Find here the China Paradigm interview # 93 and learn how companies are able to manage their brand development in China’s market.
Full transcript below:
Hello everyone. This is China Paradigm where we, Daxue Consulting, interview season entrepreneurs in China.
Matthieu David: Hello everyone. I’m Matthieu David; the founder of Daxue Consulting and its podcast China Paradigm. Today I am with Augustin Missoffe to discuss brand development in China’s market. It took us some time to have you on the show, but finally, you are here. Thanks for being with us today. It’s 8 am so, thanks for doing this early. You have been in China for much more time than I thought because I met with you maybe 5 years ago. Actually, it is going to be your 10 years anniversary in China. In June 2020 you will have been in China for 10 years. You have been in the digital industry for 6 years and now work for Hopscotch in the Chinese PR industry. So, thanks for being here Augustin. I’m sure you want to add something about how much time you have been in China before starting our discussion on brand development in China’s market.
Augustin Missoffe: No, no you’re right. I arrived 10 years ago. Thank you for meeting with me today. It is really a pleasure to be here to discuss global PR in China.
Matthieu David: So, let’s talk about Hopscotch and the Chinese PR industry. I am not sure how many people are familiar with the company, I mean the people who are listening to us. It’s pretty big. I was impressed. 250 million euros in worldwide revenue and 25 000 000 USD in Asia. In China only it’s about 8.2 million Euros. In China, you have offices in Shanghai, Guangzhou, Beijing, Hong Kong, Taiwan that are covering 40 cities which is impressive for global PR in China. You describe yourself as an event-native global agency OPR network or community. I’d like to define the word more with you later on. That’s what I’d like to talk about. The PR industry has changed a lot over the last 20 years. In the 1990s when I was a kid, we were talking about PUR in case there was a crisis or there was a scandal. When you had to communicate with the media, with newspapers, with TV, with radio, etc. Now, we talk about global PR in China when we deal with your own advertisement which we see on Weibo and so on. PR, I feel, has grown to a much bigger extent to offer an online and direct link to consumers. So, I feel that’s an industry that is changing, and it has been re-shaped over the last decade. Would you mind introducing Hopscotch a bit more? Correct me if anything that I said was incorrect!
Augustin Missoffe: The Hopscotch Groupe is the first native global PR group that was born in France many years ago and now also works on brand development in China’s market. We are providing some global PR in China. So, what is global PR in China? We have discovered many years ago that people need to be in the middle of an event marketing in China. They don’t want to have another view. They want to be in the middle of an experience and also today we have the digital, the PR, the events and shopper marketing, etc. So, we decided to do a combination of everything using tech. For example, using digital, using all the event marketing in China to mix everything and that is what we call global PR in China. The idea is to create brand development in China’s market and after to get a real impact, a real experience with the consumer. People are fed up with seeing and reading only two lines about a product. They want to live the experience. So, that is the mission of Hopscotch. It is really to push the best of the company, a product, a category of products in order to improve visibility and also to touch the heart of the consumer. That is what we are aiming for when it comes to global PR in China.
So, in fact, Hopscotch is focused on all industries – automotive, food and drinks, etc. We are providing the best of event marketing in China. Our team which, as you said, is a bit everywhere in China, is also in the rest of Asia and worldwide. Today, we have 36 offices all over the world. We have more than 800 experts/talents in our agency that are trying to innovate. We have three main directions in Asia which are innovation, creativity and being ambitious. The main focus will be then to immerge as you said. Hopscotch is quite new. However, Hopscotch is just getting shared more in the shopping center which is more than 20 years in China and 40 years in Japan or 30 years in Hong Kong. So, the idea is we need to capitalize on all of these with all of our networks and knowledge on brand development in China’s market. In other words, we need to develop more and more activities and be able to sell them to our customers worldwide.
Matthieu David: I’d like to understand more about what you do and to give a very clear understanding of the audience of what you do. So, maybe a couple of case studies and how you deal with them. I was especially surprised by your presentation. You sent me a picture of the group focusing on Asia and more specifically China and I was surprised that very early – I think it’s slide 4 – you are saying: “We worked with 3300 suppliers worldwide and we have an active freelancing team worldwide of 1500 people.” That’s not something that many companies advertise on. They would advertise on their inhouse team and not only their network. So, I feel that in a sense, you work with a lot of flexibility and agility to be able to touch both offline and online and different parameters in a connection with the community. Would you mind elaborating more? Maybe with a few case studies from the Chinese PR industry and how you operate? My question is coming from the fact that some people do everything and I’d like to know more about how you articulate those different aspects and to which extent you do the PR.
