friends’. They are simply identifying a third group that they engage with – ‘frands’.

Engagement to Overcome the Digital Disconnect

Brand exposure is not necessarily brand engagement. I still feel that the main reason for any digital disconnect in online brand development and advertising is that online users are busy communicating within their close circles and do not wish to be poked, distracted or disrupted anymore in their digital lives than they do in their day to day lives. We all know that context is king, therefore social media campaigns should above all be about offering something relevant and engaging.

So how do we engage online? I recommend reading a great post on the evolution of social media campaigns in China by Rand Han on Campaign Asia in which he outlined three broad stages in the evolution process, as below:

1. Promotion

2. Conversation

3. Community

Evidently, it’s all about building engagement which is created through quality content, but on top of that it’s also about correctly identifying and targeting those who will spread the message. This is something that I found first hand in some recent automotive research that I was involved in, where we found the 80/20 rule to be in full effect (i.e. 80% of the information about cars being spread by a group of about 20% of knowledgeable auto fans). Automotive is a key online battlefield, one of the categories that is talked about more online. The need to segment and understand types of internet participation also comes through in the OgilvyOne Connected report that identifies three distinct types of social media users, Initiators, Commenters and Gawkers.

You Can’t Manage What You Can’t Measure

In the five years since I first landed in China I think it is fair to say that the measurement and tracking of social media activities has not developed at the same breathtaking pace as the social media websites themselves. There still seems to be limited understanding of the online metrics available and the power that web analytics can bring. It feels that no one really owns this space yet and ironically, despite the unlimited scope for capturing on-site data about online usage patterns, much of the online research to date is actually conducted using traditional quantitative or qualitatively research methods rather than on-site web analytics. Even the OgilvyOne report was conducted using traditional quantitative methods.

The smart brands are already heavily involved in social media, but one conversation with a friend at a media agency sticks in my mind. It’s that brand owners are still reluctant to invest in social media until they can pin down a simple metric that can directly link an increase in online spending to increases in awareness, market share or sales. So what’s missing is the killer metric. However, in reality, it’s a bit more complex than that, brands must inspire sharing, and then embark on a process of measuring the reach of social media campaigns right across their evolutionary process.

It will be interesting to see what the next five years will bring in terms of methods for social media engagement and measurement in China.

KFC, the usually savvy China marketers, got their fingers burnt last week due to their ’Super Value Tuesday’ online voucher promotion. The offer featured a 50% discount on their popular chicken bucket.

This is my understanding of the promo. It is run in conjunction with the popular online store Taobao, with the idea that 100 lucky respondents will be eligible for this ’instant’ offer. There are three rounds in which offers are posted; round one is at 10am, round two at 2pm and round three at 4pm, consumers respond instantly through Taobao in the hope that they will receive a voucher in their inbox, the winning recipients can then redeem their vouchers at KFC restaurants. However, it seems that last week, before round one had even finished vouchers supposedly for round two and three already begun circulating on the Internet. It would seem that they were being shared as ‘valid to all’, rather than on the original basis of being valid only to the lucky 100 winners.

Not surprisingly, last Tuesday evening chaos ensued with crazy scenes in KFC restaurants across China, with angry customers thinking that they were eligible to 50% off chicken buckets but being refused the discount. This lead to many disgruntled customers holding in-store demostrations to express their disatisfaction with KFC, the negative fallout from the promotion has been circulating online amongst Chinese netizens all week. I recommend that you visit china/divide for a thorough account of exactly what happened in a Shanghai KFC. 

The Chinese love to save money, and therefore love any kind of discount vouchers, coupons, loyalty cards that make them feel as though they are getting a bargain (one good example are the popular Velo discount machines that first appeared in Shanghai and are now expanding to shopping malls in Beijing). I also feel vouchers and coupons really hit a cultural sweet spot in that they can be readily shared and distributed to friends, family and colleagues, which works well in a culture with the emphasis on the group. 

So, what went wrong for KFC? Unfortunately, after fake vouchers went into circulation and people believed that this was an offer ‘valid to all’ there was no turning back. KFC have subsequently posted a notice in all their stores and on their website, interestingly it reaffirms that only the vouchers from ’official channels’ could be accepted. However, one can only imagine the speed at which this kind of promotion would have spread across Chinese cyberspace, through the MSN accounts of friends and colleagues. Whilst the need for absolute clarity in communications is essential in a discount promotion of this nature,  it also appears that this was one big misunderstanding in which KFC cannot be totally blamed for having their voucher ripped off or leaked, and the recipients who wished to redeem this voucher were genuinely unaware of what the ’official channels’ were.

This case does demonstrate a few simple guidelines for this type of promotion:

• Keep it simple (if the overall idea is too complicated don’t bother or revise it);
• The need for clarity in communication for below the line promotions (make the small print clear);
• The power of the internet (understand and prepare for how fast online word of mouth spreads in China);
• In the event of a crisis, think quick (respect your customers take and multi-pronged defensive action)

KFC are a hugely successful brand in China, they have great brand equity which is ultimately built on trust. If anything, the negative customer reactions to this voucher promotion were likely caused by a betrayal of that trust. I don’t suspect that this promotion will damage KFCs reputation too much in China, as they acted swiftly to diffuse the situation,  sending local area managers to stores immediately, and posting notices in all stores and on their website, a lesson in damage limitation perhaps.

I am particularly interested in exploring how marketing techniques are developing here as the country becomes more and more sophisticated, confident and assertive in it’s execution of marketing. I also acknowledge that any comment on communications in China would be incomplete without taking into account the relevant cultural dimensions, and as I am no expert on the culture, I expect that I will likely be making wildly broad generalisations based on my five years living here on the mainland, as well as observations from day to day life in China. But with that, I welcome feedback and debate on the comments board so that we can make this as rich a source of information as possible for both blogger and blog readers alike (but please do keep it decent on the comments boards).

It is also my intention to make comparisons between my experiences working on marketing projects across a few different markets, and draw on my experiences working as a market research professional in both the UK and China. This gives me a good insight into a developed market vs. a developing one… and as everyone knows we market researchers love insights!  I should say that while China is still developing, one of the things that excites me most about marketing trends here is that the established culture and existing marketing infrastructure gives China it’s own disctinct character, and therefore whatever your particular stance on censorship and control, China will continue to develop in it’s own way to become a totally different market to anywhere else in the world. Ignore this at your peril Marketers!

 Some key questions I will be hoping to answer are:

• What are the most exciting marketing trends, innovative campaigns and eye-catching executions?
• How is marketing in China developing differently to other markets? What is unique to China?
• What should marketing practitioners be doing in China? What should they avoid at all costs?
• What are the common challenges to marketing in China? How can we overcome them?
• What are the burning marketing issues and hot topics of debate?

Obviously I won’t be answering all of these questions in every post, but you get the idea.

To give you a flavour of the range of areas I aim to cover in this blog, I have started by setting up some categories based on the key marketing disciplines of Advertising, Branding, Below the line, Digital, Market Research and PR, plus ‘China trends’ for those hard to pin down posts. But I’ll use these only as a framework and see where this project leads me. I’m not sure exactly where this will end up, but three things that this blog definitely is not is 1) political; 2) a personal journal of my life in China; and 3) a job or gossip site.

Please also note that all opinions on China Marketing Lab are personal and not those of my employer, and that due to confidentiality obligations, I will not post specific details about the projects of my company’s clients, though I may be able to comment on some interesting general trends that I am seeing.

Now that I’ve established some clear direction for the blog, I look forward to sharing some interesting marketing trends from China. I welcome your comments on the direction of CML, do let me know how I can make it more interesting for you.