Full transcript below:

Hello everyone. This is China Paradigm where we, Daxue Consulting, interview season entrepreneurs in China.

Matthieu David: Hello everyone. I’m Matthieu David; the founder of Daxue Consulting and its podcast China Paradigm. Today I am with Augustin Missoffe to discuss brand development in China’s market. It took us some time to have you on the show, but finally, you are here. Thanks for being with us today. It’s 8 am so, thanks for doing this early. You have been in China for much more time than I thought because I met with you maybe 5 years ago. Actually, it is going to be your 10 years anniversary in China. In June 2020 you will have been in China for 10 years. You have been in the digital industry for 6 years and now work for Hopscotch in the Chinese PR industry. So, thanks for being here Augustin. I’m sure you want to add something about how much time you have been in China before starting our discussion on brand development in China’s market.

Augustin Missoffe: No, no you’re right. I arrived 10 years ago. Thank you for meeting with me today. It is really a pleasure to be here to discuss global PR in China.

Matthieu David: So, let’s talk about Hopscotch and the Chinese PR industry. I am not sure how many people are familiar with the company, I mean the people who are listening to us. It’s pretty big. I was impressed. 250 million euros in worldwide revenue and 25 000 000 USD in Asia. In China only it’s about 8.2 million Euros. In China, you have offices in Shanghai, Guangzhou, Beijing, Hong Kong, Taiwan that are covering 40 cities which is impressive for global PR in China. You describe yourself as an event-native global agency OPR network or community. I’d like to define the word more with you later on. That’s what I’d like to talk about. The PR industry has changed a lot over the last 20 years. In the 1990s when I was a kid, we were talking about PUR in case there was a crisis or there was a scandal. When you had to communicate with the media, with newspapers, with TV, with radio, etc. Now, we talk about global PR in China when we deal with your own advertisement which we see on Weibo and so on. PR, I feel, has grown to a much bigger extent to offer an online and direct link to consumers. So, I feel that’s an industry that is changing, and it has been re-shaped over the last decade. Would you mind introducing Hopscotch a bit more? Correct me if anything that I said was incorrect!

Augustin Missoffe: The Hopscotch Groupe is the first native global PR group that was born in France many years ago and now also works on brand development in China’s market. We are providing some global PR in China. So, what is global PR in China? We have discovered many years ago that people need to be in the middle of an event marketing in China. They don’t want to have another view. They want to be in the middle of an experience and also today we have the digital, the PR, the events and shopper marketing, etc. So, we decided to do a combination of everything using tech. For example, using digital, using all the event marketing in China to mix everything and that is what we call global PR in China. The idea is to create brand development in China’s market and after to get a real impact, a real experience with the consumer. People are fed up with seeing and reading only two lines about a product. They want to live the experience. So, that is the mission of Hopscotch. It is really to push the best of the company, a product, a category of products in order to improve visibility and also to touch the heart of the consumer. That is what we are aiming for when it comes to global PR in China.

So, in fact, Hopscotch is focused on all industries – automotive, food and drinks, etc. We are providing the best of event marketing in China. Our team which, as you said, is a bit everywhere in China, is also in the rest of Asia and worldwide. Today, we have 36 offices all over the world. We have more than 800 experts/talents in our agency that are trying to innovate. We have three main directions in Asia which are innovation, creativity and being ambitious. The main focus will be then to immerge as you said. Hopscotch is quite new. However, Hopscotch is just getting shared more in the shopping center which is more than 20 years in China and 40 years in Japan or 30 years in Hong Kong. So, the idea is we need to capitalize on all of these with all of our networks and knowledge on brand development in China’s market. In other words, we need to develop more and more activities and be able to sell them to our customers worldwide.

Matthieu David: I’d like to understand more about what you do and to give a very clear understanding of the audience of what you do. So, maybe a couple of case studies and how you deal with them. I was especially surprised by your presentation. You sent me a picture of the group focusing on Asia and more specifically China and I was surprised that very early – I think it’s slide 4 – you are saying: “We worked with 3300 suppliers worldwide and we have an active freelancing team worldwide of 1500 people.” That’s not something that many companies advertise on. They would advertise on their inhouse team and not only their network. So, I feel that in a sense, you work with a lot of flexibility and agility to be able to touch both offline and online and different parameters in a connection with the community. Would you mind elaborating more? Maybe with a few case studies from the Chinese PR industry and how you operate? My question is coming from the fact that some people do everything and I’d like to know more about how you articulate those different aspects and to which extent you do the PR.

Augustin Missoffe: Sure. So, it is to analyze most of the things. So, we have the digital, we have all our event marketing in China departments, we have all our shopper departments, all our own PR departments. So, most of our activities are directly inhouse even when it comes to the Chinese PR industry. However, when you have an event marketing in China when you have a digital project where you need to work with skilled parameters and also you need to have particular expertise you are not going to invent this or invent yourself when it comes to brand development in China’s market. We always try to find the best partners and freelancers we can, everywhere to work in the Chinese PR industry.  The key as to why we are looking for parts in Beijing with suppliers where we are also going to search for the best CSR supplier in order to help us to build a very eco-friendly event marketing in China. Also, to have the opportunity to work with celebrities, to work with chefs. We do that in order to elaborate recipes, to build a totally new direction for a campaign.  

For instance, in Mexico, we are working with T-Mall in order to promote all of that. We are building some offline event marketing in China but collaborating with T-Mall in order to do that all together. So, the aim is to work in perfect intelligence together and that is why we are very proud of the network we have with suppliers and freelancers. Also, we are quite happy that these people are integrating our team year after year and we are working with them for many years. For instance, here, in our Shanghai office, we are very proud to have inter-talents who are working for us for more than 10 years in the agency, which is rare in China, especially in the Chinese PR industry.

Matthieu David: How do you communicate with different suppliers? It was discussed with an event agency that was saying: “We are very transparent and actually we take a mark-up of 20%.” It is standard in the industry and we said until the client comes, we take a mark-up of 30% on the suppliers outside of our main working office. How do you work with different suppliers? Is it something that you add up on the client? Is it something that actually you internalize so it is part of your team at the end of the day? How do you work with such an extensive network?

Augustin Missoffe: Everything is dependent on the kind of event marketing in China we are doing. We are totally transparent with our customers because, as you said, there is no need to explain to people that we are able to do something when we don’t have the internal resources. So, we are totally transparent about what we are doing in terms of brand development in China’s market. We are also providing sometimes some freelance work. So of the freelancers are internalized because we are working more than 10 months per year together. We don’t have the credentials anymore because we believe that they are our own colleagues and they are working with us on plenty of projects. One particularity of our agency is that we often sign like 2-year or 3-year contracts. So, we tend to have very strong project managers and we also try to have a strong product director. So, the idea is really to be transparent and customers always know that. It’s also the fact that working with a long-term customer is always based on trust and transparency on the fact that we can rely on each other and that is also where we like to go for brand development in China’s market.  

Matthieu David: You sent a presentation with 4 different case studies discussing the Chinese PR industry. Two of them are with major brands. One for CRV with Huawei in France – correct me if I am wrong. They are two very interesting cases. Another one is for Tunisia. So, in the tourism industry where you reached about 15 million digital impressions, 1,25 Euros in PR value and it is 57-something thousand which is very hard to get on WeChat actually. People who listen to us from outside might think that it is not a lot for China, but on WeChat, it is a lot to get 57 000 people WeChat. You worked for the Mexican one as well in partnership with Ching Do and I think there are 6. The Ching Do one is milk from France. Would you mind elaborating a bit more on those cases and give more substance to what you said to be event-native and to be 360 with different suppliers in the Chinese PR industry? 

Augustin Missoffe: Yeah sure so let’s say, for example, you have tourism in Tunisia that needs global PR in China. So, the main objective was to promote Tunisia as a destination for Chinese tourists. So, how do you do it? We worked a lot on social media. So, we built an entire marketing campaign and promoted some videos that we had directly recorded in Tunisia by making a movie with Chinese celebrities. The idea was really to invite people to come to the country and we have done promotions with dedicated tourism platforms in China thanks to brand development in China’s market. The most important thing during this campaign was really to tell people: “Forget about issues there was before you entered Tunisia and let’s focus on the beauty of the country, the diversity of the country and all the activities you can do.” Maybe you know Tunisia is a free visa place for Chinese people and so, the objective was really to boost the market. We sent it to different collaborations, leaders, KOC and also some different partnerships were delegated in order to have a successful campaign.

Matthieu David: I’d like to go more in-depth in one or two cases that discuss the Chinese PR industry. When you say that you shot videos and you displayed the video, would you mind elaborating a bit more on what media you use? Was it more on WeChat? Was it more on Weibo? How do you interact with your audience and how do you convert videos into followers and videos into a call to action and interaction?

Augustin Missoffe: Sure. So, the video has been launched in different series. It was 5 different episodes and it was accumulated into a full movie of a Chinese guy who decided to quit his work and to go and travel. He gets a phone call from his boss, throws away his bicycle and meets a young Chinese lady. She is a beautiful one, he falls in love and they try to be near each other. So, that all about the movie; being together on the beach. This movie has been diffused on the platform as part of our strategy for global PR in China, but also directly on WeChat from Tunisia to the tourism board, on Weibo and pushed with different opinion leaders. We had to have the possibility to join the service account of the Indonesian board directly on which you have plenty of information about which agency you can use to book your flight, trip, etc. All the facilities you have in order to travel to Indonesia. So, that was on different platforms and pushed by the opinion leader.

Matthieu David: For people who are outside of China – maybe people in China don’t know much about it either – but it is a travel-oriented platform. I am not sure about how different they are in the value position. You can post videos on this platform, but it seems much more like a selling website than a social website.

Augustin Missoffe: Yes, it’s a combination of both because it is also where people are expressing their feelings about trends. They are giving some sort of advice.  They are also advised before the trip, but also give feedback on their own trip. It’s also where you are able to promote, for example as we have done, a particular destination which we have done with the tourism board. All those videos were showing you the best places in Tunisia. So, this is how we allow people to see the country and ask them to push them directly to go and visit Tunisia.

Matthieu David: Okay, I see. So, you wanted to talk about other cases?

Augustin Missoffe: Yeah sure; about Magimix and global PR in China. So, Magimix is a French cooking kitchen appliance that helps you to cook with mostly whatever you want. They are very nice products and there is a cooking expert. The cooking expert arrived 2 years ago in China. It’s a beautiful machine that helps you to cook, which helps you to do everything you want. You want to have a good meal at home, you use the Magimix. This machine was not known at all at the beginning. We worked on all the strategies, all the clarification, all the social media, but also all the development of all the different tools. As an example, in France, you can control your machine. It is sent from the app on Android or Apple. When our customer arrived, he directly took the position and said: “We are not going to develop another app which we have to release in ten different marketplaces, but let’s develop a mini-program.”

So, we worked with dedicated tech agencies in order to develop all three programs and to be able to manage the machine and make use of global PR in China. So, before working with freelancers, we elaborated on some recipes with different Chinese chefs to adapt all the international recipes for the local market. We worked directly with Chinese chefs. Then we worked on the PR launch. So, we have done a huge PR launch event directly here in Shanghai where we managed to do all the visits to the store to the media and some KOLs, etc. It helped us to promote the machine directly. That has been a one and a half-year project which is still unfinished because we have to continue to promote this beautiful machine thanks to our expertise in the Chinese PR industry. It was quite 360 which is what hate because that means we can do as I said a bit of everything, but the main thing is to be able to do event marketing in China where we will have some content to also organize all the different aspects of the project to be sure we are able to do brand development in China’s market one product or one category of products.

