On one of those rare sunny Shanghai days, I'd been thinking about our pending visit to DDB and how they were tackling the 'Dragon'. An integrated advertising company, part of the Omnicom Group, and the largest global communication company, they've typically situated themselves in the Xujiahui district, one of the key hubs for corporate and retail business activity. As with all thriving, constantly expanding global business centers, last minute challenges are common, so we were delighted when Mr. Dick Van Mottman - CEO China, was able to meet with us and introduce the DDB China operation.
The premise for Mr. Van Mottman's address was, “China…opportunity or threat?” This statement typifies much of the stereotypes and ignorance that exists about this region. As he explored this statement, Mr. Van Mottman emphasized the importance of understanding China's past, in particular the reality that the country was built to “keep foreigners out.” Making reference to the Forbidden City, with its soaring walls and restricted contact to the outside world…a physical manifestation of past Chinese Government mentality. In fact, not until 1979 did Chairman Mao open up this vast, culturally rich market. Now, in 2008, China has emerged as one of the most progressive global powers with a veracious appetite for knowledge, products, services and recognition. Yet despite China's push to integrate into the global economy, they still exhibit contradictory behaviour e.g. restricting occupancy rates in hotels down to 60% for the coming 2008 Beijing Olympics.
China's resilience and fortitude is captured in Mr. Van Mottmans statement “in hurricanes, build windmills”, and that's precisely what they do. Nothing is impossible, they bring in what they don't have including IP, resources, expertise and make it happen, always looking at the finishing line unperturbed by anything along the way.
Talking on the importance of 'Guanxi', Mr. Van Mottman explained that trust cannot be taken lightly. Business relationships are very important, you cannot take without giving something back…a concept that perhaps Western companies have forgotten along the way to success? All in all it does seem a constant battle to balance and monitor the sensitivities in these relationships.
I was astounded to learn some of the demographic drivers for China's growth. With close to 50% urbanisation and an emerging middle class with an appetite for luxury brands - predicted to drive 25% of global luxury spending by 2015 - they have the commercial weight to shift entire markets. Although this is promising from a commercial sense, it poses significant management issues such as managing the positioning of a brand i.e. how do you keep you brand out of the hands of an undesirable customer segment that don't understand it, and worse, offend your desired customers by degrading it? That's a scary concept!
Mr. Van Mottman went on to explain that the 'one child' policy has created a nation of 'little emperors', and how consumers are constantly looking to acquire material wealth by brand association, thus elevating their social status. Indeed this is what greater China is trying to do on a global level with the 2008 Beijing Olympics.
Not surprisingly, Chinese growth markets are wrapped around the internet - conversely becoming a critical communications vehicle for advertisiers; Beauty care - being the no. 2 or 3 global market; and on-line shopping.
To be successful here, companies and brands must resonate with the culture. At every age they are fiercely proud of their history and brands that can capture this in their product offer and communication message will create a stronger business, brand or relationship e.g Nokia with its recognition of the Chinese language, Budwiser Ant campaign promoting unity and community. But the real challenge lies in Chinese brands being able to migrate to external markets. Certainly there are some who are well positioned to do this but they'll have to consider whether their brand names work, their positioning statements resonate or the composition of products suit the host market. There is a real catch 22 here. On one hand there's a real need for Western consumers to change the way they think about China, but this will only happen once Chinese brands begin to infiltrate Western markets…the chicken or the egg syndrome.
DDB is paving the way forward for Western companies to transact, grow and integrate into the Chinese marketplace with meaningful and profitable value for all. To me, they are building an equity bank of knowledge and experience that will prove vital to the strategies of organisations seeking to tap the rich resources that China offers those who are brave enough, committed enough and relevant.
