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HowtoCompeteandWininChinaE-Commerce
FrankLavinFounderandCEO
ExportNow
Presented:September28,2016atRetail’sDigitalSummit
DavidRothCEO
TheStore,WPP
David RothCEO THE STORE WPP EMEA & ASIA
28 SEPTEMBER 2016
WELCOME#davidrothlondon
FROM
NO CHOICETO
ABUNDANTCHOICE
Premium brands gain market shareOf FMCG brands that increased market penetration, added new buyers, 64 percent sell products at premium or even super premium prices.
Super Premium (Price Index >150)
Premium (Price Index 120-150)
Medium (Price Index 80-120)
Low (Price Index <80)
Winning brands increased penetration (gained new buyers), losing brands decreased penetration.Price Index = Brand Average Price/Category Average Price X 100
FROM
STATE-OWNEDTO
ENTREPRENEURIALDRIVEN
www.brandz.com
Chinese Brands in BrandZTM
Top 100 Most Valuable Global Brands
1 Brand
2006US $39.0 Bil.
2.7% of total value
15 Brands
2016US $402.4 Bil.
12% of total value
+927%
The BrandZ™ China Top 100 2016 grew 13%
+22% +13%
In 2011 the BrandZTM
Top 5 were all SOEs
Top 10 Chinese Brands 2016
Market-driven brands are 51 percent of Top 100 Value…
Share of China Top 100 value by ownership
State-Owned
Market-Driven
FROM
GDP ON STEROIDSTO THE
NEW NORMAL
Recent Chinese stock market swings had little effect on spending
Yes, it has strong impact
Yes, but small impact
No Impact
How did the two stock market drops affect your regular shopping behavior?
WESTERNFrom
Brands are best
Brand ParityCHINESEto
Chinese brands equal multinational brands in brand power
Chinese Brands
Multinational Brands
Consumers view Chinese brands as less different
Chinese Brands
Multinational Brands
Consumer view of Chinese and multinational brand characteristics across 16 categories.
UBIQUITOUSFrom landlines to
24 / 7
CONNECTIVITY
Ubiqutous connectivity and still growth to come
FIXEDCONECTIONS TO
MOBILE FIRST
From
% share of daily screen time
Mobile is a way of life…56% share of daily screen time
Mobile
Desktop
TV
Mobile is the strategy in China…Digitalad spending outpaces all other media
% advertising media spending
DigitalTVOthers
NO SIBLINGSTO VIBRANT
SOCIAL NETWORKS
FROM
IMPOSSIBLEE-COMMERCE LOGISTICS TO
WORLD’S LARGEST
FROM
E-COMMERCE MARKET
VIBRANTECHO SYSTEMS
WITH
VALUE-CENTRICTO MOST
CONSUMERS
FROM LEARNING TO BE CONSUMERS
brand difference strongly influences willingness to pay a premium
Premium Index: A brand’s ability to charge more than brands in the same category. Average = 100Different: BrandZ™ measurement of a brand’s ability to be unique and set trends. Average = 100. Top third are Most Different, bottom third are Least Different.
INTERNAL LOOKING
FROM
TO
GLOBAL FOCUS
FROM
TO SINGLES DAY
GOLDEN WEEKS
THE CHINA DREAM
The Chinese Dream evolves from political slogan to personal conviction
To what extent do you think these descriptions of the Chinese Dream represent your opinions?
Chinese Dream strengthens the social cohesionChinese Dream is the dream of Chinese peopleChinese Dream and my personal dream are in concordanceChinese Dream is the dream of the government
Advancing the rise of the Chinese Dream on the world stage
Faith in government to fix problems drives optimism in stock marketWhy do you feel optimistic about China’s stock market?
