Marketing to the Chinese: A New Reality?

Although struggling a bit of late, Apple has been enormously successful in China. (Having said that, is there anywhere where it hasn’t been enormously successful?) And with the recent introduction of the iPhone 6 and the Apple Watch business executives across all industries are waiting anxiously to see if the Apple magic continues.

Apple makes some neat stuff. And they’ve no doubt been on the leading edge both when it comes to functionality and the critical human interface that must be bridged between the technology of functionality and its application to daily life.

What Apple has done exceptionally well, however, is emote its products. It is the Holy Grail of marketing. Creating an emotional connection between a product and an experience.

It’s tricky business, although Apple isn’t the only marketer to have been successful. Starbucks, Nike, and Coca-Cola, to name a few, have proven adept at emoting their brands despite, what is, in many cases, a rather mundane product or service.

There are several challenges successful marketing emoters must overcome. The first, with a few exceptions, is scale. It costs a lot of money and if you happen to serve a small industry there simply may not be enough runway for you to get your emotional connection off the ground.

The other challenge, without a doubt, is luck. Your timing must be impeccable. The audience may or may not respond to your performance but there must be an audience to begin with.

Influencers can have a big impact. If the right people emote your product they can greatly enhance your chances of success. And some influencers can be bought so again it gets back to scale and the depth of your pockets. But some of the most powerful influencers, particularly among the young, cannot be bought. Their influence is more a matter of good fortune than the size of your ad budget.

The conventional wisdom today, and what I assume is being taught at most business schools, is that good marketing is all about good data mining and analytics. The key to good emoting is simply knowing which buttons to push and the key to that is data – lots and lots of data – Big Data!

Personally, I am not of that school. Consumers can’t tell you what they don’t know they want yet. Steve Jobs, I think, understood this intuitively. He did not build the McIntosh or the iPod because consumers asked him to.

For many Chinese today their aspirations remain more essential than experiential.  Price is everything and the foreign brands stand no chance to compete.
For many Chinese today their aspirations remain more essential than experiential. Price is everything and the foreign brands stand no chance to compete with local players who can produce at half the price.

The biggest problem foreign consumer products marketers face in China is the simple fact that the majority of Chinese are still in the survival stage of development. Their aspirations are less experiential and more just essential, like the physiological needs Maslow refers to at the bottom rung of his Hierarchy of Needs. Who cares what your neighbors think of you if you don’t have enough to eat?

By the numbers, however, there are still a large number of Chinese who are beyond that stage and who have an interest, and the means to satisfy it, in non-essential experiences. And these are the Chinese that the titans of golf and yachting and cruise-liners are all salivating over.

The challenge is that people can be pretty fickle when it comes to aspirations and they frequently change over time. As young man I dreamt of taking a dog sled to the North Pole. Now a lounge chair on a warm beach in Thailand sounds far more appealing.

Aspirations can be qualitative, particularly here in China where a series of food scandals over the years has people genuinely concerned about what they’re ingesting. Or, even more aspirationally, what they are putting in the mouths of their one child who will be expected to take care of them when they’re old.

This used to be a major advantage for foreign brands that were always assumed to be more reliable and to have more integrity when it came to product quality. That perception has changed considerably in recent years, however, as some of the most serious food scandals to rock China have involved foreign dairy cooperatives and meat processors. When McDonald’s and KFC start pulling products from their shelves the whole emotional playing field tilts.

And it doesn’t help that China is having its fair share of political tiffs with the foreign countries from which a lot of global brands spring. Don’t think for a minute that the average Chinese doesn’t know about America’s Pivot to Asia. Or that they don’t take it personally as a loss of face and yet further foreign aggression against their country. To the relationship-centric Chinese there is no China per se – there are only Chinese and the place they call home.

To their credit, the Chinese have also gotten a lot better at just about everything. Lenovo makes good computers, Haier makes darned good appliances, and don’t dismiss the smart phones of Xiaomi and Huamei, two smart phone makers I never even heard of when I arrived here.

So things are changing for foreign marketers in China. It used to be that being foreign and being expensive – the more so the better – was really enough. The recognition of wealth and success has always been the aspiration of the nouveau riche in every developing country and nothing satisfies that aspiration like a German luxury car, an LV bag, or a Rolex watch.

I remember a time back in the late 60’s and early 70’s, however, when the big money of New England – who were no longer nouveau – aspired to drive Volvos and Saabs. Not because they were sexy and exciting to drive. And there were certainly far more expensive cars to choose from.

They justified the purchase on the basis of safety and practicality, of course, but that was only the enabling aspiration. Saabs and Volvos, in those days, emoted patrician values – a lack of bourgeois superficiality, as it were. They drove them because they could drive cars costing far more expensive, but chose not to. They had no need to establish their wealth. They had risen above that by sending their children to the right preparatory schools and owning the right vacation property.

And that, I believe, is exactly where the Chinese might turn out to be when it comes to Apple. In absolute terms there are plenty of Chinese who can afford the iPhone 6 or Apple Watch. But in Q2 of this year it was Xiaomi, not Apple or Samsung, that captured the number one spot in market share in the China smart phone market.

Will the iPhone 6 reverse Apple’s recent fortunes in China? Or have Chinese aspirations changed? Perhaps they’d rather buy an adequate Chinese smart phone and buy a vacation home on the Gold Coast of Australia or Sanya – the Hawaii of China – where they can drive their Volvos (now owned by Geely, a Chinese automotive company) because, well, they can. Or take dog sleds to the North Pole, of course.

The change will come. I can guarantee it. I just can’t guarantee the timing. Even an Apple Watch doesn’t have that functionality yet.

When I was growing up many wealthy New Englanders drove Volvos because they were safe and practical.  In reality, however, they drove them because they didn't have to.  They were capable of driving far more expensive cars but chose not to.
When I was growing up many wealthy New Englanders drove Volvos because they were safe and practical. In reality, however, they drove them because they didn’t have to. They were capable of driving far more expensive cars but chose not to.

Copyright © 2014 Glassmaker in China

Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.