Find here the China Paradigm 75 where we, Daxue Consulting, interview season entrepreneurs in China. In this episode, we are with Benjamin Claeys to understand his entrepreneur journey in China, he is a pioneer in using QR code for marketing in China, and have set up several Chinese customer engagement platforms for innovative marketing.
Full transcript below:
MATTHIEU DAVID: Hello everyone. I am Matthieu David, the founder of Daxue Consulting; a Chinese market research company based in Beijing initially and then we opened in Shanghai and in Hong Kong and its podcast, China Paradigm and today I am with Benjamin Claeys? Did I pronounce it correctly?
BENJAMIN CLAEYS: Claeys.
MATTHIEU DAVID: Claeys; sorry I did ask you before and I couldn’t pronounce it clearly. So, thank you very much for being with us. You are the founder of two companies. Actually more companies, but you are currently managing two companies you funded which is Lihaoma so, Liha; like Liha like the gift and haoma; how are you and QRzebra, a Chinese customer engagement platform based on QR code and how to actually interact with offline to bring people online and offline and vice versa. When I read what you have done I felt it was a big opportunity. I thought QR code for marketing in China was much bigger than what I was thinking, actually because you can send people to anything through a QR code and I realised how flexible a QR code; a dynamic QR code can be. So, thank you very much for being with us. You have founded respectively Lihaoma for 4 years and a half and QRzebra; it’s actually quite recent. Only one year and one month, if my information is correct. So, what about the size now of those two companies? I always begin with this question.
BENJAMIN CLAEYS: So, maybe it’s interesting to answer of course; Lihaoma is the first real tech start-up that I did and it was a start-up that started in an application where the concept was that people could by playing those games win some gifts of the brands and have a first experience with the brand. So, Lihaoma was a Chinese customer engagement platform that we at first started through an application. Later on, we built on it with the same concept where you can make a little game in an H5 format and play a little game online and with the same concept. An engaged user incentivises the user by winning a gift and letting them win by different small little games that are quite easy to play and that was successful. We did a few campaigns with Nestle, for example, and had other campaigns, too.
So, it is a formula that worked, but, of course, doing a business like this in China as it is a non-Chinese made me
They come on our system, they go through a whole flow and they get… by doing it they say, “Hey I need for example to make dynamic QR codes for marketing in China” and I will specify on that later and they purchase our software as a service online and do everything themselves. This is a very interesting model because it allows me to be kind of anywhere, right with my team and also our team works worldwide so we have a team that is not only working in one location. Of course in China, we have a team that is based there, but it gives us a little bit more freedom in the way we do things. Of course, it doesn’t mean that we don’t need to work. We need to work very hard, we need to work 24 hours, in fact, because, for example, people buy from New Zealand to the United States so it means people are asking and sending e-mails at any time of the day and we need to answer those e-mails as quickly as possible. So, it’s a thing that went really well and maybe later I can explain a bit about QR codes for marketing in China and why it became so popular?
MATTHIEU DAVID: Yeah, I would like to begin with a question in the podcast with the size of the business. It can be about clients, it can be revenues or it can be the size of the team. Could you give a sense of those two companies so that people can project more in themselves what you do and better understand at what stage you are at in terms of development?
BENJAMIN CLAEYS: So, if you talk about Lihaoma; The team is about four people and QRzebra we are about right now six people.
MATTHIEU DAVID: So, a total of ten. Are they working together in the same offices or it’s separate?
BENJAMIN CLAEYS: Yes, yes we work in the same offices and we work together because there are different business scopes, but in kind of a way we do collaborate. Yes, of course, because sometimes there are clients that request both and some clients that request one and sometimes… yeah, it depends, but again it is a very different business scope. Lihaoma is outreaching whereas QRzebra is more a search engine optimisation game where people will find you online and come to your content marketing, right?
MATTHIEU DAVID: So, you mean to acquire your own client, right you fund more content marketing is what you are saying?
BENJAMIN CLAEYS: Well yes, because of QRzebra, we acquire most clients from Google or from Baidu or those platforms and that’s us… let’s say our main channel for QRzebra. For Lihaoma, it’s more like content marketing like e-mails reaching out to big brands, telling them what we do and of course two of our topics, right. Chinese customer engagement platform is something that every brand wants to have. QR codes are also something that everyone needs. So, these two things work well together, right?
MATTHIEU DAVID: Would you mind if we talked about the beginning actually to start so that we get a better understanding of how it started? You are not a tech person. You are an architect, right? And when you started two businesses which are tech-heavy; I mean tech-related at least and you need developers or you need to have a team or you need to know a bit of coding, at least to have a bit of knowledge to have the idea of building those businesses. So, can you tell us more about the beginning and how you started?
BENJAMIN CLAEYS: Sure so yes, I am an architect. I worked on really big scale projects as you know, CCTV building in Beijing; you know in architecture companies. If you work in such companies you will work very hard, so it is like working in a start-up and it is also that you need to be perfect, right? There is no place for mistakes if you work on these kinds of projects. Doing a tech company and an architecture company is not so different. It is also about… I always compare it like this; an architect cannot put two bricks together, but he knows how to make a building with those bricks. So, he can conceptualise a building and it is the same thing when you do IT. I know what a back-end developer knows. I know what a front-end tech developer can do. I know what all those people can do and it’s about coordinating them and seeing that we have a vision; the same when you make a building and making that there is a vision and in the end doing good project management.
So, having a team that is motivated and managing them in a way that then at the end of the day it becomes reality and it becomes something that is real. The different things with tech are that in one year you can make a company from zero to hero, like what I did with QRzebra and with architecture it can 3-4 years or even 8 years before a building stands there and maybe even because of the market changes that the building never gets built. So, it is a very different speed of doing things, but from a way of thinking; it is very similar. It is not so different. Yes, you need to understand what you are talking about, but still, you don’t need to be the guy that has put the bricks together.
MATTHIEU DAVID: And initially you started another company which was Nono Muaks. A few words about it so that we understand the very start of your entrepreneurship journey?