Augustin Missoffe: Sure. So, it is to analyze most of the things. So, we have the digital, we have all our event marketing in China departments, we have all our shopper departments, all our own PR departments. So, most of our activities are directly inhouse even when it comes to the Chinese PR industry. However, when you have an event marketing in China when you have a digital project where you need to work with skilled parameters and also you need to have particular expertise you are not going to invent this or invent yourself when it comes to brand development in China’s market. We always try to find the best partners and freelancers we can, everywhere to work in the Chinese PR industry. The key as to why we are looking for parts in Beijing with suppliers where we are also going to search for the best CSR supplier in order to help us to build a very eco-friendly event marketing in China. Also, to have the opportunity to work with celebrities, to work with chefs. We do that in order to elaborate recipes, to build a totally new direction for a campaign.
For instance, in Mexico, we are working with T-Mall in order to promote all of that. We are building some offline event marketing in China but collaborating with T-Mall in order to do that all together. So, the aim is to work in perfect intelligence together and that is why we are very proud of the network we have with suppliers and freelancers. Also, we are quite happy that these people are integrating our team year after year and we are working with them for many years. For instance, here, in our Shanghai office, we are very proud to have inter-talents who are working for us for more than 10 years in the agency, which is rare in China, especially in the Chinese PR industry.
Matthieu David: How do you communicate with different suppliers? It was discussed with an event agency that was saying: “We are very transparent and actually we take a mark-up of 20%.” It is standard in the industry and we said until the client comes, we take a mark-up of 30% on the suppliers outside of our main working office. How do you work with different suppliers? Is it something that you add up on the client? Is it something that actually you internalize so it is part of your team at the end of the day? How do you work with such an extensive network?
Augustin Missoffe: Everything is dependent on the kind of event marketing in China we are doing. We are totally transparent with our customers because, as you said, there is no need to explain to people that we are able to do something when we don’t have the internal resources. So, we are totally transparent about what we are doing in terms of brand development in China’s market. We are also providing sometimes some freelance work. So of the freelancers are internalized because we are working more than 10 months per year together. We don’t have the credentials anymore because we believe that they are our own colleagues and they are working with us on plenty of projects. One particularity of our agency is that we often sign like 2-year or 3-year contracts. So, we tend to have very strong project managers and we also try to have a strong product director. So, the idea is really to be transparent and customers always know that. It’s also the fact that working with a long-term customer is always based on trust and transparency on the fact that we can rely on each other and that is also where we like to go for brand development in China’s market.
Matthieu David: You sent a presentation with 4 different case studies discussing the Chinese PR industry. Two of them are with major brands. One for CRV with Huawei in France – correct me if I am wrong. They are two very interesting cases. Another one is for Tunisia. So, in the tourism industry where you reached about 15 million digital impressions, 1,25 Euros in PR value and it is 57-something thousand which is very hard to get on WeChat actually. People who listen to us from outside might think that it is not a lot for China, but on WeChat, it is a lot to get 57 000 people WeChat. You worked for the Mexican one as well in partnership with Ching Do and I think there are 6. The Ching Do one is milk from France. Would you mind elaborating a bit more on those cases and give more substance to what you said to be event-native and to be 360 with different suppliers in the Chinese PR industry?
Augustin Missoffe: Yeah sure so let’s say, for example, you have tourism in Tunisia that needs global PR in China. So, the main objective was to promote Tunisia as a destination for Chinese tourists. So, how do you do it? We worked a lot on social media. So, we built an entire marketing campaign and promoted some videos that we had directly recorded in Tunisia by making a movie with Chinese celebrities. The idea was really to invite people to come to the country and we have done promotions with dedicated tourism platforms in China thanks to brand development in China’s market. The most important thing during this campaign was really to tell people: “Forget about issues there was before you entered Tunisia and let’s focus on the beauty of the country, the diversity of the country and all the activities you can do.” Maybe you know Tunisia is a free visa place for Chinese people and so, the objective was really to boost the market. We sent it to different collaborations, leaders, KOC and also some different partnerships were delegated in order to have a successful campaign.
Matthieu David: I’d like to go more in-depth in one or two cases that discuss the Chinese PR industry. When you say that you shot videos and you displayed the video, would you mind elaborating a bit more on what media you use? Was it more on WeChat? Was it more on Weibo? How do you interact with your audience and how do you convert videos into followers and videos into a call to action and interaction?
