On Sunday afternoon in London, a thirty-five year old Roger Federer made history by winning his eighth Wimbledon title. Chinese Federer fans were quick to rejoice.
By: Frank Lavin
China-based e-commerce colossus Alibaba just held its first signature U.S. event, Gateway 17, at which I had the privilege of presenting and participating. They hosted a crowd of 3,000+ retailers, manufacturers, service providers, and others in, or aspiring to be in, that glorious China e-commerce ecosystem. Here’s my take.
This June 21-22 gathering was part cheerleading, part religious revival and part personal story, all combined with a whole lot of practical tips, advice, insight, coaching and matchmaking. The event did not just mark a gathering of some 1,000 curious, aspirational brands, it was also a major step in Alibaba’s broader U.S. connectivity.
This event stemmed in part from Alibaba’s desire for better outreach in the U.S, to make sure U.S. government leadership and others understood the constructive role that China e-commerce can play in helping U.S. businesses, and in part from a purely commercial desire to keep Alibaba’s growth on track and get more companies in its system.
Ma’s personal touch
No surprise that the centerpiece of these two days was Alibaba’s founder Jack Ma. Ma blends the story of modern China’s economic boom, with the story of the internet–and with his personal story, starting as an unassuming lecturer in English at Hangzhou Teacher’s College.
Ma has a compelling message about perseverance and contrarianism that likely resonated with businesses, and not just those in the room. For Ma, the Alibaba story is the narrative architecture to offer broader truths about the struggles of business life. Of course, the fact that it is the Alibaba story anchors that narrative in authenticity and ties his personal journey into one that every business in the room can also participate in.
And Ma has a knack for aphorisms and pithy phrases, all the more impressive since he is doing this in his second language. A sample:
For the struggling entrepreneur: “Today will be terrible; tomorrow even worse; but the day after will be beautiful. Most companies die tomorrow night.”
On the difference between Alibaba and Amazon: “ Amazon is an e-commerce company. We are not. We help other companies become e-commerce companies.”
I had a side discussion with Ma and shared our key insight from working in China: “If there is magic in your brand, we can make the magic work in China,” which he agreed fit nicely into his message. Two other points I shared on my panel:
Our desired end-state for a brand in China is two parallel comfort zones. For the Chinese consumer, the brand has to be in their comfort zone, meaning the product is found on their preferred platform, they can pay in their currency, and get account support in their time zone and in their language.
For the U.S. merchant, there is a parallel comfort zone so that as they sell to China they pay and receive in U.S. dollars, their contract is with a U.S. entity (in English), and they receive their account support in their language and their time zone.
If we can handle all of that, we have stripped the functional barriers out of the transaction and we are left with purely commercial questions.
Success in China has less to do with China, and more to do with the company. A prime example is communications. Every successful brand has a story and communicates it. The effort to do so must typically be greater in new markets, and it must be greater still in China, where there can be significant cultural gaps.
However, some brands do not make a special provision for advertising in China. The most frequent mistake in this regard is to equate distribution with marketing. Because it is sometimes a bit of a challenge to establish a presence in the market, they believe all that needs to be done is to get there. Wrong. Showing up is not a strategy.
Putting on a show
There were many other useful presentations and discussions over the two days, and theatrics as well. Gateway ’17 began with a rather loud drumming display, like many others except these drummers were dressed in suits and ties trimmed in neon lights and they were propelled through the air by a series of wires and hoists, Peter-Pan style. All of which gave new meaning to the phrase “beating the drum” for China e-commerce, and reminded me of the Single’s Day gala — these guys know how to put on a show.
Also worth noting was a presentation by Marcus Lemonis, the host of the CNBC show “The Profit,” who gave an uplifting talk about the role of small businesses. Key takeaway: a successful business needs a purpose beyond itself.
Was it a success?
As successful as Detroit was, were there any discordant notes? None per se, but one widely discussed bit of chatter was the challenge that SME outreach could present to Alibaba. Bigger brands such as Nike and P&G have an easier time on their system. Smaller companies have more limited management capabilities and resources. So on the one hand, Alibaba is connecting with smaller brands to improve its U.S. outreach. On the other, it still seems to score and reward its brand management team on the basis of GMV, making it harder for SMEs.
My suggestion to Alibaba: add a “new relationship” count to the metric for the Category Manager, so that a Category Manager who signs up five new accounts at $1 million each is counted as contributing more than the brand manager who signs up one new account for $5 million.