BENJAMIN CLAEYS: Okay, so I came out of architecture doing really big scale projects in Asia, Europe and I wanted to have something small scale again. I was just tired of working in these big corporate architectural companies running big things and that is why I started Nono Muaks. Nono Muaks was a concept about Chinese customer engagement platform where we made small little things also with engagements where people had you know like little things like glasses and those kinds of stuff and it was pretty engaging and we just sold it in design stores and then suddenly the bigger brands came to us like Red Bull, Bacardi came to us and H&M came to us and said, “Hey we like these things. We want you to make them for us and brand them” and that is a little bit of how I understood the power of Chinese smart retail and also the budgets that were behind those kinds of things and how brands were looking for solutions for engaging people and getting attention because, of course, you put your glasses on, you take a selfie and you are just coming into power and so this is something big.
So, this was something that and even today; this would be still contemporary, right? These are things that are never going to go away. We are at that level still busy trying to engage and it is something fun to bring people to this Chinese customer engagement platform… it is what I said. Our glasses had what we call a picture value and when there is a value for a picture; that is the reason why people take pictures and if there is a brand on it and there you go, right? So, also maybe very interesting to say is that when I was working as an architect, my wife who is a Chinese who is the partner of 2×4.org; a graphic design company who is doing branding for all the big brands; Prada. It is also a little bit of a thing that made me touch bigger brands. As an architect, you don’t touch big brands, but working in this kind of industry made me understand new things and also made me understand how Chinese smart retail works because I was an architect. I had zero understanding of running a business. I had no clue of doing those things and by doing those things like Nono Muaks, Lihaoma at first taught me the hard way because it is never an easy way to run a business and to make a profit. So, these are the things that I learned on my way coming from an architect to where I am today.
MATTHIEU DAVID: Yeah, I am on your LinkedIn profile and I am seeing actually some of the glasses from Nono Muaks which are very designed and very fancy glasses. Where did you sell those glasses? How did H&M… it is H&M, Red Bull, Heineken, Bacardi; where do they find you?
BENJAMIN CLAEYS: Well, we started to sell in design stores in Beijing; 10 or 20 design stores in Beijing and Shanghai, too. So, it was not only Beijing. Also, we were online on Taobao; the Chinese platform. So, these glasses went around and it was something that also it was that Weibo was also helping at the time, so when people had those glasses they added it on Weibo. It was also one of our marketing strategies, right? So if you had your glasses and it was on Weibo and everyone was doing it, they had all those spaces to put all the glasses so it was something that worked pretty cool and it was also a very interesting product to work with. We had our own laser cutters and because I am an architect I could draw in AutoCAD which is a material program and put laser pictures of all these glasses and those kinds of things. So, it was something really… well, I did my passion; creating and designing and making new things and that still is my passion today; helping people in doing interesting things by creativity.
MATTHIEU DAVID: Yeah I feel these days have a lot to do with the economy or the business of selfies. I feel there are coffee shops based on selfies. There are places based on selfies for people to go there and take selfies together, but you decided to stop it in March 2015. Would you mind sharing a bit of the reason why?
BENJAMIN CLAEYS: So, when we stopped Nono Muaks it is a really… when you make glasses it is a very labor-intensive product. You need to produce them somewhere and that is what I would call the production nightmare. Anybody that produces products knows very well that when you produce something, so many things can go wrong. You send it to a factory in Hebei around Beijing then you come there and the top of the box and everything looks fine, but you dig deeper and you realise that down there it is not so fine anymore and that you have to streamline these again to clients again and so it is something that yeah, there are always a lot of new stresses coming along and that is also one of the reasons that we have our own laser cutters at the moment and make our own things because controlling the whole production chain was the best option for us. We realised outsourcing was not cheaper. It was, in fact, more like a nightmare. So, in one moment I said, “You know…” They were called Kick Eyes; so, Kick Eyes glasses went to the top for a moment and then started to go down. There was less interest in it and I said it is a good moment to stop. It was a moment where I realised let’s show something new and interesting with new concepts, I told friends and Lihaoma was born.
MATTHIEU DAVID: A few weeks after you officially started Lihaoma; let’s talk more about Lihaoma from a technical perspective. As far as I can understand, you are selling H5 websites and they are games. So, those Chinese customer engagement platforms are about games. So you say actually in a URL where people change a bit of the content in the game and they can link it within or embed within their own website or with their app, maybe or within their WeChat or mini program. Could you tell us more? First, correct me if I was incorrect and then could you tell us more about what is behind it and what we buy when we are a client of Lihaoma?
BENJAMIN CLAEYS: Okay. Lihaoma is what I would consider as a game generator so, not a QR generator, but a game generator. You plug in all your images, your personal content, you customise the game to making it look like it is your game. You can do that in 5 minutes by plugging everything in and then you will get as a result a URL and a QR code and the QR codes; that is because we are of course in WeChat. All our systems work on WeChat.
MATTHIEU DAVID: Only WeChat?
BENJAMIN CLAEYS: Only WeChat because we require you to log in so like then we also know who is playing the game. This was before the mini-games came out, right? That is after the WeChat mini-games and it was, of course, a different competitor to us, but in the end, we are still quicker because we can set up your content in 5 minutes where a mini-game will take maybe a month or more to develop depending, but, of course, the mini-games of WeChat look a little bit more integrated where what we do still looks like an H5. It’s an H5 game, but as I said, we have done it with many different brands and it was something that worked well. Maybe my goal is, later on, to bring Lihaoma also outside China. It is also something I consider. I see the opportunity as a game generator and Chinese customer engagement platform to be successful outside China. It is a concept that is not only related to China. People, of course, love to play games in China, but lately, people play games everywhere in the world. It is not something that is only routed to China. I lived in China and I am still in China.
MATTHIEU DAVID: Yeah, it is the innovation we can bring from China to the world. The other way around there and I think it may not be very clear for everyone listening to us about what kind of game we are talking about. Is it a game of lottery? Is it a game where you play with others? How can you generate so many games easily where the world of games is infinite? So, I believe you have some types of games that people would just upload their own pictures. Can you be more specific about the types of games you have?
