Tiffany Serbus-Gustaveson  0:18  

Happy Wednesday everyone I am Tiffany Serbus-Gustaveson of digital strategist with BWG Connect and we are a network and knowledge sharing group we stay on top of the latest trends challenges whatever is going on in the digital landscape, we want to know and talk about it. We are on track to do at least 500 of these virtual events this year due to the increase in demand to better understand the digital space. And we will do at least 100 in-person small format dinners. So if you happen to live in a tier one city in the US, feel free to send us an email and we would love to send you an invite these dinners are typically 15 to 20 people having a certain discussion around a digital topic and it's always a fantastic time. We spend the majority of our time here at BWG talking to different brands to stay on top of the different trends but love to have a conversation with you feel free to drop me a line at Tiffany@bwgconnect.com. And we can get some time on the calendar is from these conversations we generate the topic ideas we know people want to learn about and it's also where we gain our resident experts, such as WPIC, who's with us today, anybody that we asked to teach the collective team has come highly recommended from multiple brands within our network. So if you ever need any recommendations within the digital space, please feel free to contact us reach out to me Tiffany@bwgconnect.com. We have a short list of the best of the best and we will be happy to provide that information to you. Also note that we do have a talent agency BWG Talent that we will be happy to put you in contact with as well should you have any hiring needs. A few housekeeping items. We want this to be fun, conversational educational. So put those questions comments into the chat q&a. If you feel more comfortable, you can email me at Tiffany@bwgconnect.com we will be sure to get to them. And this is a 30 Minute Webinar. So we're gonna be moving pretty fast. We will wrap up formally at the 30 minute mark. So with that, let's roll and talk about China Digital and how to drive growth in 2023. The team at WPIC have been awesome friends, longtime partners and supporters of the network. So I'm going to kick it off to you, Joseph, if you can give a brief introduction on yourself. That would be lovely. And we can dive right into the information.

 
Joseph Cooke  2:15  

Thank you. You're great. Thanks so much Tiffany. Pleased to be here with you and our good friends at BWG and friends of the network, as always delighted to speak about what we're doing and what we're seeing inside of China. Just to give a quick baseline introduction, I'm one of the partners in the firm. We've been operating inside of AIPAC for about 18 and a half years roughly primary operations sitting inside of mainland China. Where we do the bulk of our work we've got operations in South Korea, as well as Japan and then spread throughout Southeast Asia as well. And then we've got an service layer throughout North America basically coast to coast. folks as well headcounts about 350 client counts, and that sort of six to 700 range. All in and we're fairly sector agnostic with the brands that it is that we work with big brands, small brands, brands, from all different types of sectors, our expertise lies within going from zero to one and then one to 100, inside of Asia and again, primarily China. And a lot of that practice and muscle memory that's built up is really applicable to a lot of different sectors. And brands are really looking for all sorts of different micro solutions. But ultimately, everybody's looking for growth inside of the region. as a whole. Our focus in terms of our expertise sits between generally four different key areas, we've got a fairly large data division, powered by a piece of technology we build which is called dis crypto. It's effectively web scraping on steroids it renders Jas it really has the ability to download the Chinese internet on mass, and then provide opportunities analysis three dimensional blueprints as to what the opportunities are for particular brands, SKU analysis, pricing analysis, as well as really dissecting what key competitors are doing inside the market, which can provide really, really clear instructions for what a brand should do to activate elements of growth inside the market. Our digital services and eCommerce and technology practices are fairly integrated to one another. creative content, development of media assets, media activation, all the performance based marketing and the creative. We've got a pretty high octane Creative Labs division that handles all of our content practice we've got a dozen live stream studios we do in excess of about 100 hours a day of video content per day that we distribute out inside the market about 1,000k walls and Koc is on payroll so really easy to mobilize and activate a lot of activity inside the market for many brands or eCommerce practice is generally end to end totally full stack and hoe is working directly and in depth Lee with every single one of the particular platforms inside of China. It's a very marketplace heavy region, which obviously we'll talk about today we do a tons of activation and liaison, administrative product approval, and then all of the operations that go along inside of these platforms as well. And of course, inside of China, right technological considerations is always a front burner issue. And so we've got a pretty strong enterprise grade tech division in house, which weaves all these various solutions together and then provides bespoke tech development, things like SAP deployment inside the market sfdc deployment inside the market, hosting ecosystem solutions, cloud deployment, etc. And we've got a fairly large logistics practice as well, we've got a couple of facilities both in the government bonded free trade zone, as well as domestically inside China facilities under ownership over activating and managing all sorts of different types of movement of goods in and out of the market. Just a quick overview from a bird's eye view there, you can just see generally, the markets that we activate in and that we touch the platforms that we work within. And just a special focus, again, on the logistics facility to give an idea of how this integrates into everything. But 180,000 square feet split between two facilities, one inside China for domestic activation, and then one of the government bonded free trade zone as well, which allows for cross border into China, but then cross border throughout the region as well. So these facilities are licensed and integrated to every particular marketplace inside the region.