Augustin Missoffe: Sure. So, the video has been launched in different series. It was 5 different episodes and it was accumulated into a full movie of a Chinese guy who decided to quit his work and to go and travel. He gets a phone call from his boss, throws away his bicycle and meets a young Chinese lady. She is a beautiful one, he falls in love and they try to be near each other. So, that all about the movie; being together on the beach. This movie has been diffused on the platform as part of our strategy for global PR in China, but also directly on WeChat from Tunisia to the tourism board, on Weibo and pushed with different opinion leaders. We had to have the possibility to join the service account of the Indonesian board directly on which you have plenty of information about which agency you can use to book your flight, trip, etc. All the facilities you have in order to travel to Indonesia. So, that was on different platforms and pushed by the opinion leader.
Matthieu David: For people who are outside of China – maybe people in China don’t know much about it either – but it is a travel-oriented platform. I am not sure about how different they are in the value position. You can post videos on this platform, but it seems much more like a selling website than a social website.
Augustin Missoffe: Yes, it’s a combination of both because it is also where people are expressing their feelings about trends. They are giving some sort of advice. They are also advised before the trip, but also give feedback on their own trip. It’s also where you are able to promote, for example as we have done, a particular destination which we have done with the tourism board. All those videos were showing you the best places in Tunisia. So, this is how we allow people to see the country and ask them to push them directly to go and visit Tunisia.
Matthieu David: Okay, I see. So, you wanted to talk about other cases?
Augustin Missoffe: Yeah sure; about Magimix and global PR in China. So, Magimix is a French cooking kitchen appliance that helps you to cook with mostly whatever you want. They are very nice products and there is a cooking expert. The cooking expert arrived 2 years ago in China. It’s a beautiful machine that helps you to cook, which helps you to do everything you want. You want to have a good meal at home, you use the Magimix. This machine was not known at all at the beginning. We worked on all the strategies, all the clarification, all the social media, but also all the development of all the different tools. As an example, in France, you can control your machine. It is sent from the app on Android or Apple. When our customer arrived, he directly took the position and said: “We are not going to develop another app which we have to release in ten different marketplaces, but let’s develop a mini-program.”
So, we worked with dedicated tech agencies in order to develop all three programs and to be able to manage the machine and make use of global PR in China. So, before working with freelancers, we elaborated on some recipes with different Chinese chefs to adapt all the international recipes for the local market. We worked directly with Chinese chefs. Then we worked on the PR launch. So, we have done a huge PR launch event directly here in Shanghai where we managed to do all the visits to the store to the media and some KOLs, etc. It helped us to promote the machine directly. That has been a one and a half-year project which is still unfinished because we have to continue to promote this beautiful machine thanks to our expertise in the Chinese PR industry. It was quite 360 which is what hate because that means we can do as I said a bit of everything, but the main thing is to be able to do event marketing in China where we will have some content to also organize all the different aspects of the project to be sure we are able to do brand development in China’s market one product or one category of products.
Matthieu David: You talked for some time about KOL, but some people are using KOC now. How do you work with them? I feel there are a lot of questions from brands and from the west, especially on how you really leverage them? You have two cases where you talk about them. So, you say it was proposed by KOL and for Magimix you say you worked in the food industry with chefs and so on. How do you interact with them? So, more specifically how do you have to pay them? Do you have to give them the current software? How do you select them? Do you select them because they are able to sell, they are able to deliver a message or because they like the product as well and so, would you mind sharing a bit more about how to do this? What is your vision?
Augustin Missoffe: Sure. As you said, the process is quite different from KOL and KOC. Let’s start first with KOL. We are collaborating with them and one of the successes of KOL to be met is also thanks to WeChat. WeChat has been a close platform so that means you have your own service account. If you don’t have a KOL I will not be able to know your account and thus, brand development in China’s market would not be possible. So, the KOL is kind of a bridge that will help you to win visibility. KOL in China has an average of 1 million followers and up to 100 million followers. How do we work with them in the Chinese PR industry? It depends entirely on the project. But what we try to tell them is to first analyze which Key Opinion Leader will be suitable for the product. That means, for example, that we took one proposed KOL and we chose a famous celebrity. His name is Shan Shan. She lives in France and she has already expressed that she loves wine. She also loves nature. So, we took plenty of parameters and then we analyzed them to be sure it is suited for brand development in China’s market. It helps us to find the right person. After that, of course, when you are working with a KOL which has 70 million followers, you are going to see Magimix in France you are going to pay them and that is part of global PR in China.