And as for Ma? Almost 20 years after he left Hangzhou Teacher’s College, he is still the lecturer, still the teacher: friendly, but with a tone that makes you take notes as he talks to you. Aspirational, but with one eye on the downside. On fire with drive, but with a cool, controlled demeanor.
You sort of see why Ma is where he is. You sort of see why Alibaba is where it is. You sort of see why Detroit was a success.
This article was originally published in Forbes on June 22, 2017
By: Frank Lavin
1. Think Digital. Chinese ad spending is shifting away from traditional media like TV and into digital marketing, for a straightforward reason: that’s where the customers are. Chinese consumers spend a large amount of their leisure time online—up to 70 percent, according to a McKinsey survey. This is a factor in the decline of TV advertising in China, which is expected to slip to $18.73 billion in 2018 from $18.92 billion in 2016, according to a forecast from eMarketer, while digital ad spending is expected to grow from $40.42 billion to $62.14 billion over the same period. In fact, for about 60 percent of regular online shoppers in China, the Internet has become the primary source for learning about products, brands, and prices, according to Boston Consulting Group. “Ad spending in China continues to shift rapidly toward digital formats and in particular mobile formats as more time is spent on mobile devices,” according to eMarketer forecasting analyst Shelleen Shum.
2. Think Mobile. Consumers are using smartphones to voraciously consume social media, news, videos and especially to shop. Accenture says these consumers spend on average 4.7 hours a day online on their phones. E-commerce giant Alibaba Group reported that mobile shopping accounted for 80 percent of its China retail revenue in the quarter ended Dec. 31. Alibaba CEO Daniel Zhang said last year that the average Mobile Taobao user spends more than 20 minutes a day on the app, compared with Amazon Mobile users’ average of 8.9 minutes, according to media research firm ComScore. Marketing campaigns need to be developed for the small screen, also taking into account how most people use their phones.
3. Think Platforms and Ecosystems. China’s major online hubs interconnect with news portals, games, videos, and e-commerce, offering “click-to-buy” product placements that are simple and fast for consumers. Alibaba, for example, is no longer simply running online marketplaces where merchants just place search ads. Its investments in other outlets like video site Youku means Alibaba’s e-commerce platforms are now “lifestyle channels” that are part of a larger media ecosystem. Within this ecosystem, consumers can find a wide range of information and entertainment; interact with celebrities, opinion leaders, brands and each other; and participate in online communities. This environment not only offers marketers more options for reaching and engaging customers where they live online through multiple, multimedia channels; the ecosystem’s “one-stop-shop” nature also can simplify the development of digital marketing campaigns
4. Think Data. China’s big online marketplaces are leading the world in the use of data and analytics to target and understand customers. Unlike Western marketplaces like Amazon, Alibaba allows merchants to “own” their relationship with their customers, giving them access to specific data through value-added services that lets merchants to do their own analysis using Alibaba software and tools. With nearly 500 million mobile users, the type of information Alibaba collects includes data on shopping habits, payment and credit history, search preferences, social networks, and interests–drawing on information gleaned from individual activity throughout the Alibaba ecosystem. This ability to understand and zoom in on specific customer wants and needs can greatly increase marketing effectiveness and foster stronger customer relationships.
5. Think Fast. Trends shift quickly in China and today’s market leaders can wind up as yesterday’s news if they don’t continuously adapt their strategies, especially in highly competitive product categories like cosmetics. One example: in 2016, livestream videos suddenly became wildly popular in China; major brands reacted by creating their own livestream events, hiring celebrities and popular bloggers as hosts. If you spend six months evaluating digital agencies, you are probably hurting yourself more than you are helping.
This article was originally published in Forbes on March 25th, 2017
CNBC interviews Export Now CEO Frank Lavin on China trade.
The race is on to unite merchants and consumers around the world, allowing people in any country to transact with just one click. And while a range of firms such as Wal-Mart and eBay are in the game, as well as special-purpose groups such as the W3C consortium that focuses only on payments, the main players are Jeff Bezos of Amazon and Jack Ma of Alibaba. Click here to read Export Now CEO Frank Lavin’s full article, as published in The Wall Street Journal.
We know that China is the largest and fastest-growing consumer market in the world. What is less well understood are the forces that shape consumerism in the world’s most populous country. Is it merely self-indulgence and materialism? In what ways are consumers in China different from those in the West? Click here to learn more, in Export Now CEO Frank Lavin’s latest feature in Forbes.