Find here the full China paradigm episode 47. Learn more about Igor Temirov’s story selling online in China and find all the details and additional links below.
Full transcript below:
Matthieu David: Hello everyone. I am Matthieu David, the founder of Daxue Consulting Group, a strategic market research company, and this China marketing podcast, China Paradigm. Today, I am with Igor Temirov.
Igor, you have been involved with international businesses from the US, France, and the Netherlands. You are from Russia and have changed from one industry to another with a lot of different experiences in the food business and aviation. We are going to talk a lot about the last position you had at SPLAT. You have been the CEO and Business Director at SPLAT China. SPLAT is toothpaste and oral care brand from Russia, priding itself as being natural and health-conscious with fast growth. It has been named within the Top 30 fastest growing global brands by Stanford University with presence in more than 60 countries.
SPLAT is insisting a lot on how natural the products are, its certifications, and its team of more than 1,000 people now. SPLAT is made in Russia. You had been in charge of introducing and developing the brand in China. Currently, you are the Strategy Development Manager of different brands, companies, and products. You are based in Hangzhou, China. Thank you very much, Igor, for being with us. Is there anything you’d like to add to the introduction or anything you want to correct?
Igor Temirov: No, I think it was all correct.
Matthieu David: I’d like to talk about SPLAT first, and what you are currently doing with different brands and companies you are working with. SPLAT started to sell online in China, not that long ago. Could you give us an idea about the size of SPLAT in the world and China, in terms of revenues, number of people, or the number of products?
Igor Temirov: SPLAT is really a unique company. This is the reason why I decided to join the company when they were looking at selling online in China. It sent all the top managers to the famous Russian business school, Moscow School of Management Skolkovo for almost a year to study several strategies to enter the retail market in China and how the global market could identify it. The company decided to become a global player because it realized that with the presentation of a unique toothpaste, it could be very welcomed in various parts of the world. It was right at that time. It had some presence in Europe and invited me as an expert to validate its strategies of selling online in China. After these validation sessions, the owners invited me to join the company in any capacity.
It was a little bit challenging. I was not looking to return to FMCG business, where I stayed most of my professional life. But I think the most important thing was the company, the people, and the culture that were so different. Its culture was very humane, warm, and open-minded. It was probably the first Russian company that I met with this culture. It had a clear understanding of what it wanted outside of Russia and an understanding of its strengths and weaknesses. So, I decided to join. There is a saying, “Never enter the same river the second time.” But I had a lot of experience in strategies in different countries. I worked in the United States, France, Germany, and the Netherlands. I was trained and saw how the big guys and major corporations did the exercises. I saw a lot of mistakes, big flops, complete flops, and very expensive flops even with the smartest people. After that, I had a lot of experience of my own from selling online in China, marketing, production, and running a factory. I understand different elements of entering different markets. But aviation in China, in my experience, is probably the ultimate challenge, so we were trying to enter the retail market in China.
SPLAT is not a public company. We are not opening our financial information, but I can tell you that export is now about 20% of our business. China, in terms of sales, is the largest country after Russia.
Matthieu David: How many people do you have in China for SPLAT?
Igor Temirov: Currently, it’s 20 people. The most important factor to success is to start thinking about not making a Russian office in China but establishing a Chinese SPLAT office. From the very beginning, I was recruiting the Chinese nationals, people with a good understanding and feel of the retail market in China. I spent almost five years of my life in the United States. If you miss certain cultural elements of your growth, you don’t have a really good feel of the culture. That’s why, initially, I was looking for people from the retail market in China with a good understanding.
Matthieu David: Is the team based in Hangzhou?
Igor Temirov: No. We have main functions in Hangzhou, but the salespeople are regionally based, for example, we have a guy in Chengdu where we don’t have an office. Chengdu is a very good area for selling online in China, so we have a lot of sales there. The guy is working practically out of home and visiting customers. We all use WeChat for weekly team meetings on Monday. We also have discussions on the targets and performance. WeChat is a great tool because we feel like we stayed connected with all the people every minute and every moment. We know who is where, because people send pictures and comments that “I am in this city” or “I am in this store.” Also, you can exchange files immediately. It’s a very good environment for selling online in China.
Matthieu David: It’s a surprise to know that you have people working remotely in Chengdu and other different places. Maybe I don’t know enough about how you sell online in China. I went to your store on JD and Tmall. I went on your website and stores. I know you are selling online in China. The penetration of products like oral care and toothpaste is higher and higher in the retail market in China. How did you build a presence online and offline? How did you organize your team to have someone in Chengdu?
