1.39 Billion Consumers No Longer March in Lockstep: How Should Brands Tell Their "China Story"? | FreeS Fund Business School
A sense of timeliness + Chinese elements + clear values = a great Chinese story.
The Era of "Chinese Marketing" Has Arrived. What Stories Will Resonate Most with Consumers?
In the process of consumption upgrading, both brands and channels are upgrading. Behind their upgrading lies the need for infrastructure upgrades. As a critical piece of infrastructure for consumption upgrading, marketing itself must evolve.
In the past, brand equaled awareness. If lots of people knew about you, you were a brand. If your distribution ran deep, you were a brand. This meant the primary goal of marketing was simply getting the word out. Big brands would spend heavily on World Cup ads, using simple, blunt taglines to make sure you knew and remembered them — no clever design or creativity required. It was similar to the early days of TV advertising: one-way broadcasting focused on reach — the same ad, run for six months straight, seen by a billion people the moment it aired.
In the new media era, communication has become extraordinarily fragmented, and this approach has grown outdated. Building a brand today requires finding ways to strengthen communication with users, spark resonance, and get them involved in co-creating the brand. You need to stay sharp, respond to user needs, move fast, and remain flexible.
We invested in Gaoding, a digital marketing services crowdsourcing platform, because we wanted to empower SMEs with the quality services it provides, helping them adapt to this new marketing era where creativity and content reign. Below are the latest insights from Zhang Rui, CEO of Social Touch and chairman of Gaoding. We hope you find them thought-provoking.
— Huang Hai, Executive Director, FreeS Fund
Zhang Rui, founder and CEO of Social Touch, is an alumnus of Legend Star (Class 6) and Hupan University (Class 2). He serves as a digital marketing advisor to multiple Fortune 500 CEOs and CMOs in China, and was an honorary mentor at the first Procter & Gamble Digital Marketing Academy.
Telling "Chinese Stories" to Welcome the Era of "Chinese Marketing"
By Zhang Rui, Founder and CEO, Social Touch
Source: Social Touch
Let me begin with the fantastical journey of a pair of sneakers in China today:
The design references the most popular international styles and features. The manufacturer is a Chinese OEM for an international brand. Ensuring consistent quality, the shoes are produced at the lowest possible cost, then raced to a warehouse at a major e-commerce platform.
Almost simultaneously, a product page appears on that platform, precisely pushed by a "thousand faces for a thousand users" algorithm to consumers most likely to buy — when someone hesitates while comparing prices, the system automatically surfaces group-buy discounts or installment loan offers.
In the end, after the consumer places an order in the morning, the shoes arrive that same afternoon.
Except this pair is priced at just 80 RMB. A similar international brand shoe — same style, materials, production process — costs ten times as much.
▲ The fantastical journey of a pair of sneakers
This is a microcosm of Chinese commerce today. If the DNA of commercial value is a double helix of "efficiency" and "creativity," you'll find that in China today, the "efficiency" strand is exceptionally strong, while the "creativity" strand is remarkably weak.
Take these shoes: the design directly borrows from foreign products. And the height of marketing creativity? The name and logo look "just like" an international brand.
How much longer will Chinese consumers keep efficiently buying these creativity-starved products?
And is a commercial system obsessed with efficiency but lacking creativity really a healthy one — one that can actually bring consumers happiness?
▲ In China today, the "efficiency" strand is exceptionally strong,
while the "creativity" strand is remarkably weak.
Has Chinese Marketing Reached a New Crossroads?
Marketing as an industry — and the knowledge, practice, and culture behind it — has been, in China, a 100% imported product.
After Reform and Opening Up, when the first wave of international brands entered China, they brought international communications agencies with them. Chinese universities then began training marketing talent using foreign textbooks as the knowledge base.
China's market economy grew robustly, and with it came the continuous evolution of the brand–marketing–media value chain. In just over 20 years, China covered ground that took the West 50 years: newspapers, magazines, television, outdoor, PC internet. Meanwhile, overseas brands shifted production to China, building brands, channels, and growth in this emerging market. International marketing agencies profited handsomely, leveraging their headquarters' accumulated expertise in a late-developing market — from knowledge systems to technical experience to talent development.