Matthieu David: You talked for some time about KOL, but some people are using KOC now. How do you work with them? I feel there are a lot of questions from brands and from the west, especially on how you really leverage them? You have two cases where you talk about them. So, you say it was proposed by KOL and for Magimix you say you worked in the food industry with chefs and so on. How do you interact with them? So, more specifically how do you have to pay them? Do you have to give them the current software? How do you select them? Do you select them because they are able to sell, they are able to deliver a message or because they like the product as well and so, would you mind sharing a bit more about how to do this? What is your vision?

Augustin Missoffe: Sure. As you said, the process is quite different from KOL and KOC. Let’s start first with KOL. We are collaborating with them and one of the successes of KOL to be met is also thanks to WeChat. WeChat has been a close platform so that means you have your own service account. If you don’t have a KOL I will not be able to know your account and thus, brand development in China’s market would not be possible. So, the KOL is kind of a bridge that will help you to win visibility. KOL in China has an average of 1 million followers and up to 100 million followers. How do we work with them in the Chinese PR industry? It depends entirely on the project. But what we try to tell them is to first analyze which Key Opinion Leader will be suitable for the product. That means, for example, that we took one proposed KOL and we chose a famous celebrity. His name is Shan Shan. She lives in France and she has already expressed that she loves wine. She also loves nature. So, we took plenty of parameters and then we analyzed them to be sure it is suited for brand development in China’s market. It helps us to find the right person. After that, of course, when you are working with a KOL which has 70 million followers, you are going to see Magimix in France you are going to pay them and that is part of global PR in China.

However, you are going to work tirelessly with them in order to find everything to fit your budget.  Then, also, it’s the way that they are going to promote the product and do brand development in China’s market. You don’t have only one post and then end the campaign. The goal is to have continuity in the campaign to be sure that she is not going to do the promotion for only two weeks. We want to make sure that she promotes the product because she believes in the product. I have heard a funny story about milk powder. In China, you have two competitors and you have a famous Chinese person and the guy is a Chinese celebrity. His wife is European and also a famous person and thus a perfect person to do global PR in China. They are promoting one milk powder saying: “this is the milk powder for my kid” The mother is promoting the other milk powder and says: “This is the milk powder for my kid.” The idea is really to be sure that the KOL really loves the products. So, we also educate them and ensure that the person has a real affinity with the product. So that is the first thing to do when you want to do brand development in China’s market.

For the KOC; the Key Opinion Customer, the idea is also to give them sometimes some products in order to be sure that they are going to use it. Sometimes, they already have the product. So, we are going to give them some inputs to give like some other tools in order to promote the product.  As an example, when you give one category of products you are going to give it or move it around. Who can be with this category of products? Sometimes, of course, you also have to pay for them. So, it is different with each product. Paying the KOL in China is not an issue when it comes to brand development in China’s market. It is a popular business and the idea at the end of the day is really to promote your product, but check that they are going to share a product and also avoid going to the competition. We had success also through this KOL by ensuring that they are the right person for the right campaign.

Matthieu David: What are the expectations you have from the KOL perspective and also the KOC? I understand that it is creating views, it is creating impressions, but how do you really measure the results at the end of the day? Of course, it is difficult to track the conversion in sales, but would you have some metrics which are beyond the impressions? I tell you that because we worked on an evolution of some campaigns and we found out that some people liked actually more the KOL himself rather than the message. So, they went liking eventually the message proposal as a KOL, but actually the comments were all about the KOL and not about the product they were pushing. So, would you mind sharing a bit? Maybe what would be your concern when you deal with a KOL and a KOC?

Augustin Missoffe: It is always the fact that they will prefer the KOL rather than the product. However, they are always very intrigued by the KOL and this helps us to do brand development in China’s market. We have seen that if you have looked at live streaming campaigns. People are buying all kinds of products like L’Oreal and stuff. We did an amazing campaign with lipstick recently. So,  they are obviously going to follow the KOL and they are going to listen to the message. They learn about the product that is being pushed because they believe in this. So, it can be indirectly the real ambassador of the brand. So, that is also one of the main things. We must ensure that the relation between the product, our customer and the KOL is not only a business relationship. A person must like the product and believe in the product and that is how we will succeed to push the consumer to like the KOL, but also to love the product he is selling.

Matthieu David: When dealing with KOL’sy do you work with agencies? As you said, you have networks and suppliers/partners you work with or do you contact them directly? Does it go through some platform? I remember one interview we ran in the past saying that the care of the business has to change because actually you should have agents for KOL’s. KOL’s will be managed to see which products match instead of a product or a brand reaching out to a KOL directly. So, it should be the work of the KOL to reach out to them and say, “Oh, this brand is really something I like.” Or, “I like your way of talking. I’d like to work with you.” So, how do you deal with them? Is it direct or indirect? Do you reach out with Weibo or WeChat or the website?

Augustin Missoffe: Yes, so we try. We are working directly with them for one reason and that is to avoid any intermediaries in the campaign and also to deal directly with the KOL in order to do a better brand development in China’s market. There is something very interesting about KOL. It is like to choose a different product. It is mostly in the food and drink industry where KOL’s contact us directly to say, “Hey, I have seen your different campaigns. I know this one is new this summer and I would be very happy to promote these different products.” So, this is something that is becoming more and more recurrent. This is mostly because there is a huge. Most are focused on cosmetics, food or gaming. This is something that is happening more and more for brand development in China’s market. The fact that emergency will manage a pool of KOL’s and for me, I will call it the KOL factory, so, I don’t believe too much in it.

Matthieu David: Why?

Augustin Missoffe: It is becoming a KOL factory, but we still keep the virtue of the KOL who promotes products for one reason which that they believe in it. The fact that you have for a KOL agency will be more mechanical. The agency will impose the product directly on the KOL. Sometimes the KOL tells us, “I’m sorry, but I already have a competitor of your product” or, “I am sorry, but I don’t know anything about wine, so I’m not going to promote it.” They are able to say no and my main concern in the agency is that they will be obliged to promote some products because one KOL doesn’t have anything to do for 2 weeks, etc. It is one of the reasons why we are working with them directly without any intermediary.

Matthieu David: You work in a big organization which is Hopscotch again 250 million Euros in many, many countries. What differences in the cases you have mentioned and the cases you worked on and the cases that Hopscotch is working on in the rest of the world? What main differences do you have to communicate on when you work with China or when they work with China? What are the surprises they have? What are the differences in the treatment of the cases you handled in China and the rest of the world?

Augustin Missoffe: There are plenty. We’ll start by the flexibility and the fact that our customers are asking for things to be delivered yesterday. Everything is in a rush and also about all the digital activities for brand development in China’s market. In some projects, for example, I will see sometimes when we reply to the tender we arrive more with a conceptual approach. That is something that is phase one and after that, we develop all the different aspects. In China, I have had different customers that want everything, all the details at the first minute. So, they want to know everything. We don’t have a very different proposal because it’s more on the concrete part. Sometimes it’s the conceptual part that could be secondary. However, they want to have everything in detail quite quickly. Also, the digital side of the business is totally different.

I am always saying this for 9 years now. When WeChat arrived, the world has developed in two separate parts. You have China and the rest of the world extending also to everyone how WeChat works, how the towers are working and how everything is working around the digital. Now we must use it, how we should integrate it, the online to offline, offline to online, the new retail. This is part of our DNA for event marketing in China, etc. That is something that sometimes they ask me or from my colleagues, but it’s so that we do a lot of different training in order to be sure that they will be able first to get a heads up about all of that.

It’s also one of the reasons we are getting plenty of projects. We are welcoming them worldwide with all my colleagues pitching from worldwide and China and then also some information or some insight. We display some innovation that they will be able to work on and also able to re-use it during other events in the US or using PR communication in France, Ireland, etc. So, it is a bit of a mix of everything. The key components for me are different compared to the rest of the world.

Matthieu David: How do you explain that in China you feel that clients are wanting to get things faster and with more details compared to the west? What would be your explanation?

Augustin Missoffe: They are quite fast. The economy is booming, competition is fierce in different sectors and there is an evolution. I think I have been here for years and what we say on  Monday could be totally different the Friday because there are so many evolutions in the week in terms of social media platforms instead of trends and when there are mistakes as we have seen for example, for a luxury brand it is going too fast. Social media are going faster than everywhere else in the world. That is also the main thing why China is going quite fast. You can observe this over the last 10 years.

The first WeChat payment was in 2014 and today nobody uses cash, credit cards. We are all on our mobile phones. So, everything is going quite fast and you will see it is also in the Chinese mentality to say, “Make a point. Next push.” It is quite nice. I had yesterday a very interesting niche question about the fact that in France we prefer to be ready before we like something. In China, we are ready by launching the thing. So, everything is in parallel and after we will adapt. So, that is also the mentality. They are very entrepreneurial. They are very focused on innovation, so they take more risks here.

Matthieu David: Sometimes, I wonder if it’s easy to build a long-term brand by putting some tactics for long-term strategies. Companies have been building long-term strategies and I did not imagine the various luxury brands to be so fast in the change of reactions. It really considers all changes before going into it. You talked about new retail and this is a buzz word. For every buzz word we have to know what’s really going on. For me, new retail includes payments. It can be anything. It can be WeChat as well for all players and delivery. Delivery is very cheap in China and very easy. You get your food within 30 minutes. These for me, as far as I understand, are the two main components of new retail and I am always wondering, “Do I need something? Is there something I am missing here?” Because you have so much to do in food and beverage. I believe you have spent a lot of time, but what extent of new retail? What can we extend? What can we build with that? What really is new retail?

Augustin Missoffe: Sure, we use new retail for only two services because that will be payment and delivery or purely the services, but it is also philosophy. When you go to a supermarket from Alibaba, it is a place where you can do a bit of what you want. You can eat in this place. You can take your lobster, ask the guy to cook it and eat it at the place. It is also a place where you can enter freely without having to do anything. So, you don’t have cash. It is digital. You can enjoy the fact that you will have a seat, that you will discover some stuff, so it is no longer a shop. It is a pathway. For me, it is even more than a philosophy. After, if we need to speak about more practical things in terms of buying, you can do click and collect. You can go over there, try on-site and make it on delivery. You can have all the ways of living in the same place and now it is really adapting to the supermarkets. It is more and more adapted also to all the different retail stores and it will be adapted after all kinds of different aspects. Everything will be done more freely and also the fact that we are giving more information on our mobile phones and the fact that we are getting these tools which are ruling our lives. They are part of our daily lives. We do everything with them. Also, one thing which is quite nice in new retail is that everything is easy. When you don’t want a product anymore you send it back. It’s easy. You don’t need to go to the post office, stand in the queue, etc. It is the same as if you were to call a delivery guy. He will be here in 20 minutes and will deliver everything. I think there are also these kinds of philosophies where the new retail took all the place.