Igor Temirov: It is from the lessons learned. For those who are looking at the retail market in China, I suggest listen very carefully to our story and look at our experience. When you’re entering such a big retail market in China, which is very dynamic and competitive, nobody’s waiting for you. You don’t have a huge budget and don’t know where to start. First of all, you need to find the drivers of the retail market in China. When you are selling online in China, even a small wind can help you move your boat. You should be looking for these drivers that could help you move your boat.
One of those elements is definitely the online landscape in China. People outside of China do not know and understand what’s going on. The online landscape in China is so radically different from the one in any countries. It’s so developed that initially, you should really concentrate 60 or 70% of your time to understand how the online landscape in China is working. Why?
First of all, it is the best and probably the only communication tool that you
should have right now. It is your marketing and sales at the same time. The
only way to make your products well known to young
Chinese consumers is to sell online in China because you immediately expose your products to the whole
country. It is the best testing ground for your products because people will immediately give you feedback. You don’t need to do long and
expensive marketing exercises, because the online landscape
in China will immediately
tell you what is popular and what is not by sales numbers. It is the best
way to tell your long story about being
natural. Because on the shelf offline, there are hundreds of brands, and you are just one of them. It’s very difficult to reach young
Chinese consumers. But when you are selling online in China, you can tell the whole story as long as possible on Tmall, JD, WeChat, and other
platforms.
This is one of the lessons I learned. I remember when we started selling online in China, our online sales were 10% of our total sales. Because everywhere in the world was online at that time, online was like 2%-5%. It was more like a fashion item. People in the big corporations will tell you, “We are also doing online business.” But their online sales were absolutely insignificant. But I sensed from the very beginning that selling online in China will be a driving force for several reasons.
Matthieu David: When did you start in China?
Igor Temirov: Four or five years ago. After one year, it was 20% of our business. Then, some of our colleagues were saying, “Maybe you are not doing well offline in the real stores. That’s why your sales online are growing.” When it became 50%, people said: “What’s going on?” Then we did market research with our target audience. 50% to 60% of young Chinese consumers in that research clearly said that they prefer to buy toothpaste online.
One of the key reasons why I selected Hangzhou as an entry city to the retail market in China was that this is the Internet capital of China as the headquarter of Alibaba, Tmall, and many platforms. At that time, it was only Tmall and JD. From my previous experience, I knew that after several years, all these people in Tmall who feel the ceiling of their development would go out and create these small companies. This is exactly what happened in Silicon Valley. People meet each other at small cafes and decide on a new concept. Now we see that some online platforms in China are selling much more than Tmall.
Matthieu David: Interesting. You said that you began a bit with offline, and then the online landscape in China took over. Basically, most of it was offline before you began to sell online in China.
Igor Temirov: I immediately recruited the person to the communication etc. for selling online in China. Three or four years ago, people were asking me what the link between offline and selling online in China was. They thought these two were absolutely parallel worlds and not interconnected. Two years ago, it was finally set. There was absolutely a connection between offline and selling online in China. There were several reasons for how this happened. Now in China, if you go to the buyer of Auchan, Century, any chain and do your presentation, the first thing they do is to open your Tmall store and see the SKU of your products and how they are sold online in China in the last 30 days. If you want to push one SKU, which is your target, they say, “No. Just give me what is sell online in China well.” So, the online landscape in China, especially Tmall, became an absolute reference point for the sales of your product.
The second point is the pricing. You have to understand that China is a country where young Chinese consumers immediately compare prices. I went to Chengdu last week and saw people immediately go into Tmall and Taobao to check the prices for competitive products. You cannot make the stories and dream of pricing. It needs to be based on this reference to the online landscape in China. The second main point is that Jack Ma of Alibaba, Tencent, WeChat all started doing new retail in China offline because they realized that it is not enough to only sell online in China. People still need to touch and see things. That’s why there is a huge development of new retail in China right now, especially in Hangzhou, where stores are being created for what they call the new offline retail. They are trying to bring people into the stores, make it interactive, and also link online with offline. I went to Carrefour and Auchan last week. I could see “Please visit us online” everywhere on the shelf. What is happening in China, besides the development of the online landscape in China, is the traditional retail market in China like offline shops feeling that it is losing this game to online shops. To catch up, they just sit down and decide, “We have a great logistics, distribution centers, and stores. The main thing is the last-mile delivery in China.” Because the logistics and delivery service in China are working so well, they started this O2O, online to offline. People, especially Chinese young consumers, started to make their orders online. There is an application in AliPay and others as well. You can select stores on your phone in five kilometers from your office, stores, shops, restaurants, etc. By the time you come back home in one hour, everything will be waiting for you. That’s why, nowadays online to offline business is growing very rapidly.
