Global Marketing
Management Consultants
Global Marketing
Management Consultants
mobile-logo
Global Marketing
Management Consultants
Top

Managing Marketing: Doing Business In China

Annette_Sharp

Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Annette Sharp is the Director of China Digital, the China Visitor Experience Agency who work with companies wanting to market their products and services in China. She shares her views and insights on marketing to the increasingly affluent Chinese consumer and what she enjoys about doing business in China, particularly the diversity, the pace of technology innovation and change, the amazing food set against a traditional culture.

You can listen to the podcast here:

Follow Managing Marketing on SoundcloudTuneInStitcher, Spotify and Apple Podcast.

Transcription:

Darren:

Welcome to Managing Marketing, a weekly podcast where we sit down and talk with marketing thought leaders and experts on the issues and topics of interest to marketers and business leaders everywhere.

Today, I’m in Melbourne at the Club of United Business and sitting down with Annette Sharp, director of China Digital, the China Visitor Experience Agency. Welcome, Annette.

Annette:

Thank you for having me, Darren.

Darren:

The first thing I’d like to say is, what’s a visitor experience agency?

Annette:

A visitor experience agency is an agency that focuses not just on the marketing role but also understanding the consumer’s experience with a product, experience, or destination. So, we try and understand the whole experience, not just the one or two-way communication that’s pushing messages out to them.

Darren:

That’s interesting because I kept thinking this was about tourism but you’re saying it’s about the whole experience. You’re talking about brand being the summation of the total experience of brand, product and destination.

Annette:

Absolutely, beyond product. That’s what Chinese customers are looking for. It’s not just the products they’re buying; it’s the whole experience of shopping. From the practical, payment systems, how easy it is to get it back to China to the cerebral where they are engaging with people, being able to use their English language.

Darren:

Because they are the country of the eCommerce aren’t they?

Annette:

Completely. It’s a really interesting thing when you go over to China. That’s how you tell tourists in China; they’re the ones who pull cash and carry wallets. In China you do not need to leave your house with anything but your mobile phone.

Darren:

Exactly. Because of all the different mobile payment systems like WeChat Pay, Alipay. There are quite a few now aren’t there?

Annette:

They’re the main two. Union Pay is like what we would have thought of our bank card.

Darren:

Yeah, that was the old way of doing it.

Annette:

Yes, and then WeChat and Alipay came out with their payment systems. Everyone thinks WeChat is a social platform; it’s actually a lifestyle/eCommerce platform. They started with an eCommerce proposition and then built the social on top of it. They’re incredibly smart in the way they’ve done business, which is why they don’t rely on an advertising model.

You can advertise with WeChat for sure but that’s not their bread and butter. Their bread and butter is money sitting in WeChat wallets.

Darren:

I get tired of people in the West talking about how China is the copy country. In actual fact the idea of starting with a payment gateway and building a social platform on top of it is just so far ahead of where we are.

Annette:

Well, everyone is trying to catch up with them now. Everyone is now trying to force-fit their commerce models into social models, which they’re struggling with.

Darren:

And it actually has a huge impact too for the Chinese doesn’t it? While travelling in China—i notice even a street vendor will have a QR code. And there’s no cash; you just scan the QR code and put in the number and the money is transferred into their account.

Annette:

One of the really interesting things that happened in Melbourne last year was Alipay trialled a QR code payment system for buskers. So buskers on the street had a QR code and anyone who had Alipay could scan and pay the busker. So, that was a world first.

Darren:

Absolutely.

Annette:

And that’s really common in China. In fact, some operators don’t even take cash now.

Darren:

At least, as a busker, you wouldn’t have to worry about someone stealing the hat with the money in it. They’d have to steal your mobile phone and then try and find a way of getting into your account.

Annette:

Which they can’t do because the cyber security around that stuff is really tight.

Darren:

One of the things I liked about WeChat was the way they incorporated things that are particularly Chinese, and my favourite thing was the red envelope. It’s traditional in China to give money for holidays, birthdays and things like that but it was funny to see people using WeChat.

Someone would send a red envelope out to a group of friends and they’d all be busy trying to claim it even though it might mean they’d only get 1 yen.

Annette:

That’s right-20 cents.

Darren:

But they were so excited because it gamified what was a very traditional thing to do.

Annette:

And I think that’s really understanding the culture of the Chinese. The Chinese do love to get surprise packets. That’s why they love a gift with purchase. They love all the little extra things they get. Culturally, they have it on their birthdays, at weddings; they have special little surprise packets all over the place.