Matthieu David: I feel the path that was missing in my explanation of payment and delivery is the one of experience. So, new retail is also about a new experience where you would connect with a digital world. One thing you said is that it is easy to buy, return a product, etc. When it is easy for one person, it is difficult for the other one and what I am questioning is whether the client is key for event marketing in China. So, the brands and then your client. How does it deal with that? Isn’t it much more difficult to evolve now in this environment where people can comment on Twitter about the product? Before it was a bit more complicated so people were thinking twice before returning a product and so on. How do you deal with that? Is it a concern of the clients of your brands?

Augustin Missoffe: No, not so much because right now the service is something that has become more and more important for our customers and all the brands. Service is something that we use to highlight the brands. Of course, I would say all the people commending and giving some bad comments because the boxes they received have been destroyed in the delivery process. So, you have also what I call the small social grudge which for me is not so important because we have seen some brands which have been destroyed by that, but the main idea is also to control it.

We are in an industry where you have people commenting all the time. So, we need to play the game. If you don’t want to play the game, you need to leave China. It is mandatory to play this game. After, it is not for me to slave and master. It is more collaboration where consumers don’t have to impose something from brands. People who want to buy some products from luxury brands will have a very tailored service. If they want to buy cheaper brands or regular brands, they will have another service. However, they will be able to get what they want at the price they want, at the moment they want it and the brand will adapt itself. Brands have already adapted to the supply chain in terms of social, in terms of Key Opinion Leaders, etc. Everybody has something in the market so, for me, it’s more a balance between the customer and the brand.

Matthieu David: I’d like to go back to the identity and origins of the company Hopscotch. You say in the presentation that it is event-native and I got two or three feedbacks. One from a group was things that people want to connect again now, to go to events, to interact with each other and we got some other feedback from people in business to say, “We want to have interaction with temporary shops” or even their own shops with the digital aspect and then having their own shops. How do you then react to the fact that China is so digitalized, and your origin is in event marketing in China where people can touch each other, they can meet in real life? Is it something that you are combining? Is it something that you are doing differently for China?

Augustin Missoffe: Not only for China but yes, we are combining everything. We, at Hopscotch, like to say that we are experts in event marketing in China, in digital and in PR and shopper experience. So, all these pillars make us global PR in the China group. This means the digital; we are going to mix it directly with the events and the same for the global PR in China. When people are participating in an event, the experience is good. They don’t want to watch an event. They want to be part of the event. They want to live a real experience that could be for example, with plenty of digital integration because I think we also have to stop to say, “I want to do something digital.” Digital must be the hardest of the global strategy. So that is not for me one particular department or one particular thing. It is integrated now. We are in a new era where all that must be developed and digital is also the way that we get content. People through digital like to see what is happening somewhere else. When you have a VR demonstration, they want to be part of it. So, the thing with digital is that they will be able to see what is happening. So, the idea is really to have all of it to make and build a real experience to have something from nothing and to put these people; the consumer in the middle of it and it is how we succeed to create amazing campaigns.

Matthieu David: For companies and brands, it is much more expensive to sell because they have to create events, they have to manage the digital prism, they have to do all that. Let me say your margin is my opportunity. So, when you make a margin, I will find a way to actually lower the margin and be your company. This is my opportunity to charge you on the marketplace. Where do you feel actually people can save money to be able; for companies to be able to reallocate the purchases that were spent 10 years ago, 20 years ago to what you are describing now. Which companies are dropping is what my question is? What companies are not doing anymore? What are the things they didn’t consider? Would it not be an ultra-market, for instance, because I can think of a place where you have to be anymore? Is it not to work with newspapers anymore and TV anymore because actually the connection is not strong enough? What is your point, is the media; the tool that is given away; given up by the present companies?

Augustin Missoffe: I am going to speak purely for China. That is purely depending on the customer. However, we have had the change to social media, social networks to be able to collect some data, to be able to understand which companies are working and which ones are not working. Let’s take a simple example. You want to do a campaign for a product in the Chino Valley and the Shanghai Valley. You will be able to put some record on it and to have it tracking and you will be able to know precisely how many people scanned their credit card from the China Valley and from the Shanghai Valley and like that you will discover that finally, on the China Valley you have a few people who scanned their credit card instead of the Shanghai Valley where you have thousands of people. So, you have in this case, you are going to take the decision to do the communication. So, that is also the way that we succeed to collect some data and to use some data because the key to everything in fact; and I really believe in this; data will manage everything at the end. Today we have plenty of data coming from all the social platforms, all the different advertising, etc. however, nobody is working clearly on this data. In order to have a really good result and also to anticipate the consumer willingness and the consumer wish; that is also today one of our jobs to succeed to collect this data and understand the ways that the consumer is interacting with the campaign and with the product and after; anticipate the campaigns. That is something that we are tending to do and in term of what they used to, what they are doing now and what they are going to do that the data will help us to do it and our story depends on the customers or rather the Chinese market who don’t know all about the hypermarket because the hypermarket right now is dying in China up to the e-commerce so everybody wants to use the e-commerce, but how do you build e-commerce? Which activity are you going to select? Which are the more specialized and the more expert in your category of product? Should we trust the fact that we must be in China or could we do some global selling to Alibaba Global or T-Mall Global or should we do it directly? Everything is depending on the clear strategy which will be defined thanks to all the data we collect. 

Matthieu David: My understanding is the breakdown of the costs for brands and companies has changed where they were going to hypermarkets and supermarkets mainly or even exclusively. They would rely on the hypermarket or supermarket to clear the traffic. Now it is the brands and companies which have also to take into account this bit risky invested which is to create the traffic between the conversion to sell or not. That may be justified by the fact that marketplaces have a lower commission because I understand that hypermarkets and supermarkets are taking much more commission on the product. Do you agree with this?

Augustin Missoffe: Yes, it depends on the kinds of the campaign. It is the same when we have done some campaigns for products in supermarkets. We are also working entirely with a different supermarket brand which is also very… we have to create traffic etc. It is quite funny. I tried to go there on the weekend and it was full of hostesses pushing you to try some product etc, but it is the same that you can see in the e-commerce platform when you go for example, in the beginning, we have the level which is a global shopping mall. Right now, if you look at the agenda of Alibaba you will see things there that you don’t see every day on all the different products. You have one festival and you have all kinds of festivals all the time. So, also, they try to find their own way to promote traffic. However, it is the same; you can buy online or offline. People will still go in-store and also one thing that is quite important with offline retail. It is absolutely dying and just evolving.

Matthieu David: We are almost at the end of the exchange or the talk. I will ask you a couple of questions, as you know, and the first question is what books inspired you most in your journey?

Augustin Missoffe: That is a good question. For now, I am reading a very interesting book about Diplomacy which is diplomatic about… it is a book from the former ambassador; French ambassador in the US explaining his relations with everyone in his life. It is interesting the way that we could create some relation with people on trust, but also trying to get the best of the different cultures and that is something that we try to do here in Hopscotch and so besides, we are a multi-cultural team where we need to understand each other, speak to each other to get the best of each other’s cultures and this mix also helps us to build and create successful campaigns and this book has listed plenty of things like that.

Matthieu David: The last ambassador of France in the US?

Augustin Missoffe: Exactly.

Matthieu David: What do you read to stay up to date about China? As you said, China is moving fast. There are so many articles and so much content created about China and my understanding is that there is a lot of growth sometimes and it is difficult to know what is really happening because there is lots with imaging, lots of actually purely PR for Alibaba or whatever to say, “Now we have people that use AI and VR to buy” which is actually a goal think really happening in a massive way. So, to stay up to date what do you read to make sure you have the right information?

Augustin Missoffe: So, as you are; we are in plenty of WeChat groups and articles etc. so what we try to do because the day is running so fast every time I see some report I put it in a particular group which all my teams in China and after the end of the week everybody reads a bit of everything. We are after that doing kind of notes; internal notes with all the different articles and that helps us also to have all the main things and also all the different articles. However, what I read more and more is also all the reports from DCG which are normally very trustworthy and which are very positive. After that, I read also some different articles from China channel, from also Tech Crunch and I try also to avoid a little bit the too commercial articles who are promoting at the end, only the product of the providers.

Matthieu David: Yeah so you would say TechCrunch, you would say reports basically that are published and you gather all the reports and indeed there are so many reports sometimes that I feel that on some of those WeChat groups it is a full-time job to check it.

Augustin Missoffe: Definitely and I would just like to know how they monitor that?

Matthieu David: Yeah, yeah, I’m disappointed. I don’t know. What books in China? What books about specifically more about China would you recommend if any? Not necessarily history. It can be anything.

Augustin Missoffe: Sure, there is a good one in which I am reading a bit about AI and how AI is going to change evolution. It has been written by… I will send it to you. It is super interesting. He has a huge capital venture fund right now investing in plenty of AI start-ups and it’s a group that helps you to understand a bit of how China is going now and how it is going to evolve and mostly he gives a trend about all the evolution. If you have come to Shanghai recently you have seen the different new cameras. That is evolving a lot. The question is what will be the next step? How are we going to live with it and we will see what is the value-added because what I love in China is people are okay to give all their data, all their information. However, they are okay only if they have a good service in return. So, if you give them some service, they will be happy to give whatever you want. So, the question is what will be the next service that we will have?

Matthieu David: And for the cameras; people not living in China; actually, we can see the new cameras and things like to be 360 which can do it better than the old cameras which feel like we are back in the ’90s. We can see very soon in the streets, facial recognition and cameras and the ones which are not. There are two questions now that are inspired by a thinker called Peter which started to use strategy in business and in order to understand what is going to happen in the coming years or month is trying to look at successes. He was not expecting, and he was looking at figures and was not expecting it. To give you an example, I was not expecting a KAFU to pull out of China so for me it shows that there is something going on in retail which is e-commerce, which is new players and the past is not working anymore. All those prominent companies, what would be your surprises or what successes didn’t you expect, and you are seeing and witnessing? On the opposite; what failure were you not expecting that you have witnessed in China?

Augustin Missoffe: So, generally speaking, I have a little bit in the… yeah, I will say maybe in the automotive industry. We have seen some European brands who came here very proud to enter the market, however, in Europe, they were the key car manufacturers. However here we are discovering that they didn’t succeed by themselves and mostly the failure is not that they didn’t succeed, but that they didn’t succeed to adapt themselves when they had the green light to go. We have seen electricity arriving and they didn’t believe in it. We showed the SUV; they didn’t believe in it and it took too much time to train for it and that for me is one of the biggest failures we have seen because mobility after is also one of the key things which needs to happen. For me, the two main concerns worldwide would be mobility and food. Those are the two things which will take more and more places and to see some experts who didn’t see the biggest things about evolution. That is probably one of the biggest failures. 

Matthieu David: Yeah what about success? You didn’t see some things that actually would show something bigger behind it? Something which is a game-changer; a new paradigm – to use as a word of the podcast? What successes embodying it?

Augustin Missoffe: I would say something which is quite common; WeChat. WeChat is a media with all the possibilities. In the beginning, if you remember in 2011 it was WhatsApp. They tried to launch it in Europe in 2012 and 2013, but well it was not working for them. It was an exact copy of WhatsApp and after it was Chinese, and China became scared in Europe. However right now, all the possibilities of WeChat. I even try to explain to people what WeChat is and they say: “Yes, it is kind of WeChat and a Facebook.” I say, “No, WeChat is life in China. If you don’t have WeChat, you are not able to do anything. So, all the possibility I did not expect so much from WeChat and WeChat is in our daily life; a personal one, but also a business one. To be honest it is impossible to live without WeChat today in China.

