Hello, Stewart, very glad that you could join us today for this interview. In my lecture, I have also covered Mainland consumers nowadays have various spending platforms and new social networking sites. Their consumption modes have become very different. Have you noticed these differences? In fact, the changes in the Mainland consumers are really brought by Mainland’s national policy and the Internet. It started in 2015. The influence brought by the national policy is far-reaching. Apart from the impact on media communication, the media on the Internet and the consumers’ lives have been changed tremendously. What’s more, in terms of production, many manufacturers and their advertising units in their goods production had integrated with the Internet ideas. Indeed, this has overturned the findings of all previous studies in consumer behaviours. We used the basic consumer thinking process AIDA in the past, but now it’s AISAS. From Awareness, then to Interest, then to Search, then to Action, and finally to Share social. It’s very clear that it’s these 'Search' and 'Social' that have significantly influenced consumer behaviours. What’s more, today’s consumers, they are doing searching and buying, watching TV and buying at the same time. All these originated from the big data working at the back. Analysis of the big data like consumer behaviours, their interests makes these OTT televisions, like LeTV, Xiaomi, capable of figuring out what this consumer is interested in buying, then pushing out these advertisements to prime him to make immediate online purchases. There are also advertisements for ‘friends’ circles’, <i>wei shang</i> [small e-businesses]. All these are achieved through using big data in identifying consumer behaviours and interests and then push out precisely the advertisements they want. To them, therefore, it has facilitated a lot of purchases speedily. In this year’s [2016] Double Eleven, people all over the world know that Ali made $120.7 billion. Jingdong according to unofficial statistics made $20 billion. We estimate that all e-retailers in China had made $300 billion trading on the day of Double Eleven. From these, we could see consumers are making their purchases in several big festivals like Double Eleven, Double Twelve and Six Eighteen. These festivals detonate their purchasing desires. These several factors are also very important. In addition, Mainland consumers are more willing to pay online. This is the behaviour of several hundred million people. On the day, there isn’t any need to have cash to make online purchases. These are the key important changes in consumer behaviours. Based on what I heard, the consumption mode of most shoppers has changed a lot because of online purchases or social media sites. To a new entrepreneur who wants to do business or selling in China, statistics indicated that Tiers 1 and 2 cities have already shown signs of saturation whereas there are still good growth potentials in Tiers 3 and 4 cities. Like LeTV or similar companies, they could use big data to do the analysis. Nonetheless, this is not for everyone. For Tiers 2, 3 or 3, 4 cities that still have rapid growth, what different sales method do you think new entrepreneurs could have when compared to Tiers 1 and 2 cities? If it’s the difference between Tiers 1, 2 and Tiers 3 and 4 cities, take the example of an analysis of the post ‘95 consumers in a recent research, it was found that these post ‘95 youngsters in Tiers 1 and 2 cities are comparatively more emotional. They do more impulsive [sic] purchases. They could buy something because it has been endorsed by their idols. Probably 50-60% of the buyers would be willing to do something like this. They would make more purchases just because they feel happy. Tiers 3 and 4 cities, on the contrary, because of their lower disposable income, they tend to be more pragmatic. They will check product benefits, promotional offers. They are more rational. Therefore, if you are doing advertising, promotion, marketing, your advertising message in Tiers 1 and 2 cities will need to be more emotional; in Tiers 3 and 4 cities, you probably need to put product benefits into the creative to make them accept the price-performance ratio. Tiers 3 and 4 cities in the Mainland emphasize price-performance ratio a lot more. Obviously, the other one is the distribution channel. It’s also seen in Ali’s Tmall. They do very well in Tiers 1, 2 and 3 cities. Recently Ali in that 2014 initiated ‘<i>qian xian wan cun scheme</i>’ [Thousands of counties and villages scheme] managed to achieve a high business turnover in some 18,000 counties and villages in this year’s Double Eleven. On the other hand, Jingdong is stronger in distribution in Tiers 1, 2 cities because they do their own courier service in the logistic. Marketers need to beware with whom they are co-operating in order to achieve penetration in Tiers 1, 2 and 3 cities. Like the kind of advertising in the past, it was probably enough to have one advertisement to fit everyone. Nowadays with all these new social media platforms, it’s possible that with different consumers in, say, cities and villages, there are different targeting methods. Like we see Chinese consumers in general focus a lot on price-performance ratio too. In this case, when they see something lower in price, they would switch to this other product. In this way, they have less loyalty to any particular brand. Do you think the new social media platforms can help in this or not? Or can they even turn the difficult situation around? Social media indeed presents a great opportunity in the Mainland. I mentioned AISAS is 'share social'. Mainland consumers in comparison with their overseas counterparts have a lower level of trust. Therefore, social media is just in the position to provide some assistance. Previously there was a Mainland brand, in fact it’s still very successful, Xiaomi. Xiaomi started with handphone in 2014; no, 2013 probably. They are the one who use consumers’ involvement and engagement. In the Mainland, we call it <i>san yu gan</i> [sense of participation]. They published a book called <i>san yu gan</i>. It’s by one of the Xiaomi founders who used Xiaomi, its customers, and the ‘fans economics’ to write this book. They started to engage their customers, fans from as early as product research and development stage to seek their insights, their needs and put them into their products. Even when they have their press conference, they invite not many reporters but a lot of fans to support the event. This makes their fans really fall in love with the brand and genuinely support the brand. In this respect, to advertisers or marketers, it shows the need to be thorough from product development to marketing and then to social engagement in order to be successful. It sounds like to a foreigner coming to the Mainland using social networking sites or a Web platform to conduct business is not an easy task. What do you think they should do first to help themselves understand Chinese social media or Web platforms? What is the first thing they need to do to help them build this one? To overseas advertisers if they want to read English materials, Mckensey publishes quite a lot of research papers. White papers also have some very good insights. Of course, there are others, some digital research companies in the Mainland, like iResearch, Analysys; these are Chinese papers that are very good references. Of course, if there is a chance to come to the Mainland, Shanghai, Beijing to attend some seminars, there are a lot of practitioners in there who could provide more local experiences. Of course, they are also welcome to appoint some professional marketing agencies. These could provide them with more information and more comprehensive advice. Stewart, thank you very much for coming to the interview today. I think you all learn quite a lot about Internet marketing in China.