If you ask me how to measure new retail in China, it is now a problem in China, because there are traditional
tools in the West like Nielsen Data, Euromonitor, Mintel and several big-name companies who are doing statistics of data on China. But the problem is that many of those platforms and new
apps were not existent until last year.
That’s why the big guys like Nielsen and Euromonitor are measuring or monitoring only Tmall and JD. This is not very small, but it’s a small part of the story because there are new players in the online landscape in China like Pinduoduo. Nobody in the West heard about Pinduoduo until last year. It was a cheap selling platform. It appeared only late last year. Now, it went public on the New York Stock Exchange.
This is the conclusion from this. Be prepared that the models of selling online in China that you were thinking will not work for the next three years. You need to be prepared that every six to nine months, there is something new and sexy appearing in the retail market in China because young Chinese consumers are very curious and always trying to find something new. You will have this huge movement from one platform to another. If you ask me how long these new models of selling online in China will last, I can tell you that you should probably expect 1-1½ years, because new guys will appear. We all remember the story of Kaola, a new and big platform. It got a lot of money. Everybody ran to Kaola for cosmetics and everything. It was a very important platform for us. But in the search for the new platforms, young Chinese consumers would easily migrate.
Another very important thing is that all big brands are talking about brand loyalty. But because we’re dealing with Chinese young consumers, by definition, because they are young and trying to investigate new things, they cannot have loyalty. When they become 30 or 40, they become loyal. But when they are young, especially from 18 to 25, they are trying different things.
Matthieu David: You have a remote worker in Chengdu for offline sales. You said that Chengdu is doing well. Why a specific region can do better than another one when you focus on selling online in China. Why isn’t it more balanced and similar from one province to another? Why is Chengdu doing better than Shanghai or Beijing in your case?
Igor Temirov: There is some logic in this because I tried
to analyze our sales. It’s very interesting
that in areas of the highest online sales like some in the south, we don’t have
so great sales
offline.
On the other side, in Chengdu, our online
sales are not so huge, but offline sales are very
good. In the areas in the East of China like Shanghai, Hangzhou, it is
balanced. If we analyze, there are several factors for this. The southern area is a difficult
environment offline because it developed first
in China. People, there are a little bit cut up, and
there is too much of everything in the stores. It is also a very tough environment for offline because
the listing fees are very high. There have been a lot of brands over the last
20, 30 years. So, you are not a new thing. But Chengdu is developed much later.
There is a lot of new money and are new Chinese
young consumers with the purchasing power because they are
not so much exposed to the Western brands that came to Chengdu a little
bit later. In general, they are much more open to new things than the
people in the West. They are much more open to new products.
Matthieu David: Are
there any other regions that are different from what you’ve mentioned?
Igor Temirov: If you ask me for my recommendations to enter the retail market in China, roughly, China is divided into four big regions, North, South, East, and West. I would definitely look at the East first, which is the area for Shanghai, Hangzhou, and up to 4-500 kilometers inside mainland China. Then I would look at the areas around Beijing and Tianjin in the North. I would definitely look at Chengdu and Chongqing in the West. I would even recommend some companies to start in the East but then go to the West immediately, because the Beijing area, in terms of the offline retail market in China, is a little bit specific area. In our case, there was some specificity because we had Northern China, which traditionally can take a lot of products from the northern border of Russia. Those areas were a little bit covered more or less.
Also, the purchasing power of people in the north is a little bit lower. The distribution of big offline chains and online sales are lower in the north. That’s why we put it a little bit at a later stage. We started in the East. You need to look at the concentration of population with the high purchasing power because all the offline stores were based on this principle.
The second factor why I did not select Guangzhou in the south as the entry point to the retail market in
China is because although it is a
big area with a lot of population, the North of Guangzhou is an area with a
lower purchasing power. If you need to send your salespeople to the headquarters
in Shanghai, you will spend all your money on flights.