However, starting from the moment Steve Jobs pulled an iPhone from his pocket, the mobile social era arrived. Riding the advantage of the world's densest internet user base and product innovations better tailored to Chinese users, China's internet service companies grew into massive platform empires: search engines, online video, social media, self-media platforms, e-commerce, mobile payments, internet finance, mobile devices...
China suddenly leaped to world-leading levels in digital infrastructure and application innovation, boosting the efficiency of traditional commerce by an order of magnitude.
The marketing services supply market failed to keep pace. On one hand, China's increasingly rich commercial practices challenged classic marketing theories based on Western consumer markets. On the other, international 4A agencies, once haloed with leading international experience, accumulated negative client feedback. The logic is simple: their past international advantages evaporated, while local innovation and evolution lagged.
For China's marketing industry, this stage is undoubtedly an extremely chaotic period:
- Overseas "masters" are too preoccupied with their own troubles to help, while本土 methodologies seem immature;
- Domestic "platform empires" dominate marketing forums, yet their content essentially boils down to "why brands should buy our platform's ad inventory";
- Brand owners find marketing challenges mounting and sit on pins and needles; some well-funded ones build in-house marketing teams, seeking the security of controlling their own destiny — only to eventually discover this violates social division of labor and delivers declining ROI;
- Other brands abandon thinking entirely, pouring budgets into sales channels and e-commerce promotions — short-term ROI looks clearer, but at the cost of steadily eroding brand equity, a far greater strategic expense.
Three Keywords for "Chinese Marketing"
When we seriously discuss "Chinese marketing," we're fundamentally addressing three questions:
1. What are Chinese consumers actually like today?
McKinsey & Company's 2017 China Consumer Report contained this concluding observation: "In this year's survey, we interviewed nearly 10,000 Chinese consumers aged 18 to 65 across 44 cities and 7 rural townships. Of all our observations of Chinese consumers over the past decade, one stands out this year: 'Chinese consumers' no longer exist as a monolithic group, but have formed distinct diversity. This means that while identifying macro trends remains important, it can no longer provide nuanced insights into consumer behavior or help marketers make decisions."
Through open data from multiple social media platforms, Social Touch has long tracked a large sample of anonymous consumers' emotional expressions and behavioral characteristics. Analyzing cohorts through the lens of "information cocoons," we can divide mainstream social media users into over 100 distinct subgroups based on interest information graph structures. When a major social topic generates ripples, participating consumers often split into more than 10 distinct viewpoint or demographic subsets.
If we then cross-reference this with China's tiered city and town-village economic structure as a horizontal slice, multiplied by vertical variations in education background, aesthetics, and information cocoons, every brand's consumer structure is in fact one to two orders of magnitude more complex than traditional marketing segmentation approaches assumed.
The biggest opportunity in marketing management going forward is more targeted communication for more segmented consumer groups, optimizing marketing investment and communication effectiveness through this finer granularity.
Precision segmentation and thousand-faces-for-a-thousand-users in ad placement has long been realized through platform ad products. But if brands haven't developed deeper thinking about consumer segmentation at the insight level, and haven't strived for at least "hundred cocoons, hundred faces" in strategy and core creative, they're not truly capturing the value and energy that social big data offers.
2. What stories can move today's consumers?
As consumers grow more complex, what insights, what creativity, what stories should we use to reach them?
The rise of "guochao" (China chic) and "guofeng" (China style) in 2018 reveals that Chinese consumers' values today are tightly intertwined with China's political, economic, and social environment. To win Chinese consumers, telling a compelling "Chinese story" is essential. Moreover, as supply chains improve, technology diffuses faster, and market information grows more transparent, product homogenization is increasing across most industries, not decreasing. Thus, brand stories increasingly embrace and interpret values, rather than focusing on product features.
Classic cases in FMCG in recent years amply demonstrate this trend. Even mega-brands dare to publicly embrace relatively sharp values —要知道, the more distinctive the values story, the more controversial it will inevitably be. Yet in today's media environment, a controversial brand is worth far more than an uncontroversial, so-safe-nobody-discusses-it brand.
▲ SK-II: "She Finally Went to the Marriage Market"
▲ Colin Kaepernick, one of the faces of Nike's 30th anniversary "Just Do It" campaign
In summary: stories with contemporary relevance, Chinese elements, and distinctive — even controversial — values may be what truly constitutes a good story in China today.
3. How to "tell well" a story
A good story, in today's media and technology environment, faces a "how to say it" problem equal in importance to "what to say."
