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China 2016: THOUGHT LEADERSHIP |GROWTH IN THE NEW NORMAL

8 RULES FOR WINNING IN CHINA’S NEW GROWTH MARKETS

 
              
Jacco ter Schegget  
President
OgilvyOne China
Jacco.Schegget@ogilvy.com
Charles Laporte Aust
Vice President
OgilvyOne China
CL.Aust@ogilvy.com
 

China has offcially entered what President Xi Jinping has called the “New Normal”. This phenomenon incorporates a broad combination of factors – including the gradual slowing down of economic growth, a transition to higher levels of domestic consumption, more innovation-driven industrial growth, and a number of other changes. With this, there is now broad consensus that the so-called “easy growth” in China is over.
 


 

Moving forward, the brands that will excel will be the ones who innovate and create new forms of value for customers. Creativity will increasingly emerge as a core currency for companies, and ideas will be seen as the source of future growth.

MOVING AT THE PACE OF CHINA

The Chinese market is complex, and it rewards a unique set of behaviors that are quite di erent from those generally most appreciated by Western multinationals.

Speed, for example, is viewed as a virtue in itself. The closed technology ecosystem of China requires organizations to develop an intimate understanding of the local Chinese alternatives to global standard- setters, and how they are di erent. The incredible pace of economic development has led to dramatically di erent viewpoints across generational and geographic segments, and therefore requires “China-only” forms of targeting.

While these factors have long been true, the di erence is that China is now beginning to lead the world into truly new territories, and global leadership needs to play a di erent role. Seizing the opportunities in the “New Normal” will require empowering China leadership teams to move at the incredible pace of the Chinese market – not the pace of global stakeholders who need to play “catch up”.

A PERFECT STORM OF OPPORTUNITY

Despite the slowing economic growth and more di culty in finding growth, there are new reasons to be excited about the Chinese market.

• The tremendous market size of China and relative consumer homogeneity means that brands can get a lot of mileage from each initiative they launch. Even the most targeted of marketing initiatives can involve a dialogue with enormous populations.

• The growing middle class is demonstrating an incredible, ever-increasing appetite for consumption.

• The advanced levels of mobile and e-commerce penetration are making China ideal for digitally- enabled business ventures.

We believe this unique combination is creating a “perfect storm” of opportunity, for which we’ve already seen a first wave of big winners. 
 

8 RULES OF SUCCESS

Having the privilege of seeing the inner workings of some of the most successful and cutting-edge brands in China, we’ve distilled a set of eight key success factors.

 

1. Go mobile first

The new generation of Chinese consumer is living at the global cutting edge of online-to-o ine experience. Failure to put mobile experience at the core of any new business can be fatal.

2. Think journey-wide engagement

Chinese consumers have a strong sense of price-value benefit and are uniquely sensitive to empty brand promises. We see them gravitating towards the brands that deliver great experiences across their journeys, not just messaging.

3. Own your user data

In a world where brands need to compete intensely for customer attention, insights become the foundation. With China’s unique BAT (Baidu, Alibaba, Taobao) dominated media ecosystem, the temptation can be to build experiences on third party platforms and leave the data in their hands. This is like giving your heart away.

4. Focus on specific personas

While Chinese consumers may have a lot in common as  a whole, they also encompass incredible diversity. Getting it right requires sophisticated understanding around different generations, Chinese geographies and more standard 

5. Use rubber rigor

We see two frequent errors when it comes to quality standards. At one extreme, the complete abandonment of rigor and quality standards. At the other extreme, we sometimes see the desire to impose process and “best practice” that prevent teams from moving nimbly enough. Rather than committing to either school of management, we value a bit of wisdom about where and when.

6. Fail fast & iterate

Don’t rely on over extensive research, validation and up- front modeling. The winners are the ones who are  taking more entrepreneurial approaches to developing, launching and evolving new business avenues.

7. Focus on the core

China’s market is big enough to build incredible businesses in very focused areas of operations. Doing one thing brilliantly can be
a much better strategy in China than doing multiple things adequately. Take for example the story of Three Squirrels – the 3-year old company that made USD $25m in 2014 by only selling nuts on Taobao. 

8. Create shared wins

In such a fast moving world, building the business of the future requires fertile partnership ecosystems, and the building of customer interest together via complementary roles. This is particularly true in China, where aligning motivations and wins is always a great starting point.