The beauty of staying in Hangzhou is that we have people who come to the office at 8:30 am and do a 30-minute briefing. In 20 minutes, they could be at the train station, travel to their customers, spend time doing research of the stores, and talking to the distributors. They can get back to the office at 4 o’clock and have covered 500 kilometers. There is no country in the world with such great logistics. When you’re staying in Hangzhou, you can cover a lot of distance, like 50 minutes to Shanghai. If you look from a different logistic point of view, if you are in Shanghai, on the other side, you only have the sea. There is nothing. Nobody is there. So, you need to be a little bit inland of China.
Matthieu David: Interesting. In terms of distribution for offline stores and so on, could you tell us where you sell
or how many stores you have?
Igor Temirov: We entered 99% of all the top 10 retail chains
in the retail market in
China. We started Carrefour, RT-Mart, Sam’s. The only company that we were not working
with is Walmart, but
this a little bit different story.
Matthieu David: You are not coming to shops, for instance. You are not in a supermarket,
mainly hypermarkets.
Igor Temirov: No, in many provinces, there are small chains.
But if you consider Yonghui, for example, it’s a supermarket. It’s not a
hypermarket. We are definitely in Yonghui, Hema and many local,
regional chains that have 100 or 200 stores, but you’ve never heard about them.
That was another discovery for us. Besides these main national chains in the retail market in
China, you have a lot of these local
ones.
Matthieu David: In total, how many shops in China are you in? 500, 1000, or 2000?
Igor Temirov: It’s close to 13,000.
Matthieu David: How do youwork with all those retail stores in the retail market in
China? Do you have to supply them?
Do you take back the inventory that is not sold?
What kind of relationship and contact you have with them?
Igor Temirov: This is another big secret that I normally tell people. The offline model in China is absolutely 100% western type of
distribution. It is the hypermarkets, the distribution centers, the
buyers, promoters, distributors, shelves, and
promotions. To be honest, I worked in
many different countries. It is absolutely
this way. There are two things. The first thing is technical, which is to get
into the stores. It is absolutely technical. It’s a leap year. You have to make
certain payments and discuss commercial terms, etc. It’s the same everywhere in
the world. But the second part is marketing, and it is much more a scientific thing.
How do we do this? It depends on how fast you want to go. If you want to go slow and control everything, do your own direct discussions with buyers and sell directly. But it is slow and very expensive because you need to build up your distribution in the retail market in China. You need to build up your salespeople and promoters. Some people ask why you work with a distributor. Everything costs some money. Distributors have a very important and significant function, for example, distributing. They bring the goods directly to the stores. Salespeople visit these buyers of the stores on a daily basis. They have promoters. You need to ask yourself if you have these. If you don’t have these, try to build it, and you will learn that it is very expensive to do everything in-house.
The second major factor why you need to work with distributors is that it’s a very technical thing. Sometimes, a buyer of a certain chain cannot open a new contract for you, because they have limitations on how many customers or distributors they can have for a year. To open a new contract for them is a very big problem. They need to prove to their boss that you are unique and exciting. Don’t forget that for them, your product is a risk. To minimize this risk, they try to put you inside the existing contract with a distributor. For this, they don’t need to open new contracts for you. It happens almost immediately. Sometimes, we also had cases when one distributor is not selling well, and his or her portfolio is weak, the buyer adds him or her to their portfolio to raise his or her sales because their KPIs depends on the performance of the distributor.
The third reason is that everybody heard that there is a special relationship in China, Guanxi. It’s a special type of relationship based on money. It’s like people who are keeping a certain circle. I learned and told myself, “Don’t go to the negotiations.” Even if I speak Chinese with a big accent, language is a very big barrier for people to communicate, especially for trust. Trust is the main issue in China to sell online in China. I always tell people, “Try to imagine in your own country like in Russia. If a Russian salesperson comes with his boss who speaks bad Russian, you instinctively will trust the guy who speaks the language better more.”
How to control commercial terms is very easy. Your salespeople will meet with the buyer and will bring all the commercial terms to you. You’ll agree or not and ask your salesperson or manager to go back and try to negotiate again. There is another negotiation practice or tactic in China. If you are negotiating by yourself, you are the final negotiator. There’s no way to back up. But if you do it through your manager, you always have a second step before agreeing or not. You can think about it more quietly and think about counter-proposals.
