Growth in spending by Chinese born after 1990 is shaking up the world’s consumer, media and the advertising industries. I spoke about that trend in Shanghai yesterday with Tom Doctoroff, the former Asia CEO of J. Walter Thompson and author of the popular 2012 book, “What Chinese Consumers Want.” Doctoroff, who earlier published “Billions: Selling to the New Chinese Consumer,” is currently a New York-based consultant at Prophet, a global brand and marketing consultancy, and a lecturer at the University of Chicago.
What Chinese consumers want today, Doctoroff said, is much more shaped by personal passions and digital technology than in the past. “China is not unidimensional in the way that it used to be,” he said. Doctoroff also talked about the outlook for his old employer – the struggling WPP Group, of which J. Walter Thompson is a part and whose founder Martin Sorrell recently stepped down -- and the growing influence of celebrity-like KOLs (key opinion leaders) in Chinese society today. Noting that as many as half of Chinese born after 1990 may aspire to be a KOL, Doctoroff said: “What that means is that there is a big gap between what people are dreaming of and what they can be. There is a lot of anxiety. If you are able to be a tool or a guide through this new world -- this open great plain of choices, you will be appreciated,” he said. “Brands that can be sherpas will be very powerful.” Interview excerpts follow.
Flannery: What do Chinese consumers want now?
Doctoroff: Consumers are still driven by the fundamentals of Chinese society. They want stability, and they want to project their status. They want to make sure they are protecting their economic and social interests. The idea that I’ve always had is the timeless tension in China is between projection and protection, and I think that is still very much true today.
But I do think you’ve seen evolution in two ways that happened more quickly than I expected: the first is that young people are much more interested in defining themselves by their passions and interests than they were in the past. They are so connected that they are able to indulge or engage in a variety of sub-tribal interests.
Flannery: Is that individualism?
Doctoroff: Let’s be careful with that word. Let’s define individualism. The answer is yes and no. Individualism as we define it in America where society encourages you to define yourself independent of society and encourages you to be your person – such as Nike’s “Just do it spirit” – that still does not exist in China.
But defining yourself through your uniqueness and then getting societal acknowledgement for that is now very important to the post-90s generation. You can call it the slash generation: I want to be this thing and that and this. I’m not going to be constrained by one definition of me. Although China will never asymptotically intersect with the West in terms of the value of individualism, the connectivity of the Chinese young generation allows them to be much more self-defined. Still, they crave acknowledgement for their identities. If you take a look at e-commerce, it’s social e-commerce. Everything has to be on display. If you look at the time people spend on WeChat -- several hours a day, a lot of that is about social currency generation. None of this is happening in an American sense, where we are encouraged to be who we want to be. So there still has to be societal acknowledgement.
Flannery: What do you mean when you say everything has to be on display?
Doctoroff: If you take a look at any e-commerce site, it has a social component. If you take a look at NetEase Music, it’s tribal. You’ve got micro interests, and people exchanging thoughts and ideas on it. You have Xiaohongshu (also known as RED) talking about products from the rest of the world. It’s all a platform for demonstration of social capital.
I think that this is very Chinese – the fact that NetEase Music isn’t Spotify. NetEase Music has people talking about what they prefer, who they are, and why that like it. It’s very Chinese. It’s a demonstration of sophistication and distinctiveness.
Flannery: That sounds a little bit like the “Me Generation.”
Doctoroff: Do you think American individualism is real? The fact that we should define ourselves independent of what society thinks? Or do you think that’s an illusion?
Flannery: I don’t think it’s an illusion. I think that there’s still a very varied social landscape in the U.S., whether it’s in religion or organic lifestyles in Vermont. It’s a big country with a lot of space.
Doctoroff: I agree, and most people are part of that social landscape. But I still believe that in America, when you talk about the pursuit of happiness, it is who you really are and what really drives you. I don’t think that that has yet evolved in China, despite that fact that there are so many possibilities on the landscape that didn’t exist before. And that’s for the young generation.
Flannery: How are the smartest companies fitting into that landscape?
Doctoroff: Regarding the young generation, if you look at the digital scene, they are acknowledging that the emotional relationship between one’s identity online is different than what it is in the West, which tends to be more functional. If you were to ask a young generation Chinese: Do you have a different parallel identity online than offline, it would be much higher in China that it would be in the West. If you asked them if you can liberate yourself and be who you are more freely online, it would be much higher in China than it would be in the West. So some of the smartest companies, whether it’s a florist that delivers flowers or Ikea, are playing with that emotional identity online. That’s one of the big differences. It’s much more emotionally powered.
The other thing that has changed is that the definition of success has become much more multi-dimensional than it was before. The fact that the new generation of 30- and 40-year olds want to balance the different components of their lives, as opposed to a traditional definition of success – that’s something that’s new as well. So being able to balance multidimensional life and wellness – whether professional success, modern mother or father, traveler or a citizen or the world on the cutting edge -- this has broadened very much. You see this happening for the new generation or for the older generation in their 30s and 40s. China is not unidimensional in the way that it used to be. But still, people crave societal acknowledgement. This idea of sub-tribal identity and having shared passion is (also) something that motivates a lot of today’s social dynamics. People want to get together with people with shared interests.