However, you are going to work tirelessly with them in order to find everything to fit your budget. Then, also, it’s the way that they are going to promote the product and do brand development in China’s market. You don’t have only one post and then end the campaign. The goal is to have continuity in the campaign to be sure that she is not going to do the promotion for only two weeks. We want to make sure that she promotes the product because she believes in the product. I have heard a funny story about milk powder. In China, you have two competitors and you have a famous Chinese person and the guy is a Chinese celebrity. His wife is European and also a famous person and thus a perfect person to do global PR in China. They are promoting one milk powder saying: “this is the milk powder for my kid” The mother is promoting the other milk powder and says: “This is the milk powder for my kid.” The idea is really to be sure that the KOL really loves the products. So, we also educate them and ensure that the person has a real affinity with the product. So that is the first thing to do when you want to do brand development in China’s market.
For the KOC; the Key Opinion Customer, the idea is also to give them sometimes some products in order to be sure that they are going to use it. Sometimes, they already have the product. So, we are going to give them some inputs to give like some other tools in order to promote the product. As an example, when you give one category of products you are going to give it or move it around. Who can be with this category of products? Sometimes, of course, you also have to pay for them. So, it is different with each product. Paying the KOL in China is not an issue when it comes to brand development in China’s market. It is a popular business and the idea at the end of the day is really to promote your product, but check that they are going to share a product and also avoid going to the competition. We had success also through this KOL by ensuring that they are the right person for the right campaign.
Matthieu David: What are the expectations you have from the KOL perspective and also the KOC? I understand that it is creating views, it is creating impressions, but how do you really measure the results at the end of the day? Of course, it is difficult to track the conversion in sales, but would you have some metrics which are beyond the impressions? I tell you that because we worked on an evolution of some campaigns and we found out that some people liked actually more the KOL himself rather than the message. So, they went liking eventually the message proposal as a KOL, but actually the comments were all about the KOL and not about the product they were pushing. So, would you mind sharing a bit? Maybe what would be your concern when you deal with a KOL and a KOC?
Augustin Missoffe: It is always the fact that they will prefer the KOL rather than the product. However, they are always very intrigued by the KOL and this helps us to do brand development in China’s market. We have seen that if you have looked at live streaming campaigns. People are buying all kinds of products like L’Oreal and stuff. We did an amazing campaign with lipstick recently. So, they are obviously going to follow the KOL and they are going to listen to the message. They learn about the product that is being pushed because they believe in this. So, it can be indirectly the real ambassador of the brand. So, that is also one of the main things. We must ensure that the relation between the product, our customer and the KOL is not only a business relationship. A person must like the product and believe in the product and that is how we will succeed to push the consumer to like the KOL, but also to love the product he is selling.
Matthieu David: When dealing with KOL’sy do you work with agencies? As you said, you have networks and suppliers/partners you work with or do you contact them directly? Does it go through some platform? I remember one interview we ran in the past saying that the care of the business has to change because actually you should have agents for KOL’s. KOL’s will be managed to see which products match instead of a product or a brand reaching out to a KOL directly. So, it should be the work of the KOL to reach out to them and say, “Oh, this brand is really something I like.” Or, “I like your way of talking. I’d like to work with you.” So, how do you deal with them? Is it direct or indirect? Do you reach out with Weibo or WeChat or the website?
Augustin Missoffe: Yes, so we try. We are working directly with them for one reason and that is to avoid any intermediaries in the campaign and also to deal directly with the KOL in order to do a better brand development in China’s market. There is something very interesting about KOL. It is like to choose a different product. It is mostly in the food and drink industry where KOL’s contact us directly to say, “Hey, I have seen your different campaigns. I know this one is new this summer and I would be very happy to promote these different products.” So, this is something that is becoming more and more recurrent. This is mostly because there is a huge. Most are focused on cosmetics, food or gaming. This is something that is happening more and more for brand development in China’s market. The fact that emergency will manage a pool of KOL’s and for me, I will call it the KOL factory, so, I don’t believe too much in it.
Matthieu David: Why?
Augustin Missoffe: It is becoming a KOL factory, but we still keep the virtue of the KOL who promotes products for one reason which that they believe in it. The fact that you have for a KOL agency will be more mechanical. The agency will impose the product directly on the KOL. Sometimes the KOL tells us, “I’m sorry, but I already have a competitor of your product” or, “I am sorry, but I don’t know anything about wine, so I’m not going to promote it.” They are able to say no and my main concern in the agency is that they will be obliged to promote some products because one KOL doesn’t have anything to do for 2 weeks, etc. It is one of the reasons why we are working with them directly without any intermediary.
