CRM finally comes of age in China

20th March 2012 may be an important milestone in the development of China's CRM industry. In the ten years that I have been involved in trying to get companies in China to do CRM right, I have been continually undermined by the prevalence and low cost of illegally obtained and resold customer data.

As a result, only the most ethical and visionary companies have taken the time and trouble to build databases of their own customers through traditional means to cultivate powerful long term relationships. Everyone else has used mass spam email and SMS communications in a random, shotgun approach. It was only because of the sheer scale of data freely available in China that this approach had any effect - if you throw enough mud, some of it will stick.

But today, it has emerged all over the news wires that one of Chinas largest and most well known data companies (owned by Dun and Bradstreet, no less) was raided by the police and shut down for allegedly using and selling illegally obtained data (see separate article here: http://www.chinadaily.com.cn/cndy/2012-03/20/content_14867153.htm )

Whilst bad news for New York-listed Dun & Bradstreet, this is great news for those of us who believe that CRM is a strategic play, not a tactical one - even in China.

How to understand the purchase behaviour of Chinese consumers in just three characters: 性价比

I have always found it interesting that no matter how wealthy a Chinese consumer may be, they are insistent on trying to get a better deal on most of their transactions. Whilst I knew this was cultural, I never truly understood it until I learned the three characters 性价比 (xìng jià bǐ). Literally this translates as:

性 quality

价 price

比 compare

The Chinese apply this quality-price ratio assessment to every purchase decision, no matter how cheap or how expensive the item is.

If a Chinese consumer (for example, my wife) believes that a silk scarf is over priced in a market at 50 RMB she may argue/negotiate relentlessly for what seems like hours until she achieves a price that provides her with sufficient xìng jià bǐ. And yet if a Chinese consumer (for example, my wife again) spots something in a London antique shop that she believes offers xìng jià bǐ, she will buy it in a flash, even if the cost is 100 times that of the silk scarf.

It is essential that brand owners and marketers truly understand this when making pricing decisions in China. It is rarely relevant what it costs to make, it is simply about what value the Chinese consumer places on that item, and if that value exceeds the selling price. If it does, it will sell.

Consequently, the importance of the back story and brand heritage of international brands cannot be understated - if a consumer feels they are buying into a tradition or intangible benefit that cannot be found in any other product, then the more usual price comparison becomes an irrelevance in the purchase decision.

xìng jià bǐ is all you need.
(And you thought marketing in China was complicated?) :-)

How to market a US$ 1 million house in Shanghai

This picture taken today shows a young and enthusiastic real estate agent standing at a cross roads in a Shanghai suburb. He his holding a hand-written sign advertising a US$1 million house nearby.

Contrast this with the US or UK, where properties of this value are advertised in prestige magazines and viewings are carefully selected.

With property prices in China's key cities still massively over valued compared to global norms, the value perception is such that a US$1 million house does not warrant any special marketing approach, other than a guy with a sign on the street.

One has to question how sustainable these valuations really are, and whether the Chinese ten year property bubble really is about to finally deflate?

If so, the guy on the street might have to start selling something else - and so will his many friends!

Early Adopters

This picture taken today in a traditional Chinese vegetable market shows a typical Chinese "early adopter/early majority". She has just bought a new 3G mobile phone and is very proud of it.

Her demographic is hardly the target audience for a 3G Smartphone. Her salary is about US$300 per month and I question her need to be "always on" with her social network! But there she is, proudly standing behind her vegetable stall with her unopened 3G phone.

Mobile phones, like many other categories in China, show that the Chinese often adopt products at an earlier lifestage/product maturity. Good examples include Scotch whisky, iPads, Swiss watches, and luxury cars.

One of my Chinese friends has just spent 750,000RMB (over US$100,000) on an Infiniti G37 convertible car. His (Japanese) work colleagues wonder how he can afford it, as in Japan this is the type of car you would buy at the peak of your earnings. But in China, you need this type of car earlier in your career development to show to everyone (especially your peers) that you are one of life's achievers. And what does he do at weekends? he has joined the Infiniti G37 car club, so like-minded achievers like him can drive down China's new motorways in convoy and network with each other at their destination.











So next time you wonder how and why the Chinese are buying up the world's latest technology and luxury goods, remember the middle-aged woman in the vegetable market.

Paying the ultimate price

After the China high speed rail crash tragedy over the weekend, I was not surprised to see that 3 high-ranking officials of China Railways were immediately fired. Whilst this very visible action from the government may go someway to appeasing the masses, it is not the correct reaction. Instead, China should shut down its high speed rail network until every inch of track has been walked, every power unit checked and every signal/safety device tested.

With all honesty, I do not believe that the train crash on Saturday can be said to have been a surprise. Mired in corruption allegations from the start, this visually impressive show-piece of Chinese infrastructure has had a series of embarrassing breakdowns in the last few weeks and so there was a degree of inevitability about Saturday's disaster.

Whilst corruption has doubtless played a part in what is increasingly looking like shoddy construction, it is not the only factor. China has "acquired" immense knowledge and capability almost overnight in many high tech industries, without the accompanying due process of trial, error, learning and refinement. As a result, I believe there is less of an appreciation of the complexities and risks associated with applying this technology. This shallow understanding therefore leads to a blasé approach to construction and maintenance, with a corresponding stretching of safety margins and tolerances.

45 people have now paid the ultimate price on Saturday. I pray that their deaths are motivating enough to ensure that the necessary steps are taken to ensure this will never happen again. But in a country of 1.4 billion and where life is still cheap, I fear that nothing will really change.

Insights or Sampling (Part 2)

On 7th June, I posted an observation about the "marketing" of Tibet 5100 mineral water.

I was fortunate enough to take a trip on the Shanghai-Beijing high speed railway a couple of weeks ago. At prices similar to flights, this is not a cheap experience and some forward thinking brands are already marketing to the captive premium audience in the waiting hall, eg: Cadillac:
















I was interested to note that Tibet 5100 had secured the exclusive rights to distribute a free bottle of water to every passenger. Surely a great opportunity to educate the fledgling brand's target audience on the provenance of this water through some effective display techniques and information leaflets? But no...here is the Tibet 5100 (Premium) mineral water distribution point at Hong Qiao station:
















Someone tell me why no one cares?

Retail Service Culture (or not)

If Retail in China is going to develop then it needs to learn service culture - and quickly.

The rapid growth of TaoBao and numerous other on line retailers will already be creaming off the most discerning, confident and knowledgeable shoppers who shun the crowded malls in favour of the convenience of shopping from the comfort of their home.

I visited a store in Shanghai this weekend with an intention of spending on a pre-researched major purchase. However, when a simple request for more specific details was rejected by the store staff because they could not be bothered to find out, I walked out.

I accept that China does not have a natural service culture, but I have seen first hand that the hotel companies are working hard to train this into their people. Unfortunately, the retailers are not, and it seems they will only learn their mistake when their shops are in future only visited by the simply curious who do not have any money to spend.