Malcolm Wild, chief technology officer, Possible APAC

Early on in its digital life, the Chinese market liked to copy. It took its working models from other more mature companies, such as PayPal and eBay. More recently, it is developing in radically new ways, many of which are unique and invisible to brands without experience in the country. Examples include mobile malls, widespread micropayments, and bridges between physical and digital.

You might think that makes China a glimpse of the future for the rest of us, and to a degree it does, but not in the way you’d expect. The reason is that successful technology platforms tend to reflect the culture for which they were designed. American e-commerce companies, for example, struggle in Latin America, largely because it is a cash-first environment.

And one of the biggest shaping forces in Chinese commerce is one we don’t have in the West: rampant counterfeiting. It exists in almost every product category—even automotive. As a result, brands operating in the country have to overcome a paradox: Chinese consumers seek out name-brand quality, but fear the cheap look-a-likes that have plagued shopping portals, such as Tmall.

As a result, brands must be built differently in China. Rather than blanketing consumers with upfront emotional messaging, they first aim for transparency in their supply chains, ensuring that the product a consumer buys is actually from the brand. Then, they provide after-sales content and support to grow their value.

In trying to understand Chinese innovation in commerce, we need to recognize the different goals and methods for achieving it. Let’s dig in to see how it works.

1. Ensuring traceability. After scandals involving tainted baby formula and mislabeled meat, brands in China developed ways to ensure that the product a customer receives is legitimate and contains what it says it does. For example, many digitally embed NFC or QR codes in their products. Consumers scan the codes to visit a webpage or mobile property, where they can register and update products, view purchasing histories, and access additional content.
2. The physical/digital connection. The NFC or QR systems also provide a way for brands to connect with consumers on an individual level. Whenever a person verifies a purchase, brands can provide additional information or cross-market other products. Much of that content is educational, and for good reason. China’s growing middle-class consumer is new to many types of products and often purchases them through wholesalers, who don’t explain their benefits or uses. So brands have a big opportunity to help them learn how to use a product and introduce them to others they might like.
3. Branded services. While China is becoming more affluent, it remains a price-first culture. Branded products are always discretionary purchases, especially in the consumer packaged goods (CPG) sector, where a consumer may not understand why one detergent may be better than another. A brand like Suave may be an everyday purchase in the U.S., but it’s definitely a luxury product in China. This changes the game. Not only do such brands have to use different marketing and content strategies, they also need to provide additional services, or risk losing market share. This can be a big leap for Western brands that are used to marketing in a simpler, more emotional way.
4. Following relationships. Although known for living under a one-child policy, Chinese people put family above all else—and their definition of family is quite broad and extended (you can be as close to your cousin as your sibling). As a result, social commerce is more about family bargain hunting than peer review, and brands target those relationships much more so than in the rest of the world.

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So what does this mean for brands elsewhere? First, getting into the market may require more forethought and content planning than it does elsewhere, with less emphasis on advertising, and more on after-purchase nurturing. Given that only about half of the Chinese consumers are online, and it is already the largest e-commerce market by revenue, it’s still worth a shot.

China also offers a fertile ground for innovation. Brands must look carefully at the methodologies used there, and particularly the way brands cross the divide between physical and digital. The ideas probably won’t work as-is, of course. To make the most of any insights we have, we need to understand the context in which they’ve developed and the problems they’re trying to solve—and then pick, choose, and evolve them for other markets

As we’ve seen already, blind counterfeiting is not a way to build a quality brand.

Part of global marketing company WPP, Possible APAC is a digital creative agency based in Singapore.