2019 Trends: Social Marketing In China - Interview With Chris Baker of Totem Media

James Eron: Hi. We're talking here today with Chris Baker, founder and managing director of Totem Media, a global digital strategy and social media agency with a focus on China. Chris, thanks for being here today.

Chris Baker: Hey, James. My pleasure.

James Eron: Chris, tell me, why did you start Totem?

Chris Baker: I think Totem is a combination of past experiences and sensing a market need. I got my start in Asia about 18 years ago working for a brand strategy firm called Eight Partnership. At the time we were doing a lot of work in helping companies plan overall brand strategies together with what we called branded content at the time. Fast forward a little, from 2009 to 2013 I was doing a lot of work with the big agency holding groups in China, helping them set up their social media capabilities, and I think collectively between those two experiences recognized the need to combine brand strategy with social media, and so Totem was born out of that insight. We've been working with global brands in China now for the past five years or so, helping with market entry strategy, overall digital upgrading, and of course regular social management of those brands inside of China.

James Eron: I mentioned that Totem is known as a thought leader in the China digital space, and you just released your 2019 Social Marketing in China report, which is very well written, very informative. Who is the audience for this report?

Chris Baker: This is a report that we've done for the past five years. I think we started it as a thought exercise and something that would allow us and our team, together with clients, to get a really clear picture for what happened in the past year and project some of those insights towards things that we expect to be key themes in the year ahead. So, in a strange way we've kind of written it for ourselves, being practitioners of brand and social media in China, but we also understand that there's a wider audience out there. I think people who are new to China are finding some use in it because it outlines some of the big themes in the market, and of course I think other brand practitioners in China allow us to kind of indulge some of our geekiness around China and what's happening. We've kind of written it both for brands that are coming into the market with a sophisticated approach to the market, as well as people who are already in the market who kind of need to upgrade and get to the next level.

James Eron: You've come up with five key insights in your report, and I just wanted to walk through a few of these, because I found them very interesting. In the first insight, you talk about marketing to China or that marketing to China is now global. What do you mean by that?

Chris Baker: I think a few things have happened over the past several years. One is that the importance of China has risen to such an extent that in many cases China represents a huge share of a brand's total performance globally. Therefore, China needs to be taken seriously and dealt with at a headquarters level. Two, is that there is a huge volume of Chinese travelers who are going abroad as tourists, but also as shoppers. Then third, those same people who might otherwise travel and be tourists are also buying in China from global eCommerce sites, and having things shipped back to China.

All told, the Chinese consumer is one that brands who have a presence in China will be dealing with inside of China, but increasingly they need to also be addressing those Chinese consumers from a headquarters level. I think the analogy that I would give is similar to a global brand that might be centered out of Europe, well, they have to pay special attention to the US, just because of the scale of the market, and in many cases over time what's happened with those brands is that global marketing headquarters have shifted to the US, because of the importance of that market, even though they might be a European brand. I think we're seeing similar things happening now with China, particularly in luxury, travel, tourism, etc.

James Eron: I also noticed in your report that you said, "Measurements matter more," and at Kung Fu data, we're all about the data and following the market trends, but what do you mean by measurements meaning more?

Chris Baker: I think in marketing I think we always like to believe that measurement and data play an important role in our work. I think that's always been true, but what's happened in the last couple of years is China has been a market for many years now that it's been a little bit of a land grab and a rush to capture market share. I think because of the hasty approach of a lot of brands to just get in, and penetrate the market, there's been a little bit of a sentiment that we'll put kind of a slow, steady, measured approach to the side while we race to capture market share. We're seeing a little bit of that approach starting to slow down and brands starting to take quality a little bit more seriously, but also taking the approach that they really need to understand and dig a little bit deeper to achieve the next set of gains in the market.

James Eron: You also mentioned that content has become critical.

Chris Baker: Yeah. I think this kind of reflects on the point I just made about measurement. You know, the early wave of growth in China was, again, about speed to market, and the result of that was that global brands who had marketing materials from their home markets or overseas, often took this copy to China approach, where they said, "Hey. We've got a great video. Let's dub it or subtitle it, throw it into the market, because we really don't want to create content for China." That clearly is changing, as the importance of China rises.

Brands who see China as a critically important part of their overall sales story are starting to now customize their brand messaging for China. The ones that are doing the best job of this, I think about people like Nike or Apple, are really starting to see gains in terms of both sales, but also I think affinity for those brands in China, because they're demonstrating, one, that they're a cool brand, and they have longevity in the market, but also they're starting to demonstrate that they also understand their consumers well, and they're listening.