Matthieu David: Working with distributors is a very
common topic that a lot of companies in the retail market in
China have
questions on. Do you have a master distributor
or different distributors? Do you have one per province or city? Is it based on
opportunity or organized through an administrative way like within a province? What’s your framework for
distribution in such a big country?
Igor Temirov: China is quite unique because, first of all, there are no power distributors in China. What I mean by power is that in many countries, you have one, two, or three distributors who are covering the whole country. China is so big that it is impossible to find one distributor because no distributor has so much money and resources to cover the whole of China. But when you are new in the retail market in China, you will find a lot of Chinese distributors who will tell you that they will do the whole of China for you. They will ask you to give them exclusivity. Normally, it is a very easy answer. You ask them, “How many stores are you covering?” In China, there are 600,000 stores. But not all of them can cover imported goods. This is one of the limitations that make us unable to sell in each store in China because certain stores do not have imported goods section. There are 90,000 stores that are selling imported goods in China. You just ask your distributor how many of these 90,000 stores they are covering in the 26 provinces of China.
The second thing you tell the distributors is that exclusivity is two-way
traffic. It’s not only one side. If we want to give you, we will tell you we need so many sales per
year. Can you deliver this? If no, thank you very much. Let’s now
concentrate and focus on your province, city, etc.
In reality, it is more distributed by a chain.
For example, Ole is a high-end supermarket in China. So, they
have North, South, and East. Yonghui also has different headquarters. It is mixed by area and sometimes by the chain.
But because our guy in Chengdu covers Auchan and Ole, he is covering the stores
in Chengdu. My recommendation is to have one or two distributors per major city in China. It is not enough if you
have only one distributor per province. If you are thinking about quality
coverage, you need to start thinking about one or two distributors per major city. Sometimes, different distributors
have a different relationship with a different chain. You can have a great distributor,
but he will never enter the chain. This is the same story with selling online in
China. You cannot find one
distributor who will do both JD and Tmall. It doesn’t work like that.
Matthieu David: Are you using a distributor as well for selling online in China?
Igor Temirov: There are three ways to sell online in
China. One is doing it yourself.
Sometimes, we do it ourselves. In China, there is also such a thing as a TP company. A
TP company normally doesn’t do any
marketing or invest any money. They only do customer service and contact the
buyer. But in many cases, you have to do all the logistics by yourself.
And there is a distributor. With a distributor, you can sign an agreement with him to give him the rights for your brand. He will do everything, including customer service, logistics, and marketing. He will spend his money on promotions, and everything depends on the module.
Matthieu David: I’d
like to know more about what you have tried in terms of platforms in the online landscape
in China. You talked about new platforms
like Pingduoduo, Tmall, and JD. You said Kaola was big then, but it’s not a big thing anymore. Where do
you sell online in
China, and what’s your perspective on the different platforms where you sell online in
China?
Igor Temirov: One big advice is to be very careful in selecting
these new platforms and tools while selling online in China because they are very expensive and not all of them are working. I can give you an
example. Four years ago, somebody approached us several times on TV shopping and said TV shopping was a big thing in
China. I know that TV shopping is a big thing in Korea. It is still one of the major channels, and this is unique. I worked in the US, and I know what is
TV shopping and all this type of business catalog. But when we looked
carefully into the audience and asked who they were. They said they were women
who cannot use or don’t use a computer. This
was not our key audience, because our audience
can work with a computer, a mobile phone, etc. Why would they buy on TV when
they can buy it online?
Next thing was these live streaming in China. There were live shows online on Taobao and many other platforms. I decided to look
at this thing by myself and was shocked by watching these people
talking. Because, first of all, what they are talking about is not interesting. It’s not entertainment and spending
one hour watching this? Life will be so congested, but you can do so many things in one hour. To me, when I look
at it, this looks like completely stupid. So, we just tried a little bit,
because Taobao invited us with a special offer. After two hours, we only sold
200 pieces. It was not working.
The next thing is KOL marketing in
China. This is probably the biggest thing. Out of all these marketing tools in the online landscape
in China, we sit down and analyze what
will be working in China and what will not work. It became clear to us. If you
look at Tmall, it’s so big that it is difficult for people to orient in this.
In these massive offers, goods, and everything, people need somebody who will
lead them. They will trust the opinion of other people instead of the
brands. They will trust the opinion of
these group, interest leaders. That’s why we sense that KOL marketing in
China will be of
key importance in China.