BENJAMIN CLAEYS: Okay so we have different types of games depending on what we want to get from the user. For example, it could be a question and answer game where it’s like Trivial Pursuit kind of concepts and when you win you go to the next thing and it could be like kind of a roulette and then, for example, if you scan 30% and your friend who plays the game will win, for example, 20% and another friend will only win 10% so we make the whole even winning on this Chinese customer engagement platform. So, we make different games for different solutions and for different types of customers. Some customers are looking for games to convert users into sales. Other brands are more looking to build brand awareness and those kinds of games than maybe better when there is a question and they need to find the answer somewhere. So there are different types of games we make. There is also the kind of games with the three balls that fall or anything. It’s swish, swish, swish, swish, swish and then where is it? So, some games are based on luck and some games you will always win and some games you need to think a little bit. It is all these kinds of games that were tested with the psychology of a person on how can we convert you in doing what we want you to do in the end of the day? That is the whole thing.
MATTHIEU DAVID: How many games do you have? So, you have a quiz, you have a lottery…
BENJAMIN CLAEYS: We have eight different games right now.
MATTHIEU DAVID: 8; I see.
BENJAMIN CLAEYS: We develop new games on a regular basis for. Mostly it comes from a client who wants something new and then we make a new game and we push it in.
MATTHIEU DAVID: How much time does it take to develop a new game?
BENJAMIN CLAEYS: Well, it depends. It can take one or two months, but it depends on the complexity of course. Like I say, it is not always very easy to develop these kinds of things. People think it is easy. There are a lot of things that you need to do. It is not only developing it. It is to test it over a couple of periods and assess it on a couple of devices. You need to make sure that it works and there are still dozens of surprises that come with those when you develop games.
MATTHIEU DAVID: So the API of WeChat can change as well and then instances where they were working before.
BENJAMIN CLAEYS: WeChat; I can write a book about it; how terrible these kinds of things are sometimes when you are at the point of a developer.
MATTHIEU DAVID: Tell us more. Could you share some examples of the nightmares of developing a mini-program or games with WeChat?
BENJAMIN CLAEYS: Well, maybe let’s go to QRzebra and talk about a few examples. I just had last week an interesting example with QRzebra with recent doctors.
MATTHIEU DAVID: I see.
BENJAMIN CLAEYS: So, we make QR codes where people can upload a file. So, it could be an image, it could be a scan; it could be anything. Of course, it didn’t take long before a bunch of spammers came to our platform to upload images to let people add a WeChat account and then sell some illegal stuff. So, the first thing that happens is that WeChat will block you instantly and then they block your whole website. They block your domain. That means that not one of our customers could use WeChat, too – because everybody scans with WeChat – so, then you need to figure out a very quick solution where you can figure out, “How can we solve this in less than a day by finding a rule that makes it work?”
So then I told my tech team, “Block those features for now” and not one user can use it and then I told my sales and marketing team; I said, “Look, if anybody comes to you and they want to use those features they need; like any platform does in China, show their ID, a picture of them holding their ID.” That is how you need to do it and that is cool and then, of course, we give them access because then at least we know who they are. That was the biggest problem because spammers want to abuse our system; you don’t know who they are. They don’t care and of course, they had never given their ID to us. It is something that… it is a measurement where you need to take 5 seconds and you quickly need to think of a solution that can work sustainably without turning over your whole website. It needs to be something that comes from the backend quickly and then it was done and it was a sustainable solution.
That just shows in China that whenever you develop something for whatever reason it can get blocked and you need to quickly understand why and if you are already so happy that you already know why because WeChat told us why then of course to can solve it, but let’s say you don’t even know it, right; then you need to start to do what we call the begging and try to figure out what all the processes are that might be the thing that makes you get blocked. I think any big company in China has been through that nightmare already. That is of course for a company not fun because there are many customers who complain, but it is part of the game. This will never happen with QRzebra outside China. Outside China, nobody will ever block you from that level. Inside China, you need to comply with the rules of WeChat and WeChat complies with the rules of the government so it’s kind of the game where you are in between.
MATTHIEU DAVID: So, I got that you changed the way you on board clients with their ID and so on, but I didn’t get how you got your website unblocked from WeChat. Did you show them that you were implementing new rules and then they accepted and then unblocked it?
BENJAMIN CLAEYS: Yeah, so for the on boarding; we only blocked certain features, so users can use our whole platform apart from those features that are the ones that users will abuse. Yes, there is a process on WeChat that when you get blocked. You will see a page on WeChat that says, “You are blocked” and then you need to click ‘apply’ for access, you need to give your ID card again and then they re-check you, but we also send an e-mail to WeChat so we work on that moment. We have what we call an emergency plan; different sets of, “You do this. You do that.” If you communicate well then it can go very quickly. WeChat is not normally such a company that answers so quickly to your e-mails. They don’t care, but in my case, they did care and they did answer. So it was something that was solved pretty quickly for the situation we were in.
MATTHIEU DAVID: So that’s good information for QRzebra even though we may come back to Lihaoma because I feel there are a couple of things that I’d like to understand better on Lihaoma. So, QRzebra; you are selling dynamic QR codes for marketing in China – I went on your website – on a monthly basis. You are a SAAS business so it’s a subscription and you pay monthly. It could be $7 up to $36 and the differences you have between the different offers are the number of dynamic QR codes you can use per year. I feel it is actually the main difference, but after that you can track customer data through QR code in China: where they scan, how many times they scan and you can change what the QR code is linked to, again if I understand correctly about what you do.
BENJAMIN CLAEYS: I will explain.
MATTHIEU DAVID: Okay, we will listen to your explanation. The best would be to refer us to some specific cases so it’s very clear in our mind what service we can get from QRzebra.
BENJAMIN CLAEYS: Okay cool. So, first, it’s important to understand there is what we call Alibaba which is for China and there is QRzebra for the rest of the world. It is very important to understand because some things on the outside of China, but won’t work inside of China and the other way around. So, the second thing to understand is what we call a static QR code and a dynamic QR code. A static QR code you can come on our platform and you can make it for free. We don’t charge you. You can tailor your QR code and you can customise it to something that looks more appealing. As I always say, QR codes look uglier than bar codes and on our platform, you can make it something personal branded. That is the first thing.
