The Negotiation

Today on The Negotiation, Olivia Plotnick talks about her entry into China as an entrepreneur from the United States. She shares how she was able to grow WeChat accounts at a massive rate in a fast-paced marketplace whose consumer culture is so different from her home country’s. She also explains how brands can capitalize on certain WeChat features, such as Top Stories, the “Wow” function, and WeChat groups.When asked how companies should look at WeChat in 2020, Olivia recalls how WeChat gradually transitioned from a purely consumer-based social media platform to a brand-building tool. Before, you could only receive messages from friends and family. Now, Nike and Under Armor can reach out to you. Olivia calls this a “sacred space” in that brands can now develop personal relationships with consumers. This is why it is important for brands to put out relevant content, or risk being unfollowed.In China, there are a large number of social platforms—or what Olivia likes to refer to as “ecosystems”. Olivia prefers to divide these platforms into two different categories. There are eCommerce platforms such as Tmall.com and JD.com, social media platforms such as WeChat, Weibo, and Douyin (the Chinese version of TikTok). Each of these two categories serves a different purpose.How does WeChat stand out in this sea of platforms? According to Olivia, while Douyin is an “awareness-building platform”, WeChat is more of a “relationship-building platform”. Many brands use WeChat to educate their audience and provide loyalty programs. Ecommerce platforms like Taobao, on the other hand, are where “you push to sell”. Ultimately, you need to be aware of what most people use the platform for and produce content appropriate to user activity.

Today on The Negotiation, Kevin Johannes Wörner discusses his background in venture capital and the startup space in China. The German-born entrepreneur developed an “appetite” for the Chinese market at an early age. He studied at Tongji University before working for some time in Germany as a management consultant. Following this, he founded the business accelerator Properas in Berlin.It was around this point, however, that he decided it was time he made the move to China. He got in touch with Wei Zhou, founder of XNode, and today Kevin works on the company’s startup acceleration practice. XNode does three things: 1) coworking spaces, 2) corporate innovation, and 3) startup acceleration (with a focus on cross-border acceleration).One distinguishing feature of XNode’s two-month acceleration program is that the company works closely with governments. It is by building trust with these governments that XNode is able to bring in a steady flow of international startups to work with. Not only does this make working relationships easier, but it also allows XNode to leverage this worldwide network to find even more startups and entrepreneurs to partner with. The ultimate goal that XNode has for each and every one of its startups is a tangible business impact.When asked about the difference between how Chinese and Western startups scale their businesses, Kevin says that the Chinese practice the Lean Startup methodology, which makes them practical, incredibly fast, and highly responsive to the market. This was the source of much cultural shock during Kevin’s first month working in China, having been so used to the more gradual speed of German business.If Western companies wish to catch up to China’s speed, Kevin encourages cultural exchange. It is not enough to simply preach speed, pragmatism, or innovation—this will change nothing. Instead, Kevin wishes to have more Western companies and governments working together by “building bridges”. This involves reaching out to those already working in China—which include Westerners such as Todd and Kevin themselves who have developed a deep understanding and appreciation of the market over time.On the topic of “mobile-first, mobile-only”, Kevin likes to differentiate between B2B and B2C. For B2C startups, it is difficult to create applications for Chinese consumers. Instead, it is better to use existing platforms to do sales and marketing. On the other hand, it is easier for B2B startups to create new mobile solutions simply due to their smaller ecosystems—there is no need to change a consumer culture shared by millions (if not billions) of people.

Today on The Negotiation, Cyril Ebersweiler shares 20 years of business experience working with various brands in China.Cyril began his career as an eCommerce project manager for Carrefour, launching China’s first online retail platform. From there, he worked with Adidas for four months before making the switch to Air France, where he would work for the next three years. Air France at the time was taking major steps to invest and promote greater relationships in China.From Air France, Cyril joined TBWA and became heavily involved in the company’s marketing efforts. Initially, Cyril intended to work with TBWA because he wanted to go to the country in the pre-iPhone days when Japan was the leader in mobile technology. Cyril believes that this experience gave him great insight into the future of mobile marketing and eCommerce capabilities. Cyril’s work eventually brought him back to China, in Dalian, where he met investor Sean O’Sullivan. The two worked together with technology startups in China.When it comes to the difference between American and Chinese entrepreneurs, Cyril says that while the Chinese are incredibly efficient in their workflow, their marketing in other countries could improve. Foreigners looking to invest in China, on the other hand, sometimes have trouble adapting to the local culture.In 2011, Cyril founded the venture capital corporation HAX in Shenzhen. When asked why he decided for the company to be based in Shenzhen, Cyril says that “just by being [in a specific location], [companies] are automatically augmented by the ecosystem around them.” Since Shenzhen is known as the “Silicon Valley of Hardware”, Cyril intends to tap into local resources—from large brands down to mom-and-pop stores—that would maximize his company’s capabilities. 

