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March 7- 8 – Conference Summary: China The New World’s Inspiration

Laure De Carayon (https://twitter.com/laure2carayonhttp://www.chinaconnectforum.com/) starts the conference with a strong statement: China is the new world’s inspiration.

Several signals back this opening declaration. First of all, the Chinese digital market is entering a mature phase, with strong players like the BATs (Baidu, Alibaba and Tencent) as  pillars of the domestic ecosystem, making inroads abroad (which tough started a while ago). They inspire the World as they develop, at a huge scale and rapidly, locally and abroad, new ways to shop (“New Retail”), to deal with transportation (bike sharing, etc.), to engage, be it entertainment, gaming/e-sport (getting really big), education, or short videos and livestreaming driving massive audiences thanks to the power of celebrities- from top KOL (Key Opinion Leaders, many more also brand owners) to Wanghongs (“nobodys”). Convenience is the mantra: facial, even hand, recognition to check-in and pay, in unmanned stores, for seamless & unrivalled experiences, cheap and fast delivery anytime, mobile payment and financial products disrupt the traditional banking system, competing with international institutions to undertake a prodigious  technological influence best exemplified with parades of robots, drones, and autonomous cars sometimes staged in a new form of “entertainment 3.0” The race for a global AI (Artificial Intelligence) leadership is likely one of the most significant way forward of the Chinese influence, “made possible/accelerated” by the Chinese government. As Eric Schmidt (ex Google CEO) pointed out recently: “By 2025 they will be better than us. By 2030, they will dominate us.”

China Connect 8th Edition aims to highlight even further the rise of a dragon inspiring western COMEX, and impacting the worldwide economy.

A guest speaker: China and Korea Coca-Cola president Curt Ferguson

Curt Ferguson, Coca-Cola Senior Executive (https://twitter.com/CocaColaCohttps://www.coca-cola.com.cn/) at the head of 50 000 workers and 47 factories is still amazed by the size of the Chinese market. “How can you make money in this kind of environment ? There are 1.4billion people with different tastes, different regions and a very changing market: one restaurant opens every morning and one closes every evening in almost every street!”  The market is so huge that the company needs to build another 500 factories if they want to cover the Chinese market and compete with US and Mexico market shares.

Despite the difficulties, Coca-Cola sees China as the future and has a new growth vision for the region.

How do you take a western brand and turn it into Chinese? Curt Ferguson’s answers are pretty clear: you need patience and to adapt your whole model. “Your brand has to be rooted in Chinese tastes and culture.” Coca-Coca is for example launching a mixed drink made of Schweppes and Gin, something not developed in the Coca-Cola portfolio anywhere prior. And you can’t stop at the product itself; you have to adapt your entire model. Coca-Cola’s best strength worldwide is their distribution system, however, in China, the whole organisation has to be reinvented! Chinese society is a mobile and a cashless society (In 2016, Chinese mobile’s payment accounted for $790 billions versus $74 billions for the US). To put it clearly:  if you don’t sell via mobile, you are dead! According to Ferguson, “You need the resources and patience, otherwise, the Chinese will copy your model, mutate it and find another way to do it cheaper, better and more fitted to the local market.” Is “Alicocacola” the future?

Pete Lin, Managing Director of “We are Social” Greater China  (https://twitter.com/wearesocialcnhttps://twitter.com/petelinhttp://wearesocial.cn) ) answered a similar question: How to gain market share in China? According to Lin, the best strategy goes through WeChat and mobile mini apps: “You need to understand that your WeChat account is more important than your website in China”. A perfect recipe for success would also be to incorporate a  good teasing to reveal your global spokespersons and a very strong branding campaign in Q4, a quarter boosted by the 11.11 (11th November, the Single’s day holiday) which beats every record for online shopping. His company obtained impressive results using these techniques: GUESS, with a mix of branding and promotional campaign went from obscurity to number 48 in women’s fashion category. MICHAEL KORS obtained 0.5 billion social impressions in time for 11.11 and the brand BEATS, thanks to a well timed revelation of their global spokesman Khris Wu and several creative spots, is number 1 in sales revenue on 11.11 for the 2nd year in a row.