The second thing is video marketing. It’s not TikTok, but video as a main delivery tool of content. People don’t like to read so long, so they like to see a video instead. That’s why anything in the future dealing with a video will be important.
The third thing is what happened with
Pinduoduo. There are horizontal platforms in the online landscape
in China, like Tmall, JD, and Taobao. But because they are so big, people
will have certain interests. There will
be vertical platforms like Kaola, where people will group by
interests.
These are the three key things that you need to look into and analyze the online landscape in China. Everything here is the same as in the West except the online landscape in China.
Matthieu David: I went to your Tmall store when
you were talking about video. Indeed, you have a
video even for a toothpaste, which is not something you
wear or show to others. But still, you put a video of the product, the
packaging and actually the paste itself. What
you say about the video is that you put the video on the platform to showcase a
product. It’s not like live streaming or TikTok, which are purely entertaining.
It is for information delivery.
Talking about KOL marketing in China
and opinion leaders, it’s very interesting
that the online
landscape in China is so crowded that people need to get
guidance. Otherwise, they would not buy because they cannot only trust what the
brand is saying. On which platforms do you use KOL marketing in
China? Do you work with them on WeChat, Weibo, or
directly on XiaoHongshu or
on Tmall where they can also have their own
shop? How do you interact with them and with which platform?
Igor Temirov: To conclude all my advice and the key winning points of selling online in
China, you need to understand two things, how the online landscape
in China works and how KOL marketing in
China works. How the
model of KOL marketing in China works is absolutely the most critical thing for your success
in selling
online in China.
If you cannot figure out this, just
forget it, especially if you are importing goods. I am not talking about
Chinese goods. We spent almost four years trying to master the online landscape
in China and understand how KOL marketing in
China works because there are tens of thousands of KOLs in China. All of them will show you a huge
number of fans and followers. They will tell you incredible stories. You have
to filter all this and find what is working and what is not.
Four years ago, I was in Wuhan, and there was a big meeting between KOLs and the brand. We were sitting between each other, and the KOL said, “We need your money.” The brand said, “We need your fans. Please help us sell.” There was no communication. One of the reasons was that the KOLs were not talking in a business language that we expected them to say like “What is your return on investment? If I spend ¥1,000 or ¥100,000, how many sales will I get back?” This ROI is the key measurement for selling online in China. When they tell you, “We have so many viewers,” just forget about it. A lot of people can view it, but what is your return on investment? What is the conversion rate? You should measure all this and try to get the most from KOL marketing in China in terms of conversion rate because we are for business. We are about money, and they are about fans and publicity. We know that KOLs are making huge money.
There are four categories of KOLs. One is the huge stars
with 2-5 million followers. Second would be 600,000 to 800,000. The next one
will be 200,000 to 300,000 fans. The last one is the small ones with around
30,000 fans. The most important question is who you are working with. There is a natural war on how people
select KOLs. Because if you take 5 million, first of all, they are very expensive. But it’s not necessarily that young
Chinese consumers would trust them, because people
know that since they are so famous, it doesn’t matter for them to advertise anything.
The trust factor is very small for these
big guys.
On the extreme end, a KOL with 30,000 followers could be someone in the university, but his or her audience is so loyal that you can sell a lot through him or her. He or she will be much less expensive than the big guys. We found that for us, the best will be the KOLs in the 600,000 to 800,000 fans category. We are looking at their previous experience and brands they’ve worked with. We’ll go back and see how much sales they generated.
You asked about which platform we interact for KOL marketing in China. You have KOLs, and you can direct them immediately into the platform that you need. For example, we can select KOLs and direct them to only Tmall, or Jindong. This is really working. Don’t think that you will take one KOL and he or she will just spread everything. You will lose everything. You need to find the guy and keep the information and material content for this particular platform.
Matthieu David: How do you track the results of your KOL marketing in China? Because if you have different KOLs sending traffic and do your own marketing as well, how do you track that it’s coming from them?
Igor Temirov: First of all, you need to have very talented marketing people. We have a very talented marketing manager. It took us two to three managers to finally find a good one. We understand that she’s very good in that aspect. First of all, she is talking to the right agencies because mostly, KOLs belong to the agencies. You need to talk to these agencies and select them based on their previous performance, real fans and real campaigns, instead of inflated fans, so we can go back and check if it was really successful.