Matthieu David: You work in a big organization which is Hopscotch again 250 million Euros in many, many countries. What differences in the cases you have mentioned and the cases you worked on and the cases that Hopscotch is working on in the rest of the world? What main differences do you have to communicate on when you work with China or when they work with China? What are the surprises they have? What are the differences in the treatment of the cases you handled in China and the rest of the world?
Augustin Missoffe: There are plenty. We’ll start by the flexibility and the fact that our customers are asking for things to be delivered yesterday. Everything is in a rush and also about all the digital activities for brand development in China’s market. In some projects, for example, I will see sometimes when we reply to the tender we arrive more with a conceptual approach. That is something that is phase one and after that, we develop all the different aspects. In China, I have had different customers that want everything, all the details at the first minute. So, they want to know everything. We don’t have a very different proposal because it’s more on the concrete part. Sometimes it’s the conceptual part that could be secondary. However, they want to have everything in detail quite quickly. Also, the digital side of the business is totally different.
I am always saying this for 9 years now. When WeChat arrived, the world has developed in two separate parts. You have China and the rest of the world extending also to everyone how WeChat works, how the towers are working and how everything is working around the digital. Now we must use it, how we should integrate it, the online to offline, offline to online, the new retail. This is part of our DNA for event marketing in China, etc. That is something that sometimes they ask me or from my colleagues, but it’s so that we do a lot of different training in order to be sure that they will be able first to get a heads up about all of that.
It’s also one of the reasons we are getting plenty of projects. We are welcoming them worldwide with all my colleagues pitching from worldwide and China and then also some information or some insight. We display some innovation that they will be able to work on and also able to re-use it during other events in the US or using PR communication in France, Ireland, etc. So, it is a bit of a mix of everything. The key components for me are different compared to the rest of the world.
Matthieu David: How do you explain that in China you feel that clients are wanting to get things faster and with more details compared to the west? What would be your explanation?
Augustin Missoffe: They are quite fast. The economy is booming, competition is fierce in different sectors and there is an evolution. I think I have been here for years and what we say on Monday could be totally different the Friday because there are so many evolutions in the week in terms of social media platforms instead of trends and when there are mistakes as we have seen for example, for a luxury brand it is going too fast. Social media are going faster than everywhere else in the world. That is also the main thing why China is going quite fast. You can observe this over the last 10 years.
The first WeChat payment was in 2014 and today nobody uses cash, credit cards. We are all on our mobile phones. So, everything is going quite fast and you will see it is also in the Chinese mentality to say, “Make a point. Next push.” It is quite nice. I had yesterday a very interesting niche question about the fact that in France we prefer to be ready before we like something. In China, we are ready by launching the thing. So, everything is in parallel and after we will adapt. So, that is also the mentality. They are very entrepreneurial. They are very focused on innovation, so they take more risks here.
Matthieu David: Sometimes, I wonder if it’s easy to build a long-term brand by putting some tactics for long-term strategies. Companies have been building long-term strategies and I did not imagine the various luxury brands to be so fast in the change of reactions. It really considers all changes before going into it. You talked about new retail and this is a buzz word. For every buzz word we have to know what’s really going on. For me, new retail includes payments. It can be anything. It can be WeChat as well for all players and delivery. Delivery is very cheap in China and very easy. You get your food within 30 minutes. These for me, as far as I understand, are the two main components of new retail and I am always wondering, “Do I need something? Is there something I am missing here?” Because you have so much to do in food and beverage. I believe you have spent a lot of time, but what extent of new retail? What can we extend? What can we build with that? What really is new retail?
Augustin Missoffe: Sure, we use new retail for only two services because that will be payment and delivery or purely the services, but it is also philosophy. When you go to a supermarket from Alibaba, it is a place where you can do a bit of what you want. You can eat in this place. You can take your lobster, ask the guy to cook it and eat it at the place. It is also a place where you can enter freely without having to do anything. So, you don’t have cash. It is digital. You can enjoy the fact that you will have a seat, that you will discover some stuff, so it is no longer a shop. It is a pathway. For me, it is even more than a philosophy. After, if we need to speak about more practical things in terms of buying, you can do click and collect. You can go over there, try on-site and make it on delivery. You can have all the ways of living in the same place and now it is really adapting to the supermarkets. It is more and more adapted also to all the different retail stores and it will be adapted after all kinds of different aspects. Everything will be done more freely and also the fact that we are giving more information on our mobile phones and the fact that we are getting these tools which are ruling our lives. They are part of our daily lives. We do everything with them. Also, one thing which is quite nice in new retail is that everything is easy. When you don’t want a product anymore you send it back. It’s easy. You don’t need to go to the post office, stand in the queue, etc. It is the same as if you were to call a delivery guy. He will be here in 20 minutes and will deliver everything. I think there are also these kinds of philosophies where the new retail took all the place.
