The following is an English translation of the interview originally published on Jiemian.com.
The original article can be viewed here.
In recent years, several Chinese brands have started to explore the overseas market. Brands like Huawei, Lenovo and Tencent have all reported some impressive achievements abroad, but usually depend on advertising agencies to build their brands in the foreign market. We recently interviewed Miles Young, Worldwide Chairman of Ogilvy & Mather. In exploring the globalization of Chinese brands, he also spoke on the influence of the Internet on advertisers.
With the Chinese name Yang Minghao, Miles Young is currently Worldwide Chairman and CEO of Ogilvy & Mather (he became Worldwide CEO in 2009 and Worldwide Chairman in 2012). Since joining Ogilvy & Mather22 years ago, he has served as CEO of Ogilvy & Mather Asia-Pacific and representative of WPP Group. In addition to his post with Ogilvy & Mather, he is also Consulting Committee Member of School of Journalism and Communication of Tsinghua University, Economic Consultant at Jiangsu Provincial People’s Government and Guest Professor at Xiamen University.
Jiemian.com: What problems or challenges pose obstacles for Chinese brands in their mission to conquer the global market?
Miles Young: For Chinese brands, the biggest challenge is to create a brand capable of stimulating the purchasing desire of foreign consumers. A brand’s success in China doesn’t necessarily mean success in other countries.
To make this goal attainable, their first task is to conduct market research and learn about the wants of foreign consumers. As far as I am aware, Chinese companies are unwilling to invest in market research, believing it is costly. In contrast, the companies from Western countries prefer to invest heavily in market research. Before they access a new market, for instance, Africa, they will organize intensive market research on local consumers and then on comparable domestic products. According to statistics from Kantar Group, the world’s largest market research company, market research in the Asia-Pacific Region incurred a total cost of 5.998 billion dollars, but North America and Europe spent about three times as much. In the eyes of foreign consumers, many Chinese brands are not sensitive enough to their habits and preferences, and design products and promote brands that do not address their concerns.
The second barrier to Chinese brands in securing their presence in the overseas market is cultural sensitivity. For example, some Chinese enterprises promote their brands with 100% good will in Africa, but ignore the local tribal culture. As a result, their huge investments eventually generate the opposite effect. For instance, the international news page of the New York Times once reported that Beiqi Foton Motor Co., Ltd. had failed in its effort to build a plant in Maharashtra, India. Some media may be biased when reporting news on China, but this news shows that the site located by the Chinese company was a sacred site in India. In my view, this is because Chinese companies rarely take cultural factors into account in their domestic operations. The business schools of China care more about the development of “hard” skills in enterprises management, but care little about the “soft” ability like cross-cultural economic activity. Companies in Western countries became involved in global trade many years ago. Their economic exchanges with different regions and races caused their cultural “soft” ability to get deeply rooted in blood. I think, the next development phase in the global market for Chinese enterprises is to shift from the advantage of quantity in product transactions to that of a brand with “soft ability” in order to earn the love and trust of foreign consumers and then achieve sustainable growth.
Jiemian.com: What do you think of the performance of Chinese brands at the international market? Have Chinese consumers also been a catalyst in this process?
Miles Young: Chinese consumers are becoming more mature and have higher and more diverse demands for products. In an objective sense, this has encouraged Chinese brands to continue increasing the quality and availability of their products and bringing them closer to the international standard. Chinese consumers’ increasing demands are helping “Made in China” to cast off its image of low price and low quality and instead, begin assuming a quality-oriented position.
But brand improvement doesn’t happen to different sectors in a balanced way. The most competitive sector for Chinese brands now is personal consumer electronics. At the International Consumer Electronics Show (CES), which concluded not long ago, Chinese brands did an impressive job. Auto manufacturing is another industry in which Chinese brands have started to showcase their merit, but there’s still some way to go before they become world leading brands. Chinese brands in other sectors have only just started to become aware of the importance of branding.
Jiemian.com: Are you optimistic about BAT’s development abroad?
Miles Young: Yes, I’m optimistic about BAT’s efforts to explore the overseas market. Thanks to its powerful innovation, BAT has outperformed their US counterparts, and can offer highly competitive products for customers. Take Tencent’s WeChat for example. WeChat can meet nearly all of our demands in terms of daily life and social interaction. It has become an integral part of our lives. It even has more functions than Facebook, Twitter and other social media in the Western world. Recently, I’ve noticed WeChat’s vigorous growth in South Africa because its integrated functional experience is something unique.
China is recently talking much about “One Belt, One Road.”In terms of this strategy, I think the digitalized connection is the crucial link. It’s more than a road in a geographic sense – it’s a digital one as well. As an Internet company, BAT can play a significant role in this process.
Jiemian.com: The strong growth of the Internet has had considerable impact on the advertising industry. In recent years, there have been many up and coming advertisers with the social media marketing mentality. In your opinion, how will these companies affect the traditional advertisers like Ogilvy & Mather?
Miles Young: I think the influence would be very limited. What needs to be said is that there’s never been “digitalized creativity,” only creativity. Today, all communications must be digitalized, hence the so-called “digitalized creativity” is just jargon to me. What digitalization does change or what Internet companies are good at, is the way in which an idea are presented, but not the idea itself. In the end, customers want one “BIG IDEA,” which transcends the limitations of media and is communicated across diverse forms of media. These big ideas can only be the products of companies that regard creativity as their supreme principle, like Ogilvy & Mather. To date, there’s no sign that Internet operators with big data or social media companies can offer these kinds of big ideas for their customers.
Jiemian.com: Right now, many big companies have started to build their own creative marketing teams. Will this become a growing trend? What do you think of this?
Miles Young: I don’t think the advertising industry would be affected as a result. First, HR isn’t put into full use. Internal creative teams would incur a fixed HR cost, but this cost doesn’t change when the market demand for creativity rises or falls. Next, this organizational framework is unlikely to attract the first-class talents. Outstanding talents prefer diversity. They love to do many different things at the same time, for example, serve four to five companies or sectors simultaneously. This practice contributes to their professional and personal development. Some may argue that the internal creative teams have deeper understanding of their own brands, but satisfactory creativity is impossible without good talent.
Google and Facebook have started to engage talents from 4A industry and establish their own creative departments. Due to their small size, we have not seen these departments produce any grand ideas. The mere exception to me is Apple. Apple has a richly staffed creative team, but they often use external teams to generate the big ideas.
South Korea is the only exception, where large groups have a large variety of companies, even including their own advertising agencies. Their brand promotion campaigns are exclusively conducted by these agencies, but this model is difficult to promote elsewhere.
The establishment of internal creative teams is, in essence, contradicting the “outsourcing” management philosophy in the modern enterprise management practice. Why do it yourself? This means you’ll have fewer choices.
I think that advertising professionals in the new era should be more like news reporters. They don’t merely produce ads – they produce content as well. Ogilvy & Mather has begun recruiting news reporters for our creative department. We need talented individuals who know how to create news surveys, design storyline, prepare detailed articles, produce long rather than short content, tell stories and narrate events. Media professionals are content producers. Future advertising professionals must get proficient at this.