Find here the full transcript of China paradigm episode 12. Learn more about Jenny Chen’s story in China and find all the details and additional links below.
Matthieu David: Today, I’m with Jenny Chen from WalkTheChat for this new episode of our China Podcast, China Paradigm. Jenny is the co-founder of WalkTheChat. I interviewed a couple of months ago Thomas Graziani, the other co-founder of WalkTheChat, and now we have Jenny on our China business podcast. Your Chinese name is Tingyi Chen; you have started WalkTheChat with Thomas. I think it was like four years ago, three years ago, like four years ago.
You began as a digital agency, then you switched to a product and at the time I interviewed Thomas, you were both working more on the product, so cross border e-commerce solution, and then I feel that you moved back to, someway, an agency model with products. There only was one product, you launched another product with analysis of Daigou, and I don’t think you modified the app but you see leverage in terms of users, in terms of visibility and that’s a very, very interesting model. You have an agency, you have a product, and now you feel that that’s the dream of every agency, to both be able to do what they have been doing for some time, the agencies, the marketing and at the same time, creating a product. I’d like to talk with you in this talk about how you started a business in China, how you met with Thomas Graziani, how you built the product and the agency.
We already covered with Thomas a bit last time, he was like nearly a year ago, so that would be very interesting and then to talk about digital ecosystem in China, which has changed so fast. Your blog is one of the most respected blogs, the most seen blog on the digital industry in China. I know it has been shared by Chinese people in international companies and it’s in English, so I feel like that’s such a success, so the content is so good, I would like to share — you can share with us a bit more on how you build this your content strategy on Wechat as well, so your perspective on the Chinese e-commerce and social media landscape in China. Thanks, Jenny, for being with us in this China vlog.
Jenny Chen: Thanks for having me here.
Matthieu David: So we’re about the start, how did you start with Thomas? Could you tell us how you met? I’m always very interested in how a Chinese and a foreigner can meet together, start a business in China. So, I was correct? Like four years?
Jenny Chen: Yes, it’s four years almost. So we met actually a bit earlier than that, and it was doing a bar camp, which is kind of an idea-sharing conference where you go up and then talk for ten minutes and take questions. At the time, I had been working with a big chapter building company, for three years, and I was working in the accounting department, and I was getting tired of it, and I wanted to start a business for myself. I went to this conference, and Thomas was sharing about five mistakes that you should not make starting a business a China, and this just sounds like something that — someone I could talk with to get some things started for real.
And then I tracked him down in LinkedIn and emailed him, and then he started to be my start-up mentor, and I started my own project. The first one is a tea subscription company, and then the second is private dining company, which invites people to a chef’s home to eat. And then, post project failed but then I decided to join the company because Thomas just started WalkTheChat and it’s an interesting idea and I guess I joined mostly because it’s Thomas, less of an idea, because WeChat tried with just starting to have menus and the more complicated back then he has this vision that there’s a lot of opportunity in the customization of the menu, in the technical development and of course in the part where the overseas companies come into China and the marketing strategy on social media in China is something that they can leverage to start something from scratch. It’s not because of that because I don’t see that at the moment, but it’s also because Thomas, as a person, he is smart, obviously, he is one of the smartest people I know and also because he cares about things in general, not just about what’s being right and what’s being wrong.
I remember he showed videos about him, like a professor talking about why people should not eat meat, and he actually takes actions to help the people in South Africa, by donating — like, not just by saying things or just going to one volunteer event, but he actually donated money, so he’s someone who cares, and that’s, I think, very important, as a founder.
Matthieu David: So he built trust with you, basically, by the personality and how he was behaving in his own life, and you trusted him on the business side then to join him on what was beginning — WalkTheChat, I see.
Jenny Chen: Yes.
Matthieu David: I see, interesting. So, four years ago, you began as an agency and sometime after you built a product, am I correct?
Jenny Chen: Yes, we built a product. We always wanted to build a product since the beginning, even though we were an agency, we were trying to look for a model to basically — to find the best product to build and all the customization projects that we talked, was some of the larger companies, such as NFL and Nestle. Then we found there’s a lot of SME who want to enter China but they don’t have the platform to enable them to start an e-commerce store and we realized it’s a demand and it could be something that is more of a general demand, so we built this product for a lot of our clients to use and to be able to sell in China via Wechat, and then it evolved on that.
I think we focused on purely SAAS model for around two years, and it’s not until this year, the beginning of this year, we started to really focus on not only the product. The product is still something that’s a core advantage of the WalkTheChat because we can support technically, like to actually get started, but it’s also — We realized that just having a platform for them, just having a WeChat visual account, just having a WeChat store, it’s not going to bring any traffic to the business and a lot of the companies, a lot of the clients we worked with, they need a lot more support than just the technical support and then, this is when we decided to step back into the agency model and to really focus on the very high-quality clients to help them to do not only the content but also the marketing strategy on social media in China that is to say do the promotion, the campaigns, day to day operation. And this is when we really saw the sales gross of the client to help them to succeed.
