The Winning Argument for Selling into China

Cross Border eComm Pentration

This graph shows that imported goods sold into China via e-commerce grew more than six times in the four years from 2014 through 2017.  Uber-example: In that period, Alibaba’s Tmall Global, the cross-border e-commerce site, “introduced nearly 19,000 overseas brands in 3,900 categories from 75 countries…more than 80 percent of which entered China for the first time.”

Gao Hongbing, president of AliResearch, said, “China is becoming one of the largest consumer markets in the world, and this huge consumer market is still opening up. On the one hand, China’s tax cuts on imported consumer goods are increasing, on the other hand, China’s policy continues to encourage cross-border import e-commerce and other new forms of business,”

In spite of the current economic noise, Yu Min, head of the secretariat of ICC China, sees the long term future when he says, “Despite the impact on the multilateral trading system and rising unilateralism and protectionism, economic globalization is still an irreversible trend in the current environment.”

Blatant Plug: Mobile advertising in support of a Chinese selling effort is key to success.

Sources: China Daily; eCommerce study by China Chamber of International Commerce, Deloitte and AliResearch

Brands and Agencies Bring Their Own Strengths to Programmatic

Challenges for Agrencis -Brands

Data from Dun & Bradstreet’s 2019 Data-Driven Marketing and Advertising Outlook illuminates the strengths and weaknesses of brands verses agencies as the two interacting forces adjust to the new programmatic advertising universe.  Brands know their target audience better than agencies, which are once-removed, but the agencies are clear leaders in data manipulation. These data bear on the ongoing in-house / out-of-house debate in an environment where 61% of the study’s respondents say their programmatic spending will be going up in the near term.

Anudit Vikram, SVP of Audience Solutions for Dun & Bradstreet makes the point, “While buying media programmatically has become the norm, B2B companies are still struggling with how to accurately target, measure and optimize those ads across platforms and channels…Whether you are a brand or an agency, efficiency in executing campaigns is intimately dependent on understanding and activating data and generating actionable insights.”

China Edges US in Ad Spend on Video Streaming

Video Streaming 2018

Almost 70% of this year’s projected ad spend on video streaming is coming from China and the US – China is the world leader by a hair (that’s a statistical term).  By 2023 total ad spending on video streaming is projected to grow slightly more than 100% to $47 billion, at which time we expect the 70% share by the combination of China and the US to drop as the rest of the world catches up.  (Note: video streaming does not include subscription services like Netflix).  Source: CNBC

Mobile is Deeply Integrated into the Lives of Chinese Consumers

China's Progressive Pioneers

In an enormous worldwide study by Forrester characteristics of Chinese consumers relationship with technology, particularly mobile technology, stood out.  First, fifty percent of China’s respondents reported they preferred buying products via smartphone and that paying bills by smartphone was a favored method.  In addition, as the graph suggests, using the mobile phone as the interlocutor between tech support or brands, is also favored   “As a result, not only are metropolitan Chinese online consumers more advanced in using technology to interact with brands than consumers in other regions, this state of affairs is now the norm.”  Sources: Forrester; WARC

There’s More Mobile in our Ad Future

Porjected Ad Spend - Mobile v TV

This is the year that mobile ad spending overruns TV.  Going forward TV ad spending is projected to decline slightly while mobile is expected to grow dramatically.  The logic behind these projections is that money will follow changing media behavior as people get more of their information – particularly sports and news – from mobile devices.  The presumption is that the total expenditure will increase and radio and print will lose more favor.  Source: eMarketer

Blockchain to the Rescue

Digital Ad Fraud2In the digital ad space it is generally agreed that fraud exists, that fraud is bad and that we have modest measures to combat it – txt.com, etc – that are making some headway.  Brian Xie, writing for marketing Tech News, makes the argument for a form of blockchain, he describes as, “a unique consensus mechanism called Proof-of-Valid Traffic (PoVT) that rewards all participants in our open-source, blockchain-powered ecosystem — rewards them both in tokens, and in real, old-fashion cash-savings.”

Xie makes the point that current measures – impressions, click-throughs or conversions – offer no way to determine whether or not a bot is behind the result. And, while blockchain isn’t the 100% cure, it would significantly lower the percentages for the better in the above graph. Source: Marketing Tech News

China’s Mobile Penetration is Central to eCommerce Growth Going Forward

ecoomerce Growth in China

The latest projections for e-commerce growth in China are impressive by any standard.  It speaks to the incredible penetration that mobile phones have in the Chinese society.  Not only will e-commerce grow substantially as a percentage of all retail, 90% of that growth is projected to come from mobile.  The report from Boston Consulting Group (BCG) and AliResearch notes, “In addition to offering better prices and wider selections, e-commerce actually stimulates new demand in China by filling many needs that are not being met at brick-and-mortar stores.”  This is particularly true in the high growth third and fourth tier cities. Source: xinhuanet.com

The Lure of Smaller Chinese Cities

Smaller v Larger Income

This blog has written that the next wave of growth in the Chinese economy is likely to come from third and fourth tier cities.  There were stories about how Alibaba, and their competitor JD.com, where building infrastructure to better service those areas.  Combined with tax incentives from the government there is good reason for many young people to stay in smaller cities in the West and North.  The jobs may pay less, but the rents and commuting cost are also less.  Together smaller cities can make for a slower paced, more tranquil life.

Data in this graph shows that the deficit in income between smaller cities and their bigger brothers is projected to decrease over the next dozen years, which will tend to feed the trend.

“While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier and more eager to spend, and could contribute two-thirds of incremental growth in national private consumption toward 2030,” said Robin Xing, Morgan Stanley’s chief China economist, in a research report.  Source: xinhuanet.com

In China, Mobile’s the Thing

Consumer Comparison

Data from several sources define a core difference between Chinese consumers and the rest of us.  Chinese consumers really enjoy their online shopping experience and they do more of it online or on their mobile phones than the rest of us.

Another difference is seen in their response to purchases.  Peter Stein, global CEO of Razorfish, notes “that 75% of Chinese Internet users post online feedback on their purchases at least once a month, compared with less than 20% in the U.S.”  Also, the Chinese do 90% of their shopping in stores housed in vast online malls like Tmall as compared to Westerners who tend to shop on stand-alone sites by established brands or resellers.  Source: Multichannelmerchant.com

AI: Already an Accepted Business Reality

Org View of AI

A recent survey in Europe by Cogant points to the place seen for AI at this early stage.  AI has already become a future reality for a vast majority of executives and most them have reasonable expectations for what it can contribute to their organizations.  What goes unsaid is whether they are also thinking that AI will replace current staff as it performs “routine activities.”

Our adventure into AI centers on writing aids; using AI to search, organize and summarize subjects for developing new content – editorial, online and social. Source: eConsultancy