The government is trying to improve overall economy
The government is issuing new trading policy
The system of the stock market is turning transparent and mature
The government will rescue the stock market performance
Others
CHINA SPEED
STILL CHANGING FAST…
www.davidroth.com
@davidrothlondon
david.roth@wpp.com
Resources:
www.davidroth.com/dallas
HowtoCompeteandWininChinaE-Commerce
Theworld’slargeste-commercemarket
Frank Lavin, Founder and CEO, Export Now
Inthissessionyouwilllearn:
§ ThevalueoftheChinae-commerceopportunity§ Thedifferentapproachesleadingbrandshavetaken
inChina§ KeyoperaDonalconsideraDonsthatareneededto
supportaChinae-commercestrategy
China’sEconomy
ChinaE-Commerce
OnlineretailsalesinChinahit$590billionin2015($350billioninU.S.),over20%oftotalretailsales
OnlinepopulaDonandmobilecommerce=2xUS
OnlineadverDsing=$32billionin2015
SinglesDay2015exceeded$14billion;morethandoubleBlackFridayandCyberMondaycombined
InternaMonalBrandsinChina§ ~12%ofrevenueand~26%ofprofitscomefromGreaterChina.Top-sellingsportsbrandinChina
§ Nearly1millionBuickssoldinChinain2015(~80%ofglobalsales)
§ OpeneditsfirststoreinChinain2010andnowhasover100stores
§ StarbucksChinagrewfrom1,000in2013to2,000in2015;planstoopen500newstoresperyearoverthenextfiveyears
§ Chinahosts8ofIkea’s10largeststores,andIkea’sChinasaleshavesurpassedUSD1billion
§ Over1,200restaurantsin317ciDesinChina
§ Chinaisthethird-largestmarketbehindGermanyandtheUnitedStates
§ ChinaisApple’sfastest-growingmarket,surpassingEuropetobecomeApple’ssecond-largestmarketin2015
ChinaB2CCommerce
SOURCE: iResearch Consulting Group (February 2016); Alibaba (Jan 2016)
TotalOnlineSales
Marketplaces
Independentmerchantsites
InternaMonalBrandsonTmall
InternaDonalBrand
ChineseConsumer?
China market insight
E-store strategy and operations
Cloud-based IT Platform
Inbound Logistics
Brand + Digital Marketing
Order Fulfillment
Regulatory Compliance
Customer Support
Financial Settlement
WhatItTakestoSucceed
ChinaMarketInsight
E-StoreStrategy&OperaDons
Branding+DigitalMarkeDng
ITEnablement
RegulatoryCompliance
InboundLogisDcs
FinancialSedlement
CustomerSupport
OrderFulfillment
ü ConsumerAnalysisü CategoryOverviewü CompeMMveAnalysisü TailoredOnlineStrategy
ChinaMarketInsight
ü E-CommerceStrategyü E-StoreSetup+Designü LocalizedMerchandisingü OperaMons
E-StoreStrategy&OperaMons
ü BrandDevelopmentü Omni-ChannelDigitalStrategyü PR/OfflinePromoMonsü DataAnalysis+ReporMng
Brand+DigitalMarkeMng
ü InboundShipmentstoChinaü FTZWarehousingü ProductTransportaMon
InboundLogisMcs
ü ImportRegulaMonsü CustomsDeclaraMonü CIQ+QualityTesMng/InspecMonsü LabelDesigns
RegulatoryCompliance
ü Pick,Pack+LastMileDeliveryü Back-EndMerchandise
Managementü PackagingProcurement+Storageü DeliveryInsertsü CarrierManagement
OrderFulfillment
ü MulM-Channelü Pre-Salesü Post-Salesü ProductReturns+Feedbackü VIP+CustomerLoyaltyProgramsü SurgeCapacity
CustomerSupport
ü CompleteTransparencyü ChinaTaxes&Feesü LocalizedTransacMonsü FinancialSeblement&ReporMng
FinancialSeblement
ü TransacMonProcessingü Front/Back-EndITIntegraMonü AccesstoChinaSales&Inventoryü China-BasedITSupport
ITEnablement
TheMistakeofNothing
vs.
hdps://starbucks.tmall.com/
NFLCaseStudy
AboutExportNow
Foundedin2010,ExportNowistheleadingU.S.-basedChinae-CommercesoluMonsprovider,supporDngglobalbrandsinChinawithnewmarketentry,brandstrategy,anddigitalmarkeDng.
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