 
Tiffany Serbus-Gustaveson  6:18  

Awesome. Well, I know personally, and from having been a director of eCommerce and the thought of going into China, and that it's a, it's a heavy lift. So it's I guess, let's start at the overview of you know, what is the digital landscape of China today? And what does a Western brand need to know before entry?

 
Joseph Cooke  6:36  

Sure, I mean, we can talk high level in terms of the overall general metrics that we see. So obviously, it's a humongous market, right. And we've got some pretty exciting numbers out there in the region. So I mean, if you just looked in aggregate, right, the projections, and the numbers are basically three over 3 trillion in annual receipts by 2025. And this is what basically, we're seeing all the general banks and big consultation forums out there, agree on China's surpassed a trillion a couple of years ago, which basically gives it the award as the world's biggest eCommerce market, right. And this really only pulls together those that are pressing by now adding the card checking out and actually paying, right. So the blast radius that goes beyond that, with respect to the influence from online to offline, all these other kinds of things, shows tremendous value well above this. But no matter what sector one is in, or what particular size that they are, when you get to numbers of this size, there's opportunities really that sit out there for everyone. The other notable inside this market to recognize is that over 50%, of purchases, retail base purchases in China, are occurring online. And this may be one of the only markets globally where this is actually the state of play. So what we're seeing is a move away from brick and mortar pretty fast. This has obviously been accelerated through COVID. And then the numbers as a whole are being really big. And so you can look at key metrics that other large companies have brands like Nike brands, like Lululemon. And if you look at what they're doing inside of China, and the importance that they're recognizing that digital is playing, it really is a digital first market. The the the size of the market is obviously huge. The number of people, you know, surpasses, you know, I think basically it's India and China right as the kind of key contenders for world's biggest market. So there's a lot of opportunity, there's a lot of capacity, and there's going to be a lot of growth for many, many years to come. And it's a fairly digitally savvy market, but it's actually not yet fully online, which is the other exciting thing here as well is that there's still a lot of room and growth to go. When you start to look though, at what the makeup of the market is. And you get into the UX to answer the question of like what it brands need to know. I think the cats out of the bag, people generally understand that it's an internet, heavy market. It's a mobile first market as well. And if you just look historically, at the UX of the life of digitization inside of China, China basically went online, around the same time that the iPhone came out. So the introduction of mobility and smartphone technology and online connectivity basically have been in parallel, there wasn't the sort of 10 or 15 year, internet Headstart, and then mobility became a thing thereafter. And so everything's been basically built around mobility based connectivity. The other thing that I just want to generally note as that you know, humongous market mobile first big country as well, is that it's generally very marketplace forward so we don't get a lot of D to C site development. Shopify isn't really a thing inside China, even though Shopify may have some optimization with It's for Chinese. It's not a.com or.cn Direct based play, it's all very marketplace driven and app based driven. Team all obviously, the flagship platform owned by Alibaba, you know, is the king of the market as it stays right now. But their market share is starting to shrink a little bit. And the contenders that we have really, that are sort of fighting for that position is JD around 20%, it will just probably going to stay around 20%. We have third tier platforms, like Pinto, which are addressing second tier third tier retail needs that are inside the market. And then a mix of other and we're going to talk a bit today about some of these emerging platforms as well, that are going to offer shortcuts, basically, for brands to kind of backdoor the market to come into a cheaper customer acquisition environment to be able to drive growth.