Darren:

That’s quite an insight because a lot of people think of the Chinese as only purchasing on price; to negotiate the lowest possible deal. But in actual fact they do understand that value could be a gift with the purchase or just something extra that makes them feel like this is important and there’s a recognition, as a customer, that they’re being recognised and being given that special gift.

Annette:

If you have a look at Chinese spending patterns I don’t think anyone would accuse the Chinese of being cheap shoppers anymore. They are prepared to spend, to invest in things of value. They will spend money. You see that with the prices they pay for organic product in China, for the diagous sending over product that is priced accordingly.

Darren:

So for those who don’t know, how would you describe a diagou?

Annette:

Diagou is someone who shops on behalf of someone else. That’s the literal interpretation of the word. It’s actually the process as well. So, diagous are defined as anyone who shops on behalf of someone else.

It could be a uni student who is shopping on behalf of their family and friends and taking it back to China or it could be a professional diagou who has a circle of customers and will shop to order.

Darren:

And these do vary in size from individuals who are doing it on a personal basis through to a publicly listed company.

Annette:

There is Au Make. There is also DiagouSales.com, which is another platform. It’s hard to work out how many diagous there actually are. The numbers range from 40,000 to 200,000 as an estimate. I would suggest that the 200,000 incorporates all the little guys buying things for people they know back home. But there are whole postage/distribution centres.

Darren:

The thing we in Australia probably notice is all those stories about Chinese shoppers lining up and buying tins of powdered milk from Coles and Woollies and the outrage about how that’s taking it away.

There was recently a Chinese warship in Sydney harbour where they were photographed taking baby powder/ milk powder onboard by the crateful and that was the secret mission they were sent on.

But it’s become so sophisticated now that there are distribution centres that can be on the High Street or in big warehouses that are doing direct deals with the manufacturers, getting their inventory and then the individuals are coming in and saying, ‘I want that and that and please bundle it up and send it to this person in China’.

Annette:

The logistics are mind-boggling as to how this all works because you’re not just talking about one product, you’re talking about a whole collection. It’s like a mini supermarket or shopping centre.

Darren:

I read recently, Australia Post is trialling specialty centres that allow people to package and send to China.

Annette:

Australia Post have been quite innovative with the way they have approached China. They have a shop on TMall and Australian businesses can place their product in the Australia Post shop.

Darren:

Just for those who aren’t aware, the difference between Taobau and Tmall? Often people throw those words around and while they’re owned by one company they are quite different aren’t they?

Annette:

Yes, they are. TMall is for international products and it’s like having a shop front whereas TaoBao is for enormous volumes of products. If you were going to equate – which is really tricky because there isn’t really an equivalent here – but it’s probably Amazon versus eBay.

Darren:

The other way it was explained to me in China was that with TMall you can be reasonably sure that it is the brands providing it whereas TaoBao is just any manufacturer. So, it may sound and look like a brand but it may not actually be that brand. Now, they’ve tried to clean it up but there is a big difference between the two because sometimes you’re buying things that have no brand at all.

Annette:

The person who would produce earphones and camera cords and a whole lot of different stuff would sell all their stuff on TaoBao whereas Sony would have a shop on TMall.

Darren:

So, it’s that sense of coming from that brand and so will often have a premium attached to it.

Annette:

Yes, so if you want cheap stuff you go to TaoBao and, man, it’s cheap.

Darren:

Very cheap and I’ve been the beneficiary of lots of trinkets from TaoBao.

Annette:

Things you don’t need.

Darren:

Or things you want and they’re very cheap but they may not necessarily last that long.

Annette:

That’s why you buy 2 or 3 of them.

Darren:

Because you can afford to.

Annette:

Those are things you order at midnight and they’re delivered to your door by 9.00am the next day.

Darren:

Westerners that go to Hong Kong and across to Shenzhen and buy their fake bags, fake luxury items and things like that but they’re more for the Westerners than they are for the Chinese.

Annette:

Absolutely.

Darren:

Because the Chinese don’t want fake brands.

Annette:

No and it’s interesting, some of the places that are well-known for selling fake brands, the actual product is not very cheap anymore. They try and produce it so closely to the brand. They’re selling handbags for $400 or $500 or $600 Australian when you can buy the real thing but you have to knock on the right door to get into those places and know where they are. So you don’t see markets and markets of fake products anymore in the big cities in China.