And then, of course, trial and error. I would say that 40% of success is your content because you generate the content and need to find what is interesting for young Chinese consumers.
Matthieu David: Would you mind sharing a successful
case of KOL
marketing in China with some numbers if possible?
Igor Temirov: In one case, we sold like
20,000 pieces of our product with KOL marketing in
China. The selection of a platform and
KOL was a very good one. That was the
best.
Matthieu David: When you say 20,000 products sold, was it because you offered a discount? We know that marketing online is very discount-driven. Are discounts still very important for KOL marketing in China?
Igor Temirov: Nothing practical works without discounts in China. In China, discount marketing is another big topic. Definitely, you need to have a special price promotion. We tried to do KOL marketing in China without price promotion, but it didn’t work. It’s a waste of money. So, yes, people are interested. If they all come to your platform and see the normal price, they just turn back. It doesn’t work. Don’t do this. It definitely needs to be very well-coordinated. Especially now, we need to start thinking that KOL marketing in China should be coordinated online and offline, because some buyers will say, “Now we see you are offering this. We also want this.” Try to think about this coordinated system.
Matthieu David: Talking about KOL marketing in China offline, I remember reading about P&G or another very big technology company. When they entered China, they relied on “Ayi,” a group of people who were in charge of a Tai Chi group in the morning. These “ayi” are their KOL, convincing around fifty to hundred senior people to do Tai Chi with them. That’s an offline KOL marketing in China, for instance. How would you currently describe offline KOL marketing in China?
Igor Temirov: In each area
with the human profession, there are more and more activities based on data. I
will give you an example of airplanes design. In older days, when people could not test and measure, they just put a
thicker metal so that it can hold. But nowadays, people can design something,
test, calculate, experiment, and then say, “Don’t do this. You can
reduce it two times.” It’s exactly
the same thing here. This is another recommendation
from what we did, and it really worked. It’s two ways. One is you are
empirical. You can sit and think when people are interested in toothpaste. When
it is Valentine’s Day, people are about flowers. You can empirically sense
that this is a good time. But the good news is that in China, you have data. With this
data, you can analyze the whole year and select the exact period when people start talking and
chatting more about toothpaste. We selected these particular periods for promotions.
Normally, we can do it with marketing agencies in China. They know how to do this and will analyze all social listening. When you do
the schedule for the whole year, try to do it based on this. Of course, there
are obvious things like 11/11, Chinese New Year, middle of the year, and June 18. But there’s
a big question. When do you do your promotion? During or
after or before? In our experience, the Chinese New Year is a big holiday, but
people mainly buy food for their relatives as gifts. Toothpaste is not a big
item during this period. You need to find
these windows, and this is where AI is working
very well.
Matthieu David: Because toothpaste seems to be an everyday product, I’m not expecting so much seasonality.
Igor Temirov: We found a couple of slots. One of them is very unexpected and enormous. Absolutely nothing was happening, and we found this particular slot. Also, there is a certain technique on how to work before 11/11. The last days are very hectic with a lot of advertising. Through analyzing your sales during 11/11, most of your sales are coming in the first hour. All these are preliminarily selected that are put in the basket items because during the first hour; they click just ‘Pay for this.” This gives you a very important message that you need to start doing it one month before 11/11. Don’t do it last week before. The best time to start doing it is three weeks before 11/11.
Matthieu David: How do you keep update with all of this information about distribution on your website? Is it by talking to people or reading?
Igor Temirov: You need to wake up at four o’clock in the morning and try to read a lot. A lot of things I’m reading are not just inside China, but also some of the analysis outside China.
The second thing is the experience. I worked in different countries and cultures. You need to understand what not to do. This is probably the most important because you will lose a lot of money if you do the wrong things. It is a very analytical role to have a 360-degree understanding of things in China. Get in touch. Listen to what is new and why. Also, analyze whether it’s working or not. Don’t rush into this.
Matthieu David: Thank you very much. I thought we
could have more time to talk about more topics, but
it was so intense and interesting that we
focused on SPLAT. We could have talked about other experiences you had in
China. Thank you very much. I hope you
enjoy the show.
Igor Temirov: Thank you very much, Matthew. It was a great
show, and it’s a very good tool. I think it’s very helpful
if you are thinking about China.
Matthieu David: Thank you very much. I hope you all enjoyed it. Talk to you soon. Bye.
Igor Temirov: Thank you. Bye-bye.
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.
Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions
