How China is building an Offer You Can’t Refuse – my interview with China keynote speaker Pascal Coppens
The ultimate convenience
One of the big differences between East and West is that the latter is a lot more siloed, with different companies, offering different things, via different interfaces. The Chinese, though, who immediately leapfrogged to mobile technology, have a much more integrated approach. For instance, they offer commerce in a social media context. These super apps, like WeChat are a perfect example of a “zero effort” approach, as you can order tickets, buy a dress, reserve and pay for a restaurant and many more thing without leaving the one interface. “Travel company Ctrip, too, offers an incredible variety of services all in the one interface of their app”, explained Pascal. “It’s not just about booking a hotel or a flight. You can arrange your visa there, manage tax reductions and lots of other useful stuff.”
Another fantastic example of integration driving convenience is how the insurance company ZhongAn and Ant Financial both teamed up with hospitals and insurance providers to use blockchain to simplify transactions for patients in hospitals. Normally you have to pay upfront onsite for a procedure. And then you will need to contact your insurance company, fill out some papers and go through quite an administrative hassle to get your money back, after about 10 days, if you’re lucky. But Ant Financial and ZhongAn have connected most insurance companies and most big city hospitals so that the insurance money is automatically deducted from their payments from the moment that they arrive at the hospital.
“Another fantastic example of integration fuelling convenience and personalization”, said Pascal “is how Burberry and Starbucks are creating ‘social retail’ or ‘social currency’ (not to be confused with social credit) in a hybrid store conceptwhich combines online shopping with traditional bricks-and-mortar retailing”. Basically, once they enter the store, customers are driven by a digital points system which monitors the customer’s activity and engagement with the Burberry brand through a customized WeChat mini-program. The latter also gives consumers the ability to view and share content, reserve a themed fitting room in the store, and unlock items that are available at purchase at Thomas’s Café (named after the brand’s founder).
Another zero effort meets personalization comes from Nike Fit, a technology that scans consumers’ feet and maps data points in their member profiles, helping them ensure a perfect fit when they are looking for apparel on the Nike website. During the pandemic, Nike also helped their customers who use its app stay fit with livestreamed workouts and workshops through the “Nike Experience”
Of course, the ultimate convenience is fuelled by data, lots of data. And if there is one thing that Chinese companies have, it’s the latter. It’s what allows DiDi, the Chinese ride sharing service to predict when and where the vast majority of its customers will need a ride, 15 minutes before the customers need the car so that it can make sure to be in the neighbourhood at the right time.
Partner in Life
According to Pascal, the biggest difference between China and the West here is the fact that there’s much more data available in China, which means that, by definition, companies have a lot more insights on their customer’s life journey. “They know more about everything that touches people’s hearts and dreams – including healthcare and education – than any other nation. And that is another effect of the Chinese players’ integrated approach: a lot of them don’t just offer one application, they’re in social, in retail, in mobility, etc. and these ecosystems are highly effective in understanding the entire life of customers, not just one facet.
Another important aspect here, in the ‘Partner in Life’ pillar of the OYCR, is that the Chinese are bigger dreamers than we are. Chinese people are a lot more positive than people in the West as their life has only improved over the past 30 years. And technology has helped companies to realize that. “That’s why I believe it’s much easier to become a Partner in Life from a Chinese society point of view: they have all these data points and Chinese are hopeful which offers so much opportunity.”
Pascal talked about how Ant Financial invests a lot of money and attention in inclusion. For instance, they help smaller companies, SMEs to get affordable loans and ways to trade with the rest of the world. It cares more about these people than most of the institutions in the West ever did. That’s because Western financial institutions, insurance companies or even hospitals – depending on which country you come from, but definitely in the U S – have always cared more about people who have money. “There’s a huge market for Chinese people who want to move up in life and need easy, accessible and affordable solutions and services for that purpose. The ecosystems of supper apps play a very important role here: they offer lifestyle apps that are not just about financial services, or social, or trading or buying and selling. They also help them pay utility bills, order movie tickets or even give something to charity. It’s about helping them organize their entire life.” WeChat and Alipay are the most popular ones, but many players like Meituan, Bytedance, Pinduoduo, Didi, Ctrip, Xiaomi and others follow that same ‘partner-in-life’ app model.