Matthieu David: What do you think it is showing about China why WeChat took off o well in China being the super app and we don’t have that in the west? What is the bigger… what is the iceberg behind it because we see WeChat, but what is behind it? What will you take from this success?

Augustin Missoffe: Well, I think of the successes as also the way to adapt themselves to be very innovative, to have the payment and after Shanghai was one of quite the advantage is to have some rapport with WeChat which is very big and also it is part of the government which is quite something because they are also protecting all the data. So, one of the reasons we are okay to give it to them, but it is also the fact that they are evolving also. They don’t have any issue to come to sell stuff. Let’s say, for example at the beginning of the mini-program it has been a big failure from January to July. Nobody was using it. Nobody understood it and it is the point of a mini-program and at that point we even say it and I like to say it; it will be an app native here and in July we decided to change it to get some other things for the mini-program to have more easy ways to develop the mini-program and right now we have more than a million mini-programs in WeChat so they have the capacity to evolve and say, “Okay, this is not working.” We stop it and we try other things. So, it is also the fact that they are launching stuff; even if it is not totally finished., if not then the business plan is done, but they are going forward and that is also one of the big added value of the Chinese market.

Matthieu David: Thank you very much for your time and for the insight. It was a very interesting talk. I hope you enjoyed it. I hope everyone enjoyed listening to it as well.

Augustin Missoffe: Great, thank you very much. Have a good day.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #93: How can companies manage their brand development in China’s market? is the first one to appear on Daxue Consulting - Market Research China.

Translating Western Brands in China

With the unprecedented economic growth that has characterised China in the last decades, more and more foreign companies, especially luxury brands, see an opportunity to enter the Chinese market. The trending expansion towards the East has become a sort of new frontier for high-end manufacturers based in Europe, North America, and Japan. This is because, with a population of about 1.4 billion and the largest middle-class in the world, the Chinese consumer market is showing a growing appetite for high-quality products. That is why successful Western brands in China have what Daxue Consulting calls brand-naming strategy.

How to make a Chinese brand-naming strategy

In order to facilitate the outreach of foreign luxury brands, the “sinicisation”— the acquisition of characteristics connected to the Chinese culture—of even the most famous brand names is a necessary prerequisite to conquer the Middle Kingdom. In fact, the necessity to adjust a brand name from its, usually, Indoeuropean linguistic origin (the language family that comprises almost all European languages) to Chinese Mandarin, which belongs to the Sino-Tibetan language family, stems from very practical reasons. First of all, there is a great difference between the phonetic systems (the sounds that compose a specific language) that we usually find in Indoeuropean languages like English, French and Italian and the phonetic system of Chinese Mandarin. Secondly, Chinese characters are the official writing system in China, and it does not take long before realising that the Chinese writing system works in a completely different way from Latin- or Arabic-based alphabets.

Foreign Brands in China and the challenge of Chinese characters

Every successful marketing strategy starts from a good visual representation of a brand name. Western brand names in China are no exception to the rule. For this reason, the way a company’s name is written may make the difference between success and failure. Therefore, a proper transliteration of a foreign brand into Chinese characters may open the doors to a market that has no equals in terms of size and potential for growth. At the same time, a failing brand-naming strategy may turn business into a nightmare. But why is brand naming in China so complicated?

Brand naming in China and the Chinese writing system

Chinese characters form a writing system that has much more in common with Sumerian cuneiform and Egyptian hieroglyphics than it has with Latin and Arabic letters. For this reason, the Chinese writing system is officially classified as logographic, which means that a single Chinese character roughly corresponds to a word. The Latin and Arabic alphabets, on the other end, are composed of letters, which represent the individual sounds (phonemes) of a word. This means that a foreign brand name may not be easy to transliterate into Chinese characters unless it is adapted to the characteristics of the Chinese writing system. However, this is only the first challenge that foreign brands in China need to overcome in order to seize the opportunities offered by this expanding market. As we will explain in the following chapters, there are still a number of linguistic barriers that the marketing department of every foreign company must reckon with before approaching the Chinese audience.

How phonetics affects the choice of a brand name in Chinese

Phonetically speaking, On the one hand, European languages are characterised by the presence of polysyllabic (multiple syllables) words, on the other hand, Mandarin is characterised by the presence of mostly monosyllabic (one syllable) and disyllabic (two syllables) words. These differences, together with a number of other linguistic characteristics that set Chinese Mandarin apart from its European counterparts, make it extremely difficult for native speakers of Chinese to pronounce foreign brands like Ferrari and Lamborgini. In fact, these two famous Italian brands should be pronounced with the typical Italian rolled /r/, which is dreaded by most Chinese speakers because it is alien to the phonetic alphabet of the Mandarin language.

Foreign brands in China: a matter of tones

Also, Chinese Mandarin is a tonal language, which means it uses pitch variation to distinguish words that otherwise one would pronounce the same way. One famous example, that teachers of Chinese use to clarify how tones affect the meaning of the words, is the following one: 马(mǎ), with a falling-rising tone, which means horse; 妈(mā), with high-continuous tone; which means mother; 吗 (ma), without tone, which is used at the end of a sentence to mark a question; and 骂 (mà), with a rapid-falling tone, which means scolding or cursing. Needless to say that it is better not to mistake a horse for your mother, or cursing instead of posing a question. The same problem may come about when introducing a foreign brand in China. This is why, sometimes, foreign brands in China can sound really odd to the ears of the Chinese speakers.

Western brand names in China: Case studies

Below, we listed a number of the most famous and successful foreign brands in China and how they have been transliterated into Chinese characters. It is immediately clear that most of the companies paid great attention to maintaining the sonority of the original name, yet, at the same time, they have adapted the original name to the Chinese phonetic and writing system.

Chinese names of Western automaker brands

[Source: Daxue Consulting, Western automaker brand names in Chinese]

Chinese names of Western shoe brands

[Source: Daxue Consulting,  Western shoe brand names in Chinese]

Chinese names of Western brands of watches

[Source: Daxue Consulting,  Western watch brandnames in Chinese]

Chinese names of Western brands of fashion & cosmetics

[Source: Daxue Consulting, Western beauty products brand names in Chinese]

Chinese name of Western brands of coffee shops

[Source: Daxue Consulting, Western coffee brand names in Chinese]

Chinese name of Western hotels

[Source: Daxue Consulting, Western hotel brand names in Chinese]

Foreign companies’ brand naming in China

When it comes to China, the brand-naming strategy is supposed to be vital for entering the Chinese market. In fact, a chosen company’s name, written in Chinese, may play a considerable role in attracting or losing potential customers. Very often, when foreign companies enter the Chinese market, brand naming may not be one of the top of the priorities of the head office. However, relegating the brand-naming strategy at the margins of the company’s general marketing policy may lead to sound business failures, as even some world-renowned multinationals learned at their expenses.

Microsoft’s sloppy Brand-naming strategy in China

For example, in 2009, Microsoft launched in China its web service known as Bing to compete with Google. The company transliterated its search engine as 必应  “Bìyìng”, which in Chinese literally means “must respond”. That notwithstanding, the Chinese Mandarin pronunciation is very similar to the word for “sickness” 病 “Bìng”. The result of this rather superficial brand-naming strategy may have contributed to the disappointing performance of the search engine, in that it still has a negligible share of the Chinese search engine market. On the other hand, Before it was banned from the mainland in 2010, Google had reached a market share of 38.5%. Behind this success, there are a number of reasons. First of all, the company had taken great care in choosing its Chinese name 谷歌 “Gǔgē”. In fact, to make sure that the new name would please Chinese customers, Google asked its native Chinese employees to adapt the company’s brand to the sonorities of their native language. The Employees tried out all possible character combinations using two Chinese characters which start with the sound “G”; then they voted which one seemed to be the most appropriate to them. To further highlight how important brand-naming can be in China, some time after the Chinese website of Google had been launched, some Chinese netizens—not entirely satisfied with the new name of the company—created noguge.com, where everyone could suggest an alternative name to 谷歌Gǔgē.

Retaining original names of foreign brands in China

Lastly, some foreign brands prefer to keep their original name to avoid misunderstandings or confusion. However, this approach has been actively criticised in China because many Chinese speakers find foreign names particularly difficult to understand and pronounce. Therefore, to keep the original meaning of their brand name and make it intelligible for Chinese customers, companies like Apple and Microsoft proposed literal translations of their names. In China Apple has become 苹果“Píngguǒ”, which literally means “apple”; whereas Microsoft now is 微软 ”Wéiruǎn”, where “Wéi” is the word for “micro” and “Ruǎn” is the word for “soft”.

Foreign brand naming in China, advice from Daxue Consulting

Shaping a brand-naming strategy in China can create more opportunities, and at the same time, be riddled with challenges that foreign companies must overcome if they are to succeed in the Chinese market. As the experience of some foreign businesses shows, brand-naming is a crucial part of a company’s marketing policy, and its neglect may lead to an untimely business failure. Therefore, the most successful companies rely on consulting companies operating in China like Daxue Consulting, which have the necessary expertise to guide foreign companies through the complex process of branding naming for the Chinese market.

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This article How to choose a Chinese name for a foreign brand| Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

Market demand for traditional Chinese art

Traditional Chinese art has become one of the most popular categories of art. First, it is important to know what is considered Chinese traditional painting, because there is some room for confusion over its definition. The art in this category includes classical paintings from before the 20^th century as well as contemporary paintings. What define them is a common painting style that involve ancestral themes, materials and techniques. Artists use water-based ink and color on paper or silk, most often representing landscapes and continuing the themes of earlier compositions, thus creating a thematic series.

The Chinese antique market has also experienced a recent boom. It is partly explained by its fluidity: the demand of certain periods often change. While once it was pieces from the 15^th century that were popular, it is now the 18^th and 19^th century’s artworks that are in demand. There is also an increasing flow of 19^th century Chinese porcelain coming back to China, repatriated by Chinese art buyers from America and Europe.

According to The Telegraph, China has now established itself as the world’s largest antiques market, relegating America into second place, and this position benefits positively the popularity of the Chinese art, particularly of traditional style.

Recent growing interest in art in China

Thanks to China’s long history, the country is in a position to offer a huge legacy of art. The Chinese market is particularly self-contained: the great majority of pieces of art in China are bought and sold within the country itself rather than internationally.

“China is creating new collectors every day, and when a mainland Chinese begins collecting, he always collects Chinese art”, said James Lally, a New York dealer who in 2015 sold 40 percent of his traditional Chinese art to Chinese art buyers from the mainland.

Chinese collectors of art are actively repatriating Chinese antiques and traditional art, which has given the Chinese art market a boost. Hoping to benefit from this wave, western art owners are increasingly selling art in China, and major auction houses are moving towards Asia and particularly in Hong Kong. Staying in Hong Kong can be beneficial in avoiding taxes and issues with Chinese customs while staying close to mainland Chinese art buyers. However, international auction houses in mainland China have their advantages, mostly due to payment regulations.