MATTHIEU DAVID: With a logo inside to make it more visual for people. The logo inside so you can see whatever company you work with. I feel I saw some auto companies like BMW or whatever and you can have the logo inside.
BENJAMIN CLAEYS: The difference between a static and a dynamic QR code is the following: a static QR code goes straight to your website and a dynamic QR code goes first to a short URL that tracks data and then to your website. With a dynamic code and this is something that many people don’t know; if you print already your QR code and you still want to change the last link to your website you can change it at any time and whenever you want. So when you have already printed 10 000 flyers and you say, “I still want to change it” then you can change it. So we only charge customers for dynamic QR codes; the ones where you can track data and the one that you can add it in the end. Then there is another thing that we just made and that’s a very interesting thing. We also made what we call a multi-URL QR code. Mostly, QR codes go to one link, right? We made a QR code that allows you, depending on your location; so if you are in Beijing or if you are in Shanghai or in Hong Kong you will go to a different URL so we know when you scan your location and then we will redirect you to a different thing.
MATTHIEU DAVID: How precise can it be? Can it be as precise as a level of the district of the city?
BENJAMIN CLAEYS: On a city level. Why is that; of course there can always be a little… for example, if you are just outside of Beijing it might be on a 4G connection that will go through Beijing so then we think you are in Beijing. So, it is not what I would call… it is like 90% precise, but on a country level, it will always work. On the city level, it might have a little bit, depending on where you are. If you are in the center of Shanghai, then no problem, but if you are a little bit on the boundary of Shanghai it might be a little bit difficult.
MATTHIEU DAVID: I understand.
BENJAMIN CLAEYS: it depends on how the operator; your 4G operator redirects you to which Internet distributor.
MATTHIEU DAVID: I see what you just said. I scan the QR code and it is sending to let’s say a shorter now intermediary link which is where out track the data. Based on the data you collect you know the location, you may know a little bit more. What can you know more about? That is something you can tell us and then it’s redirecting to what the person who paid for the QR code wants to show. It can be a picture, it can be a video, it can be another website, it can be maybe a payment terminal to put then a credit or whatever. What can you get on top of the location?
BENJAMIN CLAEYS: So we track customer data through QR code in China, for example, the time of the scan, the amount of the scans and we track also the devices. So, we know it is an iPhone or an Android so that we know, too and we know the location. So, there are kinds of four things we know when you scan a QR code so that makes you, for example, if you use QR code for marketing in China and you know that in San Shing nobody is scanning and then for example in Beijing everybody is scanning. So, you need to do better marketing. Another important thing to mention with QR codes and it’s a mistake I see every brand makes. You need a recall fraction with your QR codes. When you have a QR code and you say, “Scan and Win” or, “Scan and do this”. People read the scan. If you don’t put that with your QR code people are indifferent. They look at it and say, “What is this about?” So, it is important to put the recall fraction. There are so many brands making that mistake.
MATTHIEU DAVID: Where do you write the recall fraction?
BENJAMIN CLAEYS: For example, it could be just, “Scan me” or, “Scan and Win.” Incentivise people. It is still a QR code. It is nothing else and the digital gateway on the packaging or on a paper and then it gives the digital dimension to your product so, it is a very important thing that people scan. You know more information from tracking customer data through QR code in China.
MATTHIEU DAVID: Do you write the recall fraction in the QR code or it’s outside the QR code?
BENJAMIN CLAEYS: We put it mostly under and sometimes we don’t even put a logo in the middle anymore. We put… that’s the thing with a QR code; you can cover some parts of the QR code. This needs to be in the center. We can also cover a little corner and put a little man there or another thing. You can be very creative with QR codes. People use it because they look at other brands; how they do it and they copy it. Nobody really thinks when they do it and that’s how we do things when we do it. We start to realise there are much more powerful ways and then there can be a little text balloon that says, “Scan me” or something like that and that makes people get a visual ID and they can read the text. 80% more scans; that is kind of a huge difference with our techs. So, that is a message that I’d like to give to the people that are listening to us; a recall fraction of your QR codes. You get 80% more scans; huge.
MATTHIEU DAVID: We talked about the Chinese version of QRzebra; did you get more information because most people do scan through WeChat so are you able to track customer data through QR code in China: get their name, are you able to get their gender or are you able to get more information?
BENJAMIN CLAEYS: Internally yes. If we make that for example when people scan that there is a little pop-up of WeChat that they need to click and then we will get that information, but we don’t do that for the moment because that means they need to log in with WeChat if they want to access the game. Also maybe something I would like to mention is the short URL that is a millisecond that you are on that page so you don’t see that as a user, right? So, you go through that and you go straight to the end result. So, when people use a dynamic QR code they don’t stay on that page, they don’t see it. It is like you are already on the end-page. It is like milliseconds. We track customer data through QR code in China. So yes, we could do that; integrating WeChat. For example, one QR code that we made and this is an interesting one. If you scan with WeChat we can let you go to a WeChat store. If you scan with Taobao you go to a Taobao store or if you scan with Douyin you also go to a Douyin page.
MATTHIEU DAVID: All those big ones; they block each other.
BENJAMIN CLAEYS: So when you scan we also know which scanner browser you are in. We know that you are on WeChat, we know that you are using a normal scanner. We know that you are coming from Taobao so we can redirect you based on that information.
MATTHIEU DAVID: You know with which app I am going to scan and if you see that I scan with WeChat you are going to bring me to the WeChat ecosystem or Tencent ecosystem and if it is Alibaba you are going to bring me to the Alibaba ecosystem and if you see it’s a Google QR code you may actually send me to an Android other than an IOS store, for instance?
