55% executives in China would actively engage external sources to collect new ideas for applying emerging technologies compared with 64% globally. 41% executives would spend more than 15% of revenues to digital spends according to PwC’s 2015 Global Digital IQ Survey.

45% respondents in China see digital technology as being almost synonymous with IT (37% globally) and 65% see it as being incorporating all technology innovation-related activities (53% globally).

Companies were investing 34% of digital budgets on IT (32% globally) and 33% on marketing (27% globally) in 2015, far higher than sales (10%), customer service (9%), operations (8%) and enterprise functions (8%).

Business leaders in China were focusing in IT and marketing to promote revenue growth. More than half of business leaders in China (56%) were confident in their organization’s digital vision and capabilities, which were higher than the global average. However, only 49% supposed they effectively utilized all the data they captured.

Nearly nine out of ten executives (86%) in China said executives responsible for digital were involved in setting high-level business strategy (77% globally). 84% showed their digital strategy was agreed upon and shared with the executive teams and 47% would share with the whole organization.

Companies (92%) in China saw creative strategy and design skills as most critical to their business but only 68% believed their skills in this area as developed. 55% executives in China would actively engage external sources to gather new ideas for applying emerging technologies while 64% globally.

Overall, China’s executives and companies were positive and active on digital owing to ubiquitous mobile and social media with consumer spending and online behaviors. Embracing the potential of data would drive the digital strategy as a critical factor for success.

Also read: Digital Accounting for Over 50% of Chinese Media Time

Source: PwC

In 2015, when the total usage of digital media users outpaced that of traditional media, the social media also showed their own unique development properties and characteristics in China.

Businesses of all sizes and levels in China are committed to test and realize the value of their social media marketing. Entrepreneurs expect to improve their brand awareness, and increase website traffic and audience reach to obtain more customers.

Companies were expected to measure ROI (return on investment), tie social activities to business outcomes, develop social media strategy, which were challenging to achieve through their social media programs.

Influence of social media activity was difficult to quantify. Marketers in China fall easily into simply referring to the number of followers, likes and reposts as the only measurement for the success of their China social media campaigns. Engagement (likes, shares, etc.), audiences (followers, fans, etc.), website traffic, leads and other metrics were several major metrics to measure the success of social media programs.

The average number of tools to analyze and report on social media activities had relations with the scale and years of experience of the companies. Some Chinese companies remained satisfied with the data they collected while many companies were unsatisfied with the lack of useful tools.

Although social media enjoyed a large quantity of daily average users, most social media marketing have not been integrated into the enterprise objective. Among all the respondents surveyed by TrustRadius, only about 50% agreed that social media data and analytics would impact the social media marketing strategy, and even less than 25% respondents agreed that the social media data and analytics would impact the companies’ overall business strategy.

Also read: China Advertising Insights 2015

My first enterprise in China back in 2009 was a social community website for fashion-oriented, affluent Chinese. Together with three partners, one of which was a Chinese, we had developed the concept and launched a first version of the website.

These were the days of Kaixin and Renren but we felt we had a chance to start something unique and new in a clearly defined niche. China seemed the ideal place for this adventure: the Chinese middle class was emerging (these were the days when the Sanlitun Village was just becoming the new Mecca for this crowd), programmers were cheap, and venture capital firms were eager to invest in promising start-ups. In short, it was the new Eldorado for internet entrepreneurs – or so it seemed.

One and a half years later, we closed shop. The Chinese competition had proved to be formidable on their home turf. In spite of the fact that we had been onto a nice concept for a social community (think Pinterest for China), we had failed to attract critical user numbers. And a second round of investment we badly needed to boost our growth never materialized.

After three years of bootstrapping and an angel investment, we simply ran out of the means to sustain ourselves and to constantly add new features to the site (a necessity to remain competitive). We had spent three wonderful years pursuing our dream but now it was clearly time to wake up and move on.

This is, of course, easier said than done. Besides the psychological challenge of having to overcome “defeat,” my three partners and I were facing very real issues: how are you going to pay your rent? What about these open student loans that need to still be paid? What about China – is it still the right place to be?