Matthieu David: I see. A lot of I didn’t see as trying to build a CRM, social CRM — I feel your software has been more focus on e-commerce, cross border e-commerce platform at the beginning, software product. Why you came to a conclusion to create this specific software, cross border e-commerce, and not like a social CRM that’s what most other agencies try to do actually when they try to build a product.
Jenny Chen: Actually, we also have a CRM platform internally, and we use it for some of the larger clients. We realized that e-commerce is something you need to get started, it’s step one to enter the Chinese market in terms of sales and then CRM is something that once you have enough following for the profiles, 1,000 followers or more, then you can start using the CRM to do retargeting and especially with the data from the e-commerce, you can do retargeting, you can do a lot more complex retargeting based on the data that you get from e-commerce. So we started with e-commerce because it’s something that can really solve the problem of the client, which is getting started in China and the market. For example, our KOL campaign and to actually sell their product and to see how the market reacts.
Matthieu David: I see, so it’s more than interest then, you want a product from a new market entrance in the Chinese market. I see, I see. Both of you — None of you, sorry, are tech developers. You are not tech developers initially; you are not a developer, Thomas was not a developer, how has it been to create a product, create a web agency, create an agency, create the network, create a market agency in a digital space, in a digital agency? I understand if you are not a developer, you can still do it, but you created a product, it’s something very different. How do you manage a site that you don’t have a developing background, in order to hire developers in other, to manage the software, and to manage clients? I mean, how do you work on this?
Jenny Chen: That’s a good question. I try to learn about the technical aspects of WeChat, for example, WeChat API and what it’s possible on WeChat and helps with talking with the client and understand what they need and what is that we can help them. In terms of –Thomas is more the guy who takes a step of learning the front end language by himself, and he actually takes the step to learn the language, and he turned to code in terms.
So he took the leadership role in terms of technology and management. We’ve been incredibly lucky with hiring our programmers, and it’s a bit from our personal network and so far, once we have this momentum and it’s much easier to hire people since we have this WeChat official account and we have a community of people who cares about WeChat. In general, hiring it’s always difficult, and it’s something we are trying to figure out by hosting more events and by trying out different platforms. We are still trying to figure out that.
Matthieu David: I guess especially in Beijing, we have all those Chinese tech giants, which are hiring some developers. I think I would not be easy to hire them, to hire programmers. Talking about agencies and your positioning, can you tell us about how you position yourself? I know you are famous for your content strategy on Wechat and also you have a very big reach in terms of your blog, you get quotage, you get visibility. Could you tell us how you position the agency compared to other agencies, some of the agencies, in China and working in the Chinese social media landscape? How do you position WalkTheChat?
Jenny Chen: Okay, sure. How we position the content? So because we are a B2B agency and our clients is someone who is interested in doing business in China. So we have the mind and to create content that is useful for our audience, so when we think about what kind of content to put out in the blog, we usually think about what is the news in the tech, especially in the social media landscape in China and social e-commerce related news.
So the business owner of companies who is interested in the Chinese market and the digital ecosystem in China is this something that they are interested in and will this be helpful for them, and it’s something they will share on the blog. So this is how we decide what kind of content do we put out.
Matthieu David: Yeah, to share on blogs, to share on WeChat, do you have a magic formula on how to share WeChat? To have an effective content strategy on Wechat? I’m sure you have thought about it.
Jenny Chen: If you have to categorize what is a magic formula, I guess what I really care about when writing an article is first, the title. This is something that people see even before they click into your account, so the title — And you can’t put everything in your title because the phone screen is just so small so you have to just convey your idea with the first maybe, if it’s in English it’s maybe first six words, so that people know what this is about and create interest for them. And then, also, the cover picture is very important; it’s something that can trigger people to click.
Especially now that we try triangles as formats, if you are a subscription account and if people star you, then the cover picture is going to be larger, and this stands out a lot, so you really need to customize your cover picture so that no matter what kind of phone and what kind of format you see and if it’s a square or it’s a mobile rectangle cover picture, we want to make sure to optimize that so that to maximize the clicks through rate. And then, once people are in your article, we try to make sense because people’s attention on the mobile phone is very short. Sometimes they see your article when they’re walking in a subway, so you want to catch their attention.