Darren:

So, on that basis you would have to say the Chinese shopper has become more sophisticated.

Annette:

More discerning.

Darren:

In that if they perceive something to have more value they’re happy to pay for it. Prestige brands like the Chanel and Louis Vuitton’s; they’re happy to pay for that because that is something that they perceive the value of.

I think China is still also the biggest market for prestige luxury cars like the Maserati, Lamborghini and all those cars. So the rise of the middle class and the super wealthy in China are willing to invest in those brands and pay.

Annette:

What’s interesting about the Chinese is that everyone appreciates those brands so that if somebody has a high value car or handbag everyone else is pleased for them. They know they’ve sacrificed something to get that.

I know there are a lot of girls in China who will save and save their money to buy an expensive handbag and when they do they’re happy to show it off. And everyone is happy for them to have it. I heard a story (I don’t know if it’s true) but in China there is no such thing as tinting of windows because when you drive around in your car you want everyone to see the fact that you are driving around in a lovely car.

Darren:

It’s all about the display of affluence because the Chinese don’t necessarily spend a lot of money on their homes. One of the things I note is that when you socialise in China you always go out to a restaurant. You rarely get invited back.

Some of that is the big cities; it’s incredibly expensive, apartments are relatively small so if you are socialising you are going to go out but the investment in luxury brands is for the things you will be showing in public rather than for the things you’d be enjoying in private.

Annette:

And luckily in China, eating out is so inexpensive to enjoy something really amazing. And treating people to dinner is also part of showing your wealth as well and making sure that the spread you put on is amazing and that there is always food left over. They want to make sure you don’t go hungry.

Darren:

It’s a sign of I care. People say, ‘why do they have 12-course banquets?’ That is because one of the things in Chinese culture is to make sure your guests are well-fed. In fact, if you empty your plate they’ll be wanting to put more food on it because they’re not sure you’ve had enough.

I think it’s a trap for westerners who were brought up to finish everything on your plate because as soon as you do you’ll be offered more food so leave something on your plate because that sends a message to your host that you’re well-fed.

Annette:

Yes. I’ve been caught a few times.

Darren:

The thing about the food as well is that in the West we’re inclined to think about Chinese food as what is actually Cantonese food, and it’s even a western version of Cantonese food isn’t it.

Annette:

Yes, it does not compare to the food in China. Food in China is spectacular.

Darren:

It also varies a lot from what people would consider to be Chinese food here and yum cha, which is so popular in Australia, but is relatively small. That’s Cantonese—I think yum cha means ‘with tea’ so you’re having tea with food. But when you go from province to province, each province has its particular dishes.

Annette:

Yes. So, it has a style of food but it also has specialty dishes. It doesn’t mean they’re not available elsewhere but when you do eat with people in China from that region they will go to great lengths to make sure you try their specialty dishes, which can sometimes be challenging to the western palate. I’ve eaten some amazing things in China.

Darren:

There’s a terrific TV series called ‘A Bite of China’, which is available on YouTube with English subtitles where they go round all these provinces. They’ll pick a particular food type like tofu and they’ll just show how from province to province the way soya beans and tofu are actually prepared and how it became a specialty of the region. It’s amazing what they can do with soya beans.

Annette:

The Chinese treatment of tofu can result in some amazing dishes whereas, here tofu is thought of as a particularly vegan, hippy, bland food but you cook it with some of those sauces.

Darren:

I remember the first time I was offered ‘stinky tofu’ and it does stink but it tastes amazing. As you’re putting it to your mouth you smell it and go ‘oh my god, how am I going to eat it?’ But as soon as you start chewing it it’s actually quite delicious.

Is that what you mean by challenging to the palate or are you talking about eating particular food that is not very acceptable?

Annette:

Yes, I ate frog in China.

Darren:

I ate it in Paris.

Annette:

Yes, but in Paris it’s called frog. In China, it’s called ‘little chicken’. So you get served little chicken and I’m thinking this chicken is really bony.

Darren:

That reinforces that thing where people go ‘what did that taste like?’ – chicken.

Annette:

That’s right and it did taste like chicken—it just had a lot of bones in it so I knew I wasn’t eating chicken. So things like what you eat and they make use of every single part of an animal.