 
Tiffany Serbus-Gustaveson  10:50  

Awesome, friendly reminder, any questions, comments, put in the q&a bar or chat? So mobile key marketplace driven? Can you tell us a bit about the typical customer journey in China?

 
Joseph Cooke  11:05  

Sure, so perfect, David. Yeah, sure. So it's the there's not there's nuance in the micro, there's nuance in the last mile, there's nuance in the technologies that are very localized to China. But we still follow the sort of classic hierarchy of customer journey through the funnel, right awareness, consideration, decision conversion, and then the spread of word thereafter. But the way that the channels play a role in this is really key to understand. I'll, I'll go through this. But the thing to understand is that the funnel, typically right traditionally has been very sort of narrow and vertical in nature, right? users come in, and you sort of control them through the stages, and you pull them through and you're trying to convert them down through every stage of the funnel. China's funnel is flat and wide. So you end up with lots of different technologies inside the market, where users are basically bouncing between touch points of it, that a brand may have to validate and reinforce the messaging. And then at some point, they make the purchase in there, right. So building awareness through platforms like Wi Fi in red wave will be legally these are sort of like your classic, you know, billions obviously ticked off. Weibo is obviously your Twitter for China. So you get you know, these YouTube equivalents and these Twitter equivalents that are basically out there promoting kind of a lot of first touch right algorithmic display of content that's allowing users to sort of work their way through the preference of content and channels and products, to be fed algorithmically information to preempt. That's where we're seeing a lot of awareness getting driven inside the market, then what Brett what folks are doing is then they're taking that awareness of the brands and then they're going in to deeper, more deliberate platforms like WeChat, which we'll talk about JD even Tmall, as well. And those platforms may be end conversion and purchase platforms, but they're also validating points as well, right? So you can learn about a brand inside of China's Twitter aka Weibo, or dou yen, and then you go into T Mahler, JD to validate the depth of product, the pricing, the customer reviews, which are all very public, and then users start to get a little bit more comfortable with not only the brand, but the product as well. They make their decisions typically inside T mall and wechat JD, and then T mall and JD are the dominant platforms as described in the previous slide where the actual purchase takes place. Right? Then, of course, we get the report out we're going to see at least 6070 80% of users who purchase leave customer comments, and they're gonna leave customer comments perfect, they can leave customer comments right so you're gonna see them you know, bragging about their purchase inside of team all you're gonna see them bragging about their purchases inside of WeChat doyenne Weibo, as well recording the unboxing UX is very much a thing, leaving first impression comments is very much a thing. And it's really prudent for brands to be present and hovering inside of these environments so that as a new customer unboxes the unit and they pull it out and they express whatever their reaction is positive or negative. It's important for the brand to participate and journey as well. Obviously, if it's positive, thanking them for the purchase, if they have a negative or an underwhelmed feeling on that unboxing purchase, it's really wise to be very public about the brand jumping in seeing if there's anything they can do potentially offering to swap out with a different product and things like this. This really helps then working its way back up to funnel so that you lower any barriers to entry for consumers, new new consumers to purchase.

 
Tiffany Serbus-Gustaveson  14:38  

Awesome. Can you elaborate a bit more on the social platforms that you spoke about? And like what are the most Yeah, mobile apps?

