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Old 2nd August 2007, 08:08 AM
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The Internet Marketing Situation In China

Recently I had breakfast with a friend in China. He asked me about the Internet, "Why should my company go on the net?" An easily answered question I thought, but there was more to it.

He totally trusted the Internet and believed that it can help his company achieve a lot in brand awareness and image. So, why the question? Turns out that the rest of his organization was not convinced of what the Internet can achieve and he is the only one who wants to go online. His next questions were, "What is the Internet interest in China? What would make the Chinese audience responds to what is on the net?"

Let's go even further: Why is the Internet going to be huge in China? And what are the differences between Internet in China and the rest of the world.

My friend's China target audience is the young, wealthy and very wealthy. In this area the Internet has already become a mass media and penetration is high. The figures are huge. This year there are 137 million Internet users in China and is expected to reach 200-250 million in the next 3-5 years, surpassing the USA. To date, the United States has the largest number of users with 153 million, but growth is just two percent annually. Through our work and experience in Nurun China, we know the China Internet audience is very responsive. On average they consume 19 hours a week, 65% more than the US.

So, let's analyze why.

Why do the Chinese embrace the Internet?
I believe it all relates back to the China's history, the social background and the educational system. There was no encouragement to educate kids to debate in school, there was little analysis and personal opinion expressed since most lessons were learned by heart. There was very little opportunity to share one's opinion or thoughts.

The Internet has changed all that. It is the only medium available where anyone, from every social background, rich or poor can share and express themselves. Anyone willing to, will and can do so. This is why they have embraced the Internet and interactivity wholeheartedly. The same relevant topics on key figures or topics in the US or Europe command a larger audience in China and create more discussion than in the other parts of the world. The developed market audience especially in US and Europe has already been, let's say, ‘brainwashed", and overexposed to a lot of knowledge on products, brands, health etc. This is not the case in China.

The attitude of the audience in the West is, "We believe we already know everything, well, almost everything". The Chinese audience realizes the fact that they are only just catching up in terms of knowledge, information and education. They are also aware that they know less if they compare themselves to the rest of the world. They crave for more information. They crave for more knowledge. The Internet provides the one medium they feel they can trust. They are aware this medium is not tightly monitored or controlled by the government in the same way as traditional media.

Now, why in reality, will the Internet in China eventually take over in terms of numbers, quality and news ways of Internet usage?

Let's take a look at what happened in the past in Japan and Korea, and later China is a fantastic example. Japan was becoming a huge economic power while Korea was still emerging but already recognized as an Asian Tiger. In these two countries, telephones were readily available and widespread. However when the mobile technology appeared, it was very interesting to see that these two countries jumped right in, much quicker than the West. When I first arrived in China in 1995, there were already several hundred million beeps. Motorola was the leading brand and China was already their largest market only after just a few years.

Asia is much more ready to embrace new technology, much faster than the West. I think that this is attributed to their deep belief that technology means progress and progress means wealth. It is a simple equation but I strongly believe this is what it is about.

Internet in China
Let us look at what is happening to the Internet in China. America invented the Internet and made it a fantastic communication tool, an information highway reflecting a sense of freedom. In the late 1990s, China did not fully understand this medium and was a little afraid of it and did not embrace it. They tried to control it but it was too costly. At one stage the Ministry of Information wanted to edit Internet laws to curb inflow and outflow of information. Then they changed their mind and made accessibility to the Internet cheap to Universities, students, to households and soon it started to grow very very fast. Why? Once again the government had the wisdom and foresight to realize how big and important it will become. However, I believe, even they did not fully understand its potential or foresee what it will mean to the people. The people were aware that this is the latest technology in communication and simply, the belief that the latest is the best. They felt they had to understand it, to master it otherwise they will be left behind, as individuals, as an economy.

So once again, this cultural aspect is the reason why the people embraced the Internet so quickly. I believe that China goes on the Internet not only for fun and entertainment but also for information. I strongly believe they have such a strong will to grow and to progress that they use the Internet to connect and to interact with new people. This determination for progress will eventually drive the way Internet works in China, inventing new ways for web utilization, online, offline, mobile phones, on TV. It will go very fast.

Companies and brands are spending more and more on online marketing. But I am not sure they really understand why. Most of them are just following the trends of the consumers, not pre-empting or analyzing what the people are doing on the web and what they can offer the audience.

Interacting on the Internet
The Internet has already become a mass media for the young and wealthy. It is clear they already have taken control and their presence and the type of content they want is driving the market. They speak their minds very loudly and vividly! We have to listen.

We have created some very successful brand campaigns for our clients like FAW-VW, Olay and Colgate. The content was interactive and entertaining in a way that delivered information, yet it also delivered the educational aspect of the product.

