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crm players in China

Daxue Talks transcript #75: China’s digital transformation and CRM players

Find here Daxue Talks episode 75. In this episode, Aurelien Rigart, Vice President and partner at IT Consultis, discusses the CRM landscape and CRM players in China as a result of digital transformation.

Full transcript below:

Hello everyone, I’m Aurelien Rigart I’m the co-founder and Vice President of IT Consultis, I’m from France. I’ve been in China and started this adventure nine years ago. So, IT Consultis is a digital transformation company. It’s a team of 80 people in three countries, which are China, Singapore, and Vietnam. So, we’re helping Fortune 500 and fast scaling start-ups to work on their digital transformation. It can range from eCommerce, from building mini-programs, from building websites, App, integrating systems together, or overall work as a consultant on their digital transformation initiatives.

What are the main requests during and after the COVID-19 lockdown?

I mean what’s interesting is that a lot of people do believe that China is fully digitally transformed. They believe this because they see that there is a deep penetration – like the whole ecosystem, like the usage of WeChat, the Alipay, the JD and so on, but there is a big war right now on traffic ownership where basically brands are really struggling to at the same time survive and gathering the data of the users. So that’s why the concept of private traffic which has never been used in the past, suddenly came in 2019 where brands finally they did understand it – like the more money they were investing, basically they were having a negative revenue. So, they were losing money on any kind of growth that they were having. So, like you’re always looking for growth, I mean in this period of time you’re looking more to survive, but looking for growth – they didn’t understand that if basically they wanted to find other channels, they may need to go back to basically private traffic and private traffic was made easier with basically the WeChat and the mini program. Because – before we started the mini-program, you didn’t have that channel. Tomorrow you’re not going to bring everybody on the website – websites are still important but it’s hard to drive people on a website unless they are already a fan of your brand and they want to see oaky – this particular car, that particular car – so brands that are at a certain level should always have a website, but what really makes a difference is really the capability within a WeChat mini program ecosystem to have the API’s for brands to be represented and to have like the full ownership of their traffic and this has been the major, major change.

In early 2019, when we did an interview with you, you said that the keyword for 2019 would be ‘omnichannel.’ How does it look like for the first quarter of 2020?

Well I would say that – that’s interesting that you remind me of this – it is definitely Omni channel, it is definitely headless, I would say that the keyword for the end of 2019 was really private traffic, so there was like a little bit of a change between Omni channel, basically private traffic is kind of like englobing the entire ecosystem, the entire Omni channel ecosystem and what I believe is that yes – it’s going to push more and more in that direction. Brands are still going to go to TMall, brands are still going to grow on all those marketplaces and they should do it, they should as well make sure that they have good ownership and at least a specific percentage, maybe 10 – 30% of their users coming on their platforms, to make sure that they have like a deep connection, but at some point they get into a fight with the category manager of Alibaba, they just don’t drop their self to zero from one day to another – I think that’s something that we’ve seen over the past and so – Omni channel is still going to be here, private traffic is going to be important, O2O which was probably 3 or 4 years ago is still very relevant, so this is going to continue but the most important is really the digital transformation that we’ve seen that is being operated and what’s interesting is that B2B is really leading the charge right now and there’s a lot of B2B brands in some very specific industrial ecosystem that are largely investing, they’re working through distributors and the problem is that they’re entering a Chinese market where – okay there are the products that are dropped, containers here – and then of course they’re doing all the marketing, they’re doing all the branding, but then comes the black box where they’re going to have one distributor, second layer of distributor and then they have the Alibaba ecosystem and basically those two are kind of like black boxes. So, trying to make sense of what the users wants, how they can adapt their strategy, their pricing points and how there can be some loyalty program and some deeper connection with the users and with their fans and that’s something we’ve never seen in the past and that’s something where we see a lot of players are really investing into that particular area and they need to find ways to create those connections because they’re not made easy. So there’s not like a magic formula where you’re going to say – hey, all of a sudden I’m a distributor, I’m a brand here and I want to target somebody that is here that is going through five layers of ownership and I have the opportunity to reach this person. So, there is no magical solution here, there’s no magic potion to make it up. So, it’s a laborious and really step by step approach using CRM, marketing automation, content, frictionless user experience, it can be app – it can be mini programs, there is many, many ways to do it, overall I’m using and leveraging as well distributors as well is something that is important, but that’s really what we see as a huge opportunity when it comes to the digital in 2020.

In the West, we see that CRM companies like Salesforce or Zoho have been able to expand massively and be titans in their industry. What CRM players are big in China?

First of all, we need to remember that it seems that we’re going to have Salesforce coming to china supposing July 2021, so of course, if things are not moving forward politically or with the virus – we never know when things are really going to happen so I think it is safe to say that those big players are going to come to China at some point, but China has not to wait to create their own ecosystem and you get a lot of start-ups that have been backed up by both Alibaba and Tencent, one of them is Xiaoshouyi which is like a CRM that is backed up by Tencent that is working pretty well, then you’ve got a few ones that are backed up by Alibaba. So, each of them is supporting their ecosystems together and kind of like blocking the other one from their own ecosystem. So, I think it’s something that is interesting and I’m very curious to see because Salesforce has a partnership with Alibaba and so they have announced already that they’re going to launch in summer 2021. So I’m very curious about how this partnership is going to influence basically the opportunity for Tencent and the mini-program to connect with this because we’ve seen over the past that they’re tried to silo those ecosystems, so I think there’s going to be a very interesting conversation, but clearly, there’s a lot of b2b players in the market that are very strong, but as well I know a lot of brands that are using salesforce globally that are just waiting for one thing that when the sales force is coming here, then we’re going to use potentially salesforce commerce and sales force here in China to replicate what they have done globally and to make things easier in terms of maintenance, in terms of programming and so on.

So, I think 2021 is going to be an interesting year to see if companies will want to resist and continue leveraging using what they’ve been developing for years or if they will say okay – let’s follow what global is saying and we’ve seen of course in China a lot of resistance. You don’t actually have the full ownership of the strategy and the governance of the country for those brands, so I think it’s going to be very interesting.

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