WHEN WEST MEETS EAST

What Baidu, Alibaba, and Tencent are bringing to Asia and the rest of the world.

Asia accounts for close to 60% of the world’s 7.5 billion population, with 4.436 billion people residing in the region according to 2016 estimates. Of that number, 63% reside in China and India alone (population of China 1.487 billon, population of India 1.324 billon). That means that China accounts for 33% of the Asia region, and just short of 20% of the world’s population.

China has long been a digital nomad in the minds of many non-Chinese marketers and all too often ‘we’ - not just us digital folk but agencies and clients alike, look to the West for trends, technology evolution, inspiration, and new ways to drive consumer engagement.

China may not have evolved in as linear a fashion as the West, for example skipping out steps that one can only assume did not keep up with demand, such as desktops and dial-up internet to name but a few. Traditional infrastructure across telecommunications and banking however, have evolved more rapidly and more recently than was seen in the step change evolution in the West. As a result they have evolved to meet the needs of today’s consumers, for example WeChat Pay for your morning coffee or Alipay for your iconic yellow cab ride dash across Manhattan. This is a consumer centric approach that doesn’t simply ask today’s consumers to fit in with pre-historic payment methods.

This coupled with the precipitous accumulation of personal wealth and urbanisation has propelled China to being a world leader in communications, digital and engagement technology. Putting this into perspective, the latest McKinsey study aptly named ‘The Modernization of the Chinese Consumer’ stated that 76% of urban populations will be considered middle class by 2022, up from 4% in 2000.

Hence sometimes the insight can be as plain as day, and none more so than the advancements driven from Baidu, Alibaba, and Tencent (regularly coined ‘BAT’).

Commonly compartmentalised as the China Search Engine, eTailer, and Social Giant; the behind the scenes transformation being driven by these conglomerates is not just staggering, it’s breathtaking. 

Stepping back a number of years, one can only respect the dominant search engine market share (80.64% as of November 2017) that Baidu has owned, and its dominant eco-system play. However, the company still receives nine tenths of its revenue from online ads and the impact of the rapid evolution and scale of Alibaba and Tencent is leaving Baidu in the corner as spends transition to more social and eCommerce driven initiatives.

As such one could argue that the days of the three-letter acronym are numbered, and that ‘BAT’ will soon simply become ‘AT’. Don’t get me wrong it’s not that we, the consumer, will cease to search, not at all, it’s just that search ‘intent’ is increasingly manifesting itself on other platforms (such as Taobao) versus the traditional search engine. Yes, the evolution of consumer behaviour has changed search / search intent forever.

The speed at which Alibaba and Tencent have accumulated their value, in terms of dollars but more importantly consumer need, is firmly driven from their focus on data, technology efficiencies, and the building of eco-systems which not only meet the desires of today’s consumers but create the desires of tomorrow.

In the recent Singles Day (11/11 2017), the 24-hour sales extravaganza that generated US$25 billion, Alibaba showcased it’s omnichannel ‘New Retail’ experience as it widens it’s ‘offline influence’. According to L2 Gartner Alibaba’s Tmall partnered with retailers to equip 100,000 smart stores across China to feature mobile QR code check-ins to redeem coupons and Tmall-connected touch screens with product tag scanning to look up items, as well as QR codes for mobile scan to purchase. Some fashion brands’ fitting rooms were also kitted out with Alibaba’s FashionAI digital stylists which scanned clothing items and recommended matching pieces that could be requested through the screen.

As the battle to ‘own’ the mainland’s eCommerce space intensifies the significance of Tencent’s stake in JD.com may become more apparent. Albeit JD’s hold on the home market is relatively small (25% in 2016, up from 18% in 2014) in comparison the platforms long standing investment in infrastructure coupled the deep pockets and eco-system of investor Tencent will fuel the race in China.

We would also be remiss to ignore the significance of the myriad of foreign investments made by both Alibaba and Tencent, in a comparatively similar space transactions with Lazada (South East Asia) and Flipkart (India) respectively. Furthermore, the investments made in the underlying eco-system players such as consumer credit scoring, online payment firms, online gaming, and instant messaging.

One thing is for sure, the new battleground is firmly rooted in the ‘Connected eCommerce’ space, and one would wisely argue that for today and tomorrow ‘eComm is the new Digital’.

So, what can we learn from China’s internet – technology giants? Here are a number of implications to be considered:

• Focus on the customer, developing an audience (therefore digital) first approach
• When we say digital first, we mean mobile first with the consumer at the centre
• Many say the ‘funnel is dead’ however the principles still apply, they simply aren’t linear
• Develop a framework which works for your new consumer centric business that attracts, develops and grows mutually beneficial relationships with core audiences
• Before embarking on executing your new ‘modern’ framework ensure you’ve got your house in order in terms of, but not limited to, audience and value definition, digital touchpoints and experience planning, data management (holistic behaviours) product / service readiness, interaction logistics whether online, offline, through-the-line (to use an old phrase - but I like it!)
• Only then start to write the creative briefs, both strategic and tactical…

This article was also published in Mumbrella Asia in December 2017.