Millions of Chinese people across the world are celebrating Chinese New Year this week. It is the beginning of a new year on the traditional Chinese calendar and is the most important holiday of the year. Each year has a name associated with the 12-year cycle of the Chinese Zodiac: 2019 is the 'Year of the Pig'.
China has been in the news a lot more in the last year due to Trump’s trade wars, problems for Huawei, population surveillance and slowing growth. Regardless of what is going on on a geo-political level, for regular visitors to China like myself, taking a deeper look at what’s going away from the headlines can help marketers understand how trends in China are going to eventually affect us all. As Peter Frankopan, Oxford historian, and author of the book ‘The New Silk Roads’ writes: “all roads used to lead to Rome, today they lead to Beijing”.
When it comes to China, it is hard to get away from the one thing the country is most famous for: size and scale. The statistics are always mind-boggling. Black Friday may seem like a big event in the international retail calendar but it cannot compete with the sheer scale of Alibaba’s Singles’ Day in November, which racked up more than $30bn in sales in 2018 - 27% up on 2017. Sales hit $1bn just one minute and 25 seconds into the event; just over an hour in and they had exceeded $10bn. Alibaba also set a world record for most payment transactions with Alipay, its online payment platform, processing 256,000 payment transactions per second. The number of delivery orders surpassed 1 billion. In just one day.
Then there is the scale of ambitions that western brands have for China: Starbucks announced in 2017 that it would open 2,000 new stores in China by 2021 – one every 15 hours. Or Prada is opening of seven stores in the city of Xi’an, three in just one shopping mall, with two stores alone for classic British shoe brand, Churchs.
Luxury brands are one thing. What about something a lot prosaic, like healthcare? Ping An Good Doctor, part of the huge Ping An insurance group, has launched China’s largest online healthcare services provider, Ping An Good Doctor. Good Doctors (what a great brand name!) has AI-geared “one-minute clinics” with online consultations, as well as 24/7 compact booths and more than 100 types of refrigerated common drugs available through smart vending machines. Each clinic has an ‘AI Doctor,’ trained to collect data on patient symptoms and medical history through voice and text input, with a human-doctors providing remote diagnoses, medical advice, and prescriptions.
If scale is one thing, speed is the other half of the equation. Part of the speed is driven by the work ethos: working on the ground in China and directly with Chinese customer has shown me that the mantra of 9-9-6 is true. Meaning 9 a.m. to 9 p.m., 6 days per week. Seriously. Not exactly the 40 hour work week!
And the city in China that symbolises speed is Shenzhen. In the 1980s it was a not much more than a fishing town. Today, Shenzhen produces 90% of the world’s electronics and has 12.5 million people. The city’s real claim to fame is hardware – this is, after all, where your iPhone or drone is made. Shenzhen is now the go-to city for robots, drones, smart sensors, and wearable technology. Shenzhen has its own 70 million square feet shopping mall area called Huaqiangbei Electronics Market, where you can buy circuit boards, LEDs, microchips, sensors, mini cameras and microphones on the spot. Shenzhen is the place where you can then get your crazy idea turned into a real product: there are hundreds of factories that can turn hardware prototypes in manufactured products in a few days.
Aside from size and scale, there is one thing that Irish marketers can look on in envy at China: convenience. The words ‘friction-free’ are the best way to describe the everyday reality of many transactions in China – to a level that is extraordinary compared to Ireland.
To understand convenience in China, you have to understand the influence Tencent and Alibaba have in China. The vast majority of online activity in China happens through proprietary applications run by Tencent and Alibaba – and nearly all this is done by phone. Mobile is ubiquitous in China – a way of life, not only a medium of communication.
Alibaba’s online payments system, Alipay, controls about half of China’s online payment market. Aside from Alibaba.com, Alibaba also has its Tmall marketplace for business-to-consumer, and Taobao marketplace for consumer- to-consumer. Combine eBay, Paypal and Amazon and you get an understanding of Alibaba’s brand portfolio.
Tencent owns WeChat, which has 1 billion+ users, an incredible combination of Facebook, Twitter, Spotify, WhatsApp, Paypal and YouTube, as well as gaming that come together in one ‘superapp’. WeChat was recently called the ‘operating system of China’.
Most Chinese companies have recognised this, and build their advertising and marketing, social communication, shopping, purchasing, and payment programmes around mobile. Brands are not just purveyors of products and services, but partners helping consumers with daily living. You can use your phone for literally everything. On mobile, consumers talk, text, shop, hail taxis, book travel, trade stocks, pay for utilities, deposit money into their bank or transfer money.
As a result, China is increasingly a living insight into a future of ‘frictionless living’ – and consumers expect it: jumping a bike, ordering a meal from a huge range of restaurants, giving money to beggars on the street — all can be done at the touch of a button. From a pure payment perspective, WeChat and Alibaba’s Alipay are making cash obsolete. On a recent trip to Dalian in North East China, I found it difficult to pay cash even in modern supermarkets and convenience stores. As Duncan Clark, venture capitalist, author of the definitive biography of Alibaba founder, Jack Ma, and longtime resident of Beijing writes: ‘I feel on returning to London or Silicon Valley that I’m going backwards in time’.
And the thinking about convenience has extended beyond just payment. Jack Ma, the founder of Alibaba, coined the phrase “new retail“ to explain Alibaba’s vision of blurring boundaries between the online and offline shopping world. The company put this into action with the purchase of the Hema supermarket chain. Each of the 50 Hema grocery locations can deliver within 30 minutes. All the aisles have interactive, digital screens to give customers product information, show similar products and what the most popular items in the aisle are (by age group if that is what you want!) Prices on the screen can be changed via wi-fi – including products such as seafood where prices are determined by supply and demand. If you want, each store will cook the food you buy at one of the in-store restaurants rather than the shocking inconvenience of actually having to cook it yourself! And, of course, there is automated checkout that recognises each product and accepts Alipay.
Next stop is facial recognition: Alibaba's Ant Financial has teamed up with KFC to debut a "smile to pay" service, which allows customers to pay for their deep-fried chicken simply by smiling after placing their order at one of the fast food restaurant's self-serve screens.
However, even if you don’t believe that China today gives us a glimpse into the future, one thing you might have heard of is slowing Chinese growth, and how Trump’s trade wars mean that Chinas is going through a downturn. A look at the percentages about China annual growth make interesting reading compared to Ireland: in 2018, retail sales growth was 6.9%, compared with an increase of 9% in 2017. Not exactly a crisis!
So, happiness and prosperity to you for the year of the pig or 恭喜发财 (gong-sshee faa-tseye) in Mandarin, or if you prefer Cantonese, 恭喜發財 (gong-hey faa-choi).