Demand for high-value art in China: pushing exorbitant prices

On 18 December 2017, a landscape collection by Chinese artist Qi Baishi sold for $141 million at a Poly International auction in Beijing, setting a record for Chinese artwork sold at an auction worldwide. Top-quality artworks by master painters create tension in bidding salesrooms in China. The Chinese fine art auction in 2017 has seen a success specially after improving lots quality in the continuous offering high-end and high-value lots. Throughout the year, top-quality artworks have created some tension in bidding rooms in China. Even if the sold lots rate dropped a little in 2017, the turnover of Chinese fine art auction actually reached a new high at $5.103 billion, according to Art Price.

Imports of foreign art are down by around a fifth, and Qi Baishi was not the only Chinese artist with skyrocketing prices. “The Goddess of Cloud and the God of Longevity” by Fu Baoshi, who died in 1965, made more than $35 million in 2016, and China’s most expensive living artist is Cui Ruzhuo, with his “The Grand Snowing Mountains” painting reaching $39 million in 2015.

Chinese are more and more willing to pay eight or even nine figures price on true masterpieces, notably in the high-end and ultra-high-end market (lots above $14 million -or 100 million Yuan). In 2017, 38 lots sold in this bracket, more than double the number reported in 2016, according to Artnet’s report of 2017.

The returns on high-quality art in China

The exceptional performance of the Chinese art market in 2017 is positively related to the slower economic growth of the country: due to uncertainties in real estate and stock markets, more cash flowed into high-quality and authentic works of art that are considered to have a steady investment return. At the same time, the market considers purchasing art and antiques as an advantageous opportunity for long-term investment, and Chinese collectors of art and investors are returning to traditional Chinese works of art.

The wave of new buyers in China: investors turned into collectors

China may no longer be overrun by speculative collectors who neither know nor care about the works they’re buying. The new generation of Chinese art collectors are enthusiasts that don’t just venerate the art by its monetary value, but they understand the history and cultural significance of the works they collect. They are a small but influential group coming from the enormous growth of “new money” in China. With their passion for Chinese art – both classical and contemporary-, their influence goes beyond the simple purchasing of pieces: they are pursuing memberships in powerful art organizations, setting up foundations, and building new museums, thus boosting the market.

Taxi driver-turned billionaire, the story of an art collector in China

Liu Yiqian was once a taxi driver in the Chinese port city of Shenzhen. He became a millionaire by buying shares from state-owned companies before reaching a small fortune, which was enough to start investing in art.

Liu Yiqian and Wang Wei are one of Asia’s most world-renowned collecting power couples. They spend on high-profile Chinese antiques, but their purchases are not made for speculative purposes. The have established the Long Museum, which has two Shanghai branches that collectively house China’s largest private collection of art. Thanks to this influential group of collectors like Liu Yiqian and his wife, China has been experiencing a boom in art museums.

The slowdown of 2018 in the Chinese art market

Are reports predicting an end to the booming art market in China?

Released in 2018, the Claire McAndrew’s annual report on the global art scene, produced for Art Basel and UBS presents some discouraging results for the art market in China. There has been a “contraction in supply of high-value art in China and cautious buying, as trade and debt crises loomed”. Sales through the mainland’s dominant auction sector fell by 6 percent over the year and China’s art market share was of 28.96 percent of the global total, a 5.21 percent reduction compared to 2017.

One of the two items that sold for over $50 million was Zao Wou-Ki’s Juin-Octobre 1985, auctioned by Sotheby’s Hong Kong for $67,5 million.

With increasing debt crisis and slower economic growth in China, buyers have been more cautious in 2018. Lower-risk contemporary paintings have seen a larger success than in the previous years, influencing the market confidence on Chinese art.

What is over the horizon for China’s art market in 2019?

As China is said to be the world’s biggest economy by 2020, major Chinese cities such as Guangzhou and Chengdu are hailed as the next great wealth spots and home to the growing multibillionaire class. However, the new elite of Chinese collectors seem to have developed a strong interest in international contemporary art, partly because of Western galleries and fairs’ efforts in promoting Western Art. International galleries have been opening spaces at an increasing pace this last year, mostly in Shanghai and Hong Kong.

China’s share of Western art’s revenue is growing rapidly, with an increasing number of Chinese buyers of western art and of Chinese auction houses selling it. Competition among top auction houses from London, New York, Hong Kong and Beijing has become stiffer than ever.

Selection of top 5 international artists in 2018

At the same time, the restructuring of the Chinese art market that started in 2015 continues with the country’s auctioneers currently trying to reduce their unsold rates, according to Art Price.

Risks around the art market in China

Throughout 2018, the downturn in sales in the art market in China  was influencedby many factors, such as the government’s ban on selling Chinese antiques, the difficulties of extracting large amounts of money from China, and the increasing default on payments.

Constraints for Chinese collectors of art and International auction houses

One of the reasons of the Chinese art market’s slowdown in 2018 is the obstructive legal environment around the art industry in China: overseas auction houses cannot sell certain “cultural relics”, which includes Chineseartwork from before 1949. It does not come as a surprise that the cultural relics are the most profitable sales today in China.

 This is partly explained by the fact that China seeks the return of its own heritage. To benefit from the return, it won’t permit foreign firms to sell these antiquities in China. At the same time, foreign firms cannot auction Western antiques in China (from before 1949) either. Only Christie’s has been approved to conduct auctions in China, and Sotheby’s has been forced to collaborate with a state-owned multimedia company in Beijing in order to carry out some of its sales.

With the growing demands of the new Chinese collectors of traditional Chinese art, these regulations limit prestigious foreign auction houses to serve the domestic market, resulting on a visible slowdown in the market.

Difficulties on extracting money from China

In addition, a government banking policy states that Chinese citizens from the mainland are limited to taking out only $50,000 per person per year, including transfer to Hong Kong, Macau and Taiwan. Immediate payment by credit card is possible, but usually the money is transferred from Hong Kong even if the client is from mainland China. Even if clients are well-capitalized, delay payments still persist, which slows down sales in auctions. 

Defaulting on bids and payment in the Chinese art market

In the latest Art Basel report, Claire McAndrew warned that non-payment by Chinese art buyers is getting worse. It is partly due to problems about the authenticity and provenance of the artwork. Among all lots sold in 2017, only 49 percent of total sales were paid, and the nonpayment rate is even greater with lots over 10 million Yuan – $1,5 million-  for which only 28 percent of the value had been paid.

In 2016, Sotheby’s Hong Kong took bid winner Yu Kin-po to court accused of nonpayment.

At the same time, there was a lawsuit in a Manhattan courtroom concerning a $24 million Richter painting which a Chinese bidder, Zhang Chang, who did not pay up. There are many nonpayment case among lower prices than the multimillions, but such cases rarely reach the courtroom as the costs of taking legal action are just too great.

Another potential reason, McAndrew wrote, is a historic cultural difference: “In China, bidding is not always perceived as a legal obligation”, seen as the start of a misunderstanding that has caught out action houses in the West and in China.

In some cases, dealers find themselves locked in a chain, waiting for payment of an artwork sold to pay for the new one on which they had bid. In others, owners attempt to bid up their own pieces and dealers bid wildly to increase prices. In any case, speculation forces dealers to purchase items only hoping to find buyers after the event.

Fortunately, the restructuring of the Chinese art market should benefit Western auction houses, with a new legal framework aiming to eliminate unpaid and forces to an immediate payment for purchases of artworks.

Future speculations on the future of the art market in China

The Chinese art market has developed rapidly over the past few years, and most people still treat it as an investment. With a larger market share in China, Chinese art in general and particularly from the high quality and traditional end is known to have profitable returns on investment.

The year 2018 has seen a slowdown in the Chinese art market, and experts’ predictions on the future are varied. Some of them expect to see growth in the market, with Chinese art gaining popularity in auction salesrooms across continents. Sales growth will be expected as well in Mainland China, thanks to a return to Chinese culture by repatriating antiques and investing in Chinese traditional-style art.

However, a new generation of millionaire Chinese collectors with a real love for art is increasingly interested in international contemporary art. Art experts then predict an end to the boom in the Chinese art market while spending on art in China is growing steadily.

International auction houses should be aware of the limitations and risks on selling art in China or to Chinese buyers. Currency restrictions and defaulting on payment are bound to negatively affect the art market in China if the government does not rush into regulation reforms.

Author: Ines Beneyto Brunet

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Full transcript below:

Matthieu David: ​ Hello everyone. I am Matthieu David, the founder of Daxue Consulting, and this China marketing podcast, China Paradigm. Today, I am with Simon Vericel. You are the founder of Influence Matters, and you have been in China for 17 years since 2002.

Simon Vericel: I arrived in Shanghai in 2002, and I have been in Beijing since 2004.

Matthieu David: ​ You founded Influence Matters in 2015, but you started many other initiatives in the PR industry and advertising industry in Beijing. You focus on tech PR, more specifically, B2B tech in China. That’s one thing I’d like to define more precisely with you, in terms of content. What is and what is not a PR strategy in China? You are activating some campaigns on social media and also very active offline in events, which is also a PR strategy in China. But social media for me is not clear whether it’s PR strategy in China or online digital marketing in China. I’d like to understand better what services you provide to your clients like Origins Technology, Air Visual, Fyber, Day Day Up, some mobile marketing and service app, some consumer tech, some blockchain companies like Pascal, Crypto Kitties, enterprise software like Terark and even automotive industries. You are very tech-oriented.

What is the size and story of your company?

Simon Vericel: More precisely, we provide PR strategy in China for B2B tech in China. Most of our clients are start-ups, SMEs, and scale-ups. All of them are foreign companies that we help in China. PR strategy in China differs from other types of communication because use third parties for communication. We provide PR strategy in China, which means we start with the communication strategy in China for our clients. They usually have a global communication strategy or none at all. We are going to define their communication strategy in China. Once we have a communication strategy in China, we are going to define their messages and stories for China. We put together the content that can be press releases, articles, interview material, and social media material. We are going to disseminate that content on various channels, primarily the traditional media in China, which is very much online, and social media. We also support our clients in events and help them put together.

We use third parties like social media influencers who have followers aligned with our clients and events. We do not communicate directly with the customers of our clients. We go through one of these third parties. That is the difference between marketing and PR strategy in China. Marketing and advertising are direct communications with customers. For example, if you work with social media campaigns for our clients, because our clients are smaller, most of the time, they don’t do big campaigns on social media, so we have to help them build their presence on Chinese social media. We register for them, set up their WeChat Official Account, Weibo and Taobao account, usually on the main platforms, not secondary platforms like Douyin. We build their presence and the first layer of the communication strategy in China through their followers on these platforms. Once we have a bit of follower, we work with influencers who are going to promote their social media campaigns to gain more followers in their target industry. We only do B2B tech in China, not B2C, which means we don’t work with game launchers, for example, or consumer tech like product launcher. But we work with industrial companies in China. We work with blockchain, who are service providers in blockchain through other industries like E-commerce industry. We work with the gaming industry, like game developers or problematic advertising platforms. Games outsourcing companies could also be our clients because their targets are e-game developers. Same for the industry where we are working on semi-conductor or the industry of small manufacturing tools, where the target industry is going to be the tech industry for any industry for semi-conductor or manufacturing industry for smart manufacturing use.

Matthieu David: ​ Could you tell us more about your size now?

