Jenny Chan 陳詠欣
Nov 18, 2015

'Be quick, or be dead': 5 innovation commandments for China

BEIJING - Speakers at the China Innovation conference, hosted here yesterday by Campaign Asia-Pacific, delivered five imperatives for brands that want to take advantage of innovation for commercial success in China.

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Be quick, or be dead

The pace of development in China is at a 7:1 ratio compared to the West, said Philip Beck, co-founder and chairman of Dian Yue Technology.

“What happens over seven years in Australia takes just one year in China. Everything happens very quickly, so you have to be really fast—if you don’t, you’re dead.”

Moreover, people now have shorter attention spans than goldfish, he added. "It’s now down to about eight seconds and it’s getting shorter. In 10 years time it will be about four seconds, that’s how long you have to reach them.”

A "great number" of Western companies have failed to come to grips with the implications of ecommerce in China. “Even we were surprised at how quickly consumers moved from using their PCs to their mobiles to buy things from Taobao and other sites,” Beck said. “This has become incredibly powerful and it will not slow down.”

What is the quickest way to innovation? "We need to base that on existing models, not start from scratch or make innovative things out of nothing," said Cindy Chen, chief strategy officer of Focus Media. "We need to build on what we already have".

Make it easy, or get passed over

Chinese consumers will move on in a blink if it is hard for them to discover brands or to use their services. "They will not wait for you,” Beck said. “The only thing they might wait for is Singles' Day—to get a bargain.”

Neil Kothari, managing director of Fugumobile, emphasised the importance of user experience to make things easier.

One of the other biggest revolutions in user experience is in electronic payments: Alipay, WeChat Pay, and the like. "All of a sudden I don’t even open my wallet anymore," Kothari said. "This is changing the way we pay and preparing us to spend more through mobile. Now there is no gap between an excited consumer and an impending purchase."

Sun Kunpeng, data strategy director for Haier, said the company is leading with UX. “We don’t see ecommerce as a sales tool, but rather as a communication platform that connects Haier with our consumer base,” Sun said.

Brands have to tweak their mindsets that a payment transaction is not the conclusion of the sales process, but "the beginning of our conversation with the consumer”, Sun added.

Close the gap, or lose the lead

When it comes to working with startups to capture innovation, there is still a “connection gap” between innovators and the consumers/marketers they need to connect with to promote their products, no matter how groundbreaking they are, said Lydia Shen, chief marketing officer of WithinLink.

“These innovators don't necessarily know anything about marketing, telling a story, connecting with consumers or even know any marketers,” she pointed out.

To narrow or hopefully close this gap, Haier's Sun said that innovation among employees and through dialogue with consumers were the most important "innovation spheres" for companies to foster.

In the case of employee-driven innovation, Haier had previously supported a group of employees with a particularly innovative concept by setting them up as an autonomous startup “so they then become a partner of Haier”.

Both small startups and large corporations need to give a very clear message to employees that they are focused on three questions, Sun said: "Who are my users? Where are my users? And what do my users want?”

Kill your assumptions, or risk your business

It’s interesting to note the how change in China is viewed through the lenses of marketers versus consumers themselves.

According to OMD's 'The Future Of China' research, the Chinese are very short-term thinkers who don’t think beyond five years. A possible reason, said Jeanette Phang, director of business intelligence at OMD China, may be the government's five-year plans, which are also aligning the expectations of citizens.

"Marketers need to understand that they are not selling long-term goals but short-term dreams," Phang said.

Instead of technology itself, the push for innovation is coming from both the Chinese government, which provides incentives to companies filing patents, and consumers hungry for new products, new communications, and new media content, Phang said.

Get tough on your supply chain, or be cannibalised

Dian Yue's Beck touched on an unforeseen consequence of the rush to ecommerce in China. Now that GDP growth has slowed, companies are facing unforeseen over-capacity issues.

Brands which made deals with multiple ecommerce distributors in various Chinese provinces in the past are now caught in online price wars with their own products, said Beck.

Why is that so? Their various distributors were able to establish different ‘official’ branded stores on TMall and other ecommerce platforms on behalf of them. “I call these distributors terrorists because they are killing brands,” he said.

“Even Apple has resellers, but those resellers cannot go below a floor price because if they do, then Apple will cut them off,” Beck said, adding that smaller brands needed to learn from that. “They need to get tough, and now is the time to get tough before ecommerce gets even bigger.”

 

 

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