Tom Doctoroff is one of the most influential Western ad men in the world’s fastest-growing major economy. The JWT Greater China CEO is a Mandarin speaker who has lived on the Chinese mainland for 14 years and previously spent four years in Hong Kong. He combined that local knowingness with an outsider’s perspective about the Chinese consumer psyche in his first book, Billions, published in 2005. Now, in his new tome, What Chinese Want, he builds upon those observations about the country’s evolving economy and what the implications are for marketers.
Adweek: How does China’s culture of conformity inform consumer behavior?
The golden rule of marketing in China is you have to maximize public consumption in order to charge a price premium because brands are used as tools of advancement in a societally mandated definition of success. Any brand that helps you advance and project status is going to be purchased. Anything consumed outside the home is going to command much more of a premium than anything inside the home where people are extremely price conscious. Nobody is going to invest in an expensive bed spread. This also means you have to position things in a subtle way. Spas need to help you recharge, not just relax. Benefits need to be externalized; brands need to help you connect better, project better with society. Even with something like detergent, if it is positioned within the context of having your child look good on stage because you’re able to get stains out or make their clothes look white then that is more than just a sheer economic savings kind of proposition.
How does that awareness of status relate to the Chinese notion of "face"?
Face is the fuel of forward advancement, and there are specific points at which you gain face or you lose face. If, for example, you are at a table talking about a possible deal and wearing the wrong watch, and if somebody says that is not a good brand, you lose face. Face is more than just what other people think of you; it’s how many social credits you have accumulated.
Why haven’t we seen the next Google coming out of a Shanghai garage?
You do have millions of entrepreneurs in China. They usually have very small businesses and trade in something that is usually commoditized so they use low price and resourcefulness as the ultimate competitive weapons. These people are a huge force in the Chinese economy. What you don’t have is a lot of innovative, mold-breaking entrepreneurs, people who say, "I’ve got a better idea. I’m going to do it this way and buck conventional wisdom." That goes back to China’s culture of anti-individualism because creativity, by definition in a Western sense, is dangerous. Most people are not raised to persuade people to accept a different paradigm. It also comes down to the fact [that] institutions don’t exist to encourage entrepreneurs— things like the venture capital markets and the wide availability of credit. This goes back to the Chinese belief that the individual is not considered the basic productive unit of society.
Will we ever see a Chinese commercial understanding of innovation and creativity?
They understand what innovation is and they admire it tremendously. Steve Jobs is a hero because of the fact [that] he had a different vision and he pursued it and won big. The problem is that the economic and social structures don’t encourage it. So will we ever see a Chinese entrepreneur that is truly innovative or a Chinese company known for innovation? I don’t want to say never, but I don’t see how this can happen on a broad basis unless you have significant political reform. You need a government that is impartial and has the mechanisms to protect individuals’ interests involving everything from judiciary to corporate governance to how banking loans are determined to transparency in bookkeeping to a more rational tax regime.
Why are we not seeing more of the development of a service sector in China?
Two reasons—one is macro, the other is human. The macro reason is that any time an industry affects the broad masses, it will be controlled by the state. So anything having to do with financial services, travel, even tourism is subject to the inherently noncompetitive commercial ethos the state advances. The second is bottom up and the comfort people have with paradigms and scripts and their fear of challenging conventional wisdom. A stewardess or hotel attendant would have to have the confidence to go off script, to really probe into what their customers’ needs are and give a solution even if it might not be on the approved checklist of solutions.
When will we see Chinese brands compete globally in developed markets?
I don’t see any Chinese brand now that is able to command a price premium relative to Western goods on their own turf in the near future unless you’re talking about a Geely-owned Volvo. In order to compete at a price premium, you have to be innovative…but you also have to have a marketing-driven culture. It’s difficult for brands to get out of the orbit of sales to really embrace a marketing ethos. Chinese brands are all over the place in emerging markets because they have a good price, value balance. So in the developed markets, you’ll see them in the value segments first, but in terms of Chinese brand image, cache, cool, the sense of cutting edge, this is a long ways off.
How are the Chinese owned-and-operated ad agencies doing?
There are no huge local Chinese advertising agencies that get most of their revenue from creative and strategy. This gets back to the kind of management and talent required to lead agencies; people who are able to lead and outline a conceptual vision and have the resources to fall in line with that conceptual vision; the kind of people who will break out of using low price as a competitive advantage and have a servile client-agency relationship. Once local brands get beyond a certain point in China, they come to multinational agencies.
Why aren’t brands better leveraging digital marketing in China?
They’re doing e-commerce, but I think it’s because of the structure of the companies. To do digital marketing, to do real engagement in the social and content realm, you need to have a marketing-driven organization. It’s a shame because Chinese consumers are incredibly sophisticated when it comes to digesting digital information.