Moving to the travel market, interesting facts and numbers were presented: 92% of Chinese consumers intend to travel overseas in 2018. According to a white paper released by Nielsen and AliPay, 65% of Chinese tourists are using mobile payments when traveling abroad (vs only 11% of non Chinese tourists.) They spend in average USD 3,754 per person and are more likely to buy from a merchant who offers they favorite payment method (Alipay, WeChatPay or UnionPay).

The travel market: A huge market to be  closely watched

Kevin Guo, General Manager of CTrip.com (http://www.ctrip.com/), the giant online travel company, confirms the size of the Chinese travel market (130 millions people) and the opportunity to seize in the near future. According to him: “The golden week is not the only marketing opportunity”. He even considers that week as a trap for the travel marketers! At this time of the year, half of the Chinese population is already on the road. The efforts should rather be directed towards the new trends: week-end travels (Chinese people are becoming very keen on escaping the polluted cities). Joyview, the new holiday concept from Club Med, which aims to provide a short holiday experience 2 to 3 hours from China’s first tier cities, is a perfect example of this new trend. Family travels in theme parks is another trend to be followed. Thierry Hellin, Deputy CEO from Pierre et Vacances (https://twitter.com/thierryhellinhttps://www.pierreetvacances.com : “Today’s China is 1970’s France in terms of family destinations”. The group believes China is lacking the infrastructures and announced that they will build 25 Center Parcs in China over the next years. Slow travels, Spa and self driving travel are two other new trends. Finally, the young traveler’s aged 18 to 34, who represents 60% of the tourists crowd is a must watch category with specific needs: they enjoy last minute,  digital and fragmented travel plans and they will be sharing at any time on their favourite social networks.

A booming economy led by the millenials

Jean-Baptiste LE BLAN (https://twitter.com/Spliohttps://www.splio.com/fr/), General Manager at Splio China, a leading SaaS marketing platform, also highlighted the millennial generation’s strong impact: “Their speed and their decisions are setting the trends and changing the way companies behave.” These young consumers are ultra sophisticated shoppers used to very colourful and aggressive marketing campaigns (at least for our Western eyes). They always look for the best price and an intense experience. According to the Splio company who successfully led marketing campaigns in China, the secret to boost revenues is to think omnichannel and offer a completely seamless experience. Online and offline experience have to be fully integrated and aligned. Teams have to be connected.

That’s how you can transform WeChat followers into loyal consumers: unify every point of sales and create a seamless customer experience.

During a firechat with Laure de Carayon, Yannick BOLLORE, CEO of the Havas Group (https://twitter.com/YannickBollorehttps://twitter.com/HavasGrouphttps://www.havasgroup.com) pointed out how much Chinese advertising creativity has caught up in the recent years. He acknowledged that the country is now much more advanced than the Western world when it comes to mobile first strategies, emotional advertising, social networks or mobile payments.

“China is currently the second biggest economy in the world. It will become the first one this decade.” According to Bollore, the automatic cars and the entertainment industries will be the two first categories to benefit from the Chinese and rising middle class and GDP’s growth in the coming years.

A story of ‘BEFORE’ and ‘AFTER’ in China:  A whaouh effect of technological liberation.

Tom DOCTOROFF (https://twitter.com/TomDoctoroffhttps://www.prophet.com/), partner at Prophet, encouraged us to dig into the new Chinese middle class identity to unearth preferences and insights. The economic and technological liberation turned material insecurity into consumer confidence, a new expression of Chinese pride, fully supported by the Chinese government. “It is a 5000 years old civilisation evolving and driven by two fundamental forces: the New and the Timeless.”

Chinese want to experiment new identities but still have a strong preference to do it from a distance, via the shell of a screen. There is a strong difference between China and the Western world when it comes to the online self. Chinese people want to have a fantasy identity to break through familial, hierarchical and sexual taboos and use technology to reborn as heroes, as different self.