Simon Vericel: We just celebrated four years last month. In the past four years, we grew to 16 people. We just opened an office in Shanghai last month. We have 4 people in Shanghai and 12 in Beijing right now. We have really ambitious growth plans because we are looking at 35-40 people by the end of 2020. We want to double the size of the team of the company every year.

Matthieu David: ​ From the point of view as an entrepreneur in China, isn’t it difficult to grow the size of the team based on the fact that most of the PR strategy in China is on a project base, not a retainer base like every month getting some services?

Simon Vericel: Most of our business in on a retainer base. We work on six months to one year, sometimes more, on the retainer programs for our clients. We currently have 10 active clients, 9 of which are retainers, so we just have one project, a three-month project that should turn into retainer after that. We build on the retainer base and make bonus money on projects.

Matthieu David: ​ If I am a company in the B2B tech in China, I want to advertise in China or build my PR strategy in China, how would you approach my topic? What questions would you ask me? What should I bring to you to start working with you and get a bit of visibility in China?

Simon Vericel: We have a business-goal-centric PR strategy in China, which is a bit different from a lot of other companies here. Because we work mostly with smaller companies, we are connected with their business goals. We spend a lot of time understanding and dissecting how different the business goals of our clients are going to be in China. There might be a lot of different goals, depending on the size of the company. Some might come to China for the first time and are looking for an investor or partner to help them open the Chinese market. Some are at a further stage and looking for their second release with a need to recruit. A lot of our clients are developing their businesses in China. We spend a lot of time really understanding what they are trying to achieve as a business in China, so we can connect our communication strategy in China, messages, channels and the people who we are going to talk to for them, based on their business goals.

Matthieu David: ​ Could you tell us more about a couple of cases that you have worked on to illustrate the event, digital marketing in China and so on and how they are articulating?

Simon Vericel: I’ll give you one clear example that we’re working on right now. It’s for a startup that just celebrates its first anniversary now, a software bug detection tool. It is very B2B tech in China. They are built by four founders that are extremely experienced in compilers, a kind of software development tools. They built a new way to detect bugs in the development phase of the software. Their clients in China are any companies that develop software, such as our company, banks, government offices, game developers, or software developers. They will launch their product a bit later this year. Right now, they are starting to build their awareness in the B2B tech in China. They are trying to reach those companies and their CTOs, people who are in charge of the development of software to let them know about this new product and the company. We just spent the first-month engagement with them, a six-month engagement, for now, building more of the fundamentals of their communication strategy in China. First, we put together the company introduction, the product introduction, the biography of the founders, all the materials that we need for the first layer of their communication strategy in China. We build that into a press kit, the material that we are going to send to the press whenever we need to work with them. At the same time, we also build their social media channel like WeChat that will launch next week. By the end of this week, we even built their Baidu Baike, a very important platform, especially for software companies. We also built a communication calendar for the next couple of months so that we know when we are going to do use PR strategy in China, either an announcement like a press release or press event to connect our client with the key media, or developing some case study articles for them to publish and placing in the specialized press that they are targeting. For example, there is press specialized in software, food, banking in China. We also built a calendar of events over the next six months to include any event that would be interesting for them to attend, either as an exhibitor or a sponsor, because it can support their lead generation in these events.

We will support it over the next five months, in developing content and running media relations to get some awareness in the specialized press. Running a social media account can help the company draw a solid base of potential customers that will follow its social media accounts and get them to the right events with the right PR strategy in China at these events, so it’s lead generation efforts will be easier when it goes there.

Matthieu David: ​ In this case, you build its presence in China for it to be seen and reachable like the WeChat account, a website or at least an account where it can rank on Baidu through Baidu Baike, which is equivalent of Wikipedia in China but made by Baidu and very well ranked. 

Simon Vericel: We have a network of partners for things that are not directly related to PR strategy in China and support our clients when they need. We have an SEO partner if a client needs a website in Chinese or to localize their website. If they need video content or graphic design, we have partners doing that. As an agency providing PR strategy in China, we work on the messages and written content, which includes press releases, articles, content that is written, and anything that is designed by working with a partner.

Matthieu David: ​ Why did you decide to focus on the B2B tech in China? It’s a bit contrast for me because there are so much press and hype in consumer tech on CES like Xiaomi, Oppo and so on and China is really good at this. There are plenty of companies in consumer tech.

Simon Vericel: First, I am a geek, and that’s the main reason why I am more interested in B2B tech in China. I have always been passionate about innovation, innovators, and technology in general, and the innovators are mostly in B2B tech in China. The innovators, who invent chips, chip design or applications, don’t necessarily think of consumer applications when they are developing, because consumer applications come much later. If you look at the new phone like OnePlus, a very good Chinese brand, all the technology in that phone was invented five, six, ten years ago. The technology invented today is going to be on mobile phones in five, six, ten years from now. That’s the main reason why I got into B2B tech in China because I am a geek.

Consumer Electronics Show is very big in the US, but imagine that CES in China only takes 3-4 halls of the Shanghai Exhibition Center that counts 17 halls altogether. Every March, there is Semicon China, the biggest semi-conductor show in Asia. This year, it took all the 17 halls, plus 10 temporary halls built in the middle. The largest show for the B2B tech in China is about ten times bigger than the largest consumer electronics show in China. Consumer electronics are not that interesting, because they are already finished products, the innovation of which happened a long time ago. We are working for some clients, who are inventing the way the factories are going to work or applying artificial intelligence to e-commerce or marketing. One of our clients, a communication agency, is doing digital marketing in China for companies, but it uses data and artificial intelligence, which are all technology. We are working for them and helping their clients understand why digital marketing in China should focus on technology before an actual campaign. To me, it’s a lot more interesting to work on what’s inside, what makes B2B tech in China work rather than the finished products.

Going back to semi-conductor, one of the good examples I’d like to say is that China consumes about 90% or 70% of the semiconductors made all around the world, but it only builds 10%. It means that 90% of those semiconductors in China are imported from other markets like Korea, Japan, the US, and Europe. Our position as a PR agency focused on B2B tech in China is just what we should be, because there is a huge market in China for B2B tech in China. And there is a lot less competition than in B2C communication strategy in China.

Matthieu David: ​  Could you name a few events for B2B tech in China?

Simon Vericel: In B2B tech in China, the events are very specialized. There is a bunch of events where you have to be. If you are a semiconductor, an industrial application, a manufacturing company or a robotics company, there is a Semicon China in mid-March every year. There is a show about wind energy every year in October in Beijing for all the companies that are in wind power, from turbines to cables to wind power to connectors. There are a couple of shows that focus on locomotive technology like Auto Shanghai. I was there this year for a client. There is a whole section of the show for B2B tech in China about cables, seats, etc. One of our clients that makes industrial connectors for the robotics manufacturing industry, wind, and railway industry goes to a show every month specialized in the industries that it focuses on.

Matthieu David: ​ Would you mind mentioning some verticals that foreign companies can have a huge untapped market in China like factories? 

Simon Vericel:  Most verticals will be in semiconductors in China that will be interesting for foreign companies because a lot of future technology is happening in China. Take mobility as an example; whether it is electric vehicles or rail technology, China is still inventing the fastest trains right now. These trains need a lot of chips. Then we are going to have mobile communications and mobile phones that still use a lot of foreign technology.

We have one client, a French semiconductor company that covers 100% of mobile phones all around the world. Nobody knows the name of the company, but it does the base of the semiconductor material on 20 or 30 chips in your phone. With 5G in China, this is going to grow to 50 or 60 chips. It has actually calculated the millimeter area needed for 5G. Semiconductor is definitely an area that will has a lot of opportunities for foreign companies, in chips or the type of technology for 5G, because China is going to be one of the first launch markets to roll out the nationwide network for 5G, which means it’s going to be the first market to develop applications for 5G. These applications for 5G will connect everything with the Internet. They will need a lot of chips, technology, and algorithms to develop artificial intelligence or machine learning applications very fast. China is going to lead the world in the development of any applications built on 5G in the next 10 years.

Mathieu David:  I know you are very involved in China France relations through La French Tech, an association promoting French technology all over the world. You have chapters in Beijing, Shanghai, New York, Silicon Valley, and all around the world. Could you tell us more specifically about what you do with La French Tech in China and what you see from the China France relations?

Simon Vericel: I founded the French Tech Beijing almost four years ago. The chapter in Shanghai is a little bit older than the Beijing one, and as you mentioned, there are chapters all around the world. Our goal is to promote French innovation globally and create a community of French entrepreneurs in China with local entrepreneurs in B2B tech in China. We have already created a community of about 400 people in Beijing, a bit bigger in Shanghai. We work with the French government a lot at the same time because we are supported and sometimes funded by it to create a connection between France and other markets like China. In the past couple of years, we worked very hard to create connections in various technologies, but last year and this year mostly in artificial intelligence, because there are big similarities in the expertise. We need artificial intelligence and more generally, what we call a deep tech, which is everything based on an algorithm in between China and French.

Chinese universities output some very good software engineers, who are good at designing new algorithms for artificial intelligence. The French university system is also very good at that. We have some of the best software engineers in the engineering schools around the world. The head of artificial intelligence in big American and European companies are French like the Head of AI at Facebook, Spotify, etc. They are all French. They have teams out of France, and a lot of them are also Chinese. We are trying to create some connections between innovators in China and France. Hopefully, some sparkles are going to happen, and we will have some projects and cooperation, at the government level, individual level, and company level between these two countries. Both countries benefit from each other’s expertise to build China France relations and ties. It has been rather successful so far because we understand each other pretty well. We are also in a position in the past two years that let Europe as a whole be interested in China. China’s trade war with the U.S. that blocks a lot of American companies from having an open door in China let France and Europe have a much more open door here. There are a lot of opportunities for French companies to leverage the Chinese market through our core technologies. We, as French Tech, identify where these opportunities are and put people together.

Mathieu David: French Tech is more about giving visibility to French technology and labializing some companies, more than being an organization with business and so on, right? 

Simon Vericel: La French Tech is a community more than an organization, were on the accounts of the French government, the President or Vice President has to oversee La French Tech. We are recognized recently as one of the communities in the world, but not as an association or a proper governmental organization. We are just a group of people who love innovation and technology, and France and China at the same time. We are creating China France relations. Our main goal is to be completely disinterested in any profit. We do it really for the love of France and hoping France to stand out because it has the tools, technology, and skills to stand out. It’s just very bad at communicating its strengths. The government realizes that and gives the keys to a community of entrepreneurs in China to actually do that, which was a very clever thing to do, because we are working 120% on our companies already, another 50% on our families and another 20% on La French Tech, because we are promoting China France relations in technology. If you put it in a very broad way, that’s what we do.

Mathieu David: Would you mind talking a bit more about a topic that has been in a bit hype over the last years, Chinese companies going global? I know you worked specifically on this segment in a company called Hill+Knowlton Strategies China.