Luckily, I had placed my bets on the right people: with one exception, our core team remained intact and we decided that we wanted to continue working together. I can’t stress enough how important it is to find the right people (and retain them) when starting your own business. After the quality of your actual business idea, it is easily the single most important factor as regards success and failure. Moreover, I was blessed with a great network of likeminded entrepreneurs and had two business coaches who helped me tremendously.

Then there was the question what kind of new business to start. After our grandiose idea had failed, we all were in the mood for something more ordinary but stable. So we decided to make use of the resources and connections we still had and to open a web agency in Beijing and Hamburg, Germany. To be sure, this was a different business altogether: first of all we needed to find clients.

Fortunately, there was (and still is) a considerable demand for quality web design and development in China. And as more and more Western companies realized that they needed to establish a web presence in China, there was also a growing demand for our services in Europe. More recently, there has been a surge in requests for mobile applications, SEO and social media marketing. To be sure, demand in China (from both Chinese and Western clients) is not the real problem.

But that doesn’t mean it is easy to run a profitable service business here in China. First of all, you have to ask yourself what core services you can provide and what kind of market you are actually operating in. For instance, it makes a big difference if you are offering web development services or if you specialize in digital strategy.

My recommendation would be to always focus on niche markets that require creativity, a keen sense of taste, and a theoretical foundation. You do not want to compete against an army of cheap labor. Second, you should always try and sell your working methods as much as your actual service. It is very challenging to be a service provider for Chinese clients, unless you find a way to guide your client through the process. You need to find a way to show your Chinese client the added value of approaching a project with a professional, Western methodology and workflow.

At the end of the day, no matter what creative service you are providing, you will need quite a bit of stamina to make it here in China. After four pretty intense years, we are finally able to choose the jobs we want to take on and to decide when to say no.

Today, we run a boutique web agency that does not only provide us with a stable income, but allows us to pursue other business ventures as well. We have managed to carve out a niche but only after we learned some important lessons the hard way. The good thing in China is this: there are plenty of entrepreneurs and professionals who are willing to share their China experiences and to help aspiring entrepreneurs. Do get in touch with these people. It may help you avoid some of the China traps and is certainly time worth spent.

Dr Johannes Kadura is the managing director of digital agency AKRYL, which maintains offices in Beijing and Hamburg. He is also a business coach at The China Expert.

Purchasing foreign products nowadays shows a rising trend in Chinese market. Foreign products, commonly perceived as being with good quality, are often more expensive in China than in the west. 

One Haagen-Dazs is sold at USD14.29 in China, while it costs USD4.87 overseas. But why are foreign products more expensive in China? The pricing of an exported product are determined by several factors: the import tax, cost, sales channels, brand processing strategy and so on.

The import tax affects the final price of exported products but it may not be so decisive. Take the pricing of “Coach” handbag as an example: it is priced at USD617 in China, USD417 in HK but USD294 in US.

US price (294)+ Tariff (10%)+ VAT (17%) + logistcis”=US$406

We can figure out $406 is much lower than the actual price of $617 in China. In China, the import tax on imported goods are generally between 10% to 20%, lower than some countries such as India; however, it’s even cheaper in India than it is in China.

When it comes to the cost of the foreign products, labour cost in developed countries could be a factor but during recent years, some parts of production lines have transferred from local to the developing countries with cheap labor, such as China, India, Vietnam etc., which, in other words, has lowed the cost of products instead.

You may not know most of the coffee beans consumed at Starbucks are sourced in Yunnan Province, China. Starbucks has primary processing factory in Yunnan, which can control the cost of  coffee bean within USD0.06 for each cup. However, with lower cost, why is the price higher in China?

Let’s take a look at the sales channels. According to some friends in the retailing industry, the more well-known brand can often get a lower rent.

Starbucks, ZARA, Levi’s, Coach, CK, NIKE, Haagen-Dazs… all achieved great success and have a good market share in China. The president of MONT BLANC in China once said:

we sell one bag for USD4,873 in China; though the government cut tariff by 20%, the bag is still USD4,873. We make profit even from tariff.