Matthieu David: I feel the path that was missing in my explanation of payment and delivery is the one of experience. So, new retail is also about a new experience where you would connect with a digital world. One thing you said is that it is easy to buy, return a product, etc. When it is easy for one person, it is difficult for the other one and what I am questioning is whether the client is key for event marketing in China. So, the brands and then your client. How does it deal with that? Isn’t it much more difficult to evolve now in this environment where people can comment on Twitter about the product? Before it was a bit more complicated so people were thinking twice before returning a product and so on. How do you deal with that? Is it a concern of the clients of your brands?
Augustin Missoffe: No, not so much because right now the service is something that has become more and more important for our customers and all the brands. Service is something that we use to highlight the brands. Of course, I would say all the people commending and giving some bad comments because the boxes they received have been destroyed in the delivery process. So, you have also what I call the small social grudge which for me is not so important because we have seen some brands which have been destroyed by that, but the main idea is also to control it.
We are in an industry where you have people commenting all the time. So, we need to play the game. If you don’t want to play the game, you need to leave China. It is mandatory to play this game. After, it is not for me to slave and master. It is more collaboration where consumers don’t have to impose something from brands. People who want to buy some products from luxury brands will have a very tailored service. If they want to buy cheaper brands or regular brands, they will have another service. However, they will be able to get what they want at the price they want, at the moment they want it and the brand will adapt itself. Brands have already adapted to the supply chain in terms of social, in terms of Key Opinion Leaders, etc. Everybody has something in the market so, for me, it’s more a balance between the customer and the brand.
Matthieu David: I’d like to go back to the identity and origins of the company Hopscotch. You say in the presentation that it is event-native and I got two or three feedbacks. One from a group was things that people want to connect again now, to go to events, to interact with each other and we got some other feedback from people in business to say, “We want to have interaction with temporary shops” or even their own shops with the digital aspect and then having their own shops. How do you then react to the fact that China is so digitalized, and your origin is in event marketing in China where people can touch each other, they can meet in real life? Is it something that you are combining? Is it something that you are doing differently for China?
Augustin Missoffe: Not only for China but yes, we are combining everything. We, at Hopscotch, like to say that we are experts in event marketing in China, in digital and in PR and shopper experience. So, all these pillars make us global PR in the China group. This means the digital; we are going to mix it directly with the events and the same for the global PR in China. When people are participating in an event, the experience is good. They don’t want to watch an event. They want to be part of the event. They want to live a real experience that could be for example, with plenty of digital integration because I think we also have to stop to say, “I want to do something digital.” Digital must be the hardest of the global strategy. So that is not for me one particular department or one particular thing. It is integrated now. We are in a new era where all that must be developed and digital is also the way that we get content. People through digital like to see what is happening somewhere else. When you have a VR demonstration, they want to be part of it. So, the thing with digital is that they will be able to see what is happening. So, the idea is really to have all of it to make and build a real experience to have something from nothing and to put these people; the consumer in the middle of it and it is how we succeed to create amazing campaigns.
Matthieu David: For companies and brands, it is much more expensive to sell because they have to create events, they have to manage the digital prism, they have to do all that. Let me say your margin is my opportunity. So, when you make a margin, I will find a way to actually lower the margin and be your company. This is my opportunity to charge you on the marketplace. Where do you feel actually people can save money to be able; for companies to be able to reallocate the purchases that were spent 10 years ago, 20 years ago to what you are describing now. Which companies are dropping is what my question is? What companies are not doing anymore? What are the things they didn’t consider? Would it not be an ultra-market, for instance, because I can think of a place where you have to be anymore? Is it not to work with newspapers anymore and TV anymore because actually the connection is not strong enough? What is your point, is the media; the tool that is given away; given up by the present companies?