According to Doctoroff, brands need to provide a platform for emotional release and creative liberation, they need to empower consumers to live new dreams and provide social currency and peer endorsement.

A plunge into the online luxury industry with Eric Chan, CEO of Secoo, China’s largest luxury e-retailer

(http://www.secoo.com/ – SECOO app: https://itunes.apple.com/cn/app/寺库奢侈品-注册即送1000元大礼包/id644873678?mt=8)
The average age of China luxury buyer is 25 years old, 10 years younger than in the past. The millennial and the generation Z are forecasted to become the major consumer group of China luxury market in 2025.  Eric Chan is convinced that “new designer brands (European and Chinese) have a huge potential as millenials want to go away from their parents brands.” For Secoo’s Ceo, The way to enter the market is online: shopping malls are becoming a far too expensive investment for new brands and there are more and more professional and regulated e-retailers with a sharp focus on branding and design, like Secoo.

Social 3.0 : KOL Management Automation through AI Algorithms & Blockchain

Today everyone has a voice online. CEO Miranda Tan from Robin8 (https://twitter.com/HelloRobin8http://try.robin8.com/robin/) came to China Connect 2018 to warn us about the social media major pain points and to present Robin8’s solution. The first problem she outlined  is the control of datas: “Companies do not control neither own their data, social media platforms do”.  Secondly:  “inaccurate and fake data are everywhere and represent a big obstacle for the legitimacy of digital marketing.”

Robin8 technology brings a solution to the scene: their AI algorithm and blockchain technology extract the valuable information from the big data to detect influencer profiles and match them with the adequate brands. Robin Blockchain can also pay the influencers with a cryptocurrency that rewards them for their data and their work. A perfect solution for trusted insights in China.

KOL: The key to build a sustainable and entertaining business in China

Antoine BUNEL, Key Opinion Leader in China & French Food Personality explained the importance of KOLs: “you need to create amazing stories if you want to connect with the Chinese.”

Networking is key when you build your brand and it implies quality interactions: “KOLs work better as they are more fun and are closer to the audience than brand content could ever be”.

A panel with Miranda TAN , CEO of ROBIN8 , LUFY (https://twitter.com/Lufyyyy), Top 5 Francophone Lifestyle Influencer for Studio71 and  TF1 MCN, Antoine BUNEL, China KOL & Food Personality and Thomas OWADENKO, CEO of OCTOLY ( – https://twitter.com/owadenkohttps://www.octoly.com/) and Grégory POUY, Founder of LA MERCATIQUE (https://twitter.com/gregfromparis) discussed the KOL phenomenon and its key differences between the East and the West. The KOL, along with WeChat, are much more important than the traditional media and advertising industries when it comes to promote a brand. The influencers market in China is massive – not only in terms of revenue, but also for the tremendous number of influencers available for brands, the number of platforms and live streaming programs. There are more than a hundreds platforms in China! The difference between East and West is here very important: while Lufy, (based in Belgium) does around one livestreaming a year, Antoine Bunel (based in China) is live many times a year for shows lasting 2 to 3 hours!

China has become the largest market for live streaming, with 2018 revenue expected to reach $4.4 billion, according to a December 2017 report from Deloitte.

Live streamers use their phones to record themselves singing, driving, eating, discussing stocks, working or just talking. The viewers don’t only watched: they talk back and spend a lot of money. Viewers can buy virtual “gifts” for live streamers, which appear as emojis (of flowers or kisses) on the screen. The hosts can convert them back into cash. Some of the best live streamers make millions a year this way!

As KOL marketing is gaining more and more eyeballs, the price increases exponentially. On Wechat, price for hiring KOLs in the cosmetics industry grew the most: more than 300% increase throughout last year.

The next trend for KOL goes further: they won’t stop at co-creation with international brands, they are already starting creating their own brands. Antoine Bunel makes it clear: “It will be a game changer for the future!  I am willing to create digital products as well as travel shows.