Another perfect example of companies helping people create better lives for themselves is the collaboration between Didi and BYD. BYD has a new EV model of car specifically designed for the car sharing business: the door on the left, for instance, cannot be opened because it’s dangerous to do so in a taxi, the space in the back is bigger and there’s more entertainment in the back, as well. BYD helps Didi drivers offer better services to their customers and make more money. On top of that, they created Didi Finance and work with Postal Savings Bank to offer a very affordable payment plan for drivers who ride for Didi, allowing them to pay back the car each month, like a lease. It is especially interesting for those shared drivers with an electrical vehicle, as they will be able to give that energy back to the grid. And so Didi is working with car brands, energy providers like State Grid, battery companies, rental and after service partners and financial institutions to make life better for people by aggregating all services on the Didi platform to anyone in order to lower the total cost of ownership for Didi drivers.
Another great example is that of JD.com and Alibaba who helped famers survive and even be more successful than before when coronavirus hit China. The farmers used to put packages of their fresh vegetables or flowers on trucks driving to a distributor who sold them to consumers or grocery stores. But during the pandemic, that was no longer possible. So China’s largest online retailers JD.com and Alibaba offered farmers to use JD Live and Taobao Live to talk to millions of consumers confined at home directly in exchange for a small commission. Both JD and Alibaba made the applications easier to use for farmers, helped them create an online shop and took care of distribution all the way to people’s homes. The farmers then started to daily stream live content for an hour or more about their crops or fruits, talking about their characteristics, how they were grown and cared for, how to preserve or prepare them. They even shared personal stories about their lives, the real people behind the produce.
Saving the World
According to Pascal, the big difference between Chinese companies and Western companies when it comes to fostering a Saving the World strategy is that the former is more driven by the government than by the consumer or the citizen. The government is very much invested in solving the problems of pollution and health and protecting the weaker in society. And the main reason is that they feel the direct impact of these problems a lot more than we over here in the west (except for maybe California and Australia). “If you can no longer go outdoors because the pollution is so bad, you have no other choice but to change the lifestyle.” And then the companies are the ones that are changing people’s behaviour by creating products and solutions that fit the ‘Saving the World’ narrative of the government. So the dynamic is very different, even though the result is the same.
Another difference between China and the West in the Saving the World pillar is that everything that’s related to saving the planet is much more related to ‘showing off’ over there. It has almost become a luxury to be environmental friendly while over here it’s much more about guilt. In China it’s for instance about eating healthier, organic, more expensive food. Or it’s about using better fabrics in a fashion. It’s not so much that they want to save the planet but that they want to show that they are part of saving the planet. It’s exactly the same from the side of the companies. “Most of their initiatives are created to score good points with the government, so that their initiative gets promoted and it helps their reputation. So here too, it’s not just about CSR or feeling guilty but it’s more about showing off. You might be cynical about that, but if the end result is just as good, it does not really matter, does it?”
A great illustration of that is how Ant Financial took the initiative to build the QR Corona contact tracing app in just a matter of weeks. They saw that 1 billion people had a huge problem and that they had better tools than the government to solve this problem. So they just went ahead and launched a contact tracing app in Hangzhou. After a month, it was fully operational and very accurate. And that’s when the government took it to 200 other cities in China.
Today, China has 60% of its population living in cities and in 15 years it will be 70%. As these people will need to live somewhere, companies are investing in new clean cities. Tencent, for instance, has unveiled plans for an almost “city of the future,” equivalent in size to Monaco, in the Chinese metropolis of Shenzhen. This “Net City” will be almost entirely car-free and will prioritize pedestrians, green spaces and self-driving vehicles.
Another great Saving the World example, in which a company uses gamification to stimulate its customers to act more sustainably is that of Alipay’s Ant Forest. This initiative on the company’s mobile app rewards its users with “green energy points” each time they take a step to reduce their emissions. That could be biking to work or buying more sustainable products. These green energy points then grow into a virtual tree on the user’s app, which Alipay then matches by planting a real tree or protecting a conservation area. By August 2019, 122 million trees were planted in China by Alipay Ant forest. On top of that, it also helped create around 400,000 job opportunities and 8.4 million dollars in income by working with farmers to plant trees, develop organic agricultural products, and connect them with e-commerce platforms.
So they are investing just as much as us in “Saving the World”, even though the dynamic and driving force for the part may be very different.