Why is Digital Transformation so Hard in China?

Everyone in marketing is talking about digital transformation, but few are really doing it.

2021 is the year when genuine digital transformation is needed more than ever. Marketing teams in China currently operate in a state of chaos and chronic inefficiency. When the work was easy and the money was flowing, this wasn’t a big problem. Now, growth is slowing, competition is fierce and wages are rising.

To continue to succeed in this new era, marketing teams in China need to walk the walk, not just talk the talk.

So, Why is Digital Transformation so Hard in China?

Hasn't COVID Kickstarted Digital Transformation?

Organizations saw their digital transformation plans unexpectedly accelerated early in 2020. Instead of years, they were now forced to change in a matter of months. Globally, COVID pushed 78% of companies to invest in digital transformation of marketing activities.

However with China’s aggressive response to the pandemic, life returned to normal far quicker than the rest of the world. The pressure for rapid digital transformation dissipated with only 19% of Chinese companies citing COVID as a driver for change. So China marketing teams quickly returned to their pre-COVID chaos.

What Teams Misunderstand About Digital Transformation

The marketing industry’s key purpose is generating hype. So, there is always more enthusiasm to “create new” and little desire to “modify existing” business processes.

Currently, driven by FOMO, every business is investing in mini-programs and social CRM projects that are typically solutions going in search of a problem. Millions of RMB are set on fire, backing complex projects that have little hope of delivering a return. Meanwhile, neglecting content marketing, the foundation for building a successful brand.

In China, content is seen as a way to directly drive sales and often perceived as commoditized. However, according to our research, really great content delivers immense returns.

With so much focus on new initiatives, the basics of marketing get overlooked. Yet, streamlining the existing content marketing workflow can yield meaningful improvements with much less investment. Countless hours are wasted on the same repetitive and menial tasks that could so easily be optimized.

Why so Resistant to Change?

China must surely be one of the most digitally advanced societies on earth. It’s impossible to go a day in China without scanning a QR code and if you dare to try paying with cash, people look at you strangely. Right inside WeChat you can do everything from buying groceries and booking flights to investing money. In restaurants you no longer speak to a waiter, simply scan the QR code on your table to view the menu, place your order and pay the bill, all using your phone. 

Yet, while daily life in China is more digital than ever, there is strong resistance to digital transformation in the workplace. We spoke to a Digital Transformation manager in Shanghai, who said it’s a constant struggle stuck in between multiple stakeholders, from junior staff right up to top management.

This resistance manifests itself in 4 ways:

1. Poor Understanding of Technology - Beyond knowing the buzzwords, the majority of digital marketers are surprisingly not very digitally savvy.
2. Unable to Identify Opportunities - Entry level staff carry out the tasks they are given, with no sense of how their work connects to the big picture.
3. Unwilling to take Responsibility - A culture of personal responsibility makes people less willing to drive new initiatives in the workplace.
4. Fear of the Unknown - They’re surprisingly comfortable working overtime in their dull and repetitive roles and unable to see the potential benefits. If anything, 80% of Chinese workers fear tech will take their jobs.

Digital Requires More Than a Team; the Culture Must Change

Assigning the responsibility to the IT department, creating a new team or hiring a CTO isn’t enough to drive the change. The entire management must be behind pushing the change throughout the organization. 

With mounting competition, many marketing agencies are feeling margin pressure and are desperate to optimize their workflow. However, clients are often the major barrier. They want their agency to be more digital, but are unwilling to change their habits to support the transformation.

Why is Digital Transformation so Important Right Now?

The modern idea of “Digital Transformation” in the workplace started around the millennium and until recently, was seen as the key to productivity. A report by McKinsey in 2014 said digital transformation would drive a quarter of China’s productivity growth over the next 10 years. However, 6 years later, little has changed, but pressure is mounting.

Evolving Industry & Market Conditions

The days of China being synonymous with plentiful cheap labour are over.

In the past decade China’s GDP per capita has more than doubled, meanwhile productivity growth has declined. Companies are paying higher wages and getting less done. Gone are the days of bottomless marketing budgets that allowed teams to endlessly add headcount.

Fierce Competition for Attention

As China’s middle class has grown and with brands desperate to reach consumers the marketing industry has boomed.

WeChat launched Official Accounts (OA) in 2013, as of 2020 there are well over 20 million OAs vying for the attention of users. Meanwhile the average WeChat user follows less than 20 OAs. Bombarded by content; read rates have continuously declined, as the attention spans of consumers have collectively gone down. Marketers today face a huge challenge to stand out amongst the noise.

Time to Work Smarter, NOT Harder

So many in the marketing industry blindly subscribe to common truths without using data to make decisions. From our recent research into Luxury WeChat OAs, 17% of articles are published on Friday evening, but the data clearly shows this is also worst time in the week to push out content.

Instead of just using data to make internal reports, teams must use that data to make smarter decisions that actually impact outcomes.

The Current Agency Model is not Sustainable

The combination of inefficiency, increased competition and a miss-guided focus on new initiatives has turned marketing agencies into modern sweat shops. It doesn’t take a highly paid consultant to see how employees operating under pressure and on little sleep are ill-equipped to overcome the ever increasing challenges.

Digital transformation of existing workflows has incredible potential to deliver better results and free up bandwidth.

So What Should You do?

Change is obviously not easy. It takes time, energy & persistence.

5 Actionable Things You Can Do in January 2021

1. Identify the Problems

Identify the most painful parts of your workflow or operations that could be impacting the quality of the outcome.

• Slow approval processes?
• Endless rounds of revisions?
• Not utilizing data to make decisions?
• Repetitive manual work?

The impact of this pain goes far beyond the time it occupies. Long hours and repetitive work are proven to demotivate people.

2. Understand the Benefits

Work with your team to map out all the great things that will come from the transformation. To overcome concerns, help individuals understand how their roles will change - for the better.

3. Make it Part of Your Culture

• Provide the time, space & resources for employees to acquire the skills to drive the change.
• Be willing to change old habits and ensure that you’re using data to support decisions.
• Challenge & encourage your team to find solutions to streamline or automate repetitive tasks.

4. It takes two...

Marketing should be a team sport. Almost every brand works with multiple agencies. It’s unrealistic to expect an agency to work smarter and deliver better results without the client also changing the way they work. Discuss and be clear on the benefits to both sides.

5. Keep it Simple & Be Realistic

Although digital transformation will affect your entire organization in a major way. This should be an evolution not a revolution. Instead of large disruptive projects, implement small changes on a regular basis.

Don’t be easily dissuaded. Fundamentally digital transformation depends on changing employee habits which is hard and takes time. Stick with it.

Thanks for reading & please let us know what you think in the comments below.

Connect with me to learn more about how KAWO can help digitally transform your China marketing.