Flannery: Is that part of the natural evolution of the Internet era that we see in the U.S., where’s its easier for you to stick to groups or “sub-tribes” that are more interesting to you?
Doctoroff: It’s a convergence but not an intersection. The U.S. has always had sub-tribes. I still believe that the need for acknowledgment of your multi-dimensionality is Chinese. You need to be recognized on social media in terms of followers and in terms of interest (and that) is different from what it would be in America. Of course, there are people with followers in America, too, but the degree that identify comes from external acknowledgment is more in China than America.
Flannery: I’m reading the book, “Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked.”
Doctoroff: Yes, so if you take a look at the amount of time Americans spend on Facebook everyday versus the amount of time Chinese spend on WeChat, despite the fact that WeChat has many more functions than Facebook does, it is amazing. The Chinese are spending more than three hours a day on WeChat. And that isn’t driven by individualism. It’s driven by the need to connect with other people and be acknowledged for what you’re contributing to society.
Flannery: Where does that go from here?
Doctoroff: This is the $64,000 question. In my view, once you’ve entered society by being married and having a child, people become significantly more conservative. I think it’s a life stage where you’re able to explore right now in your 20s. By the time you’re in in your 40s, you have to master something so that you are in control. I am not of the opinion that this is turning China into a fundamentally different place. There is a core craving of stability in the country and in one’s personal life. So yes, people are changing in the way of connecting and what they expect from brands. Take a look at Hema. It’s a new way of connecting online and offline. It’s new retail. It is addressing a need for control and reassurance. It’s a big deal. Still, the question is whether you’re doing it for yourself or for other people to be impressed.
Flannery: What does the growth of Douyin, whose video format has exploded in popularity, mean for people trying to connect with the Chinese consumer?
Doctoroff: It’s very important. I would say that Douyin is technologically allowing identity experimentation, but it’s from a safe distance. You aren’t out there in the street. So the Internet has an emotional release that is much greater than in the West, and this fits into the popularity of Douyin. But it is removed daily life; it is done from a distance. Chinese have always wanted to be acknowledged as different and special. It’s never been the case that Chinese have wanted to fit in, in the Japanese sense. When I talk about the tension between protection and protection, people have always wanted to be noticed as standing tall. Technology makes that much easier for the young generation. So brands that are able to use Douyin to enable that self-expression do it quite powerfully.
Flannery: What kind of things are you doing at Prophet?
Doctoroff: Prophet is a consultancy that’s very different from advertising. I used to be in advertising. Advertising is ultimately about having one message and clearly communicating it. Prophet is a very unique consultancy that is combining analytical rigor from a customer’s perspective and making sure that there is a clear value proposition. It is bridging between strategy and execution in a way that advertising agencies never did. That is interesting for me to be engaged with.
Flannery: Can the old model for advertising agencies survive in today’s climate?
Doctoroff: The resignation of Martin Sorrell suggests that the old advertising model is not going to survive. There needs to be a
redeployment of assets (within the company). The advertising world can survive but it needs to be significantly remodeled. In order for WPP to survive, it needs to redistribute its assets in a way that makes sense for clients. That’s why they need to sell (assets). The horizontal model has not proven to be terribly successful. People talk about Kantor first, but they need flexibility.
Flannery: Speaking of Kantor, which has done a lot of research on KOLs in China: The number of people that are seen to be KOLs seems to be getting bigger and bigger.
Doctoroff: I think there is a statistic that I read that says 50% of post-90s dream of being a KOL.
Flannery: What does that mean for advertisers?
Doctoroff: What that means is that there is a big gap between what people are dreaming of and what they can be. There is a lot of anxiety. If you are able to be a tool or a guide through this new world, this open great plain of choices, you will be appreciated, because 50% of people will not become KOLs. Brands that are shepherding people through identify articulation – brands like AirBnB, which helps people define themselves as distinct, or brands like Visa, which help people define themselves as global citizens -- this identify articulation is very important. Consumers need sherpas. Brands that can be sherpas will be very powerful.
If you look at SK-II, they were originally talking about anti-aging. Now they have turned into (a brand that embraces) “change your destiny.” They are doing that not in a sense of Western rebellion. They are using a natural ingredient in a way that allows you to reveal your inner beauty so that you can have confidence to advance. They do this in many ways. They created a movement against “left-over women” (women that remain unmarried relatively late in life). This isn’t saying, “You can be whoever you want to be.” This is saying, “You have the confidence to change your fate.”
There is a very subtle different with the West. Any brand that is able to help guide people through a diverse lifestyle and multidimensionality (in a) society that still has a fairly narrow definition of success – they are going to be the winning brands.
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