 
Joseph Cooke  14:46  

Hmm. So I think it's important to recognize that the importance of social apps in terms of share of mind and share of time in the day, it is pretty overwhelming, right? So, you know, we're close to a billion social media users inside of China. But if you look at how much time users are spending per day, it's an excess of about four hours. So this provides a lot of opportunity and a lot of minutes throughout the day for brands to get access to those eyeballs. And that, and that mind as well for the end user. And really we're seeing across kind of all demo groups is all platforms are basically accessible and being used by everybody inside the market. If you get a just a ranking of generally what the app usage is, in terms of the top ads, you know, we WeChat obviously owns the space and it has for many, many years. You know, it is this sort of hyper Super App that we'll talk about. If you look number two here Taobao This shouldn't be confused with Taobao as kind of China's CTC platform. And those that don't know, Taobao is basically another marketplace inside of China owned by Alibaba. It's sort of a sister platform to Tmall or Tmall. Global. Taobao was never a viable point of sale for any brand. I mean, it's basically the Craigslist of China like it's just so low brow that it's, it doesn't hold a lot of merit. But the Taobao app is the app that powers the entry point and search engine and access to to volunteer more global as well. So users go to talbo Search for vacuum sealed water bottle, inside Taobao. And then they see the Hydro Flask flagship team all store in the search results, or the team or global store, for example, right. So that's where the starting point is for the Alibaba ecosystem, which is why it's number two. Ali pay is integrated and woven into literally everywhere where you can park with your money in China, there's going to be an Alipay payment. And so you know, the payment gateway being the third most popular app in China really shows and demonstrates the popularity of commerce online inside of China, right? I don't think Pay Pal is the third most popular app in the US, for example, to compare it right. And then just to note, you know, dou Yen is number four, and just a point on dou yen. Yeah, this is obviously the original Tik Tok inside of China. This is more like the parent platform for what it is. So yeah, okay, heavy duty usage across all of these apps inside the market, and it plays a really, really important role in all of the users time online inside China.

 
Tiffany Serbus-Gustaveson  17:38  

So what is the average average age, the social media user in China?

 
Joseph Cooke  17:43  

Okay, so the age, I'm going to just, I'm just going to jump ahead because I got a couple of slides on on WeChat, and dou yen. So the average age parallels the age of all the metrics that we see across generally all platforms and sites, so the highest penetration groups and demos of these platforms is going to be mid 20s, to late 40s. So it's an extremely sort of like, older age group than we see comparatively to the West, especially in the Dalian ecosystem. The exciting thing about that is that's where all of the purchasing power sits inside of China. So we've got the richest, most lucrative, most ready to buy consumer base, and most independent consumer base as being the most concentrated user groups inside of these ecosystems. So that goes for WeChat. But also that goes for dou yen. And I think if you look at comparative metrics to tick tock usage in the West, right, I think average tick tock usage, last time I looked, you know, four or five, six months ago, was something in that like, you know, 17 to like 2324 age bracket, I think, I think is where the bulk of the usage is. And in China, the bulk of the usage is like significantly older than that, as well. So it's a totally different content ecosystem. It's not nearly as like gnarly and greasy as it is in the West, it's way more intentional. It's way more like, you know, academic and, you know, the content and it is a lot more vanilla, let's say, and, and also shows a lot of merit around just like commercial and commerce based content as well. Right, you know, speaking directly about the merits of a particular brand or a particular product isn't thoroughly out of place, inside of Debian, right? Aligning with KOLs and influencers is totally legit. Live streaming through the Dillion platform as a method to then get content out there and have somebody again, come out and endorse the product and say that I put hot water in this eight hours ago and it's still boiling hot and you know, that's totally par for the course, right? The added bonus though, inside of these platforms. And that's both inside going in, and we chat. But really notably just to speak about, you know, dou Yen is that it's commerce equipped, and it's always been commerce equipped. So this is a very, very viable and important commerce based platform. And the usage rates are going up really, really, really, really fast. And again, that user base is really, really, really, really liquid comparatively speaking to the rest of the market inside of China. So discovering content, and going right through the purchase inside of DOE, again, is totally table stakes inside of the market. And it's an extremely lowered customer acquisition cost and a much higher conversion rate inside these ecosystems as well. So the big takeaway should really be around the concept of social commerce, inside of China through a handful of mobility apps targeted at again, that primary target market inside of China.