Authenticity is key in relationship between brands and KOL. Lufy: “it can only be  guaranteed if KOL test the products and accept a contract only when they love a product”.

Another way to build a brand presence digitally in China is the art of campaign pre-heating, described by Yuan ZOU, Head of Digital Asian Markets for NEWBASE (https://twitter.com/thenewbasehttp://www.thenewbase.com). Lessons can indeed be learnt from Chinese domestic brands who know how to create a whaouh effect and build a mystery story via the suitable digital channels: KOLs, ePR, news on mobile, BBS (forums) or knowledge platforms. Pre-heat campaigns allow to whet the consumers appetite, build momentum for the future campaign and make sure your first dollars count.

The Chinese retail revolution: A new era

Romain MILLET, CEO of BEAUMANOIR China (https://twitter.com/GBeaumanoirhttps://www.groupe-beaumanoir.com/), Susanna CHIU, Director of LI & FUNG DEVELOPMENT China, and owner of Explorium  (https://www.lifung.com) and Hubert de MALHERBE Chairman and Creative Director MALHERBE PARIS (https://twitter.com/Malherbeparishttp://malherbe.paris/) were invited to talk about Chinese retail and all agreed on one point: China is moving 10 times quicker than France. The speed is especially amazing in the 3, 4 and 5 tier cities where nothing existed a few years ago. The panel also discussed the new retail era specificity: experience before sales. The malls offer today many services: drawing to personalize your clothing & denims, gym, zoos, exhibitions, working spaces and of course food and beverages which account for 50% of a mall’s turnover (compared to only 5% in France.) They also addressed the retail marketing which has become mobile in the recent years: Malls are using their consumers datas to build personaes and create touchpoints in the malls targeted to the different clusters. Susannu Liu explained: “The links between brands supply chains and consumers should be invisible and smooth”. Explorium 3.0, the new shopping mall from the Li&Fung group, fosters the adoption of technologies to enhance products delivery’s speed through innovation and digitalisation of the sourcing and logistics operations. For example, the mall’s consumers wear data recording wristbands that track their movements. The sensors and data analytic tools help brand and store owners more accurately measure and better understand store traffic. They get a precise view on how shoppers navigate the aisles and they capture their response to promotion campaigns, so that the store owners better forecast demand and adjust their marketing strategies.

Paul DOHERTY, CEO of The Digit Group (https://twitter.com/pauldohertyaiahttps://twitter.com/thedigitgrouphttps://www.thedigitgroupinc.com/) finished the first day with an unsettling statement: “Trends are going to  hit you.” One of these trends is people looking for extreme sensations. They want to escape and get emotions until they don’t know what’s real and what’s unreal.  The second is the remaining large labour cost in many industries. To the Digit Group CEO, the right question to ask now is “How to use digital tools to do better and cheaper work ?” China, as an emerging hyper reality powerhouse (The 1st VR theme park that is being built up in Qingdao) has the solution and it is clearly time to implement some Virtual Reality  and Augmented Reality fundamentals into place if your brand wants to keep up with the trends.

 

DAY 2, March 8

 

“Hallyu” or the Korean fever in China

Tony LEE, Founder of SINOSPHERE INSIGHT (https://www.sinosphereinsight.com/) is warning us: “Western culture is no longer the dominant force in shaping the world.” It is the first time an Asian country exerts contemporary pop culture on a global scale. A few numbers can give us a pretty good idea of the wave: the number of Korean restaurants grew by 700 % in the recent years and there are 4 million Chinese visitors a year in Korea. Chinese young people want to become as cool as Korean stars.   Tony Lee stands it as such: “You cannot create the wave but you can ride it.”  The good question is now: “How can I satisfy their curiosity while making the connection to my brand?”

Lesson 1: You need stories and personalities that resonate with them, not just an ideal or an abstract image of a westerner.
Lesson 2: You need to start perceiving China and Korea as one market when it comes to  trends.
Lesson 3: A cultural wave in never one way traffic – You have to get ready for the Chinese wave!