For the past 7 months, this show has been all about China and the amazing opportunities that lie in wait for companies willing to put in the work to be successful there. China’s business landscape and culture have been our bread and butter, it’s what this show has been built upon, and because of that, we need to talk about the tragic events that have been happening there over the last month due to the outbreak of the Coronavirus. The past month has been a difficult one for China and those impacted by the Coronavirus. We at The Negotiation and WPIC Marketing + Technologies have been impacted as well, and our hearts go out to our colleagues, friends, and loved ones that are suffering from the impact of this terrible virus. Our prayers go out to all of you and anyone listening who may have a loved one who has contracted the virus and we wish them and everyone a speedy recovery. Our thoughts are with you now and will be with you through every subsequent episode until this tragedy has been put behind us.That said the show must go on, as they say, so with a heavy heart we’ve asked our helmsman Jacob Cooke, CoFounder, and CEO of WPIC Marketing + Technologies, if he would be kind enough to jump on for a quick discussion about the online and offline commercial landscape due to the Coronavirus outbreak, what the data is showing us given much of the country is shut-in or closed for the time being, and what companies can be doing in the meantime to be prepared for the chapter that follows this one.Again, to everyone impacted by the Coronavirus outbreak out thoughts and prayers are with you.

Today on The Negotiation, Sarah Kutulakos talks about her experiences working for the Canada China Business Council (CCBC) for twelve years, and how doing business between both countries has changed over the last decade.Sarah talks about the evolution of the “depth of companies’ activities in China”. She highlights eCommerce as a big game-changer for the consumer market, as well as brands’ bolder attitude as a whole towards the creation of IPs.Sarah says that if you do not figure out how to compete in China, you will not know how to beat Chinese competitors in your own core markets. It is not that going to China is a must; but if you have a product or service “that aligns with China’s consumption trends or five-year plan,” then it may be worth entering the market. However, she highly recommends tooling and partnering up before even considering an expansion. Those who try to impose their brand in China without the proper partners or support group will fizzle out fast.The rise of the middle class in China was a key factor in achieving the unmatched speed of its economy today. “The capacity to accomplish is unfathomable,” says Sarah. At the same time, it is much harder to integrate as a foreigner today compared to as recently as 2011 due to changes in technology. “They used to roll out the red carpet for foreigners,” says Todd.Sarah specifically points to April 2019 as a turning point that gave foreigners “second class status”, when, unless one had a local bank account, they would be unable to use digital payment systems. “We are not the shiny new thing,” concludes Todd. “They know now that they are the shiny new thing.”Regarding how CCBC has impacted her home market, Sarah says that their incubation function has greatly expanded. The decision to enter China is not a light one, but Sarah is now confident that the team she is working with can help serve as the bridge between the two countries.