There is a solid reason of higher pricing adopted by many well known premium brands in China as it’s still true among many Chinese consumers’ perception: high pricing = premium quality.

Wechat recently started displaying the total number of views and likes for Wechat official account articles; the transparency from Wechat seems to be helpful identifying the true value of a Wechat official account and quality of considering some articles from accounts with hundreds of thousands of fans only have a few hundred views in one day.

But how real are these numbers?

The metrics of “views” and “likes”, soon after Wechat launched, are doubted of its true value as there have been services being offered on Taobao to technically increase the numbers. One “like” often costs less than half yuan; “1,000 views” costs about RMB10.

Tencent claims they have implemented countermeasures with sophisticated algorithms. But can it really prevent the manipulation of Wechat metrics? A well known Chinese blogger Nanqidao did an experiment:

As shown in the screen captures above, the left one, before we bought Wechat “Like” services on Taobao, shows a total number of 1 like and 66 views while the right screen capture shows 53 likes and 1,694 views, less than 30 minutes after he paid for the service. The Wechat account used has only 201 fans as he conducted the test.

What else could be faked on Wechat?

A search on Taobao will find various service offering related to Wechat besides increasing the number of views and likes, such as buying fans, total number of shares, Wechat polls, Wechat participation, public accounts trading, etc. Almost all metrics on Wechat can be faked.

What is hardly to fake is Wechat platform contribution to your revenue, which might be difficult to track except for those who have implemented e-commerce transactions on Wechat.

Don’t get me wrong; the number of views and likes are helpful metrics monitoring the content quality but that can’t be all you measure. You should develop a strategy and tactics, such as connecting a Wechat offer to a offline sale, to measure the true impact of your Wechat marketing to your brand and sales.

Alibaba announced a new 2D code strategy called ‘Ma Shang Tao’ last week. It will become a significant part of company’s “cloud+ terminal” strategy.

Alibaba chief operating officer Zhang Yong said, “Any code would become a terminal and it is no longer just a simple business card but more services and content.”. This 2D code strategy will achieve seamless connections between any people, people and information, and people and objects. The first 5 apps released are ‘product code’, ‘service code’, ‘interaction code’, ‘media code’ and ‘shop on the code’.

Product code. Every product has its own product code, like a unique ID card. The product code can access Alibaba’s billion commodities library. Using this product code, customers can know accurate details about this product quickly and can also complete purchase online.

Service code. Service code is for delivery packages. Scan the service code when signing off for receipt of packages, then they can enjoy the personalized services provided by sellers, including service manual and post-sale services. Meanwhile, through the service code, more sellers can reduce the cost of maintaining the relationship with customers and open up the online to offline (O2O) transactions.

Interaction code. Interaction code provides a channel between merchants and users. Users can participate in cloud games and events by scanning the interaction code. So far Alibaba has collaborated with Pepsi and Tsingtao Beer. Consumers will see the interaction code on each product this summer.

Media code. The media code is to help traditional media’s transformation. Once customers see the promotion on the media, they can scan the media code and purchase online immediately.

Shop on the code. This type of 2D codes will change the current operation status of offline shops. In the future, as long as there is a code, there is a shop behind it. Besides that, the shop on the code will soon become a necessary element for physical stores and shopping malls. Customers can acquire promotion and discount information through this code.

Alibaba’s 2D strategy for e-commerce is not about payment but connection, a connection between online and offline as e-commerce transaction is not objective yet. Alibaba wants to develop users’ habits of scanning code via 5 new apps above.

Content marketers and publishers experienced in utilizing third party recommendation engines may be interested to give Baidu Recommendations a try.

Baidu released its content recommendation engine service to its content network publishers around May this year and made it available to the public about one month ago.

According to Baidu, over 1,000 websites have used Baidu Recommendations to boost their traffic and the average increase in traffic is 15%.

It provides three display style (above): pop-up, embedded, slide in.

After selecting the display style, templates will be provided to choose from as shown in the image at the top of this post.

For inbound marketers and content marketers, Baidu Recommendation is worth testing as part of your China content marketing strategy.