We always summarize our articles in the first paragraph, usually in bullet points, so if people want, they can get the information in 10 seconds, the most important information. And then, in the body of the article, we usually put a lot of pictures because it catches people’s attention so that it’s much easier to view articles with, for example, graphs. We do a lot of graphs to data analysis, so we use more pictures and graphs, this makes it easier to read. And you want to have an active call. It depends on what kind of content you put out; if it’s a campaign, you always want to design a very clear like a user pass so people can read your article and you need to define what you want them to do. Is click into your WeChat mini-program shop? Is it follow your official account? Is it share on your moment and to join a lucky draw? So you want to have a very, very clear user pass so that people can do exactly what you want them to do to maximize their conversion rates.
In terms of content, for B2B, of course, we try to be as educational and useful as possible, but even for our clients, which is usually B2C business, we still have them — You need to have like at least 60% of content that is very, very focused on educational or useful content, so that people — and you don’t need to put any branding in it because once, as soon as you put a product or branding, it just kills the ratio rate, so you can have just branding and building brand awareness content to… For example, if you are a closing company, you can write about what is the fashion trend of this autumn and how you can dress up with some new product and just don’t sell the product as an end. And this can really help the user find value in your article, even if they don’t have any intention to buy and it’s maximizing the re-share rate.
Matthieu David: I see. You’re talking about the content you create and your content strategy on Wechat. As an agency, WalkTheChat, how do you differentiate from the competition, in terms of value proposition, as an agency?
Jenny Chen: We are — in terms of the things we write, we are very, very analytical and we are very data-driven, so that’s one of the — and we always tell them… We are very, very transparent. Thomas has the saying of an open kimono, so you can — we even write articles about where we get all the source of information. So, for me, myself, I follow a bunch, between 10 to 20 official accounts in Chinese that talk about tech news and digital ecosystem in China.
Usually, the Chinese news is a lot faster than the translated ones, and there are a lot more in details, so this is where we can get the newest information and then we also have the first mover advantage because we are the first official account to talk about WeChat marketing and only about WeChat marketing. So we already have a huge follow-up base, so this helps a lot to keep growing based on that.
Matthieu David: I see, I see. You talked a bit about your clients, which are many B2C. You are specialized, but you don’t only do WeChat, you’re also managing Weibo you’re also managing other platforms. Could you tell us about the social media landscape in China currently? Weibo was created nearly 10 years ago, WeChat is a bit more recent, but you know how to leverage social media in China like new players like Pinduoduo, Toutiao, you have live streaming platforms.
How do you articulate all those platforms and could you share some cases about how you articulated those platforms? If you do. Or maybe you would say that particularly WeChat is so popular with close to one billion users that you don’t need the other platforms? I would be very interested in your opinion on this question of marketing strategy on social media in China.
Jenny Chen: Yeah, that’s a good question, and it also has a complicated answer because it depends on the product and the category. For us, we work a lot with fashion and cosmetics, lifestyle consumer like fast-moving consumer goods, so for these products, usually if you have to choose one platform, of course, it’s WeChat, because this is where people spend most of their time using their phone, but if they have somewhere, I would say about 5,000 USD budget in terms of social media and Wechat marketing, we would then recommend weibo as a second platform to join, just because weibo is a lot cheaper in terms of user acquisition and it has a lot of follower for KOLs, and I’d say it’s also cheaper with the content and it’s very good with the engagements.
So sometimes we use both Weibo and WeChat, Weibo more being a user acquisition Channel and then use the kind of — lead the follower to follow weibo to WeChat as a traffic generation for WeChat because conversion rate on WeChat is a lot higher. So that is weibo if the company has enough budget, we definitely recommend — And of course, it also depends on their brand, for sure.
Then, for the other platform, we can start with Pinduoduo. So Pinduoduo is a platform where it is very, very social-based e-commerce and they’re very selective in terms of what kind of products they want to — what kind of brands they want to put on their platform because they have a huge user base. It’s very hard to get on to it, especially for newer foreign overseas brands, but once you are on it, the traffic is quite high. So far we haven’t worked much with Pinduoduo, except for doing analysis and doing this on a consulting basis.
If your brand is large enough and it’s a consumer brand, then it’s a platform to consider and then the — I think you mentioned Douyin as well, right? So Douyin is a short video platform that is very, very popular among our first, second-tier city, it’s a younger generation, and it’s a very good platform to leverage new UGCs, user-generated content. If your brand is well-recognized among the Chinese consumer, so if you already have the brand recognition then haveing a marketing strategy on Douyin is a very good platform to encourage people to create their own content related with the brand and that you join like a marketing campaign. So the best product that you can sell on Douyin is for example movies, music, which is created by KOL and it already has a huge following. So the KOL, I mean it’s actors, the celebrities are creating the artwork and they could…
Matthieu David: May I focus on marketing strategy on Douyin? You said that you could convert from Douyin. On which platform do you convert? Do you go on Douyin, you have an e-commerce platform that you have to move to another platform like Tmall to WeChat. How does it work?