Joël PALIX, CEO of FEELUNIQUE.COM, (https://twitter.com/feeluniquehttp://www.feelunique.com/) a beauty e-retailer, was the next speaker, and focused on the online beauty market (China’s share is 30% globally). The sophisticated Korean way, the fascination for foreign brands, the self image consciousness and social media are driving beauty spends upwards, especially among consumers born after 1990. Chinese consumer are seeking a greater level of interaction with brands and products, they are attracted by brands that incorporate distinctive lifestyle elements and offer novelty and excitement. To achieve great impact, quality content well communicated by influencers and a control of the fake traffic from platforms  is key.

The hot brands become very popular in China before they are even available on the market! There are several cross-border platforms for Chinese consumer to follow beauty brands worldwide, such as Little Red Book (http://www.xiaohongshu.com/). It is indeed the fastest way to test your product in China before starting a registration process (6 to 18 months). To be successful when launching your beauty brand in China, Joël PALIX gave several strategic recommendations:
1/ “Opening a WeChat account and post once a week won’t work!” WeChat is about live streaming with KOL, Gamification, Value added service, etc.
2/ Exclusivity: don’t sign a distribution contract, keep your distribution options opened and keep control of your inventory.
3/ Create a Chinese marketing calendar, engage with consumers on the latest platforms  and pivot your strategy every 3 months.
4/ Travel to China at least 3 times a year to catch up with the market trends.
5/ And finally, listen to the Chinese proverb: “If you don’t experience anything, it’s impossible to gain knowledge.”

Jade ZHOU, Global Senior Partnership Manager at Meitu (https://twitter.com/meituofficialhttp://global.meitu.com), explained how the selfie culture is going from East to West. Meitu is the number 1 beauty and photo editing application. The company’s range of apps are installed on more than 1.5 billion unique devices worldwide.  Meitu Inc. is the leader with 53.5% of photos and videos shared on Chinese social media retouched thanks to AI technology.

Following the beauty trend, there is a surging demand for fitness and health in China. Urs Casagrande, Co-Founder of EMOTION, highlighted the market potentials for smart gyms: the sport centers number is still low compared to the US. On top of it, there is a massive tech demand: Chinese love gamification or AI powered apps that help you correct your posture, your speed or create a training plan adapted to your needs.

Nathalie BASTIANELLI, Founder & CEO of WE BELONG (https://twitter.com/n_bastianelliwww.webelong-foundation.org), a foundation promoting innovative sustainable solutions described how China is transforming the field with cutting-edge innovations like air filters set up on bicycles or one-day made 3D printing house.

It is helped by a revised environmental law reconciling contradictions between economic development and the environment and a booming sharing economy, the largest in the world that could represent 20% of the country GDP by 2025.

Nathalie Bastianelli also emphasized the importance of the Chinese vegetarian market: “In 2014, there were 505 vegetarian restaurants in China’s mainland; while in 2017, there are more than 3000.”

Nicolas du CRAY, Partner at CATHAY CAPITAL (https://twitter.com/nducrayhttp://www.cathay.fr/en/), Benjamin JOFFE, Partner from Hax (https://twitter.com/benjaminjoffehttps://twitter.com/hax_co), Xavier BAILLARD, Incubator Director, at VALEO (https://twitter.com/Valeo_Grouphttps://www.valeo.com/en/) discussed the Chinese race to become an AI powered economy, with Tom MORISSE, Research Director of FABERNOVEL (https://twitter.com/tmorissehttps://www.fabernovel.com)

The market of AI in China is already very large: 80% of the Chinese think AI will have an impact on every industry and 90% say they would study AI if they have opportunity.