Darren:

There’s a saying for the Chinese; they’ll eat everything on 4 legs except the table. They’ll eat everything that flies through the air except the plane and they’ll eat everything that swims in the ocean except the submarine.

Annette:

Yeah, that’s very true. And when you’re asking someone how they are in China, you don’t say ‘Hi Darren, how’s your day?’ You say, ‘have you eaten?’ That is their way of checking in with you.

Darren:

When you’ve had enough, your 18 courses, you pat your tummy and say, ‘I am full to the brim’. So, that’s a good tip for people who don’t want to be force-fed for the next 3 hours.

Annette:

Yeah, look that up on your Baidu translate.

Darren:

But some of that is also due to the fact that China has faced famines and starvation and in recent times too. We’re talking in the last 50 years. It’s been such a big issue in China. It’s hard for Westerners to appreciate that because you’d have to go back to the 1920s and in Australia, back to the 1800s to a time when people were facing starvation on a mass scale and yet that’s present in the Chinese culture.

Annette:

That’s right; it’s recent memory. That forms a lot of the ways that Chinese approach saving money, eating food, making sure you’re prepping for the future so it does impact, maybe not so much the younger generation but definitely the older generation.

So, when you’re looking at when people come to Australia to experience Australia, you’ve got to look at different generations and groups of people and target your experiences accordingly.

Darren:

Because there is a strong focus on food but also food safety and food quality. Part of Chinese medicine is literally you are what you eat; that your diet, the quality and safety of your food is so important. That’s one of the things that makes Australia such a desirable location to visit but also to receive their food.

Annette:

Yeah, to import from. And when you see the way Chinese live in terms of shopping for their everyday food. They do use markets a lot. There are a lot of wet markets around but also when they shop at supermarkets, they buy their food almost on a daily basis.

We were in China, staying there for a couple of months, a few years ago, and I went to the supermarket to shop for my family and I ended up having two trolleys because their trolleys are very small. I filled them up to the brim and I had people following me around the supermarket wondering what I was doing because I was buying for the week.

And the Chinese don’t do that , A , because they like to eat fresh but also because they didn’t have the refrigeration and they don’t have huge kitchens with fridges and freezers to store their food in so they buy their food on a daily basis.

Darren:

With that as a backdrop, their food, culture, where they’ve come from, we’ve seen huge changes in a very short period of time; the one child policy, the opening of China to the world. What is it that businesses in Australia need to be aware of when they’re dealing with China?

Obviously, you’ve got to be aware of the history and the culture but they also see this rapid race to modernisation as well.

Annette:

I think modernisation is a good word for it, not westernisation. We often push the point that they don’t want to be western; they want to be modern. But it is happening at such a rapid rate that when businesses do engage with the Chinese they do need to understand that their risk modelling might have to be a little broader than in other markets.

You really need to be able to shift and move with the way the market moves from a technology, distribution, legal point of view. Laws change in China overnight. Platforms get shut down or pop up overnight. Import laws change. The diagou laws changed on the 1st of January, which has changed their business model substantially so things change all the time in China so don’t be wedded to a particular strategy.

Darren:

Be flexible.

Annette:

Yeah and be prepared to try different things. Don’t try and force fit your western strategy into the China market.

Darren:

They’re quite curious shoppers, right? Part of it is offering it and allowing them to discover how they want to use it because they will incorporate brands, products and even services in the way that they want them.

Annette:

I think a really good example of that is the red wine issue when Chinese first started drinking wine and it’s a massive potential market but at first they started mixing it with coke because that’s how it was palatable to them.

And over time they’ve become more discerning with their wine but initially you just have to let them drink it that way. And they will get there, they will evolve because they do want to understand how to indulge in things like wine (they haven’t got to cheese yet).

Darren:

Just on that, I know how to order a beer; I still can’t work out how to get a cold beer because almost everything is served at room temperature because, traditionally, drinking cold things was seen as anti-healthy –that chilled drinks would bring on a cold or some sort of infection.

Annette:

So, one thing you do need to learn when you go to China is the term ‘bingshui’, which is cold water because if you ask for water they will bring you hot water.

Darren:

Or warm.

Annette:

Because that is good for the digestion and it makes sense. They stand up after they eat; they drink hot water to help the food move through your system. What they do is quite sensible; it’s just different from what we do.

Darren:

Now, the other thing that’s exploded in China and we mentioned it earlier with WeChat is social media. For a country that, politically, is a communist country, economically is quite capitalist or socialist, there is a huge amount of interaction and uptake with people with social media.