James Eron: I know your fourth insight is regarding social commerce, and you say that that's in full swing now. How does that occur for brands?

Chris Baker: Yeah. This is an interesting one. I think globally social has been thought to underperform in the overall marketing mix. Right? The story has been that social is an important driver of consideration and you need to be present there, but there's not a direct link to sales. That's the story in the West. You know? Contrast that with something like search. Right? Because it's often the last click, search is relatively overestimated in terms of its attribution or contribution to sales.

I think what we're seeing now in China is that social and sales are locked at the hip, and both inside of eCommerce channels, like Tmall and JD, which have always been very social channels, given the amount of messaging that takes place, but also inside of places like WeChat, the conversations that exist inside of social channels are having direct impact on sales. I think the biggest testimonials to this in the past year in China has been the rise of Pinduoduo, which is best described as a pyramid marketing scheme, whereby a customer who's interested in a product will rally the support of many friends, and in doing so all enjoy a group discount on a purchase. Right? So, that's a scenario where because of the fact that that person inside of WeChat using Pinduoduo can send a message to 10, 20, 100 friend, get them in on a sale within the same environment and transact quickly, that means that social is a primary driver of eCommerce.

The other example would be of an interesting new tactic we’re seeing from coffee merchants in China. There's a couple of them in fact, but they've been setting up inside of WeChat Mini-Programs a way of social selling. I think the one that is most notable in last year is called Coffee Box. What they've done is they have offline retail, but they set up a Mini-Program that would allow a consumer, let's say James, to come in and set up his own virtual shop, pick the themes of his shop, and pick the drinks that he wants to sell to friends. By selling and referring friends to purchase, James would then get discounts on his own purchases. They're really utilizing this mobile, social connection and payments that exist in China towards making viral social sales.

James Eron: It's very interesting to see how things have developed in the China market. Now, your last point in the report is that retail is being reshaped by social. It's not just eCommerce. We're also talking about traditional retail.

Chris Baker: When we talk about this, we’re really referring to offline retail being reshaped. I think China is a market that’s development and growth is relatively recent in the grand scheme of things. It has a pretty fragile, weak, traditional offline retailing sector, and at the same time monolithic, successful, online eCommerce companies, like Alibaba, JD, etc. Those companies therefore exercise a huge advantage over a weak and fragile offline environment and have been moving really swiftly into that offline environment to take some of the learnings, best practices, systems, data, and applying that to offline.

At the same time, China being an environment where you have same day deliveries, extremely high penetration on mobile payments, and everything else to facilitate really swift, efficient, pain free eCommerce, what's happening is a little bit of a shift with offline towards using valuable offline retail spaces towards more experience driven outcomes. An example there would be Nike with its house of innovations in Shanghai, where they have workshops, allow people to fully customize products, do individual styling, and otherwise have an amazing experience knowing that somebody can walk away connected to them on WeChat or another social CRM system and buy from them anytime, after having an amazing experience.

James Eron: Again, this all sounds very fascinating. How can people get their hands on this report?

Chris Baker: At the moment we've been distributing it on LinkedIn. So, if you connect with me on LinkedIn and send me a message, we will distribute a report to you.

James Eron: All right. Chris, that sounds great, and of course we'll put a link in this interview also. Chris, thanks for joining us today. Fascinating stuff. Congrats on getting the new report sent out. I'm sure there'll be a lot of people that are downloading it.

Chris Baker: My pleasure. Thanks, James.

About James Eron

James Eron has over 20 years of consulting and industry experience in China, Japan, and the US. As a Partner at Kung Fu Data, James is a China market entry expert bringing quality brands into China and executing strategic turnarounds for brands struggling in the world's most competitive eCommerce market. His work makes extensive use of China eCommerce data to identify and capture market opportunities. Clients include a wide range of B2C brands from apparel, cosmetics, and luxury to pet food and consumables.

James is a frequent writer on China eCommerce topics and is regularly invited to speak at events surrounding China’s e-commerce sector. He is also global ambassador for the Global Retail Insights Network (GRIN), a community of creative, inspired retail minds helping shape the future of global commerce.

About Kung Fu Data

With offices in Beijing, Shanghai, Hong Kong, and San Francisco, Kung Fu Data is an independent data firm and market maker possessing a rare combination of authentic understanding of the West and China in-depth local know-how. Since 2010, we have used proprietary data and optimization technology to help foreign brands enter and thrive in China’s largest e-marketplaces. Our sole mission is to bring brand owners a level of strategy and data transparency they never thought possible.