BENJAMIN CLAEYS: Yes, there are two different things. Definitely yes, Alibaba and Ten Cent; those two things and then the other thing is what we call app store QR codes. When you scan we send you to an Apple store or we send you to an Android store; a Chinese Android store, in this case. We make different QR codes for different purposes on a platform. You can see there are different tools. Another interesting thing to speak about for example is what we call a Wi-Fi QR code. Everybody when they go to a bar they ask, “Can I have the password?” It is very annoying. Just put a QR code with all the information. You can create it for free on our platform. You scan and people are on your Wi-Fi as easy as that. Every phone can recognise it. In one click you are on the Wi-Fi. You don’t need to know what is the name of that Wi-Fi or whatever. It is something that is super powerful, super easy and super user-friendly if you look at bars or hotels or whatever, but things that I don’t see too much already happening in reality.
MATTHIEU DAVID: So, you began already to talk about the specific cases. I’d like to know what are the best cases you have in mind for a user of QR code; successful cases? My understanding of a QR code is that it’s very… there is a difference between China and the rest of the world and WeChat has made QR codes much more popular than the rest of the world, first thing. Also, you can pay for a QR code in China that doesn’t occur in the west and the second aspect is that we see initiatives led by WeChat which failed like the Shake-Shake. You know, the Shake-Shake with the phone. It failed, basically. The brands tried to inter-ride with a billboard and the phone and asking people to shake-shake and basically, it didn’t take off and only a few people use it now. Would you mind sharing a couple of campaigns or specific use of QR code which has become a bit massive or sizeable?
BENJAMIN CLAEYS: Yes, so very interesting to say, for example, that yes, it is definitely WeChat that made QR codes worldwide. That is definitely true. Also, QR codes still give people the freedom to scan or not and it is also very clear when there is a QR code because it is visual. Cases we work on; we also work for bigger brands, for example, Furla who made a two-year plan for QR codes for marketing in China to integrate into their stores. Another brand that we now work for is Universal; Universal Studios for the movies, right so they came with a problem to us of those multi-URL QR codes. They say, “Look, we have QR codes in the Philippines, in Hong Kong, in China, in Malaysia and we need a solution where we can be with one QR code to find a solution.” So those are the bigger brands that are using our QR codes on a bigger scale, right? So, they are absolutely doing cross-boundary and neat solutions on that level. These are the clients that mostly look for kind of solutions that go beyond what most of our customers would not use.
MATTHIEU DAVID: I am very interested to understand what can be a two-year plan for QR codes in shops? What can be a plan for two years?
BENJAMIN CLAEYS: Okay so, for example with QR codes you can…let me give you a few interesting cases of using QR codes in Chinese smart retail. That maybe interesting. For example, a brand that does QR codes for marketing in China, like for example, Sikora; they have a QR code on every person in the store. You can scan and you go to them. So, they have already made that kind of integrated. You can put QR codes on the window, you can put QR codes on your products when you ship them so that you get more information. So, that is also what I always try to tell our customers. When you scan, people can see the story of the brand. They can see the story behind the product; where it is made from. This is a kind of interesting information where you are doing branding for free from your product. You have a product anyway so why don’t you add a QR code on it?
So, another luxury brand that uses it is Gucci. When you open the bag you see a QR code. It is the first thing you see. So, QR codes could be used in so many different ways in Chinese smart retail by engaging the user because everybody is on a smartphone anyway all the time so why not give them opportunities to cash with something and that they can straight away share with somebody. That is also a powerful thing. I am in a store and I see something cool. I scan it and I can say, “Hey I want to share my research” or here, “I want to share it with my friends.” So, this is always the ways that, for example, bigger brands are trying to think, “How can we make whatever is in our store shareable or make it more engaging” so on the window it could be, for example, you scan, you play a game off Lihaoma and you get 20% off and you say, “Hey, I just won 20% off. Let’s enter the store. Let’s see what I can get for 20% off” and I become a customer. So, there are a lot of ways that you can use QR codes for marketing in China in an engaging way. It all depends on what you do behind it and it all depends on how you use it in a way where the customer has benefits and has engagement.
Those kinds of things are what the customer looks for and this is the thing where we are kind of…we are not a consulting agency, but, of course, working a long time with QR codes made us understand all the different used cases that are brands that we work with are using and sometimes brands come also with very interesting proposals or come up with interesting ideas and we say, “Hey, that’s fun. I never thought about it.” Another way that is, for example where QR codes get used a lot and you might have seen it; on Chinese smart retail it’s on the table. You scan, you order, you pay and they will bring it to you or let’s say, for example, it is in the high-speed train from Beijing to Shanghai. You scan, you order, you pay and they know your seat number because your QR code is unique and they will come to you and they will deliver it. So, it is not like, “Hey, please can I…?” No. So these kinds of processes we will see in the west also because it makes life more efficient and better and people are already paying because that is also the biggest trouble that many brands have; you know with this kind of way you can get paid upfront. So, that’s also helping in a country like in Belgium or France where a waitress costs a lot of money.
MATTHIEU DAVID: You mentioned that the biggest issue with QR code and companies who want to use a QR code is the code to action. How do you segment the different codes to action? You said that one is information. I think everyone gets that. You scan, you get information from the product, you have an IKEA shelf that you need to build and you can scan and it does know how to build it; information. You can pay with that, but that is very China-specific. Then you can scan and play a game. Are you segmented in different recall fractions and would you have a concurrency view on what can be done in different segments?
BENJAMIN CLAEYS: So, for example, the recall fraction is very important in any situation. It is not something that goes along with whatever. Of course, if people have a need or whatever; they will scan of course quicker but the recall fraction is still the thing that makes people make their decision in their brand and scan a QR code and that is like I said the first thing and the most important thing. How will I cross that bridge? If I have a store, I always compare it like this: you have a door and if there is no sign, “Enter to come in” or, “Get a free cocktail” or whatever; when you enter that door, you will look at it, but you will probably not enter or you will… but if it says something that you are interested in and it looks very nice and there is a door and it has some really nice, good calls for an action you will like it and you will enter. So, that’s the same thing with QR codes for marketing in China. You need to have a nice sign on your door that says, “Enter this thing.” that is the first thing.