"Telling well" is fundamentally about the story's propagation itself. In the past one-to-many, one-way channel era, spreading a story was simple: "media strategy" meant media selection and budget allocation. But in the mobile social era, the most effective media have become hundreds of thousands of self-media accounts, KOLs, even consumers themselves. The "telling well" process has grown increasingly complex, with numerous execution details that decisively impact final effectiveness.
In practice, we've found that over 80% of brand self-media partnerships are selected based on the account's name rather than historical data; another common approach relies on the brand manager's impression. Imagine the efficiency gains possible here. Meanwhile, in KOL propagation, using highly similar content performs significantly worse than letting KOLs create their own. We've also found that when KOLs engage with consumers after posting branded content, e-commerce traffic conversion increases by 30%.
Social Touch's self-developed "Ripple Cloud" intelligent propagation system, combined with our extensive first-hand data from annual KOL collaborations and our long-built social cohort analysis engine, enables scientific selection of opinion leaders influencing segmented groups, with intelligent optimization design and effect prediction across propagation dimensions. Meanwhile, in specific KOL communications, how to achieve "one story, multiple angles" at the strategy, content, and creative levels, and how to integrate story propagation with online/offline sales strategy — these involve substantial key management work in project execution, becoming critical strategic and executional elements of digital marketing today.
Two Phenomena in 2018 Chinese Marketing:
"Crisis Ripples" and "China Chic/China Style"
Against this backdrop, two interesting phenomena emerged across Chinese marketing in 2018:
The continuous appearance of "crisis ripples"
The first phenomenon: major domestic brands faced an endless stream of public image crises in 2018. Crises are inevitable in business development. Beyond building crisis response capabilities within the critical first 24 hours, brands must recognize that social media crisis ripples have become a persistent strategic challenge requiring long-term attention and investment in brand strategy.
What are brand "crisis ripples"?
Ripple theory is a communications methodology created and long used by Social Touch. Crisis ripples are a propagation phenomenon we've observed in recent years: when a brand crisis erupts, the continuous development of social networks, the high freedom of self-media expression, and the eagerness of self-media and opinion leaders to comment and capitalize on short-term hot topics collectively generate massive ripple effects. These are sustained as self-media continuously reorganize and reprocess brand-related historical materials for reinterpretation and behavioral analysis, producing wave after wave.
Why do these crisis ripples matter?
First, their power. Large-scale, high-intensity ripples have enormous and sustained impact on consumers. Crisis ripples routinely surpass in scale what brands' ordinary positive marketing can generate.
Second, crisis ripples serve as a precise test of brand equity and brand moats. Brands with solid accumulated equity, healthy or even strong consumer relationships, and consumer trust and preference show remarkably significant moat effects when facing crisis ripples —大量自发 consumer defenders emerge, the ripple's propagation and diffusion potential is substantially weakened, and ultimate sales impact remains limited. Brands lacking brand equity and healthy consumer relationships painfully discover, under crisis ripple assault, that their massive previous marketing budgets failed to truly save or invest in consumers' psychological accounts, building moats that could withstand shock. They end up suffering dual losses to brand and business.
Can brands prepare in advance for crisis ripples? Social Touch's answer is yes. Traditional brand theory focuses only on building positive, active, even perfect images before consumers. In the more transparent, directly connected mobile social era, social media "controllability" has dropped sharply. Modern brands must honestly and proactively examine their own business model risks, consumer pain points, and competitive dynamics, investing scientifically and systematically in advance, so they can respond calmly, orderly, even turn crisis into opportunity when ripples emerge.
What's more terrifying than crisis ripples is the "ostrich mentality" of some brands — ignorant and fearless, failing to think or prepare in advance, then pretending not to see or manage when negative ripples hit. After a few rounds of this, such brands aren't far from complete failure.
The strong rise of China chic and China style
The second interesting 2018 phenomenon: in brand marketing, commercial creativity, and culture, the powerful emergence of "guochao" and "guofeng."
Li-Ning, Feiyue, Lao Gan Ma, Haidilao, Yunnan Baiyao — brands persisting in applying and innovating Chinese elements — all won greater consumer affirmation and support on social media in 2018. Entertainment programs like The Rap of China and similar concepts also reflected young Chinese people's growing ability and desire to creatively express their own aesthetic viewpoints.
