INNOVATION FACTORY

INNOVATION FACTORY: CHINA’S DIGITAL PLAYBOOK FOR GLOBAL BRANDS​

The criticism of China used to be that it was good at manufacturing but not at innovating. It has now proven those critics wrong. On top of that, some of its companies have developed cutting edge management approaches. We look at what’s behind China’s digital transformation, its unique e-commerce to see what Western brands can learn from China.

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WHAT'S INSIDE

In this book you’ll learn:

  • How China got to its current stage of digital transformation
  • How Chinese brands optimize e-commerce and digital marketing
  • What highly effective management approaches Chinese companies have used to ramp up profit and turn around failing enterprises

 

Here’s an excerpt to give you a taste.

In earlier stages of our digital evolution, the expression “online to offline (O2O)” emerged to describe a strategy that leads potential customers from online channels to make purchases in physical stores. 

In an omnichannel world, not only must businesses have an online presence that can draw customers to offline locations, but also offline locations that can draw customers online. These two entities must be aligned and intertwined in new ways. The phrase for this kind of interaction is online merge offline (OMO.

This might mean getting access to online discounts or privileges as a reward for visiting physical stores, experiencing product or service VR or AR simulations at store locations, being able to buy things online from an apparel retailer and pick up your package at a convenience store near your home or online customer service representatives at physical stores who can help with online order issues providing an in-person and digital service experience.

Pop-up Stores

It also includes pop-up stores. Pop-ups are suitable for almost any brand, especially direct to consumer (DTC) online-only brands. They’re a chance for your existing and new consumers to touch, feel, see, smell or taste your products in a fun, exciting environment. They can be as simple or complex as your budget allows so whether you’re a multi-brand retailer, SME, DTC or hybrid business, pop-up stores should be an instrumental part of your overall business growth strategy.

Brands use pop-up stores in China as powerful tools to boost brand awareness, offer samples, provide coupons, give free gifts, collect data and feedback and increase e-commerce and in-store sales. Here are some best practices from China when it comes to pop-up stores.

Location, Location, Location

Location is key when it comes to pop-up stores. Choose a spot that’s easily accessible and has high foot traffic, such as a shopping mall or a busy commercial street. Also consider the location’s proximity to popular tourist attractions and transportation hubs.

Create an Immersive Brand Experience 

To make a lasting impression on consumers, create an immersive brand experience that engages all the senses. Use interactive displays, experiential marketing, and unique brand messaging to create a memorable experience for consumers.

Offer Exclusive Discounts and Promotions 

One way to drive traffic to your pop-up store and increase sales is by offering exclusive discounts and promotions to customers. For example, offer a limited-time discount on products or provide customers with a coupon that they can redeem online or in-store.

Give Product Samples

Consumers are particularly receptive to product sampling. Use your pop-up store to offer free samples of your products to customers. Provide them with easily accessible product information and use QR codes and forms to capture their real time feedback.

Collect Customer Data 

Use your pop-up store as an opportunity to collect customer data, such as email addresses and phone numbers, or to connect on social media. This can be used for future marketing campaigns and to build a loyal customer base.

Integrate With E-commerce and Offline Retail Channels 

To maximize the impact of your pop-up store, integrate it with your e-commerce and retail channels. For example, provide customers with a QR code that they can scan to access your online store or offer discounts for customers who make a purchase at your pop-up store and later visit one of your retail stores.

Gamify Things to Increase Enjoyment and Interaction

To increase interest, enjoyment and engagement, gamify your pop-up. Have customers complete tasks at the pop-up to get clues or codes for a specially designed online game. Have a photo treasure hunt. Have a room designed for an AR game where visitors can solve puzzles to win prizes. Have a physical challenge for customers to complete for a branded badge. 

Link the games as much as possible with your brand and products. For example, a sneaker brand coud have a “Make your own keychain” area. Each person gets a keychain to keep with a stuffed fabric mini version of the brand’s new shoe in white. They can use provided supplies like markers and decals to color and decorate it. Then staff takes a photo and enters it into the database for people to vote on their favorite. The chosen version will be made by the brand with the winner getting free merchandise. 

QUOTES FROM THE BOOK

“Successful Chinese startups prioritize adaptability, quick production, and deep investment in influencer marketing while overseas brands often opt for a more organic strategy, risking missed growth and copycat challenges.”

Tingyi (Jenny) Chen, Co-founder of Walk the Chat

“In past decades the trend was for China to copy the West. Looking at today’s market, however, it seems that China has leapfrogged the USA across various digital platforms, such as super apps like WeChat, and certainly social commerce.

Moreover, around 90% of audiences in China aged 35 now get their sports content via digital platforms such as Tencent Sports and Douyin, while in the USA, digital viewership is rising fast, but linear TV channels are still the go-to platform for major sports like the NFL, NBA, and so on.”

Mark Fischer, Managing Director Fischer Sports & Entertainment Asia, Former SVP & Managing Director at NBA China

“Social new retail, combining social media, e-commerce and offline retail provides seamless consumer experiences and growth opportunities for retailers. As AI progresses, it will further improve the social new retail experience in China.”

Sandrine Zerbib, Founder & Chairwoman of Full Jet & President of Baozun Brand Management

FAQ

China is still a major manufacturing centre but there are supply chain changes afoot as a result of issues that were brought to light in the wake of Covid and China’s strict, prolonged Covid policies.

It isn’t known for many modern innovations that resulted in brand new technology being developed (0 to 1 innovation) but it’s well known for refining already existing technology (1 to n innovation). Being able to create new things and to hone them once they exist are both necessary to stay competitive in a challenging economic environment. More than anything, what we learn from China’s new corporate structures and leadership paradigms is that it’s important not to rest on the laurels of what has worked in the past and revisit all aspects of a work environment.

The key is to look at the thinking behind what companies have done and, if it’s something that applies to your market or there’s scope for improvement, see how you can apply it in a way that makes sense for you, your area and your business. For example, China is known for its 12 and 24 hour marathon sales livestreams. If you don’t think this will fly in your location, modify it to make it fit. You might try a 2 hour livestream sales event for a special occasion like Black Friday or before Christmas.

This is often the time when innovation isn’t an option – it’s a requirement that will enable your business to stay afloat and stand out from the pack. Great business innovation is usually about putting the customer at the heart of your business. Even in turbulent times, customers still have particular requirements and if your brand can serve the ones that no one else understands or can serve well, you will be sitting pretty. If your customers have disappeared, then innovation in the form of a creative pivot is what’s needed.

Definitely. We have a chapter about this and how it’s good to learn from each other in the book.

Although those might be elements of innovation for some companies, true innovation is about much more than just these 2 elements. It’s about intense customer-centricity, it’s about using solutions that are authentic to your brand and much more. 

For example, a brand that is known for its fine handcrafted leather products would not hold the same place in its clients’ hearts if it were to design a robot to do this job and publicize how they were replacing their skilled workers with machines. However, that same company conducting a special livestream for its members allowing them to see one of their artisans at work would be innovating in a way that fits their brand.

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