All industries will be disrupted:

  • Banking and payment application with facial recognition,
  • Fintech with credit scores used to determine if a customer qualifies for a loan or not,
  • Automatic driving,
  • An ultra personnalisation: there is a shift from an ownership model to a usage model, for example, Didi (Chinese Uber) works on elaborating systems smart enough to recognize the customer: which music, which destinations, what seat position do you prefer?
  • Unmanned stores. As Westerners, we may think Amazon Go is a “New Retail” pioneer and the first to marry online with offline, offering consumers a “more efficient and flexible” shopping experience. But on the other side of the globe, Alibaba is doing the same thing with Hema (www.freshhema.com) — and it’s got a two-year head start! Hema’s 36 stores, based primarily in Shanghai and Beijing, already operate on a hybrid online/offline model. Customers download the Hema app, use their mobile devices to scan product barcodes as they shop and then submit a payment from their Alipay digital wallet.

Funding and Data are the key elements in this disruption. Benjamin Joffe confirmed that “Chinese companies can scale fast as they have access to a lot of ‪datas and fundings.” Government push for AI technology and 48% of global AI start-ups funding comes from China (versus 38% for the US).

China’s e-commerce is also a game changer for the automotive industry. Jacob Nyborg, Head of Marketing (https://twitter.com/Maserati_HQhttps://www.maserati.com/maserati/international/en), Maserati indicates that the “barriers between what you can buy online and offline are completely falling in China”. China is the best place to try something different: Buying a Maserati online becomes possible! There is of course a long way before Germans or Europeans buy a car in a vending machine or online but Nyborg recommends to watch the trends closely as maybe there are some possible adaptations to fit European markets. You have to learn from it and watch markets that could be ready like Japan or Korea.

 

A last panel discussed how Chinese brands are expanding overseas or going really global. Matthieu FAURE, CMO at OFO (- https://www.ofo.com/fr/fr), Isabelle CAPRON, Vice President of ICICLE Fashion Group (https://twitter.com/IsabelleCapronhttp://www.icicle.com/), Penny WU (, Europe Business Director at SHANGHAI JAHWA UNITED (http://www.jahwa.com.cn/en/Aboutus/Intro.aspx) and Frédéric LANGIN, General Manager Sales and Marketing Europe for TCL MULTIMEDIA – http://multimedia.tcl.com/en) highlighted the key perceptions of a Chinese brand in France. They acknowledge “they have to fight against stereotypes like cheap products and pollution”. Isabelle Capron added: “Stereotypes about Chinese products are deeply rooted and we need to debunk them.” The main challenge is to reveal that there is a “NEW made in China” which is capable of the exact opposite of what we think: creativity, eco-consciousness, high quality and a very strong user experience.

The conference ended up with a two hour intensive MasterClass on WeChat, with Thomas GRAZIANI, Co-Founder of WALKTHECHAT (@thomas_duqi  – https://walkthechat.com/).

“All eyes are on WeChat, it makes up for 35% of Chinese users daily usage.” No wonder why the masterclass was a big hit among the participants. China is a connected empire and brands have to master the social networks rules. Numbers speak for themselves: Tencent + Alibaba + Baidu account for 71% of mobile time spent. WeChat (owned by Tencent) represents 35% of this total mobile time.

The Masterclass covered lots of topics going from content, payments, ads, KOL, CRM, gaming to conversions rate.

WeChat must be closely watched in 2018. The social network already announced WeChat will become a stronger tool for B2B marketing with the opening of WeChat for Work. The platform will continue to invest in search relevance and push a more “algorithmic” approach to the news feed that will lead to more dynamic and targeted advertising. The social network will also re-organize the way content is being consumed by opening a special platform to consume content from WeChat Officials Accounts.

Laure de Carayon concluded the 2 days announcing the 2nd edition of China Connect Shanghai on June 12 (http://shanghai.chinaconnectforum.com/). China Connect Paris will be back March 2019 for its  9th edition. Earlier in the day, the French Tech China represented by Nicolas du Cray, announced 3 major rendez-vous

  • CES Shanghai June 13-15
  • Business France partnership with JD.com to facilitate the Chinese market access to french tech brands
  • The new F2initiatives.com (Forty Under Forty) to promote French and Chinese tech talents

China Connect is a partner of the French Tech at the CES and of the F2 Initiatives

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