Take Colgate's MaxFresh campaign. Jay Chou is the face of a multitude of Chinese brands. How did we make his campaign for Maxfresh stand out from all the others? We let the consumers remix his television commercial. Not just chop it up, but also add their own titles and inserts as well as seeing what other music Jay can dance to. The audience loved it. They interacted with it and even forwarded to their friends. There were almost a million and half unique visits in a two month period. We even added a flash toothpaste mixer, a cute little application to enable Colgate to get the feedback from more than 1000 users on which toothpaste flavor they prefer.

There is nothing faster than the Web to let a marketer know if there is interest in their products, what they like or don't like about it.

Nowadays, very often when we are briefed by clients, they are looking to us to tell them what they should do online. One client said, "I know my product has to be online. You are the expert, you understand my audience, you understand the web. I don't. What can we do?" And this is not a first timer. The Internet is growing so fast, the type of content, and the reason why people stay on the web are evolving, and habits are changing.

Right now a strange thing is happening, a lot of brands are not taking a leadership stand on what should happen online, and instead of trying to create they are the followers. I don't think they are really aware of this but probably unconsciously taking the safe way and just watching where the Internet will go and where it will take them.

So where will the Internet go in China? With such a large population and a phenomenal annual growth in Internet users, the people will be in the driver's seat. Now is only the beginning.
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Old 2nd August 2007, 09:11 AM
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Re: The Internet Marketing Situation In China

Well written article... really is all correct as I see it.

Been amazed myself at technical product meetings for example how much engineers really know (not just computer ones, all business areas) - and it is coming from all their hours of internet reading.

They will pull up the really leading edge technology questions - and actually understand the issues (I am sure more than a few visitors have taken a step backwards and gone wow, these guys in their own time and using half their income to get a computer and go online, are learning what my staff can't be bothered to do in paid time free). Are they crazy - no they are driven by the love of knowledge and see a responsibility to their job (and gain respect from their colleagues and peers for being smart).

More so than any other group, I see the Chinese population eating up the internet and they will continue to.

The young generation is interesting as well - being net aware and being online is a test of being modern and intelligent. If you are not, the implication is you are either super poor or "intellectually challanged" (both big negatives).

On the net applications side they are jumping leaps and bounds as well - partly fuelled by access to free (or very cheap) software and cheap labour costs for content such as drawings & illustrations... companies like MS have taken the position, let them use ours for a few years (then when they are all reliant on MS Server applications etc.) the money will roll in (and it will in the near future).

Small example is one business area I am in which is based in a more rural part of China - when I stated only one, maybe two companies had a homepage... now their are around 3000 homepages (every company has one, including a few individuals hoping to sideline business).

At the moment you see a huge mix of software and applications being used - most poorly as they are still being learnt (but sometimes used perfectly).
Internet advertising is also starting to take interesting turns and serious big companies are pumping money into big campaigns.
Like other parts of Asia there is a strong emphasis on java or flash interactive content... and it is being eaten up by the net population.

On the future of IDNs side - we should all be thankful for the .cn ascii firesale - this has breed overnight a huge number of domainers... who although not educated yet with ascii only purchases (when they realise IDNs work on their browsers) - will fuel the education chain of IDN domains (very quickly those with the power to spend will learn what an IDN is and why it is useful to have keywords in one - some will not agree, but a percentage will go, ok... lets give it a try... here is a few thousand for you to play with).

Chinese businessman are believers in the internet - many of them have made the majority of their sales contacts via the internet and know it is important to them.

I am also awaiting G3, in a couple of years time, I can see the internet in China as being truly mobile... a little like now where I find that hotels in China are nicer than the West (and cringe when I have to go to the USA for example)... the internet will be the same... cheap 3G access is on the way and this will mean more people online anywhere, anytime at greater than average broadband speeds.
I can see the time very soon, when I will groan at the costs to go online when out and about - being so used to the cheap 24 hour access I will be able to get in China.

The next boom internet wise is going to be online sales sites - some really wealthy players, with huge manufacturing bases and brands are starting to get into this (one for example I am very keen to watch, is a guy who owns 10,000 advertising light boxes, an advertising company and a tv channel - his leap into online sales I imagine will be like no other company I have ever seen... his target is high-end luxury goods).

Cheers and smile - 5 years and IDNs will not be cheap drops anymore.
Be thankful that the internet population in China are fast learners and a percentage of those with the money will listen (the real fun will start in the 2nd round as good IDNs become less available at cheap rates).


PS: just wish now I had studied programming and SEO a little more than I did... as this is the weakness in China at the moment.
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