Jenny Chen: So Douyin today, generally speaking, you cannot put any e-commerce conversion link, so it purely for brand awareness and brand building and this is why it’s only limited to larger brands. It is, however, changing so as your marketing strategy on Douyin. Last year, it did a test to put with only the top Douyin KOLs, you can put the Taobao link directly buy after seeing live streaming with the KOL and then I think it’s two weeks ago, so we also put a mini-program link. So it is possible…
Matthieu David: WeChat mini program
Jenny Chen: We tried a new program to WeChat shop, to sell in China via Wechat. I think today it only appears to accounts so it is still an early stage that they’re testing it, but it’s something that you can see is coming like it’s a trend, easier to link with Taobao or WeChat mini program, depending on I think, I guess the size of the KOL. So today it’s not open to everyone yet. Douyin belongs to the larger parent company Toutiao, and Toutiao is the independent from both Alibaba’s influence and Tencent’s influence, so it’s interesting to see and it’s quite strong, it’s like almost the second biggest social media content generation company in China, so it’s an interesting thing to see which actions they will take or as they’re going to even create an e-commerce platform on their own, to serve all this traffic.
Matthieu David: Do you see some successful cases of Douyin from companies, because I see a lot of user-generated content, but have you seen companies managing their campaigns successfully and also, a sub-questions is what is the business model of Douyin? How does it make money?
Jenny Chen: Okay, interesting. So for successful case studies, besides the movies and the music, some of the companies that is really well on marketing strategies on Douyin is, for example, the hot pot companies, the hot pot chain, Haidilao and what they did is they — so they are a hot pot company that is famous for their service that they can provide all the ingredients so you can put into a hot pot so you think they kind of encourage people to create different recipes for the restaurant and people try to find hidden menus so they combine different ingredients and they make something very absurd or something very interesting that other people also want to try, so this is a very good case study because it’s something that really encourages the user to create content on their own and it’s very easy for users to just creating content like that.
And then, another company is also food-related, it’s Coco, is a milk tea company from Taiwan and what they did is they also created a very special menu to make some milk tea in a very special — it’s like when you’re going to Starbucks and you have your favorite drink order, and for this milk tea company is they encourage you to create your own milk tea that is very absurd and maybe with a lot of bubble tea, like the bubbles, something like that, so people get excited and they start to share it a lot on Douyin. They have a very interesting marketing strategy on Douyin yes.
Matthieu David: How does it work? Is it a competition? How does it work? It is a competition like Coco and the hot pot company, they create their own content, and it’s the content created is shared, or they push people to create content, and then they get reward competition and technically speaking, they can get rewarded, they share, users share, could you explain a bit about the back story? They create content then it’s shared, so it’s centralized, a centralized model or they push their basis to create content to share and in some way, but I don’t know how they would reward them. Would you elaborate a bit more on this?
Jenny Chen: So this is very much driven by KOL s on Douyin, because Douyin is something like — KOLs in China have a lot of traffic and these companies they would go to a lot of KOLS, a couple hundred and ask them to create very, very, like high-quality content using some brand-related like materials, and then they use a hashtag to kind of have this topic on Douyin, so that people would feel curious, and they will click into this. So, so far, like when you share, then there’s a reward, so it’s not a very clear reward system, but today is very much driven by the KOL traffic.
Matthieu David: I see. Do you use Douyin on a daily basis? Do you feel useful entertaining? Why do people go on Douyin? Purely for entertainment or also to learn and think, what do you feel the use of Douyin?
Jenny Chen: What I understand, I don’t use Douyin myself, but what I understand from talking with young people is that it is very easy to spend a lot of time because the whole app is designed to keep you inside the app without leaving it but giving you endless content and the content is made in a very specific way that will keep people interested, so I know Douyin has a very strong content creation team to guide and to guide the user to make the content in a specific way so that it looks cool, there’s a very cool music effect, so that it could be interested in the younger generation in the top tier cities and because the whole app’s design, so you can just keep swiping and I know people spend hours or even spend overnight using this app and it’s interesting to see as a lot of people trying to delete the app because they just spend too much time, but a lot of times they usually download it again, after a certain period, so it’s kind of like how you get addicted to drugs.
Matthieu David: Exactly, I feel it’s an addiction because people don’t search for information, it’s a lot of push actually, it’s not a search, I see. Interesting. In terms of platforms that you mentioned Douyin, Pinduoduo, Toutiao which is a news app, very famous for the algorithm created, we have seen a new player beyond JD.com and Alibaba, and you wrote an article, I don’t know if it’s yourself, about JD.com and Alibaba on Double Eleven and generally speaking about JD and Alibaba is getting better and better in the landscape of e-commerce and also the social media landscape in China through quality, through services, through having a buying product and then reselling and marketplace only compared to tier one, which is a very light asset model, that’s what you wrote in the article, which was a very interesting article. How do you feel about the new platform like Xiaohongshu? How do you differentiate them? First question.