Augustin Missoffe: I am going to speak purely for China. That is purely depending on the customer. However, we have had the change to social media, social networks to be able to collect some data, to be able to understand which companies are working and which ones are not working. Let’s take a simple example. You want to do a campaign for a product in the Chino Valley and the Shanghai Valley. You will be able to put some record on it and to have it tracking and you will be able to know precisely how many people scanned their credit card from the China Valley and from the Shanghai Valley and like that you will discover that finally, on the China Valley you have a few people who scanned their credit card instead of the Shanghai Valley where you have thousands of people. So, you have in this case, you are going to take the decision to do the communication. So, that is also the way that we succeed to collect some data and to use some data because the key to everything in fact; and I really believe in this; data will manage everything at the end. Today we have plenty of data coming from all the social platforms, all the different advertising, etc. however, nobody is working clearly on this data. In order to have a really good result and also to anticipate the consumer willingness and the consumer wish; that is also today one of our jobs to succeed to collect this data and understand the ways that the consumer is interacting with the campaign and with the product and after; anticipate the campaigns. That is something that we are tending to do and in term of what they used to, what they are doing now and what they are going to do that the data will help us to do it and our story depends on the customers or rather the Chinese market who don’t know all about the hypermarket because the hypermarket right now is dying in China up to the e-commerce so everybody wants to use the e-commerce, but how do you build e-commerce? Which activity are you going to select? Which are the more specialized and the more expert in your category of product? Should we trust the fact that we must be in China or could we do some global selling to Alibaba Global or T-Mall Global or should we do it directly? Everything is depending on the clear strategy which will be defined thanks to all the data we collect.
Matthieu David: My understanding is the breakdown of the costs for brands and companies has changed where they were going to hypermarkets and supermarkets mainly or even exclusively. They would rely on the hypermarket or supermarket to clear the traffic. Now it is the brands and companies which have also to take into account this bit risky invested which is to create the traffic between the conversion to sell or not. That may be justified by the fact that marketplaces have a lower commission because I understand that hypermarkets and supermarkets are taking much more commission on the product. Do you agree with this?
Augustin Missoffe: Yes, it depends on the kinds of the campaign. It is the same when we have done some campaigns for products in supermarkets. We are also working entirely with a different supermarket brand which is also very… we have to create traffic etc. It is quite funny. I tried to go there on the weekend and it was full of hostesses pushing you to try some product etc, but it is the same that you can see in the e-commerce platform when you go for example, in the beginning, we have the level which is a global shopping mall. Right now, if you look at the agenda of Alibaba you will see things there that you don’t see every day on all the different products. You have one festival and you have all kinds of festivals all the time. So, also, they try to find their own way to promote traffic. However, it is the same; you can buy online or offline. People will still go in-store and also one thing that is quite important with offline retail. It is absolutely dying and just evolving.
Matthieu David: We are almost at the end of the exchange or the talk. I will ask you a couple of questions, as you know, and the first question is what books inspired you most in your journey?
Augustin Missoffe: That is a good question. For now, I am reading a very interesting book about Diplomacy which is diplomatic about… it is a book from the former ambassador; French ambassador in the US explaining his relations with everyone in his life. It is interesting the way that we could create some relation with people on trust, but also trying to get the best of the different cultures and that is something that we try to do here in Hopscotch and so besides, we are a multi-cultural team where we need to understand each other, speak to each other to get the best of each other’s cultures and this mix also helps us to build and create successful campaigns and this book has listed plenty of things like that.
Matthieu David: The last ambassador of France in the US?
Augustin Missoffe: Exactly.
Matthieu David: What do you read to stay up to date about China? As you said, China is moving fast. There are so many articles and so much content created about China and my understanding is that there is a lot of growth sometimes and it is difficult to know what is really happening because there is lots with imaging, lots of actually purely PR for Alibaba or whatever to say, “Now we have people that use AI and VR to buy” which is actually a goal think really happening in a massive way. So, to stay up to date what do you read to make sure you have the right information?
Augustin Missoffe: So, as you are; we are in plenty of WeChat groups and articles etc. so what we try to do because the day is running so fast every time I see some report I put it in a particular group which all my teams in China and after the end of the week everybody reads a bit of everything. We are after that doing kind of notes; internal notes with all the different articles and that helps us also to have all the main things and also all the different articles. However, what I read more and more is also all the reports from DCG which are normally very trustworthy and which are very positive. After that, I read also some different articles from China channel, from also Tech Crunch and I try also to avoid a little bit the too commercial articles who are promoting at the end, only the product of the providers.
Matthieu David: Yeah so you would say TechCrunch, you would say reports basically that are published and you gather all the reports and indeed there are so many reports sometimes that I feel that on some of those WeChat groups it is a full-time job to check it.
Augustin Missoffe: Definitely and I would just like to know how they monitor that?
Matthieu David: Yeah, yeah, I’m disappointed. I don’t know. What books in China? What books about specifically more about China would you recommend if any? Not necessarily history. It can be anything.
