Francis Fukayama is most famous for writing ‘The End of History’ at a time when history was just re-starting but in 1995 he wrote another book called ´Trust’, which I think is more important. It describes how trust glues a country together and talks of China as a low-trust culture like Southern Italy, based on family units and with weak ambient-links between strangers; the opposite of Sweden or Norway.
For a lot of the country, that’s true. There is scant trust in China for anything, let alone corporations. They have a wealth of examples of companies exaggerating, embellishing and just plain lying to the public. Food scandals have led wealthier city-dwellers to feed their kids only imported milk powder if they can.
As a brand, how do you build trust when your audience have little understanding of the place from which you come; when they can’t read the labels on your products or your stories in the media? How do consumers notice you on e-commerce when Alibaba alone is growing its international portfolio to 40,000 brands by 2022?
When foreign brands take off in China, it’s built on a basic platform of consumer trust that they are what they say they are and that they treat their customers well. These beliefs are built of personal experience and recommendations far more than through traditional advertising.
Britain has a unique advantage against almost any other country when it comes to Chinese student numbers. In 2017/18, almost 107,000 Chinese students were studying in the UK. A huge number of them earn money as part-time Daigou – overseas buying agents for their friends and contacts. They source products that people have heard about and want to get hold of, often just visiting a local supermarket and then sending a parcel back home; but most importantly they find brands that they trust and recommend them on their Wechat social media accounts.
The Daigou channel has suffered some push-back lately as the government cracks down on the large syndicates that smuggle luxury goods in traveller’s luggage and clear Australian shelves of local milk-powder, but the part-time mail-delivery student-buying model continues to thrive. It’s a personal social media activity, selling to family and friends and taking payment in RMB. It operates largely under the radar and consumers pay import duty on the parcels they receive.
Consumers believe Daigou because it works as a pre-selection process and the audience has a personal connection to their buyer. It’s powerful and it acts to create a secondary market that is separate from the primary British audience. At their 2018 mainland China eCommerce launch, Boots revealed that the Boots Cucumber skincare brand was far more popular amongst Chinese consumers than with their everyday British audience. It had already succeeded before Boots launched in China and without commensurate acceptance from British consumers. There’s a reason that Boots was able to set up its own cross-border ecommerce store for China. Daigou have built the business for them.
Chinese students in the UK are our best brand ambassadors bar none. Tourists are our next resource. When brands such as Cambridge Satchel got hot in China eCommerce, it was because Daigou recommended them and tourists sought them out. They are looking for great products with clear USPs and credible stories – and we can build a market for them almost entirely through this channel if we want. The brands we build will be powerfully real and powerfully trusted.
Without this kind of loyalty, retailers will have a tough time in China. Tmall makes money encouraging retailers to join and then pay them for marketing. Macy’s and New Look have already closed their Tmall Global stores. The marketing costs far outweighs the benefits unless consumers already have a good reason to come to you.
For the Chinese, Brand Britain and The Brands of Britain are primarily the cumulative face-to-face experience of students and tourists in this country. We don’t manage them properly and we need to. Too many of our students and visitors live separate lives to our people. They live in cold flats and mix only with Chinese.
They attend class, do homework and go back for instant noodles. They test brands in supermarkets but never know the producers. For many, their view of Brand Britain is of commercial education, distant strangers on the street and well-developed retailers. With a bit of work, we can change that, bring them into the fold and achieve a huge amount more as a nation. I spent twenty-two years in China and was twice named as one of the country’s hundred most innovative marketeers. I’d like to do it. Would you?
By Leo Austin, a businessman based in the UK. He was previously CEO of China’s leading mainstream spirits brand and is now Senior Advisor to The Conference Board China Centre.