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For Their Entertainment: China and the Connected Consumer

It is conventional knowledge that the US influences the majority of global trends in marketing, especially with regard to the use of data and analytics to drive people-based marketing through both offline and online channels. However, I would highly recommend that marketing leaders in the US keep an eye on what is going on across the globe, especially in China where there are lessons to be learned and innovations to be leveraged.

During a visit to China last fall, I was utterly amazed at what I saw in comparison to a visit I made about a year prior. Almost everyone had a smartphone and more importantly, they were using it constantly throughout the day: getting an Uber, looking at clothing, making reservations, chatting, and sharing pictures with friends. I completely “get” the constantly-on-your-phone behavior, but what was really different about consumers in China is the way they use their phones. It’s as much about e-commerce as it is about socializing.

Just in the last year or two, there has been an interesting convergence of several factors that have now made e-commerce in China the role model for other countries, especially in developing nations. The first factor is the rise of the young consumer with disposable income. These younger consumers are hard-working – earning money and spending their disposable income on personal interests such as fashion and electronics, which they prefer to buy from quality global brands.

The second factor is technology. Given the country’s constraints with regard to technological infrastructure, China had to approach e-commerce in a new way, leveraging a combination of technology, connectivity, and mobility. Companies such as Baidu, Alibaba, and Tencent have all created new ecosystems of services that enable the Chinese consumer to buy products and services in a way that is adapted to their cultural norms. Another reason that e-commerce has exploded in China is that the entrepreneurs developing this ecosystem have never taken their eye off the consumer. Everything they develop is focused on the culture and specific needs of consumers.

I was recently introduced to, and had the pleasure of working with, Marco Gervasi, management consultant and executive director of The Red Synergy and author of East Commerce. In working with Marco and talking about the opportunity in China for US-based, multi-national brands, he provided the following four key considerations:

1) China is now a two-headed dragon. While part of the economy is slowing down and will do so for the next 10 years, another part is experiencing a strong growth,  exposing substantial opportunity. Thanks to a new class of consumers referred to as “connected consumers,” consumption will play an important role in China's GDP growth. Internet and e-commerce represent a great opportunity for those companies willing to reach and satisfy these new consumers.

2) Chinese e-commerce is unlike its Western counterpart in a number of ways. First, Chinese consumers prefer to be entertained rather than to search for new products; Second, they rely on platforms rather than on individual websites; and third, they expect a social experience when making a purchase.

3) E-commerce is not the only opportunity, though. China is now envisioning and launching revolutionary business models in online-to-offline (O-to-O) marketing. In particular, the financial, retail, and healthcare sectors are about to be profoundly disrupted.

4) Data will play a fundamental role in driving China's continued growth. It will supply the indispensable knowledge to reach the “connected consumer,” and in O-to-O, data will be the game changer that will successfully integrate online to offline businesses.

All of this change and advancement in China represents a great opportunity for brands to enter the Chinese market or further build their brands. For US-based multi-national companies, I recommend starting with an understanding of the maturity of China’s CRM landscape, the availability of data, and the country’s regulatory and privacy environment. This understanding will help in developing the appropriate strategy for leveraging existing people -based platforms in China. How data is collected and applied has the power to drive efficient, individual-level targeting and personalization at scale.