Augustin Missoffe: Sure, there is a good one in which I am reading a bit about AI and how AI is going to change evolution. It has been written by… I will send it to you. It is super interesting. He has a huge capital venture fund right now investing in plenty of AI start-ups and it’s a group that helps you to understand a bit of how China is going now and how it is going to evolve and mostly he gives a trend about all the evolution. If you have come to Shanghai recently you have seen the different new cameras. That is evolving a lot. The question is what will be the next step? How are we going to live with it and we will see what is the value-added because what I love in China is people are okay to give all their data, all their information. However, they are okay only if they have a good service in return. So, if you give them some service, they will be happy to give whatever you want. So, the question is what will be the next service that we will have?
Matthieu David: And for the cameras; people not living in China; actually, we can see the new cameras and things like to be 360 which can do it better than the old cameras which feel like we are back in the ’90s. We can see very soon in the streets, facial recognition and cameras and the ones which are not. There are two questions now that are inspired by a thinker called Peter which started to use strategy in business and in order to understand what is going to happen in the coming years or month is trying to look at successes. He was not expecting, and he was looking at figures and was not expecting it. To give you an example, I was not expecting a KAFU to pull out of China so for me it shows that there is something going on in retail which is e-commerce, which is new players and the past is not working anymore. All those prominent companies, what would be your surprises or what successes didn’t you expect, and you are seeing and witnessing? On the opposite; what failure were you not expecting that you have witnessed in China?
Augustin Missoffe: So, generally speaking, I have a little bit in the… yeah, I will say maybe in the automotive industry. We have seen some European brands who came here very proud to enter the market, however, in Europe, they were the key car manufacturers. However here we are discovering that they didn’t succeed by themselves and mostly the failure is not that they didn’t succeed, but that they didn’t succeed to adapt themselves when they had the green light to go. We have seen electricity arriving and they didn’t believe in it. We showed the SUV; they didn’t believe in it and it took too much time to train for it and that for me is one of the biggest failures we have seen because mobility after is also one of the key things which needs to happen. For me, the two main concerns worldwide would be mobility and food. Those are the two things which will take more and more places and to see some experts who didn’t see the biggest things about evolution. That is probably one of the biggest failures.
Matthieu David: Yeah what about success? You didn’t see some things that actually would show something bigger behind it? Something which is a game-changer; a new paradigm – to use as a word of the podcast? What successes embodying it?
Augustin Missoffe: I would say something which is quite common; WeChat. WeChat is a media with all the possibilities. In the beginning, if you remember in 2011 it was WhatsApp. They tried to launch it in Europe in 2012 and 2013, but well it was not working for them. It was an exact copy of WhatsApp and after it was Chinese, and China became scared in Europe. However right now, all the possibilities of WeChat. I even try to explain to people what WeChat is and they say: “Yes, it is kind of WeChat and a Facebook.” I say, “No, WeChat is life in China. If you don’t have WeChat, you are not able to do anything. So, all the possibility I did not expect so much from WeChat and WeChat is in our daily life; a personal one, but also a business one. To be honest it is impossible to live without WeChat today in China.
Matthieu David: What do you think it is showing about China why WeChat took off o well in China being the super app and we don’t have that in the west? What is the bigger… what is the iceberg behind it because we see WeChat, but what is behind it? What will you take from this success?
Augustin Missoffe: Well, I think of the successes as also the way to adapt themselves to be very innovative, to have the payment and after Shanghai was one of quite the advantage is to have some rapport with WeChat which is very big and also it is part of the government which is quite something because they are also protecting all the data. So, one of the reasons we are okay to give it to them, but it is also the fact that they are evolving also. They don’t have any issue to come to sell stuff. Let’s say, for example at the beginning of the mini-program it has been a big failure from January to July. Nobody was using it. Nobody understood it and it is the point of a mini-program and at that point we even say it and I like to say it; it will be an app native here and in July we decided to change it to get some other things for the mini-program to have more easy ways to develop the mini-program and right now we have more than a million mini-programs in WeChat so they have the capacity to evolve and say, “Okay, this is not working.” We stop it and we try other things. So, it is also the fact that they are launching stuff; even if it is not totally finished., if not then the business plan is done, but they are going forward and that is also one of the big added value of the Chinese market.
Matthieu David: Thank you very much for your time and for the insight. It was a very interesting talk. I hope you enjoyed it. I hope everyone enjoyed listening to it as well.
Augustin Missoffe: Great, thank you very much. Have a good day.
China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.
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