Fallon Brainfood: Dragon (China) Rising

15 February, 2007
::Brainfood::
Dragon Rising

Copyright ©2007 Fallon Worldwide. All rights reserved.

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Thanks for coming. So, let’s talk about China.

Dragon Rising: The New China

Changing cultural and economic landscape.
The role of government in today’s China.
Business and the booming consumer market.
A cultural evolution.

A company that’s doing it right.

What could it mean for you?


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“The world has never seen such a sudden
and sustained rise of an economy that
was so desperately poor just three
decades ago.”
Brian Bremner
BusinessWeek: Why Taming the Dragon is Tricky


Everyday, we read about the incredible story that
is China but without a clear understanding of
how it affects our lives.
As a global company, it’s a topic that’s more relevant than ever.


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And with the 2008 Olympics being described
as China’s “coming out” party, the buzz
will only increase.
The event will be the most profitable in Olympic history—
over $1 billion in revenue from local sponsorships.


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Source: International Olympic Committee Statistics

The nation’s growth has been staggering in
recent years, sometimes beyond comprehension.

Annual economic growth rate over the past 25 years: +9%.

Urban population: 2001-2006 annual income growth +9%.

Economy will become 2nd largest market in the world this year.

More than 660 cities: 49 have +1 million people.


Sources: The Economist
Money Management Feb 2007
AdMap China Supplement Feb 2007
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It’s a complex nation, full of contradictions and
constantly changing market dynamics.



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At the core of everything is the people. Their
culture, values, aspirations and ambitions are
dramatically shifting, and understanding them
is key in figuring out how we fit in.


The role of government in today’s China.

Business and the booming consumer market.

A cultural evolution.


Chinese consumers are finally seeing their
country taken seriously on the global stage.

Aspire to be political, business, and cultural trendsetters.
And they know the world is watching.


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We’re witnessing the rise in national desire
to be a country led by innovation,
not just manufacturing.
Leading the charge in areas such as stem cell research and the
exploration of space.
By 2050, they seek to be the global leader in science.


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People are optimistic about the future, and see
their government as a positive force.


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Source: Pew Research Global Attitudes Project July 2007

While getting softer, the realities of a communist
government often impede growing cravings for
freedom and creative expression.


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But despite some ugly realities, Chinese people
today have a government more open to
Western style consumption than ever.



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While the future will be led by business and
consumer culture in cities like Shanghai, people
across the country are following the trends.


“Marketers who ignore the pent-up demand
of 1.3 billion emerging consumers
spending more than $700 billion
do so at their own peril.”
Noreen O’Leary
AdWeek China Series


Brands are being redefined through a unique
cultural lens.

In many ways still new to a consumption culture, people are seeking
out brands that align with their aspirations.

U.S. China

Cheap, quick Status, “face”


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An unprecedented level of freedom is spurring
real world business training and education.

Border restrictions continue to loosen, benefiting all of us.
6.8 million Chinese traveled to Hong Kong in 2006.
80 million Visas were granted to residents previously
unable to visit Hong Kong.
Influx into China as well: 2nd biggest tourist spot by 2010,
world’s premier destination (will pass France) by 2020.


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At the heart of this is the emergence of a culture
that is fueled by its aspirations for success.

The auto industry is a particularly telling example.
Fastest growing auto market in the world.
Number of cars sold grew 22% in 2007 (8.8 million sold).


Source: AdWeek China Series 2007
People’s Daily Feb 2007 30

“Consumer psychology is hierarchal here.
Brands are markers in this
ambitious society.”
Tom Doctoroff
JWT


Years of association with “cheap” and “fake” has
lead to a craving for authenticity.


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We’re witnessing the rise of a middle class
starved for branded consumption.

Current urban population with significant discretionary spending
power is estimated to be around 125 million people.
Projected to grow to 650 million by 2015.


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Source: AdWeek China series

And the wealth of this group is expected to grow
at astronomical rates.


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Source: AdWeek China series

Status brands are the new badge of honor, and in
many ways have created new lifestyles.


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It’s indicative of a broad cultural shift: a historically
thrifty populace now eager to spend their cash.


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Source: AdMap China Supplement Feb 2007


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Driven by curiosity (and ability) to explore the
world beyond China, they’ve rapidly adopted
technology and new media.
More than 135 million Chinese are online.
43% use message boards.
76% are on video sharing.
24% are active bloggers.

400 million mobile phone users (compared to US: 250 million).


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Source: CIC Data


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Nearly 80% of Chinese Web sites have some form of bulletin
board system.

Daily page views across boards: 1.6 billion (10 million new
posts published every day).

45% of Chinese people who use bulletin boards spend 3-8

hours per day.

47% of users have bought products directly through a
bulletin board.

Source: iResearch Consulting Group 2007 42

In such a short period of time, they’ve more or
less caught up with the developed world in the
media they choose to engage with.

Social Networking Professional Networks

Online Video


Source: China Internet Network Information Center Jan 2008 43

Young people in particular have leapfrogged
technology adoption at incredible rates.

In a survey of 15-21 year olds…

China (Shanghai) U.S.
Used IM Yesterday 91% 59%

Engaged with Virtual Worlds 64% 22%

Watched TV yesterday 19% 68%

Read magazines 81% 20%


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Source: Harris Interactive China YouthPulse 2007

The flip side to this amazing story is that,
for much of China, this is all still a dot
on the horizon.


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But the tides are shifting.



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To help put what we’ve talked about today into
context, let’s look at a company that’s shown it
knows how to engage people in China.



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What implications may arise for us?


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An incredibly complex and diverse nation of
people demands a China strategy just as intricate.


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We’re seeing a generation of entrepreneurial and
creative minds redefining what it means to be a
Chinese company.


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The emerging young and affluent are poised
to define China’s global future.


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And developing a deeper understanding of this
new generation is critical for our own future.


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“To be successful in China, businesses need
to stop lusting after the billions, and take
time to understand the one.”
Sandy Thompson, Head of Planning (Asia)—Saatchi & Saatchi
Author: “One in A Billion—Xploring the New China”


Check the blog and keep the conversation going:
http://fallontrendpoint.blogspot.com

QQ Coins
eBay
Dragon Rising
Google China Co-Created Customization Eco-Friendly
Avatar Brands Pollution Environmentalism
P&G
Made in China Black Gold
Telecom Chery
Asia Globalization Authenticity
Brandz Chinese culture Instant Message

China
SMS Starbucks 3D Messaging
More Chinese
Going Local
Middle Class Little Emperor General Motors Virtual Worlds
Materialism Automotive Early Adopter
Broadband

Guanxi Tier Cities
New World Order Communism
Superpower Income Divide Playdo Virtual Life
Brand Evangelists Connections
Consumerism
Plan for Action Community
Plannerliness Futurist
Brainfood Thought Leadership Agency Culture
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Watch for next month’s invite to Brainfood.


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