Simon Vericel: It was actually my first company. I started there after I graduated in 2005. My first job there was working for the 2008 Beijing Olympics. It was the agency that does communication strategy in China and around the world and international media relations for the 2008 Beijing Olympics. During that, we worked for some of the sponsors of the Beijing Olympics, many of which were Chinese companies, including Haier and Tsingtao Beer. Right before the Olympics started, some of the Chinese sponsors asked us to support them in doing international communications for them. I left the Beijing Olympics team and started building the China Going Global team. The China Going Global team was exactly what the name says. It was helping Chinese companies as the first ones starting to go overseas build the brand and markets outside of China. Our first big client was Haier at one point. Because we were working for Tsingtao Beer at the same time, I was in Tsingtao every two weeks, the city that became the headquarters of both Haier and Tsingtao Beer. We helped them build their international communications system, their communication strategies in China, messages and also train the executives in international communications and media relations, because they had to understand how to respond when there was an issue with a product, such as a washing machine of Haier breaks up in the U.S. For example, our team of 130 people supported Haier in 17 countries around the world, including New Zealand, India, Pakistan, France, Germany, Italy, Spain, Canada, U.S., and a couple of countries in South America. We had one monthly global call with all of them. No one understood anything, because you had 17 different English accents on the call. Once you went from New Zealand to a Pakistani accent, everybody was lost. But it was a fun thing, and we did that for a couple of years because we were working for Haier, which was one of the most high-profile companies going global. We started working for a couple of others like Hanvon Technology, a Beijing based e-readers, and facial recognition company. We worked for Bank of China and China mobile. We built a team of around 10 people in Beijing specialized in helping Chinese companies going global. We had centers of expertise pretty much all around the world with people specialized in helping Chinese companies in their own market, whether it was Europe or the US. It was an interesting trend at the time. Actually, not a lot of these companies were very successful, because these companies didn’t really see the international market as important for them. China is still so big. They still have a massive growth in China that 95% of their resources were in China. They were going global mostly because other companies were doing it, and they wanted to do it like them. Haier never really managed to build a huge brand. They were actually more famous outside of China 10 years ago than they are now.

Mathieu David: Which Chinese companies do you analyze as successful overseas?

Simon Vericel: Lenovo is probably one of the most successful cases overseas and one of the rare ones, but it did that through the acquisition of IBM and integrating IBM’s global network. It basically acquired the international position. Haier tried to do the same thing, but it didn’t succeed. It acquired GE Home Appliance Division 10 years ago I think, but it’s not something that we necessarily remember, whereas you remember Lenovo. Interestingly, Lenovo is doing well overseas. It does have some issues as a company image in a couple of markets around the world, but it has been super successful in building products that the rest of the world wants like mobile phones. There are also other Chinese companies that have been successful overseas. Right now, there is ByteDance with TikTok, the international version of Toutiao, which is massively successful outside of China. They managed to build a product that is new outside of China and built on the success in China, which doesn’t necessarily work outside. That is so different and good for them. We’ll see more, but we’re not going to see a huge amount of Chinese companies being successful outside of China so soon, because they still have a massive market.                  

Mathieu David: Thank you very much, Simon. Congratulations on everything you achieved and thanks for your time.

Simon Vericel: It’s been a pleasure and fun. I look forward to listening to myself and seeing comments on this. If anybody wants to ask me any questions, I’ll put some contact details next to your video somewhere, a link to my LinkedIn or something. I’ll be happy to connect with anyone who wants to know more.

Mathieu David: Thanks to everyone for listening. Bye.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article Podcast transcript #51: Favorable PR strategy in China for strategic business development is the first one to appear on Daxue Consulting - Market Research China.

For the rest of the world, it might already be a brand-new year, but not for Chinese people. The Chinese Lunar New Year is on the 5th of February in 2019. It is the most important traditional Chinese festival, which is also known as ‘Spring Festival’. The Chinese Lunar New Year is a challenge for international brands to interpret as the festive holiday carries very special significance to Chinese people. In this article, Daxue Consulting highlights some controversial examples from this year.

How can Chinese Lunar New Year be interpreted?

 1. Use the zodiac animal of the year

According to Chinese 12-animal zodiac, 2019 is the year of the pig. This appears to be a straightforward symbol of the New Year, yet much could be done wrong. Some animals are easier to use than others, e.g. rabbits, which is cute and harmless in both East and West cultures. But when it comes to pigs, foreign brands should be careful. Though pigs are a symbol of affluence in Chinese culture, they also could be used to call someone lazy or foolish.

We identified some negative reviews from netizens regarding campaigns such as the one of Gucci: some think this Chinese New Year special collection is hilarious; some are mocking what Gucci will do for their photo shooting next year (as the year after is the year of a mouse). Nevertheless, many Chinese netizens think the piggies are pretty cute (‘Meng’ as they said) and really like the droll pig figure on the products.

Screenshots: GUCCI Chinese New Year special collection on its Chinese official website
(CNY17.600 = USD2600, CNY12500 = USD1850)

A totally different strategy has been used by France luxury handbag brand Longchamp and Japanese high-end cosmetic brand SK-II, these two brands both use the element of pig’s squiggly tail in a more discreet and easily acceptable way.

Mr. Bags X Longchamp Limited edition

SK-II Chinese New Year limited edition

2. Use the Chinese language/wordplay

At the beginning of January 2019, Italian luxury brand Bvlgari released a promotion campaign on Chinese social media WeChat for the upcoming Chinese New Year. This post has since been deleted, which used a wordplay with Jew and Zhu (猪, Chinese for pig). Jew supposed to be the short version of jewelry and pronounced similar to Zhu in Mandarin, Bvlgari intended to use this smart mix-up to promote their Chinese New Year special collection of jewelry & watches. However, the brand seems to forget the other meaning of Jew and ironically the animal pig is ‘not kosher’.

Screenshots: Bvlgari’s now-deleted WeChat post promoting Chinese New Year special collection

3. Using other traditional Chinese elements

Burberry also launched a Chinese New Year campaign, named “Modern New Year” (摩登新禧). The luxury British fashion label has snapped up two Chinese very powerful influencers Zhao Wei (赵薇) and Zhou Dongyu (周冬雨) for this big campaign. The idea of the shooting is to set a scene of a family portrait showcasing the luxury products. Unfortunately, some Chinese netizens thought the ad lacked warmth: ‘They all look so isolated from each other; no one in this pic seems to be happy.’ On the other hand, a lot of Chinese consumers see this ad as stylish and modern. It is clear that Burberry has successfully managed to attract the attention of Chinese, as both opinions have caused heated discussion on Chinese social media.

Burberry’ Chinese New Year campaign “Modern New Year” (摩登新禧)

Another example is from U.S. high-end cosmetic brand Estée Lauder, which uses Chinese traditional paper-cut styled fans and changed the bottle color of their star-product from brown to red for the Chinese New Year campaign. This ad successfully creates a traditional and festive era, and at the same time, stays chic.

Estée Lauder Chinese New Year campaign 2019

Do NOT neglect the perception of local Chinese

Not long ago, Dolce&Gabbana released three now-deleted promotional videos presenting a Chinese model eating Pizza and spaghetti using chopsticks, these ads were accused of being stereotypical, insensitive and disrespectful by Chinese consumers. With following poor China crisis management of D&G, the brand received huge reputation damage in China. It is doubtful that insulting China was the intention of D&G, instead, the brand tried to engage with Chinese consumers by using typical Chinese elements like chopsticks. Unfortunately, they neglected the perception of Chinese consumers by calling Italian food ‘great’ and chopsticks ‘stick-shaped cutlery’. To avoid misunderstanding and unnecessary brand image damage, international brands need to put great value on consultation from local experts.

Author: Chencen Zhu

Chinese culture is unique and very different from Western one including holidays and festivals. Even the New Year, Chinese celebrate differently, for example of a cultural feature is the date of the New Year, namely January-February based on the Lunar calendar and every year the date of the holiday varies. All companies, especially international luxury brands do not miss the opportunity to make a marketing campaign on the eve of the holiday and get more loyalty and brand awareness from Chinese customers. But to make sure that your campaign will go successfully and your brand name will not be spoiled, we recommend to consult with the experts, who are familiar with the Chinese market characteristics.

Daxue Consulting can create and manage complex and various methodologies to answer your Branding issues, to find answers to all questions do not hesitate to contact our project managers at dx@daxueconsulting.com.

This article International luxury brands meet Chinese Lunar New Year 2019 | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

Two weeks ago, several official news accounts and KOLs on different social media platforms in China, including Weibo, WeChat, Tencent Video (腾讯视频，a Chinese video streaming website with over 500 million mobile monthly active users and 63 million subscribers) and Bilibili (a Chinese video sharing website) posted a video named Chopsticks. This chopsticks video got huge attention these days, which was produced by CCTV for public service in 2014. Why did this video from 4 years ago suddenly just go viral among the Chinese netizens?

Screenshots: “Chopsticks” on CCTV News WeChat account got 100,000+ views, Weibo KOL names 艾达出生在美国 got 114,000 views and 意匠id got 1.7 million views, on TencentVideo this video got 790,000 views

What is the Chopsticks video about and why did it go viral on the Chinese social media?

This 5-minute-long video was made of 8 small stories happening across the whole of China:

A baby’s first taste of food with chopsticks (Inspiration);

A mother teaching her toddler daughter how to use chopsticks (Inheritance);

A child learning table manners (Courtesy);

As Chinese say: “Do not move your chopsticks before your elders do so.”

A mother cooking for her son who came to visit after three-years of working away from home (Caring);

An elderly man putting bowls and chopsticks to offer sacrifice and pray to his late parents (Longing);

A family inviting a lonely neighbor home to celebrate Chinese New Year together (Good-neighbors);

As Chinese say: “One more guest is just one more pair of chopsticks.”

Husband bringing home a pair of children’s chopsticks to his pregnant wife after a long-day work (Interdependence);

Having dinner with the whole family and sharing food (Gratefulness).

This video uses chopsticks as a medium of emotional bond and cultural inheritance. No matter which part of China is one is from, which dialect one speaks, or what food they eat, by using chopsticks, people share the same culture and history. Most Chinese netizens describe the chopsticks video as touching, they also feel a sense of pride having such graceful cutlery with a long history.

What is the Dolce & Gabbana controversy?

On Nov. 18th the Italian Brand Dolce & Gabbana (D&G) released three posts on Chinese social media platform Sina Weibo as well as other international social platforms like Facebook and Instagram to promote its upcoming runway show in Shanghai (planned on November 21), with hashtags #DGLovesChina# and #DGTheGreatShow#. D&G introduced their first episode of promotion video on Chinese biggest microblogging platform Weibo with the sentence: “First up today is how to use this stick shaped cutlery to eat your GREAT traditional Pizza Margherita.”

Screenshots from Dolce & Gabbana’s official Weibo account on Nov. 18th, 2018

Unfortunately, it didn’t end there. On November 21st Weibo users posted screenshots of a conversation between D&G designer/co-founder Stefano Gabbana and an Instagram user, showing designer’s offensive comments about China and its people. Although the firm claimed that Gabbana’s Instagram accounts had been hacked, it triggered massive anger among Chinese netizens. As a result, the numbers of Chinese celebrities boycotted the D&G runway show because of its issue. The brand confirmed the cancellation of Shanghai Great Show on its official Weibo account just hours before its scheduled time. Many social media users in China labeled this video as stereotypical, insensitive and disrespectful, and some even interpreted it as racist. D&G deleted the posts within less than 24 hours after its release.