Then the second thing of course, once you enter the landing page or whatever people go into needs to be following their interests and needs to be of course engaging. When you make a landing page where it is like a website and I have seen that; that is not mobile-friendly. They land on them and that’s what everybody does; they click it away, right so you might have scanned them, but it didn’t make them cross the bridge. They didn’t give you information, they didn’t pay, they didn’t do whatever. So, that is the next thing. So whatever is behind your QR code needs to be also user-friendly so it is a whole flow. It starts with just a door; to make people enter is one thing and to keep them there and consuming is another thing. That’s the thing where it needs to go hand in hand and be user-friendly. It is not only the design or the recall fraction that is important. It is also important what is the size of the QR code for marketing in China? If you put it in on the back of your packaging who will look there; nobody. It needs to be on the top right where everybody can see it. That is also very important. It needs to be a nice designed QR code so it doesn’t look like a barcode.
So, something you think like, “Hey, this is something that can get some benefit again.” So, it is all about understanding those things; the size, the colours of the QR code, the recall fraction; all these things together will make you enter. When people – I am an architect; design a building we make the gate and everything very interesting so when people look at that thing they walk into it without knowing that they are entering the store and one of the best buildings like that is in Paris; Santo Pompidou. When you are entering Santo Pompidou you are entering the building without realising that you just entered it. It is made in such a smart way and that is the same thing with your product. You need to make it in such a nice design; a smart way where it is very easy to enter. Then after that, of course, it is about the next steps with your consumer.
Of course, QR codes for marketing in China are used in very different ways like you mentioned Chinese smart retail, but also we get a lot of customers who come from education with QR codes in education. There are different levels and needs for QR codes. Also, we have QR codes for business cards. You scan and I have all your contact information in one click. In China, you might say that people will connect with WeChat, but you know; you might not want to give all your WeChat information to everybody, but you might want to give your e-mail and all these things and business cards always end up on your desk. Probably, you have a lot of them yourself.
MATTHIEU DAVID: Yeah.
BENJAMIN CLAEYS: But if you put it on your phone again it just makes it easier. I just look you up and I find you. So, this is also one of our major customer’s comfort; they come only for that; just for their business cards. So, it is so diverse and also the customers that come to QR codes it is so diverse that it is something that people think like, “Yeah QR codes were there like ten years ago. It never took really off.” Is it still something big? Well, I will say the main reason that it changed in the west is that you don’t need an app anymore to scan a QR code. With an iPhone, you just point your camera if you put it in your settings, of course. You will point your camera and it will say what kind of QR code that is there; a Wi-Fi QR code, a URL, an SMS; whatever it is. So, this is also the thing that Apple understood from studying China; QR codes for marketing in China are a very powerful thing. We need to get that in our system, right so that is also something I realised and that is why I do believe that QR codes in 2019 are taking off like hell. We can see that even in America. One of our biggest markets is the United States next to China.
MATTHIEU DAVID: Okay, could you share about the US market because the US market is not WeChat dominated like it is in China and my understanding is that the reason why a QR code is so popular in China is because of WeChat which Facebook has not developed that much. They haven’t developed QR codes that much so, could you share about how it is working in the US? What app do they use to scan and how do people use it?
BENJAMIN CLAEYS: Very good question; so if we look at the different places in the world we have China, South-East Asia and you have the US and the US; I can say it is almost our biggest market. So, Europe is a little bit behind. You see some talents coming, but the US is definitely the trendsetter in the west, I would say. In the US many people struggle with it. Some people download apps they don’t really understand. Some understand that they can scan it with their smartphones without downloading an app, right? So it is something where we get really funny questions about QR codes and we sometimes think like well, yes, it is a very new product in the US, but of course people also understand the business opportunity with it and the lead generation they can get through it so it is going pretty quick. I must say it’s also one of those markets where people are really familiar with SAS, Services and Software. “I need it right now. I am going to buy it.” That is also the spirit of if you are in the United States wherein the rest of the world people are living like, “Yeah, do I need it? Can I not get it for free somewhere?” That’s a different mentality with the United States and the rest of the world.
This is the thing where I feel the United States is now becoming a trend setter in the west and that’s why they become worldwide. I am sure about it. If China is doing it and the United States is doing it then the rest of the world; just a matter of time before they follow, too. So, that is also when I came back now to Brussels because I am calling you from Brussels. I started to see QR codes more and more; almost on the window of a business like you can scan and you can understand if the business is closed maybe it brings them to their e-commerce. So, it is in newspapers. I can see it even in the paving; as you scan and you can see the history of the street. So QR codes are still becoming more and more used also in Europe, but it still takes a bit longer here for people to really take it with both hands and get it to the next level. That is the thing that I also can say.
MATTHIEU DAVID: What apps do people use in Europe and in the US to scan?
BENJAMIN CLAEYS: Well, they use all these millions of apps that you can find on the App Store. I think there must be over 60 different scanning apps. They don’t use social media to scan. So, they don’t use Facebook, they don’t use WhatsApp because on WhatsApp you cannot do that. You can only scan to log in, but you cannot do anything else with it. So, Facebook still doesn’t understand it, but that’s how it is. So, people use all those kinds of mini-apps that aren’t even famous you know; they are just some small developers who made it.
MATTHIEU DAVID: Which one is the most used?
BENJAMIN CLAEYS: The app that I always and there is the name to say that; it’s called QR Reader Without Apps. That’s the name of the app on Google Play and iPhone because that is the other thing; it is mostly for free, but there are ads in between, right?
MATTHIEU DAVID: I see.
BENJAMIN CLAEYS: When my customers ask me that I say to use that one because it is really great. It is very well designed, but it is not a branded app. Again you don’t need an app to scan a QR code. You can use it with Android as well as an I-Phone. Just point your camera.
MATTHIEU DAVID: On the phone, right; the video or camera, sorry?
BENJAMIN CLAEYS: Yeah you put on the photo and then you point it to the QR code and with an iPhone it works great. Why would you need an app and Android it works great too with the latest Androids, but sometimes in the settings with Android you need to say, “Please allow me that my photo can also recognise QR codes” so Android is a little bit… they were, in fact, the ones who did it before the iPhone, but iPhone did it well. They integrated it in a way that is super useful and I think most iPhone users by now start to realise that they can scan like this.