 
Tiffany Serbus-Gustaveson  21:06  

The original social commerce scene. Yeah. So we get about seven minutes left, can we talk about the different strategies that a brand can do to grow in China?

 
Joseph Cooke  21:22  

Sure, yeah. And maybe just in, in in just to protect the time a little bit, I'll just, I'll kind of just blast through a couple of concepts then. And then we can do some q&a, or however you want to take the end of it. But just to sort of summarize our our recommendations with what we see between all the different platforms inside the market and how you convert users Tmall and JD is referenced earlier, these are the two dominant marketplaces for typical classic eCommerce inside of China, and about two thirds of the market is going to be doing all their purchasing inside of these two platforms. This is purely pay to play hardcore ads to commerce, performance based marketing. brands can sit anywhere between like 10 and 12%, all the way up to 50 to 60% in terms of ad spend, depending on category and age and demand of brand inside the market. And I can speak to the nuances a little bit later if we want. Julian Redbook Weibo, this is very much content to commerce, right. So going to town on the content producing original content, copywriting video, writing evergreen content content that stays up there forever, been really aggressive with that and using that content to then convert to commerce inside the market. And that's where you can start to get a recognition on the ROI has been a lot higher than that if you're getting the right blend and mix of content. And then we chat window dwell these platforms, this is more like community to commerce, right? This is about building audience building community engaging with the community being ready to activate and kind of like a customer service element of it asking questions, seeing new products coming out and said the market offering SKU pages inside these ecosystems and allowing the community to really then show preferential bias towards particular products and then converting that bias into actual conversions inside the market as well. And then just getting, you know, really kind of quickly around. Well, I'll just kind of just give a reference there just to give an idea of like the volume right of purchases, doyenne, you know fiscal ended 21, totally bonafide 100 and 50 Billion US in terms of purchases inside that ecosystem. Quarter trillion inside we chat, the estimations in 2022, is that those numbers both grew by around 30%. So huge growth, huge numbers, tons of opportunities for brands inside. And then just visually to get a bit of an idea, speaking a little bit about kind of some of those tactics that I talked about creative content on the left. I mean, that's easy, having a lot of fun with different ways to display and localize brands and offer promotions inside the market. KOLs is really about hooking up you know, this is an example of like a pet brand hooking up you know, what better Kay Well, can you have an A pet brand than a pet, right using and consuming the product, whether it's pet food, or an accessory or a neutral or a toy or something like that, live streaming their third one and this is really where, you know, you might hook up with a potential influencer or you have your own studio like we do, and you're just speaking directly to users. It's not beautiful, doesn't look great. I mean, think QVC meets Amazon, but it really does convert and it offers a lot of opportunity for public questions to come out live streaming to address those questions. And you're a millimeter away from purchase. Now purchase now purchase now, right? So if you get the right message and you get the right audience the right time of day, you can move 1000s and 1000s and 1000s and 10s of 1000s of units over a five to 10 minute period. We did a big livestream at 1111 last year, with Vitamix in Ohio at HQ in their corporate kitchens with their shaft we brought our StrikeForce team in set up a little mobile studio had a live streamer, you know what their exact shaft broadcast into China. You know, I mean, it was dozens and dozens and dozens and dozens of millions of viewers inside of China. And you can get an idea of what those purchase levels look like around 1111. And then a lot of Cobra it in there, just something to mention something that we love doing is cross pollinating, brand, equity between sectors where there's complimentary positioning in there to really then build and develop really, really solid traction inside the market. Right. So, you know, like, again, I'll just stick with that Hydroflask example hooking up with a surfer, a skate brand, right? And then, you know, water bottle, being able to access skate brand, and that whole fashion culture, and then fashion culture being able to access, you know, accessory market, right. And both audiences go like that in terms of size. So maybe in the interest of time, I'll just, I'll just press pause there, if you want. And then Tiffany can kind of go into