Tips from local experts on the successful development of a foreign brand in China

E-reputation is crucial in China to build a well-known brand

According to McKinsey & Company: “Since 2015, the primary driver of increases in luxury spending in China has shifted from consumers making their first purchases of luxury goods to incremental spending from existing luxury consumers. This transition means that luxury-goods players need to invest more in building loyalty among existing customers.” E-reputation and word-of-mouth are extremely impactful for a brand to develop in China. The power of social media should not be underestimated. No brand should take a risk to lose their reputation on Chinese social media.

“It takes many good deeds to build a good reputation, and only one bad one to lose it,” Benjamin Franklin.

Understanding the local Chinese culture by foreign brands to avoid sensitive topics

“Western brands seeking to enter and expand in China should be aware of Chinese cultural sensibilities,” said Angelica Cheung – Editor in Chief of Vogue China – reported by WWD. “Instead of dictating everything from head office, they would gain a lot from listening to the opinions and insights of their Chinese teams.”

As Chinese merging middle class holding stronger purchasing power, they also expect foreign brands to respect them and their culture. For international brands who are not familiar with Chinese culture, it is extremely important to get acquainted with the local sentiment and be careful about the cultural expression.

In-time and proper crisis management

Things spread with an uncontrollable speed in the modern digital age, thus crisis needs to be responded quickly and concisely. The backlash of an issue on social media is strong and can easily cause a series of chain reactions. To be able to avoid the irreparable damage to the brand image, international brands need to put great value on strategies of crisis management in China. 

Author: Chencen Zhu

Daxue Consulting’s Expertise: Business Turnaround in China

Daxue Consulting has developed a set of close-to-market methodologies that identify new market opportunities in China, which fit the ambitions and available resources of its clients. Daxue Consulting also works with growing companies, assisting them with various challenges from market shift anticipation to internal re-organization and deciding new ambitious objectives.

This article D&G issue in China: Why the video about chopsticks suddenly went viral on Chinese social media | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

[more about Branding in China]

Most foreign companies, in an effort to break through the Chinese market, have translated their brand names in Chinese. Indeed, this language is fundamentally different from English or French in its pronunciation, and this often translates into names that can hardly be articulated by Chinese people. Thus, companies often choose to translate brand names using a phonetic transcription, with or without an additional meaning. However, though simple it might appear, this type of translation can turn out to be quite tricky if you don’t pay attention.

How to translate brand name in China

Many companies have translated their brand names beautifully, adding a new meaning that appeals to the Chinese. For example Coca-Cola, 可口可乐 which translates as happiness in the mouth; Head and shoulders 海飞丝 which means “silk flying over the ocean”, or BMW 宝马, the treasure horse. While this method accurately copies the original pronunciation of the brand name, the added value that comes with its meaningful translation also helps the company in gaining market share!

However, with the cultural wealth of China and the numerous hidden meanings that belong to the Chinese language, comes the tricky trap of treacherous translation: let’s take a look at PUMA 彪马 which translates as strong horse or tiger horse. In traditional Chinese culture, this name alludes to longevity, elegance, success; thus adding to the brand the ideas of dynamism and athleticism. While it might seem like a successful brand name translation, when taking a look at search results on Google and Baidu, we can notice a significant gap between the rarely searched chinese name and the much more appreciated original one. Why so? The 彪马 refers to the horse, a pleasant and gentle animal; in direct confrontation with the idea of the puma, which is known to be fierce, and wild, showing leadership, power and energy. This contradiction effectively leads to confusion and ultimately… oblivion.

Chinese adaptation or cultural identity protection?

Keeping that in mind, there’s also one very special case: the one of Carrefour, 家乐福 which translates as house of happiness and fortune. Happiness and fortune even more are ideas that belong in the very roots of Chinese culture, and that hold a deep meaning to every Chinese home.

Nowadays, few are the Chinese who don’t know about Carrefour, but this ultimately leads to one subtle problem: due to its deeply traditional Chinese name, Carrefour lost its French identity which originally was one of its main qualities, seeing as many Chinese idealize France. Most Chinese people today link Carrefour to a China that’s old fashioned, dated, unattractive; and that has tarnished the image of the French company, which led a communication campaign on the origins of the brand, in hopes of a new beginning.

This also relates to the Gucci case, 古琦 which means ancient and precious jade. While it accurately relays the idea of luxury and elegance, it also has a connotation of tradition and heritage; which completely overrides the notions of modernity and trend that are strongly needed in a fast evolving fashion industry. Still in the same market, we can take note of the firms that have chosen an acronym for their Chinese brand name translation: for example, Louis Vuitton which, instead of the regular phonetic translation 路易威登, is often referred to as LV; and the same applies to Yves Saint Laurent which goes by the name of YSL in China instead of its phonetic alternative 依夫圣罗兰. As Chinese brands often have at most two or three characters, the high number of characters in the phonetic translation of these brand names might be the reason as to why people refer to them using the acronyms that are much more easy and convenient.

Eventually, companies have to be very careful when translating their brand name, whether it be with the double meanings (because of the different accents of the Chinese dialects), or with the coherency of its translation.

See also: http://sinonym.net/

http://www.chinesenames.org/

This article Translate brand names into Chinese is the first one to appear on Daxue Consulting - Market Research China.

This article has been provided by Sinonym team in China. Sinonym is naming consultancy which offers an unique method and expertise on naming process in China. The Sinonym system aims to provide peace of mind that the chosen name is high potential and low risk. Its approach uses a time-tested system for generating and vetting name as well as an unique cross-linguistic and cross-society feedback panel, through a partnership with one-of-a-kind Phonemica, the award-winning social media site for Chinese languages.

Find a name in China is a brand campaign

Find a name in China  is not an easy task when a foreign company extends its business to China. There is different ways to manage it and some of the biggest worldwide companies did not showed the same strategy.

Some companies, like McDonalds, choose a name which sounds similar as“McDonalds” (Mai Dang Lao) in Chinese. Other foreign companies like Apple Inc. literally translate the meaning into Mandarin Chinese “Ping Guo” (苹果); which also means “apple fruit” in Chinese. Finally, there are some companies that do a combination of a direct translation and a phonetic one like Starbucks. They literally translate the “star” of Starbucks and make the “bucks” sounds the same in Chinese.

There are also some examples of excellent translations in automobile, food, luxuries and finance industries which not only make an easy combination of direct and phonetic translation, but also use remarkable words to lure customers` curiosity. For example, Acura named its Chinese brand “Ou Ge” which means praise or eulogy and deliver a message to the consumers that the car is of excellent quality. Another example is Benz which is named as “Ben Chi”, it is a positive written language for “run” and is used to depict a grand spectacle. This shows the brand`s world class quality and top grade.

Getting the wrong name can prove to be disastrous for a foreign firm

Foreign firms need to pay enough attention to find a name in China. A good name can bring a company to prosperity in China. Compared with other factors such as a good business model, quality control and strong network with the local government, possessing a good Chinese name may not be the top priority for executives of many foreign businesses. However, in fact, many firms, even among the most prestigious ones, may find that overlooking the role of a good, suitable name can bring problems.

Google, for example became the object of ridicule in China because of it Chinese name “Guge” which was publicly considered to be strange and unsophisticated. The name upset a great number of its Chinese fans when the world`s largest search engine first launched its Chinese brand name “Guge” in 2006. The name, which in Chinese means “harvesting song”, sounded having nothing to do with the business and being inexplicable. The disaffection drove a group of Google Chinese fans to create a site called noguge.com, aiming to collect suggestions for alternative names. More importantly, people despised the name because it was hard to pronounce and this resulted in lower brand awareness in third and fourth-tier cities than ever expected.

Naming is a specialist profession and having domestic employees which can translate into Chinese is not enough to find the most suitable name. For multinationals, naming its brand in Chinese is crucial; it is a matter that relates to its reputation. Being assisted by a professional China-based company is the best solution to be sure to take the best decision. Sinonym is one firm which can help foreign companies to set up the first stone of your branding strategy in China.

Source :

http://www.ibtimes.com/apple-inc-aapl-iphones-not-too-expensive-chinas-smartphone-users-study-1561439

http://www.huffingtonpost.com/news/mcdonalds-china/

http://www.nytimes.com/2006/01/02/business/worldbusiness/02iht-web.0102starbucks.html?_r=0

http://sinonym.net/

http://marketingtochina.com/sinonym/

This article Sinonym about naming in China is the first one to appear on Daxue Consulting - Market Research China.

Audi China lead the luxury car market

Audi China is no exception. In 2013, Audi begins is now gearing up to open its second assembly plant and producing its A3 sedan in FAW-VW’s Foshan facility. This establishment finally increases its carmaker’s capacity there to 700,000 units per year.

Interestingly, when it comes to luxury cars, the slowdown in the Chinese economy is having an adverse impact on sales of some of the premium luxury cars, such as Ferrari and Lamborghini. On the other hand, the affordable luxury car makers (A8 L, A6 L & Q5), such as Volkswagen, have been witnessing a great sales increase. The luxury car market is usually dominated by European manufacturers in China where Volkswagen’s Audi leads in terms of sales. In 2013, Audi China sold 491,989 cars in 2013 which saw a 20.67% than 2012, nearly doubling Mercedes Benz’s sales.

Long term strategy made Audi the first brand in China

Different from the rankings in other countries, Audi takes over the first place in China. The most influential reason is its long-term cooperation with FAW. This relationship has built Audi China a mature, stable partnership with its suppliers of car components. These suppliers master the most advanced technology of production in China and they share the same vision of quality with Audi. Mutual support, trust and seriousness create continuous power for quality enhancement. Moreover, the deep relationship has made Audi in China a vehicle for bureaucrats and government servants for quite a long time. The special relationship has brought strong sales as well as good branding for years.

On most recent auto exhibition on 20th April in Beijing, Audi China launched its new-energy solution – A3 Sportback e-tron with a series of 20+ types. Audi is charging into China`s green car market. Audi China has been making efforts on solutions for the minimization, of a sporty, environment-friendly high-grade car. Audi`s prospective is another reason for its leadership in China which attracts a lot of consumers and keeps consistent with the environment-friendly vision held by the government.

Branding strategy of Audi China

xiangce.baidu.com

Audi`s Branding strategy in China is also highly effective. For example, Audi’s sponsorship of top music, art, culture and sporting events is not a form of corporate philanthropy but rather serve strategic PR purposes. Audi China provides its customers and media persons with a wealth of opportunities to experience premium music and sporting events and premium lifestyle. By associating Audi with world-level events, the awareness and retention of Audi as a luxury car brand can be greatly enhanced among consumers and media professionals. Gradually, the brand of Audi becomes commensurate with luxury lifestyle and premium art in the minds of consumers. Meanwhile, Audi`s CSR practice is also representative of its PR strategy. For instance, in 2005, Audi joined United Nations Children` Fund in lauching a major CSR program “Driving Dream”. This project also helped promote Chinese public’s acceptance of Audi as a well-established corporate citizen.

Audi China has outlined a long-term vision for the mainland’s green car market as well as its improvement of its luxury products. As the most fuel efficient premium brand in China. Audi, with its locally built model in China (efficient start-stop technology & brake energy recovery), will step into new era with China`s rising economy,

Amy Wang, market research company China

See also : The NY Times / Forbes

This article Audi China : analysis of a successful strategy is the first one to appear on Daxue Consulting - Market Research China.