And secondly, we saw that in cross border e-commerce was Double Eleven, one of the best selling items was sportswear and I feel, as I understand, that KOLs in China played a big role in sportswear, do you feel that Xiaohongshu changed a game on this aspect and what’s your take on the new platform? Youdan and Xiaohongshu, for instance?
Jenny Chen: Sure, yeah, it’s very interesting to work in this space because there are new platforms coming almost every month. How do I feel about each platform? It really depends on the brand itself, so it’s not — every platform has its own users, are user-based, and they are usually very specific, and they are very good in promoting maybe one category.
So, for example, Xiaohongshu it’s very good for promoting fashion related, female-focused like some product that looks like. For example, cosmetics are the biggest category and then also the sportswear is also quite big on Xiaohongshu as well, and it is very, very focused on cross border e-commerce. It is a platform that the brand does need to have some initial recognition for having a good campaign on Xiaohongshu because just like Douyin, on Xiaohongshu you cannot put a conversion link, so it is more difficult for a brand that doesn’t have, for example, Taobao which is the first platform people still think about when they think about buying something.
So if you don’t have the — if you are not listed in the major marketplace, such as JD and Taobao then running a campaign on Xiaohongshu, people wouldn’t know where to find your product, even if they are interested in it because usually the conversion part is — you hire a KOL in China, the KOL writes like a review article about how their user experience is with using your product and then people would go out from Xiaohongshu and go to either Tmall, Taobao or whatever e-commerce platform they first think of and to search for this product.
So if your product is not listed on the marketplace, you are losing a lot of very good traffic, so for Xiaohongsh, it’s very good, it’s very good for like the product that works well with the KOLs, that is female-targeted, but then listen on Xiaohongshu because , there are two layers: one is Xiaohongshu is like just a social media platform where people share their like, their user experience of a product and so you can leverage the KOL on this to promote the campaign; and then, the second layer is Xiaohongshu also has its own e-commerce, platforms who sell various products just — It’s something that brands could consider to join this, but without investment into the key opinion leaders to promote your product, it’s very hard to get traffic on Xiaohongshu, even if you’re just listed on there. This is the case for most of the platforms, including like JD, Tmall and even WeChat, so you do need to find a source to generate traffic in order to succeed.
Matthieu David: To elaborate a little more on Xiaohongshu, which is a recent e-commerce comer to the game. What is business model linked to JD and Tmall that don’t take commissions? I know Tmall commission is about 6% to 10% given to Alibaba. What’s the business model of Xiaohongshu?
Jenny Chen: So they also have their own e-commerce platform, and they also take a commission based on that, so this is just like Tmall but with social media like aspect to it, because it started as a blog to review all the cosmetics products and this is where together initial user base and they expand on that.
Matthieu David: I see. So, I misunderstood when you were saying that there’s no link on JD.com from Xiaohongshu you have a lower conversion rate, but you still have a conversion rate on Xiaohongshu, right?
Jenny Chen: Yes. If your product is listed on Xiaohongshu, but then for the smaller brands, say you cannot list it on Xiaohongshu because you need to get an invitation and you need to pass the process with the Xiaohongshu team.
Matthieu David: Okay. So talking about Xiaohongshu, what other platforms that we consider? We talked a lot about Youzhan on WeChat, what do you think about those platforms? Do we see conversion rates? I mean, high conversion rates if it’s very used? And also, we saw some grants leaving Tmall and Alibaba ecosystem because they didn’t want to share that, they didn’t want Alibaba to retarget on their customer’s competitors and to move on WeChat. I feel those sell in China via WeChat more carefully, especially for the use of those data. So what do you think about this platform and why grants would do on this platform?
Jenny Chen: Sure, yeah. That is the biggest WeChat shop platform in China, so a lot of the companies use it to generate their retail shop and this is — I think this goes back to the race of how people’s awareness changes, seeing WeChat more like a social media platform but more as e-commerce, a place where people can find the brand directly and to make a purchase directly on WeChat.
So this goes back to the whole social commerce trend which is happening in China and very fast, in the past three years. We definitely see more brands interested in going B2C directly. A lot of brands, they come to us, and they are used to only sell via distributors on Tmall, and they more and more want to take back control to directly, so to the users. Especially that you can generate brand awareness, you can get them for user data, and — I think, on a platform level, WeChat, they would not share your user information with another… your competitor and I guess this touches a bit about how the advertising works on each platform, I guess for JD and Tmall, advertising is very centralized, controlled by the platform on its own and the most it’s either by banner ads or the key search words and they use a lot of the data from the brand to target the consumer’s product for them, for example.