Annette:

With China, even if you’re a small platform you can still do well because a small platform in China might have 50 million people using it on a daily basis. WeChat has got over a billion monthly users. Weibo is just now re-establishing itself with about 400 million monthly users.

So, those platforms are massive but you can still do well being a little platform but the spread of social media allows the spread of things like Douyin or TikTok, which is known globally to explode overnight.

Darren:

It’s amazing because it was huge in China and now it’s come to the West—they call it the international version.

Annette:

The global version.

Darren:

The global version is TikTok but the Chinese are using both.

Annette:

Yeah and they use it daily, constantly. They sit on the train or bus in China; people are just glued to their phones watching 15 second videos of cars reversing backwards.

Darren:

Or preparing food or young women miming to songs or whatever.

Annette:

Or putting on their makeup. The thing about Douyin or TikTok is the consistent display of videos. You’ve got 15 seconds but before you can choose your next video the next one just appears so the algorithm just keeps serving up videos and you go ‘well, I’ve only got 15 seconds so I’ll sit though it until the next one’. It’s just a constant stream of video.

Darren:

This is one of the things; China is incredibly innovative, especially with technology. I remember when Douyin came to the West as TikTok, the big thing they pointed out was every single western social media platform would collect data on your behaviour before they would then start serving things up to you.

Whereas, TikTok, from day 1 would say, ‘here are some things to look at—this is for you and then we’ll just refine that’, which was a totally different way of thinking.

Annette:

And it’s done amazingly well. And I think with the 15 second format you can get away with doing stuff like that. If you were serving up longer things that people had to sit through then they’d possibly skip through or jump out but because it’s only 15 seconds they just stay.

Darren:

Hearing your voice and the way you talk, you are absolutely a Sino-phile; you love China.

Annette:

I do.

Darren:

Where did that come from?

Annette:

It was an evolution. I’ve always loved multicultural communication and understanding community-based connections and because we were running a business that had tourism as its main industry and the tourism industry really relies on China now. So as our clients got more and more reliant on China we started doing more and more in the market, I went over there, loved it. I love the Chinese approach to collectivity, collectivism. They want everyone’s experience to be better than their own. Everything they do, from leaving reviews about products, the intention is for everyone to have a better experience than they do individually.

Darren:

It is amazing isn’t it because they are so active in sharing. When they discover a new experience or product they are so enthusiastic in sharing that and it’s not show-off. It’s as you say, just wanting everyone else…

Annette:

To join in and experience that. I think that’s a really lovely way of living and it would be so nice if other cultures could adapt to that, and obviously the food.

Darren:

It still amazes me how we in the West (Australia) because we are part of Asia, Australia is more part of Asia than Europe. We may have been settled 200 years ago by Europeans but increasingly we’re opening the country to people from the region, from all round the world. Multiculturalism, whether people agree with it or not, is alive and well here.

I’m just wondering what more we can learn especially from the Chinese, from your perspective, than we have so far.

Annette:

I think they are really hard workers. I think their attitude to work and study might be slightly excessive sometimes but they are hard workers and they respect hard work so if you look at a company like Huawei, they employ something like 6,000 PhD graduates just in their R&D department.

They really invest in people, in themselves. They celebrate success, which I think is really nice. I think we can learn that if people work really hard they deserve accolades. I think we can learn to cook like them.

Darren:

Or at least an attitude towards food.

Annette:

And sharing. I think the sharing culture is something we can learn from. I know a lot of the Chinese aren’t bilingual but their willingness to embrace and try and learn English is fantastic.

Darren:

It’s certainly easier to learn English than Mandarin. I’ve managed to butcher Mandarin all the way through this and I’m sure my wife will kill me when she hears this. And also thank you for not picking up my incredibly poor pronunciation but it’s been fascinating having this conversation.

Like you I am also a big lover of Chinese culture and life. But I’m just wondering as a final question. There are definitely signs of almost splitting the world in two; we’ve got the West with Trump, Chairman Xi in China. If it’s going to split in two which side of the fence do you think Australia should choose?

Ideal for marketers, advertisers, media and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley and special guests. Find all the episodes here

Want more articles like this? Subscribe to our newsletter:

Fill out my online form.

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

We're Listening

Have something to say about this article?
Share it with us on Twitter, Facebook or LinkedIn

Tweet
Share
Share
Buffer
Pin