Advertising in China: What’s New, What’s Not

It seems many of the big Chinese ad agencies are not headed up by Chinese people. Why is this the case? Did Westerners bring the “advertising industry” with them?

The first clients who advertised big — i.e., with any degree of professionalism — were the large FMCG companies such as Unilever and P&G. When I arrived in Shanghai, Unilever was approximately 70% of our revenue. Today, this is certainly not the case. Local brands are absolutely critical to any agency’s bottom and top lines. If a 4A’s company doesn’t have a roster of local clients, they are simply not a player on the Chinese adscape.

The fact that there are still many expatriates who run agencies — actually, there are fewer of them now today, but foreigners are still reasonably represented at the top and down a few levels as well — is one of the disappointments of our industry. (I included expatriate Chinese from Hong Kong, Taiwan, Malaysia, Singapore in this group.) Of course, there will always be a need for for individuals with an “internationalista” outlook for clients with operations centralized outside of the mainland. But advertising, as an industry, has had difficulty in developing senior local talent. It’s not a question of salary, that’s for sure. Nor is it necessarily a failure of “intent to groom.” The biggest challenge is, simply put, advertising is not fundamentally respected as a career path for many locals. They prefer careers that are more concrete, with a clearer “return on investment.” An adman’s key strength is the ability to articulate the abstract and lead clients to embrace what can’t be proven. We have to be conceptual warriors and this doesn’t appeal to many Chinese who tend to take refuge in the concrete. There are too many talented 35-year-olds who abandon the industry for a more “respectable” career. The ones who stick with it, the ones who have the capacity to inspire, are worth their weight in gold and we do everything possible to retain and promote them.

JWT China has state-owned and private sector clients. How would you describe working with the state-owned organizations?

All local companies have certain things in common. They are hierarchical and the big boss wields absolute control. So maintaining close relationships with the CEO, or founder, is absolutely critical. Establishing trust, rooted in a combination of value-added and empathy, is absolutely critical. That said, there are differences. Large state-owned enterprises tend to be much more Byzantine in terms of decision making, with one eye focused on the market and the other on political imperatives. Smaller local (private) enterprises are more entrepreneurial, more apt to take risks and decide things relatively quickly. They also tend to be more receptive to “unsafe” creative. The “joys” of working with local companies, despite the operational and relationship management challenges, is that they are genuinely passionate about their brands. Their ambitions are huge. They also have a natural appreciation of the ins and outs of both the Chinese market and the Chinese consumer, leading bolder experimentation, assuming the stars are aligned in terms of clear objectives and open communication. From an ad agency’s perspective, it’s very much high-risk, high-return. I’m as proud of the work we do for our local clients such as Anta or COFCO (China’s largest food conglomerate) as I am from some of our largest multinational companies such as Ford or Nokia or Microsoft.

Supposedly Chinese marketing managers find it very difficult to adopt new creative ideas. If you could say five things to these people what they be?

The pitch I always give to local business leaders is simple: robust brand equity — i.e., active consumer loyalty for a brand — leads to premium prices and a high P/E ratio. Beloved brands are, to state the obvious, emotional propositions, ones that fuse functional and emotional appeal. Most need convincing that when function and emotion are “aligned,” they are mutually-reinforcing, and there is no need to “choose” between tactical and thematic, between nuts and bolts and evocative messages. But they need a reorientation to help them grasp how “brand ideas” are constructed and I think JWT is quite good at translating global brand building truths into a “paradigm” or “framework” that leads to long-term propositions and justifies price premiums — of both their brands and JWT’s services!

So, to answer your question, we must always reinforce the link between business imperatives and creativity. We can never take it for granted that this tenet is implicit. I can’t think of a “five things” to say to them, other than what I’ve mentioned. But the analytical robustness of any recommendation has to be empirically bullet proof. Once they endorse the logical thought flow, from underlying business problem to creative solution, minds open, and decision makers are able to put themselves more easily in consumers’ shoes, folks who, it goes without saying, do appreciate creativity.

JWT places a lot of importance on local knowledge. With China being such a vast and diverse place with various tierings, and customs and values of people differing from province to province, how does one advertise to the Chinese population? Is there a one size fits all?

Of course, one size doesn’t fit all. But there are “unifying themes” and “variations” on these themes. It’s like a Bach Fugue; there is a primary melody with interpretations of that to address target consumer and geographic considerations. Some roll their eyes when I harp on about a Chinese “worldview” that is fundamentally different from Westerners’ basic motivations. But smirks be damned. In order to touch hearts, brands need to be brought into alignment with this worldview. After 13 years here, I am fundamentally convinced that there is a unifying “Confucian” conflict — between self-protection and status projection — that brands have a fundamental role in resolving. Unlike practically any other country (Korea and Vietnam come closest), China is both boldly ambitious (ladders are meant to be climbed and meritocracy is a cherished value) and regimented, with hierarchical and procedural booby traps for anyone who hasn’t mastered the “system.” This tension between upward mobility and fear-based conformism shows up everywhere, in every business meetings, in every struggle with a mother-in-law, in every new generation release on the internet. Brands that help consumers simultaneously stand out and fit in have the greatest appeal. Diamonds, for example, are popular because their sparkle is conspicuous but, at the same time, elegant and understated. The same goes for Mont Blanc’s six-point logo. Rejoice shampoo’s proposition fuses confidence and softness.

All communications needs to position products as a “means to an end,” with clear return on investment. And all products must dramatize “public consumption” in order to justify a price premium.