 
Tiffany Serbus-Gustaveson  26:06  

a couple minutes left. Any questions, comments up, please share in the last two minutes here? Just curious, besides the social commerce, you know, what other tactics are brands using, that consumers are responding to?

 
Joseph Cooke  26:20  

Yeah, the classic beachhead. Again, a bit of nuance to sector and age of brand. The classic beachhead is going in and activating inside of like Timo, typically ish, right? Going in setting up on Tmall, running a little bit of media, really refining out that assortment Strategy, really refining out what that positioning Strategy is getting some products in the hands of consumers inside of China and giving them an opportunity to give public feedback back to how they feel about that, right? Not really a lot of risk with that. But, you know, what does it take to drive the first 5000 individual purchases, right, so you've got historical evidence that the product is legit. And you can play to the algorithmic parameters of what Alibaba sets out inside Tmall. So good store performance, good conversion rates, low bounce rates, lots of time on page, good customer feedback, good ratings to the product. And Timo takes that algorithmically and just shoots you right to the top right, that's a really good first 100 Day Strategy that can get a brand from zero to one. And then using those other channels like social commerce and the kind of mobility social media ecosystems. These are great complementary brand awareness plays as well that can then drive users from outside team all potentially inside of Timo to search for your brand. But really, you either go with an e-comm marketplace first Strategy, or you go with a social comm first Strategy, those are really the two viable ways to go unless there's some kind of an outlier associated with

 
Tiffany Serbus-Gustaveson  27:56  

the brand or the product. It makes it much more digestible when you put it that way. As opposed that they get like, Oh, I'm going into China. This is a big,

 
Joseph Cooke  28:05  

yeah. And the best way I can compare it to the west is like you launch a brand on Amazon, or you launch a brand on Facebook, Instagram. Great, right? Facebook, Instagram gives you complete control over your content, complete control over everything, and you can drive revenue with that. You go to Amazon, you're starting to play a third party game and you're a little bit in a hamster wheel. But if you do it well, you can, you know, kick butt and take names. The logistics Strategy I booked grazed over quickly, you know, we've got a full suite of kind of logistics solutions through cross border domestic lots of shelf space, bring product into the market, using single source inventory to activate lots of different areas. So thinking a little bit about how you're going to move merchandise into the market is also a notable thing to be really kind of whiteboarding out but you know, we we can help a brand. Think about that quite simply.

 
Tiffany Serbus-Gustaveson  28:53  

In real quick is delivery time. Hugely important to this audience. Oh,

 
Joseph Cooke  28:58  

yeah. Yeah. For the better same day. Of course, you're playing ball. Yeah. But you know, like we specifically picked our logistics facility location for Nanjing, because that's basically the geographic center of the population. Right. So you've got Jiangsu Province, Jia Jiang and Wei Shanghai, like you've got arguably 120 million people within three to six hour delivery. That's legit, same databasing. Same day to Shenzhen. Guan, Jo, next day to Chung Chang, or like way out west for about a buck to two bucks delivery. Wow. Yeah. Unbelievable. On ground Logistics is totally, totally figured out inside China.

 
Tiffany Serbus-Gustaveson  29:39  

Awesome. Well, Joseph, thank you so much for the content, the time educating everybody that joined today for those that join thank you so much for joining we hope to see you at another event we definitely encourage follow up conversation with the WPIC team. They have been awesome partners with BWG for many years, and we greatly appreciate you guys. So thank you again Joseph, thank you all. Have a great rest of the week and weekend and see you on the next event. Take care y'all.