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Chinese new retail

Daxue Talks transcript #26: the dynamics of Chinese New retail explained in 5 minutes

Find here the Daxue Talks episode 26. Max Peiro tells us about how brands should break silos in the customer journey to offer a real and immersive omnichannel experience. This plays a rising role in the Chinese New Retail, where all brands are developing the greatest innovations to win the race.

Full transcript below:

Max Peiro:  My name is Max Peiro. I’m obviously not Chinese. I’m from Barcelona, but I’ve been living for 12 years in Shanghai. And I am the CEO of Re-Hub. At Re-Hub, basically, we are problem solvers. We work with large corporations here in China to help them identify business challenges and match them with proven startups that can solve these problems.

Interviewer: Omnichannel experience has played an important part for all brands in China. Why are they so important? 

Max Peiro: Omnichannel is very important because in the end, it’s all about customers. Customers don’t think about silos. So, brands should break those silos. We were talking earlier about customers having all the power and being extremely data-savvy. At the end of the day, they interact with brands across multiple touchpoints where they are online and offline and they don’t care. They just expect a seamless experience. So, I think that at the end of the day, omnichannel is a natural consequence of being customer-centric. Of course, this is easier said than done. It’s not that easy. Omnichannel is not about having retail stores and having e-commerce. It’s much more than that. It’s about putting the customer in the center. It’s about understanding customers and what they need. I always say the same. In this new environment where customers have all the power, brands are fiercely competing to gain their attention. So, it’s crucial for these brands to deliver to these customers what they want, where they are, and when they need it. For me, this is a true definition of omnichannel.

Interviewer: How should brands adjust their strategy to create a better experience in the Chinese market? 

Max Peiro:  I will give three words as an answer. And these three words are localize, localize, and localize. I think that this is the most important thing in China. It’s always been very important. But I think nowadays we’re seeing how fast the ecosystem here is changing and how different it is evolving compared to other markets in the West. I think localization is more important than ever before. When we talk about localization, we talk about empowering the decision-making process locally—being able to understand what is the uniqueness of the Chinese market and then being able to adapt to that. It’s about understanding what your local competitors are, what the emerging trends are, what the best practices, and which emerging players are taking the whole market by surprise. And at the end of the day, don’t take things for granted. I think that nowadays Chinese consumers are extremely sophisticated and savvy when it comes to digital and assessing brands and products. So, it’s about understanding them, understanding what they want, and understanding what are the best channels to engage with them. 

InterviewerNew retail was initiated by Alibaba, but all the digital giants are now participating in the race. Who is the first in this race and who developed the greatest innovations? 

Max Peiro: I don’t know who is the first in the race. I know that the clear winner in this race is the Chinese consumer. We’ve seen the evolution in the last three to four years. Whether it’s new retail or not, the digitalization of everyday life provides tremendous value to the user or consumer. So, I would say that the consumer is a winner of this race. One thing that is great about China, on one hand, is to have these few giants like Alibaba or Tencent that have massive user bases and that they can inject innovation into these user bases in a much more efficient way than in our market where the market is more fragmented and they have a lot of different players. And on the other hand, we have these digital-savvy consumers that are willing to embrace this innovation. And we see that the adoption rates in China of any new innovation are way faster than in any other market.

So, this is a great thing about China and it’s also what is bringing a lot of these new retail innovations. When we go back to who is developing the greatest innovations and who the winner is, I’m not sure, to be honest. I know that Daniel Zhang was the one that initially coined this new retail concept. And Alibaba led the way in terms of leveraging their eCommerce experience combined with their Alipay offering. But I would say that both Alibaba and Tencent would be in front positions in this race. Both of them are doing incredible things to bring more and more value to this development. And besides that, I would also give a special mention to Meituan-Dianping. I think that it’s often the underdog in this race. I think what they did in terms of digitalization of everyday life—online to offline (O2O)—when it comes to service is incredible. And now, recently we’re seeing how they are starting to reap the benefits of this. We’ve seen them being profitable for the first time. We’re seeing their stock price growing really fast which, for a technology company at least in the West, means that it’s a very good sign that they are doing things well and also grabbing attention not only in China where of course they are very popular and doing very well, but also in the West. 

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