MATTHIEU DAVID: So, you are based in Brussels and you have been in China for a long time. One of the…
BENJAMIN CLAEYS: I am not based in Brussels. I am here just for two months to work here. It is too hot in Beijing.
MATTHIEU DAVID: I see.
BENJAMIN CLAEYS: I am still based in Beijing, yes.
MATTHIEU DAVID: Okay. So, you are between Europe and China and one of the very dynamic sectors between China and Europe is tourism where the Chinese tourists are changing the places. They have to put the description in Chinese, they have to adapt to WeChat and even WeChat payment and all those businesses which actually support the transformation of those museums, hotels, parks toward being China compatible and WeChat compatible and receive payment from WeChat and I feel that QR codes would be a solution to so many things; translation, also the audio; the video. Are you seeing something happening or it’s still an anecdote; something very small?
BENJAMIN CLAEYS: There is I think a hole in the market. I knew an Italian who was helping restaurants to translate their menu in Chinese and I guess he also had a QR code on the menu and he, unfortunately, stopped his business. It was a really good concept because, of course, it was helping Chinese consumers to scan and read the menu in Chinese. So, there are millions of ways that this can help in a very simple way for businesses to be a solution, but I guess it will take a long time for most European businesses to come to that level. Maybe some corporate businesses might enhance and use it quicker, but I think most smaller businesses will take some time. On the other hand, what I do see now, for example, in Belgium I can pay with QR codes right now, too. That is something new. It is called Paid Connick. They are trying to scale over Europe. You scan a QR code and you just input your codes and you pay like in the same way that it works on WeChat.
These kinds of businesses are developing in Europe little by little; like I say I hope it is going to be a global approach all over Europe, but I think it mostly works by country and if you go to a different country, it is used over a new app or whatever so that is also the problem a bit when you are in Europe. There is not one integral approach mostly it is like a different approach for different countries which is, of course, a pain point now when you are a tourist and traveling to Europe. If it comes to software it is still on some levels it is not always… if it comes to payment it is not always unified in a digital way.
MATTHIEU DAVID: Yeah that is the issue and WeChat made it so much more simple; WeChat and Alipay for China. We have still ten minutes for the last ten questions. So, we already assigned it to you before so you already know them. What books inspired you most in your entrepreneur journey?
BENJAMIN CLAEYS: Okay there are different books, but one book that I would maybe like to talk about is for example called Cashvertising. Cashvertising is a book that helps you to understand how to sell. There are many other books that can help you to sell. It is a book that every employee might offer when they are in sales and marketing need to read what is the psychology of sales and then an interesting thing about this book is that it’s not rocket science, it is not that there are not any other interesting books that talk about sales like a Sales Actuator Formula which is also a very good book, but this book; Cashvertising helps people to understand the psychology and applicable ways of doing it because reading about how to sell and doing marketing is one thing, but doing is another thing, right and that is something that this book helps you to understand how to do it in the end and that is I think one of the books that I found pretty interesting because I am very interested in the psychology of people and to see how they act when they do this and when they see that and then it tells you how to work around that.
MATTHIEU DAVID: That makes me want to buy it. What do you read to stay up to date about China?
BENJAMIN CLAEYS: Well, I don’t read too many books about China because China is so diverse when finding information. It could be all LinkedIn with some articles, it could be and mostly with social media; that is the first thing. It could be on Douyin; maybe they see something interesting and new. There are so many new ways to get information today about China that is not only on books and if you are very busy as an entrepreneur you don’t always have the luxury to read books. So, I try to get some snippets out of different things and try to see how I can use those things in my business or understanding.
MATTHIEU DAVID: So, LinkedIn would be the primary source of information. You are not the first one to say that, actually and I am very surprised how LinkedIn evolved now. It is like media and people get information from the media. It’s like because Facebook and Google are forbidden so people go to LinkedIn to get information in China.
BENJAMIN CLAEYS: Well, there are many people in China using LinkedIn, of course as a way to express themselves to the rest of the world and it is still a very interesting, professional platform. Even there are more and more users on it, it still tries to be a platform for professionals and I think that is the power of LinkedIn; when you use it and connect it to the right people there’re a lot of interesting things and opinions to read and I think that is also what people look for, right? It’s not only reading an article. It’s maybe having somebody having a good opinion about an article and then saying, “Hey this is worth reading now because now I have only 24 hours in a day so I need to pick my stuff quickly and if this person says it is an interesting article then let’s have a look at it.” So, LinkedIn is a very helpful tool for quickly getting information that might be important for you. Of course WeChat too; WeChat groups are still interesting if you are in the right groups. There are many good groups or professional groups where you can get very interesting information.
MATTHIEU DAVID: In very Chinese ways, actually. You need to go and see to go to the Chinese group of WeChat. It looks like it is more closed and more mysterious to get into the groups. You spoke about 24 hours in a day; so, what productivity tool do you use to make it more productive?
BENJAMIN CL AEYS: Okay let me make some good advertisement. I love Trello myself for the simple reason it is a place where you can put cards, you can make different boards for different kinds of people, I can manage my company through Trello through my mobile phone from anywhere I am, it is a place where I even manage my personal life; I put things on it to remember and all this kind of stuff; everything I don’t need and everything that I want to put out of my head, but if I think it is important I put it on Trello and make a little card of it, send the information and I can make action phones and I know what my developers are working on and what is going wrong with them, so Trello is free in China so that is also cool and it’s a very easy, simple system that you can customise to your own needs. I know there are plenty of different people using different platforms and all these kinds of things for workflows, but for my size of business and for the people I work with it works really good and it’s a platform that really helps us a lot in doing daily things.
That is also what I tell my employees; if you have some problems or some cases and you went through the whole thing, on Trello write it down because next time you are going to come to the same problem; you go to Trello and you find it back and you know the flow again, right because, for example, WeChat; there are so many things you need to remember when you have an official account and all these kinds of things and you have been through the whole mess and you did it once and now it’s nicely recorded on WeChat. Next time it will take us ten minutes instead of two hours, right? So, it is something that I do really like; Trello is good productivity…
MATTHIEU DAVID: Yeah Trello is a good tool and it is used in China. We use also Team Vision which is equivalent to Trello; a copy of Trello in China which got acquired by Alibaba and I heard about that a few days ago, actually. If you had extra time what would be the third company you would manage?