It's not only domestic brands that can embrace "Chinese elements." Many foreign brands have moved remarkably fast on localization. Numerous foreign consumer brands have increased R&D investment in China, launching products targeting Chinese consumers' specific needs on faster cycles.
Behind guochao and guofeng may lie a new generation of Chinese consumers' aesthetic confidence, which in turn reflects China's overall economic and cultural development, and young Chinese people's reconceptualization of China's relationship with the world. This shift may mark a profoundly significant beginning. After all, in the first phase of China's market economy, discourse power regarding product aesthetics and brand values was scarce; now, slowly, that discourse power is returning to a foundation of respecting and recreating Chinese aesthetics. An old saying goes, "What's Chinese is what's global." It appears that era has arrived.
Supply-Side Reform in China's 2018 Marketing Industry
Since the early 1980s, when China entered the market economy, international marketing companies arriving alongside international brands brought marketing theories, success cases, professional methods, and talent development mechanisms that had evolved over decades in Western, European, Japanese, and American market economies and mass media eras. Over 40 years of reform and opening up, China rapidly covered ground that took other countries 100 years, at 5x fast-forward speed. We witnessed the rises and falls of print media, broadcast media, television media, and PC internet media, entering the mobile social era and approaching the AI era.
Chinese consumption and consumers, driven by rapid technology, media, and market development, have grown increasingly abundant, complex, and changeable: China is a vast territory with rich economic layers and interresonating circles; Chinese consumers are a highly diverse, distinctly characterized, and increasingly opinionated population...
When China today has become the world's largest consumer market in numerous industries, the world's largest mobile internet market, the world's largest social media market, the world's largest e-commerce market, the world's largest middle-class consumer market, and the largest urbanization process market; when China today faces imperative economic structural transformation, surging supply-side reform, blooming social media, increasingly significant consumption stratification, and unprecedented importance of brand premium realization — China's marketing industry must rapidly improve its own quality, advancing supply-side reform and optimization, to better support Chinese commerce in developing and competing toward higher value-added directions.
The current state of China's marketing industry appears to have clear group-based leaders at the top, but is in reality typical of early-stage service industry markets: "scattered, chaotic, poor." According to Chinese government statistics, in 2016 the marketing services industry had 4 million practitioners across over 400,000 companies, averaging fewer than 10 people per company. Among leading companies, foreign group companies rank high, but in reality most group companies are simply collections of small and medium firms. The industry's leading standalone companies employ no more than 2,000 people. Compared to large enterprise service companies like Accenture and Deloitte, each with over 15,000 people in China alone, marketing industry concentration has at least 10x room to grow from today's levels.
This fragmentation leads to insufficient investment in marketing professional innovation and the industry's own digital transformation and construction.
Massive data and algorithm resources in marketing are held by upstream data platforms, achieving online and intelligent ad placement/media management.
Marketing service companies, who should hold the highest value-added link in marketing decision-making — strategy and creativity — have never truly transformed into digital companies, maintaining essentially the same workflows and methods from the David Ogilvy era to today.
In fact, marketing is a typical industry needing substantial data support to improve decision quality and efficiency, while continuously accumulating decision data and final client marketing performance data through business processes. This data represents a marketing company's greatest asset, yet few marketing companies have achieved much in this area, fully utilizing true industry data to create new value for clients.
Industry "scattered, chaotic, poor" conditions further drive talent流失, declining client satisfaction, and shrinking industry profitability. They also explain why, despite China's constantly changing media and competitive environment, marketing market supply hasn't felt vigorously developing, indirectly contributing to the underdevelopment of creativity in Chinese commerce's DNA.
The future of China's marketing services industry requires seriously organizing industry professionals and new technical talent to collaborate, technologically transforming the industry's workflows and tools, making marketing services a truly advanced service industry "armed to the teeth" with advanced big data and AI technology. Meanwhile, marketing industry professionals need a platform organization that can provide leading brand endorsement, technical empowerment, and management empowerment. Platform organizations should handle well what every marketing professional needs but benefits from scale when centralized, while allowing more talented creative marketing professionals to concentrate on bringing creativity to client brands. Then, enhanced brand creativity brings greater added value to client products, ultimately making consumer experiences and lives more creative.
(Source: Social Touch. Feel free to share to Moments.)
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