Today on The Negotiation, Scott Silverman emphasizes efficiency and localizing new technologies as the two keys to brand success.When it comes to promoting your product, your service, or even your company, you must influence the perception around the thing you intend to bring exposure to. As to “what’s in the soup”, the most sacrosanct are 1) the product, and 2) the key benefit. The brand must be aware of the sensibilities of its target consumer and market accordingly.Scott brings up Lenovo’s ThinkPad as an example. Instead of simply translating the copy into Chinese word-for-word, the better approach would be to “calibrate” the benefits to better resonate with the Chinese buyer, which may include the tone and manner of the promotional material. “Content is not key,” says Scott. “Context is key.”Scott works in multiple markets in Asia. To thrive as a marketer in these countries, especially as a Westerner, he says that you must “be like a comedian: You have to know your audience.” For instance, he likens Hong Kong to Shanghai (and even Germany), wherein they simply want the hard facts listed out, sans an abundance of visual metaphors.Specifically, they want to know these three things: “What is it? How much does it cost? Why should we care?” In fact, Scott does not like to use the term “Asian market” as they are all different, to the point that he now focuses on marketing to individual cities.Scott believes that direct response campaigns are the best way to measure consumer insights. These are incredibly valuable in that, for a specific product, a brand may decide on different calls to action or rearranging the list of benefits depending on the city.Measuring data was “very basic” in the 2000s compared to today’s market. This was partly due to changes in communication—back then we had direct mail; now we have email and social media. This allows for more clarity of consumer realities in real-time. “Almost 100% of what I do now is digital,” says Scott.The recent “tsunami” of mobile solutions has completely revamped the economy. This led to brands opting for more experiential marketing that is uniquely mobile native. The immediacy of mobile is its defining trait. People became less patient, and the longer it took for them to receive something, the higher their expectations for it. “This is what brought creative and media together. It forced a relationship that before was a little tenuous.”“In order to succeed in China, you need to be willing to fail many, many times. The speed to fail is the speed to success.”

Today on The Negotiation, marketing specialist Lauren Hallanan talks about all things digital marketing, influencers, and social media for brands in China. Lauren shares her insights on what platforms are on top and which are soon to be left in the past by consumers and brands alike. Listen in to learn what tactics are being used by domestic Chinese brands and why studying their approach could be the key to attracting superfans for a brand or product in China. We kick off this episode by asking Lauren for a breakdown of the social media landscape in China. WeChat, described by Lauren as a “super app” that is well on its way to simply becoming an operating system, has become the dominant social media platform in China. Its rich offerings simplify life for consumers, meeting all their needs in one synergized ecosystem. It also offers brands the freedom and tools they need to reach and interact with their customers in new ways. Other popular platforms discussed are Weibo, a platform that has become a part of the fabric that is Chinese social media; Douyin, the local parent of TikTop, is a short video platform has taken off in China; and Xiaohongshu aka Little Red Book, a fusion of Instagram, Pinterest & a blogging platform like Medium or Reddit. We also talk about the shift away from Baidu for product searches in the buying lifecycle. In recent years Baidu has taken major hits to its credibility by not clearly separating ads from search results. Their handling of advertised post promotion amongst other mistakes has led to a significant loss of trust.             We discuss the tactics frequently used by successful brands in China, specifically using KOCs (key opinion customers) like the cosmetic brand Perfect Diary. Brands are also collaborating with thousands of very micro-influencers to get customers talking and reach beyond first-tier cities where physical retail is less available. We also discuss the issue around private traffic, the traffic to a brand’s website that is considered owned by them and not available to any other company. China’s heavy use of social media by brands, where more and more brands are creating hundreds of chat groups on social platforms to get closer to their fan base and even perform customer service, means the traffic is technically owned by the social media platform, not the brand which has its own potential complications.Lastly, we talk about a new movement in China that points to a shift in culture; Idle Fish, an Alibaba platform for buying and selling second-hand goods, has become very popular thanks in part to influencers. We discuss several reasons Chinese consumers are starting to shift their opinion on buying used goods, including environmental and economic reasons. What are western brands missing when they try to enter the market in China? If you ask Lauren, it could be any number of the things mentioned above as well as a lack of perspective. She urges brands to start thinking of WeChat as their core engagement platform for their audience. She also suggests that they humble themselves in order and look to domestic Chinese competition, as they’re often “more agile, deeply understand the target audience and are unafraid of experimenting with the social media platforms that China runs on.WygTFJ5bf83BvIKRpTrf

