The Chinese Financial Crisis: Danger or Opportunity?

Prestigious Wealth Management

Crisis: 危

China’s stock market has been in global headlines for the past two months as share prices have lost all of this year’s gains and uncertainty remains over what lies ahead. A financial crisis in the world’s second largest economy certainly warrants the attention of marketers, who must determine what impact the situation might have on their brands and regional operating strategy.

In Chinese, the word for crisis is “危机,” or “weiji.” The word is a combination of two characters: danger and opportunity. The current crisis in the Chinese stock market illustrates the need to take both perspectives.

Danger: 危

On one hand, it would be easy to dismiss the current situation as a fringe concern, only impacting the cash flow of small number of investors. After all, according to some estimates only one in 30 Chinese citizens owns stock. Despite the portrayals in Western media of novice day traders: retirees, at-home parents, and office workers on smoke breaks, only a small percentage of people have actually lost money. Even new investors who have only been in the market since the start of the year are back to break-even. However, there is real risk lurking beneath the surface: Chinese consumer confidence might drop in response to the market movement, resulting in fewer goods purchased and triggering a long-feared economic slow-down. Moreover, with the recent devaluation of the Yuan, foreign brands have suddenly become relatively more expensive in China. This double-threat danger to brands requires revisiting growth forecasts through the end of year and for 2016 planning.

Opportunity: 机

However, smart brands must seek the other side of crisis, which is opportunity. In recent years China has been the largest contributor to global GDP growth and remains a market with huge potential for foreign brands. “Singles Day,” coming up on November 11th, is still the world’s single largest e-commerce sales day and twice as big as the U.S.’s “Cyber Monday.” Chinese social network services (SNS) are still growing and more active than ever, as evidenced by discussion of current market events; brands must still determine how to incorporate Youku, Weibo, and WeChat into integrated communication strategies. Finally, e-commerce giants have started to expand beyond borders, offering foreign brands easier access to China’s US$670 billion e-commerce market. For example, JD.com has started to open locally-focused portals in countries like South Korea to facilitate the distribution of small and medium brands into the Chinese market.

One lesson that we have all learned over the past decade is that any country-focused economic crisis can have a global impact, whether Iceland, Greece, or now China. With the lessons of history in mind, marketers should to keep calm and carry on…with caution. By keeping a clear head and being ready for quick action, brands will be able to benefit from both sides of this crisis, minimizing danger and maximizing opportunity.

[An edited version of this post appeared last week in Marketing Magazine.]

The Next Decade of Social Media

On Stage at Cannes Lions

Last week, I shared some thoughts on the next decade of social media at the 2015 Cannes Lions festival. The key points are highlighted in this Guardian article:

  1. Gone
  2. Shoppable
  3. Snackable
  4. Automated
  5. Connective
  6. Filtered
  7. Integrated
  8. Chinese
  9. Subcutaneous
  10. Empowering

More coverage of the talk is available in these write-ups:

More images from my week in Cannes:

Understanding China’s digital and social media landscape

China is the world’s largest digital market, with the most online users and social media participants. While brands can use many lessons learned regarding consumers and content, the unavailability of familiar channels requires marketers to better understand the nuances of China’s digital marketing and social media landscape.

Pudong
China is the world’s most populated country, with over 1.3 billion inhabitants. It also maintains the world’s second largest economy, on track to become the largest by 2016. This growth has contributed to the rise of consumer classes within the country and in turn captured the attention of global brands.

As brands ramp up marketing efforts in China, they are increasingly prioritizing digital channels. The country has 560+ million internet users – more than any other country – and the average user spends more hours per week online than with TV, print, and radio combined. Despite this high amount of time spent online, adoption of major digital and social platforms in China has been limited. Many Google properties including YouTube, Blogspot, and Google+ are blocked to regular web browsing, along with Facebook, Twitter, and others. Instead, Chinese users spend their time on country-specific sites like Kaixin, Douban, and Jiepang.

From what I’ve observed, there are many similarities to global marketing tactics than one might assume, given China’s restricted access. However when you get past differences in channel and focus on consumers and content, the lessons are similar. People have become the medium. Listen first. Your real job is storytelling.

But of course there are differences as well. China’s social media sites are similar to US sites and analogies can help keep things straight, but they have different capabilities and user bases. “Weibo” (微博) is Chinese for microblog, but should you use Sina, Tencent/QQ, or another? Pinterest-like sites Mogujie and Meilishuo don’t have monetization challenges, however many brands (particularly outside of the fashion industry) are struggling to find a place for these sites within their digital strategy.

And don’t forget scale: during the 2012 Olympic Games opening ceremony, Twitter recorded almost 10 million related mentions. Sina Weibo? 119 million. The biggest day in the history of US e-commerce was Cyber Monday 2012, with an estimated record US$1.5 billion in sales across online retailers in a single day. Last year, Taobao doubled that on Singles Day (11/11), seeing US$3.06 billion in sales.

On the surface, the landscape appears similar to the rest of the world, but the details are where the differences start to matter.