On WeChat, it’s less about a specific competitor, because you don’t have this option to target a very specific competitor. Instead, you are targeting only the user behavior, and today it’s not very, very accurate, in terms of what you can customize, in terms of the targeting, but you cannot do like a, for example, cart re-targeting, you don’t have like a pixel, like in Facebook where you can retarget the visits from your website. There’s a lot of limitation in terms of advertising today.
Matthieu David: Yeah, I feel so frustrated actually that WeChat has developed such a pool of powerful tool like Facebook. I mean, the targeting tool to target audiences on Facebook where you have to Look Alike, you have targeted audience, you can target precise ages, precise interest on Facebook and WeChat has the same data, maybe even more because they are linked to mobile phones from the very beginning, and you cannot target very well. How can you target on a campaign on gender, on cities? Do you have interest now or not yet?
Jenny Chen: We get a lot of interest in terms of they want to place ads on WeChat, to develop a real marketing strategy on social media in China, but the first thing with our clients, it’s not a sophisticated platform such as Google or Facebook, so it’s the quality of the users that are generated from those campaigns are likely to be lower, much lower than if you generate like a follower from a key opinion leader campaign, which is very, very targeted. And because of the limitation, we usually only encourage the brand to only use it for — like if you want to get started and you want to have enough number, meet a KPI or just getting started from ground zero, it’s a good tool to generate enough followers to meet your target, to just get started.
Or if you just want — some of the larger brands, like car brands, they want to have like more of a brand awareness campaign, then WeChat moment is very good because it has the video and it has the H5 landing page so that people can — you can guide people through entering user information, but in terms of the preciseness, it’s — I actually work with — I gave a lot of feedback to the WeChat marketing and advertising team, and they say are aware of the difference between them and Facebook, and they’re constantly referring to Facebook to trying to improve the platform and I think Tencent, as a larger company, where they make most of their revenue is from games, like the games, and this is — I guess that is partly why they are reluctant to optimize advertising to really like monetize advertising more, because today they still benefit a lot from games. But since this year it’s starting to see signs of slowing down, so maybe the next year they would focus more on monetization with building a much more sophisticated system for the advertising platform.
Matthieu David: Yeah, on the other hand, Facebook was scary at some point, you can target exactly the followers as the people who are like your competitors, it’s so precise though, it’s a bit scary. I feel it is changing a little bit, try to be less obvious. You’re talking about KOL in China so actually because of the tool of advertising on WeChat is not very precise, it’s also very, very expensive because not precise it means you need to pour a lot of money into t because your target is very large so you cannot appreciate the target. You go through KOL. How do you target KOL? How do you identify them? How did you work with them? Is there a systematized way of working with them? Is there a ranking? How do you work with them?
Jenny Chen: Yeah, we — So there’s a lot of ranking platform, it’s like a search engine platform for KOLs on different platforms, and the one we use most is called New Rank, and I think this is the biggest like a search engine for the KOLs in China. It gives you by putting into a keyword, for example, industry or like your product name, you can see the ranking of the KOL related to that keyword. So it’s a very good base to start your KOL search, but then it’s also a very hideous job to identify what is the best quality KOL because there’s a lot of fake reads in the social media landscape in China, so you really need to dig into the data, into it is a content match with a view number, is a view number and it’s the right proportion with the likes, is there enough comments to see the right user engagement level and there is a comment, is a real comment or it is a fake? And what’s the quality?
And before we worked with a KOL, we sometimes also ask two things: one is the screenshot of the backhand to see for them in the back-end the re-share rate of the article. Is it reasonable where is the user usually reading from? And this you can see like the content is well or not, based on the proportion. And second, we also look at other brands, as we work with. So if the brand is like similar to a brand that we want to do and then we ask for case studies, like what is the conversion number and sometimes it’s hard to get this information because they try to — if it’s a very good KOLs it would be transparent, and they can tell you exact number for campaigns that they did with the link, and we can see it’s a very good sign. If the KOL refuses to reveal any of this information, we would question the realness for the data.
Matthieu David: I see. Interesting. You were talking about KOL in China, what do you think to KOL it has so — not only, but live streaming. Live streaming has been based on KOL, live streaming should — and then selling to Taobao, and I guess Weibo also try to leverage live streaming in China. Could you tell us more about how live streaming in China is currently doing? We saw a lot of hype on it, like one or two years ago, it is still the thing to do when you are in e-commerce to try to do social e-commerce through live streaming and is the thing to do when you have a shop in China to reach to more people? Do you see still good cases or the hype has disappeared?