BENJAMIN CLAEYS: Well, I am an architect so I have always been interested in 3D printing and it’s something that I already have been thinking of something new that I had in my mind and maybe one of the concepts that I have in my mind is maybe building a city on the ocean, right? I still think it is a very interesting thing to be on the ocean. I really want to go to a marsh, but I think the ocean is a much more interesting place where you can have a floating city depending on the temperature; whatever you need. You can move it. It is a universal place, the ocean, right? Right now we only use it to go from point A to point B with cargo or for leisure, but I think there can be much more done.
Also see in the level of, for example, all climate changes; all those countries that will disappear, all those people that need to find a place to go to. No country wants them. Nobody wants you, right? So why not make a city on the ocean where people could live temporarily, have an education and go back to wherever they come from or maybe stay there? Something like that. I think as an architect I love to think big. I love thinking with all kinds of things, but as an architect, we always say, “Head in the clouds, feet in the mud” and it means… it is the same with QRzebra; you can dream of this, you can dream of that, but at the end of the day you need to be hands on, you need to realise what is going on and quickly adapt to your situation.
MATTHIEU DAVID: What is the most surprising experience you had in China so far?
BENJAMIN CLAEYS: Oh, I can write two books about entrepreneurship in China already. I am sure. I have been to so many things where you can get two of all and I think by now being in that situation and also working with Chinese people it’s a place where people say, “No, we cannot do it.” It is blocked and then you need to think of how we can go over the wall or under wall, but we need to go through that thing, right and this is being an entrepreneur in China makes you much sharper, much quicker and you need to be very innovative because you deal with situations where you think like, “How can this be?” It is true. You read it and you need to deal with it. So, I have been through all kinds of things from financial miseries to goodness what, you know. I have been through the whole process of being an entrepreneur, but I also believe that it is part of being an entrepreneur and also believe that it makes you a better entrepreneur.
MATTHIEU DAVID: What people need to know is that banks don’t finance any small company or medium-sized companies and even actually some big companies; banks do not finance them in China.
BENJAMIN CLAEYS: Well, people always talk about start-ups about investment and series A and series B and I always tell the people, “Don’t go for investment. Don’t do it. Just run your own company, try to grow it and maybe, in the beginning, it goes slower.”
MATTHIEU DAVID: Go for clients.
BENJAMIN CLAEYS: Go for clients, go for revenue because you know at the end of the day I am now a company that is selling in 89 countries. We are doing pretty good. We have big brands on board and everything even then to get an investment is not easy. Investors see what kind of revenue you have. They look at all those kinds of things and based on that and based on your team and this and this and this they won’t be busy with it. Don’t spend your time on investors. When you are really good they will come to you. Don’t worry about it, right? Be focused on getting clients and customers. Be focused on building a business that runs, that people need and maybe I know people, a French guy that I know who made a small investment in my company and he made a whole company and that’s why also I choose him as an investor. He made a whole company and he sold it in China and he did it with zero investment so it is possible. It is not easy, but trying to get investment is neither easy. So, I would say to most entrepreneurs; try to build a good product and I know you will need a little bit of money for somewhere, but you know try to focus on really making a good product and a great added value for your customers. If you have that all the rest will come its way.
MATTHIEU DAVID: The last two questions actually are two sides of the same question. One of the ways for us as a Chinese market research company to understand what is going to change business; an embodiment to see the wisdom before it becomes big is to look at unexpected success and unexpected failure. For instance, an unexpected failure ten years ago would have been cut full and we would expect them to leave the country and the next success would be Xi Cha tea; how can you sell tea at such an expensive price in China and grow fast and be so successful? So what would be for you an unexpected success and unexpected failure you have witnessed over your years in China?
BENJAMIN CLAEYS: Right, so an unexpected success to my eyes was Nono Muaks with those glasses because we just did something and the same with QRzebra; we just did it with the idea that there could be a market fit for it and those two things went pretty quick and pretty solid. An unexpected failure might have been the application for Lihaoma because when we made the application we thought you know it is going to be easy to get users, we are getting investment and we don’t need to focus on revenue. We just need to focus on building an interesting Chinese customer engagement platform that people like to be engaged with. That was a mistake. We didn’t look too much at our market fit. We did not focus on revenue. We focused on getting more users and thought like when you read online; this app bets so many users and they don’t even make money and they get so many investments. That’s if you are called Mr. XXX, but you are not Mr. XXX. You are just a small fish in the sea who wants to do something, right? So, that was an unexpected failure when we made this app, but doing that was then successful from then on. I learned out of my mistake and it made me realise that “Hey, that is the market fit and not the application.” I would like to say that the application will also be a good fit, but you need much more investment and that was one of the elements that were not there at that moment. We didn’t get that investment so that was the thing that made us not enough to make us go to the level that we wanted to be in.
MATTHIEU DAVID: Thank you very much. Congratulations on everything you have built and I think it was very interesting. I think you are in the business of QR codes for marketing in China which is going to change how people interact offline and online. I see only this way for businesses like Airbnb, hotels, museums to create more revenues and to link with other businesses. Still, a lot to do, I believe in the real world to connect people online, but thank you very much for being with us. Congratulations again for everything you did and I hope you enjoyed the talk and I hope everyone listening to us enjoyed it as well.
BENJAMIN CLAEYS: It was a great pleasure to talk to you and I think like I said QR codes for marketing in China is just something that starts in the world right now. People still in many countries have no clue how it works and that is also the prosperity that we have that we are not only making business, but we also try to be innovative. QR codes for marketing in China is not just a thing that can be innovated or even think of new ways of using it and that is I think also the powerful thing that I must feel very happy for because when you make a business it is not only about your understanding of things, it is also the knack to at the right place at the right time and that is also something that people forget with QR codes; “I am definitely in the right moment now.” That is really the great thing that I have today. Thank you very much for your call and I hope everybody that listened also enjoyed it.
MATTHIEU DAVID: I am sure they have. Thanks. Bye-bye, everyone.
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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