That said, this “unifying theme” needs to be interpreted for different socioeconomic tiers. In lower-tier markets, for example, definitions of success are more short-term, more inextricably linked to home and hearth. We also tend to emphasis that protection side of the equation because non-middle class consumers — people who have benefited less from waves of economic reform — are less convinced that the world is safe. Likewise, brands are less familiar is Tiers 3-5 cities so communications has to be simpler and more direct and the role of in-store experience and reassurance is even more fundamental than in primary markets. And young consumers are definitely more into self-expression — though this is about ego affirmation, not Western individualism, a point many of my industry colleagues disagree with me on — than older age cohorts. So, yes, age and income are “variables” that very much need to be considered and, no, one size does not fit all. But you don’t need to completely reinvent the wheel every time you develop a strategy for a different market target.

I also believe the claim “China is many countries” is often (but not always) a canard, a red herring. China is unified by timeless cultural imperatives. We frequently confuse geographic discrepancy with socio-economic and age differences, two fundamental confounding variables.

I know you get asked this all the time but how do brands build a name across China? Western firms seem to roll-in to China with products, like the Apple iPhone, but really only consumers living tier 1 cities such as Beijing and Shanghai can afford them. Do big brands like Apple need to create an almost ‘value’ range to reach the lower-tier consumers of China? Are the lower tier consumers even on Western brand agendas?

There is a middle class in every city. Once you realize that individuals earning 20,000 RMB per month in both Shanghai and Wuhan have more in common with each other than do denizens of specific cities in at different socio-economic strata, things become simpler. Apple is a middle class hit… everywhere. Inland consumers who can afford, say, a Ford Focus are almost as sophisticated in terms of buying an auto as their coastal cousins, with the caveat that care must be taken to keep messages simpler for first-time, usually lower-tier, buyers.

That said, brand tiering is a fundamental challenge for brands as the expand geographically. Practically all of Procter & Gambles products have cheaper variants and they have pursued this strategy with a relative degree of success. In the Apple era, Nokia’s non-smart phone range at the rural fringe is a powerful weapon to win “the next billion” mobile phone buyers. Chinese revere scale and “big brands” — i.e., ones that extend across price tiers — reassure; to boot, any brand that does not boast both margin and scale will have a difficult time taming unwieldy distribution channels. However, we need to keep in mind that the “cheaper” products are targeted at less affluent consumers. Extreme care must be taken to avoid equity adulteration of the premium variants as the brand is extended downward. This is a tricky minuet and some of the best marketers have fallen by upsetting a delicate price-value equation. As a rule, expensive brands should be used to build image and tactical promotion of inexpensive versions should take place closer to the point of purchase.

What are the key differences and similarities between Chinese and Western consumers?

There are two key differences. First, all benefits in China are externalized; Chinese egos are huge — I always say every Chinese has a dragon in his or her heart — and they demand societal acknowledge for their contributions to and success within society. They are not individualistic in a Jeffersonian sense as are Westerners, who respond, in many cases, to “internalized” benefits. Luxury goods, for example, are a tool for career advancement in China. In the West, they are often appreciated for their own intrinsic quality. In shower gel, the leading Western brands have “sensual indulgence” as a core proposition. In the PRC, the key benefit is “an energizing shower experience that helps me start the day with a kick.” (Sometimes, this difference can be quite subtle. Europeans go to spas to relax. Chinese go to recharge batteries.) Second, there is absolutely, positively no cynicism towards brands in China. As said above, they are vital tools of advancement. Furthermore, in a constricted mass media environment and a society with a narrow definition of success, brands are the most powerful badges of identity. Brand communications is, by far, the freest form of expression and, for that reason, beloved. Of course, the Chinese are suspicious shoppers — they don’t take quality for granted to reassurance in terms of both quality and impact on image is critical — but there isn’t cynicism. We have not entered a post-modern communications era here, and I doubt we will, given fundamental role brands play in consumers’ identities.

It’s worth noting that the digital world differs here too. “Emotional release” is a critical driver — there are already 150 million micro-bloggers! — and this urge is fueled by on-line anonymity. For Facebook to succeed in China, it would have to scrap its “real name” policy. Despite the explosion of lifestyle alternatives and individualism as an aspiration, the Chinese are constricted when it comes to self-expression. In this respect, the internet is a blank canvas on which to paint dreams. Of course, e-commerce is exploding in the PRC, just like anywhere in the world. But, again, “transactional safety” must be reinforced and most cash is usually exchanged only after consumers have been given a chance to kick the tires of a product.

Advertising is about persuasion, I guess this might be a question of Chinese culture, but if the Government said all its people ‘should,’ not must, sign-up to a ‘China Mobile’ tariff do you think they would?

Interesting question. Let’s put it this way — it would certainly help. The Communist Party is still the quintessence of authority and its “endorsement” would reassure many safety-seeking buyers. To boot, the backing of the government would translate into immeasurable distribution/channel clout.

On a lighter note, people may not realize this but you were actually lucky enough to be an Olympic torch bearer at the Beijing Olympics, how did the opportunity come about and what was it like?

I loved being a Torch Bearer. I was invited by a client, Lenovo, that was also an official sponsor of the event. Despite all the propagandist stage management, the moment my foot hit the pavement — we all got dispatched from buses at our designated running points — the crowd went wild. Not for me, of course, but for the torch and everything it represented about China’s ascension to superpower status. Adding more emotion to the moment was the Sichuan earthquake, from which the nation was still recovering, and the media furor over the Tibetan protests. People were afraid the Olympics would, in the yes of the world, “fail.” So the Torch relay, at a historic juncture, morphed into a national declaration of perseverance. It was moving, even inspiring.

This interview was originally published on ChinaSMACK, a leading website on China’s media, advertising and popular culture.

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