Jenny Chen: That’s a good question. So live streaming in China is kind of like cooling down as an industry overall, compared with like one year ago, and it depends on your product and which platform you are in. So, for example, WeChat on its own, it doesn’t have the live streaming feature so you can’t really start a live streaming on WeChat and then convert into sales, but then if it’s on Taobao or Weibo or Xiaohongshu they have this live streaming feature, and if you work with a KOL that has a lot of following and it keeps doing this kind of live streaming interaction then it’s possible and it’s quite still a very quite powerful tool, because you see the product, you see the celebrity that’s recommending this and then you have buy button, directly there.
So I think it really depends on who you are working with, as a KOL, and what is your brand. Are you listed on the right platform to really analyze it is the right direction to go?
Matthieu David: When you say Xiaohongshu has a live streaming platform, I mean, service, does it mean that when in the backend you can open the live streaming if you are a seller or a KOL on Xiaohongshu and it’s opening the live streaming platform, or it’s another software you plug in on Xiaohongshu, it’s another app that you use, and you live stream through Xiaohongshu. Is it embedded?
Jenny Chen: It is embedded, like if the platform has this live streaming option, then it is embedded and…
Matthieu David: So Xiaohongshu is embedded.
Jenny Chen: I need to double check that.
Matthieu David: Ok. But most of them are embedded.
Jenny Chen: Yes, yes.
Matthieu David: I see, I see. We were talking about live streaming in China and how it was the hype, like one year ago, now we talk a lot about AI, it’s a lot of voice recognition as well. Do you see something happening? Like gadgets, still have the emphasis in terms of voice recognition with Xiaomi, Baidu, Tencent as well? So far, what I’ve seen is a lot linked to music, or it’s a lot linked to as a use of some devices, devices of Xiaomi, linked to a device with voice recognition. I’ve not used one of Baidu yet, but do you see some real use of voice recognition in China in daily life and especially for e-commerce?
Jenny Chen: It’s a good question. Where do I see voice recognition in China? I guess, on the one hand, people are more willing to talk to a phone because like it’s a whole user habit of WeChat, like you talk to the app, but then, on the other hand, I feel people use voice recognition, the built-in assistant on the phone a lot less, compared with like some Western countries where people use Siri a lot. But, on the other hand, there’s a lot of AI speakers where you can talk to and can be connected to the devices in your home.
So it’s interesting to see how voice recognition in China will play out in e-commerce. I know there are some creative tasks, try to use voice recognition. So, for example, one of our copywriters, they did a campaign for a water company and this water, the idea is you drink this water, it can help you to bring you back to youth and they hire this company to build basically a machine to measure the laughs, so you have to laugh as hard as you — like, laugh harder and this will collect the laughs and then like it generated how much younger you are becoming. So, as I said, it’s creative ideas that are created like around voice recognition, but it’s still quite an early stage in terms of like actually using these campaigns.
Matthieu David: Yeah, because I don’t feel people buy through voice recognition in China. The battle of Alexa from Amazon was that people would buy from Alexa and so far it has been disappointing, people don’t buy through Alexa, don’t buy by talking to the machine, to the speaker but still buy on the phone, desktop, mobile, tablet. China is basically not advanced on the use of voice recognition in e-commerce yet, as far as I understand. Okay. Voice recognition, talking to the phone to send a message, that’s a good transition to an article you wrote about the app bullet Messenger.
So it was a very interesting article you wrote, saying that most people dislike receiving messages on WeChat through voice, actually. I read them very late. I tell people I don’t like them. How do they do now voice Messenger, it had very interesting features, it seemed to solve this issue, it seemed to be — your opinion to be the slack of China, maybe more professional, more used is the proficient word. How is it doing now?
Jenny Chen: Well, nobody even mentions it again. Is that a thing with China? Like if something can go really popular, has millions of users, just because the people who create it it’s someone that’s famous in that industry and people follows it and then it becomes hype for like the first month, and then they’re kind of dying out.
Matthieu David: Is dying out?
Jenny Chen: It is. No one around me is using it anymore. I think, at some point, people are using it to share illegal content, the censored content that you cannot share on WeChat and then because it’s still a new platform, so you can share a lot more information, so people use it to create groups and to share those like maybe sexual content or other things.
Matthieu David: Okay, so not a good feature, I see. Interesting. So how many millions of users?
Jenny Chen: I’m not sure, let me…
Matthieu David: It was one of the fastest growths, right?
Jenny Chen: It was, yeah. I remember the title was like it’s going to kill WeChat at some point. If it keeps growing at the rate, it was growing, but I think today it’s not. So it’s like it has five million registered users on the 11th day of its launch and had got to 150 million RMB funding on the seventh day, so it was…. yeah.