Tom points to social changes as most fundamental to the rapid growth of the Chinese market, particularly with how quick consumers are in adopting new technologies. There are three keys to this change: 1) Immersion, or maximizing the buyer experience (i.e. standardizing vertical video); 2) Innovation, and framing these novel platforms as a positive lifestyle change; 3) Entertainment, which was never a huge factor to the Chinese consumer in the past.According to Tom, there are two types of content: 1) Marketing content, which is produced by brands; and 2) User-generated content (UGC), which is created by the consumers themselves. When it comes to content that resonates with Chinese consumers, the focus should be put on who buyers are listening to at that point in time. This is always changing: From Key Opinion Leaders (KOLs), today’s “authority figures” are micro-influencers.The common thread here is the democratization of business. While before we were constantly faced with big, flashy, high-budget advertising, now we tend to listen more to raw, down-to-earth, and entertaining individual creators who are (seemingly) “just like us”.Tom advises Western brands to understand their customers’ touchpoints and ecosystems. The biggest mistake companies make is not being aware of cultural nuances. At worst, they risk offending potential buyers with their marketing. At best, they know where consumers go, but not how to actually engage with them or how to tailor their brand to their target customers.Tom’s real-life example is when a company once reached out for help regarding what content to produce on WeChat—without first considering whether WeChat is really the best place for them to be in. Understanding the platforms is important indeed, but it is just as important to understand the culture of the people using these platforms.

The China tech scene has been on the rise for the past decade. However, challenges still exist (and are actually increasing in number) for foreign companies looking to enter China and vice versa.            As the first foreign correspondent to interview Jack Ma, Rebecca was witness to the eCommerce tycoon’s early days as an entrepreneur. She remembers him as being charismatic, honest, and open. She notes that he did not seem to have any handlers around him listening to their conversation—although the situation is quite the opposite today.            With Jack Ma’s departure as Chairman of Alibaba and his replacement by Daniel Zhang, Rebecca believes that the company will only continue to innovate and thrive with the new leadership. For example, 11.11, or Singles’ Day, was Daniel’s highly successful brainchild.            With regards to the US and China’s respective strengths over each other, Rebecca brings up Kai-Fu Lee’s assertion that both countries are on the same level with regards to the development of artificial intelligence; however, China is implementing these technologies faster than the US is. At the same time, the US has the R&D lead on AI. China is also implementing 5G and all-things mobile (particularly when it comes to payments such as Alipay and WeChat Pay) at breakneck speed.            When a foreign brand decides to enter China, it’s important to put the right managers in place and not giving autonomy to the local staff when it comes to decision-making. This is mainly for purposes of communication speed, considering that the Chinese economy is moving incredibly fast. Waiting a week or two—or even overnight—for a decision may cost the brand any edge they have.            “The challenges in China are more pronounced than in other markets,” says Rebecca. Think carefully on whether entering China, out of every other country, is really the best next step for your company.

Today on The Negotiation, Shawn Graham discusses his transition from a politician in Canada to a business consultant in China. As the 31st Premier of New Brunswick, Shawn participated in a highly successful trade mission to China which brought an influx of new business for the Atlantic province.Speaking of the various Canadian business leaders that Shawn accompanied on his trade mission, the former premier refers to the experience as a “baptism by fire”. At the time, China was quickly evolving and rapidly expanding its access around the world. There was huge potential for growth in this emerging market.Shawn admits that he fell short of how far he could have taken the mission since his first trip to China also happened to take place during his last year as premier. “You need to be in China on a regular basis to cement those [business] relationships.” Beyond simply shaking hands or signing a contract, it is imperative to build an intimate, human relationship with a potential Chinese partner before any business can be done.What amazes Shawn about the Chinese economy is that it seems to have grown dramatically every time he makes a visit (nowadays he visits up to eight times in one year). There are 30 million Chinese citizens that move into the middle class each year. This means that disposable wealth is on the rise, which means that the Chinese have grown very particular about who they do business with in order to maintain a good income. Shawn has seen many businesses fail because they march in to “do the deal” before establishing a friendship.For anybody looking to do business in China, it helps to know a few important things. One of them is understanding the challenges peculiar to Chinese companies. As an example, Shawn brings up the ongoing talks to possibly bring Huawei and its 5G technology to North America. Another consideration is the climate. China has had a pollution issue for a long time and cannot accept being penalized for it when North America has been exploiting its environment for profit for over a century themselves to varying degrees. At the same time, one could say that China’s one-child policy was the country’s biggest sacrifice for their environment.The bottom line, says Shawn, is that “the Chinese are not coming. They’ve already arrived. It’s best to learn to do business with them rather than against them.”