Matthieu David: Wow, it’s dying out. Last part of the talk, I like to talk about Double 11. Today is 19th; Double Eleven was eight days ago. Double Eleven, 2018. How was it this year? You wrote an article before, I think, Double Eleven, you wrote an article after. I read both of them. You compared JD.com and Tmall, JD.com was actually giving the numbers a bit earlier than Alibaba and with a different way of calculating. You also — and that’s what I would like to focus on, analyze some key examples and some key ways of leveraging Double 11. To summarize some of the aspects you found out, sell coupons.
So you sell a coupon at 1 RMB which gave access. You sell a coupon, which is something that the west doesn’t understand, you sell a coupon, and then it gives you access to 20, 30, 100 RMB discount on Double 11. You can preorder, of course, this is the easy way, you can preorder like two weeks before, from 1st of November, as I understood. You’ll correct me if I’m wrong, but I try to summarize your article, I tried to memorize, and you also have games. People play games, sharing and they get what we call in China red envelope where they would get some discount, right? Red envelope being a bit of cash or discount or coupon as well they can reuse after what could win one-day Double Eleven or actually it could be a bit more complicated in this, I guess. And you also mentioned the management of scarcity, I think it’s Dyson you took the case of Dyson which launched a product weeks before Double 11, only 2,000 units every day, making the product rare and then available with discounts so creating a lot of weight of the scarcity so it’s supposed the clients would actually queue, digitally queue to buy them. Would you have examples of companies which successfully used Double 11?
Jenny Chen: Yeah, it seems like — Some data just came out several days ago and this year there is a lot of company that is on the, I think, 10 billion sales figure for the Double 11.
Matthieu David: Double 11. One company, 10 billion RMB sales.
Jenny Chen: Yes, their total — I’m sorry, it’s one billion. One billion, sorry, yeah, yeah, yeah. It’s one billion, and there are a total of eight brands, and there are Apple, Xiaomi, Huawei, Midea, Haier, Nike, Adidas, and Uniqlo.
Matthieu David: One billion in 150 million US one day.
Jenny Chen: Yes, exactly. And a total of 277 brands which has more 100 million RMB in sells in Double Eleven, which is a lot more than last year. Last year is only 167 brands, so it seems like the platform it’s kind of consolidating around larger brands and a lot of — like all those names that we heard, these brands are already established within the Chinese market.
Matthieu David: Yeah, you talk about Apple. I was surprised to see Apple because I don’t see Apple making discounts. How does it do on Double 11? What does it do on Double 11?
Jenny Chen: I’m not sure. I’m sure they must do some kind of discount, but maybe on the older model. I think you don’t see Apple run advertising in any other countries, but in China, they have to do it, the same with discounts. Maybe not a newer model, but maybe in like the older ones.
Matthieu David: What I liked in your article that you used some example like Three Squirrels, a food company which did well on Double 11, well on Pinduoduo. I can’t remember if I’m mixing the articles, but you had a couple of Dyson which did well in the prelaunch. Would you have another example in mind you really admire, and you get inspiration from?
Jenny Chen: That’s a good question. I don’t have any — I follow brands and then — Let me think.
Matthieu David: The example of the Three Squirrels was interesting. I don’t know if you were the writer of the article which was on your blog. It’s a food company, and I think it’s the same as on Pinduoduo, which was offered for free, but this example was interesting. Then you had Dyson on your blog that I find inspiring.
Jenny Chen: I follow a lot of brands on WeChat and they are very much KOL based so when it comes to Double 11, like they would launch special campaign to encourage the users to make purchase after — Like, even myself, like I don’t drink wine but then there’s an account that I follow, and after reading like five minutes into the article, it really builds up the demand, like the emotion ‘I have to buy it now’ and then I bought a couple of wines. So these are a lot of examples with, for example, the WeChat KOLs, they are very very good at building the emotion, the scarcity and then you have to do something like right now, otherwise you are going to miss either the coupon or the promotion, so it’s all about a bigger build up in the impulse purchase.
Matthieu David: Yeah, China really is a country for this kind of marketing and Wechat marketing, you have all this KOL, micro influencers you can leverage. The last word is about an article I just want to mention was very interesting. I read very little about this e-book in China, and you wrote an article saying that actually it’s increasing, it’s growing, it’s big in China and I guess the country that people read most should be China, the highest number of sales in books and so on should be China and e-books, I guess, would be the biggest market in the world and the way to monetize also shows innovation of China.
The Chinese ecosystem can be innovative, not buying the books but pushing for some games or sharing in a very Chinese way of being very social. Thank you very much for writing all those articles, they are very informative, and every time there is one, I guess you’re educating a lot of the community around the digital ecosystem in China Thanks, Jenny. I hope you enjoyed this episode of China Paradigm, the China vlog, where we interview entrepreneurs in China. Thanks for the time, and I hope everyone enjoyed the talk as well.
Jenny Chen: Thanks a lot for having me in China Paradigm!
Matthieu David: Thanks. Goodbye.
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.
