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Greetings from Byton - Marketing in China - Health Insurance 2.0

Hello from Beijing & Hamburg, here it is: the very first issue of the ChinaBriefs Update with lin
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Greetings from Byton - Marketing in China - Health Insurance 2.0
By ChinaBriefs Team • Issue #2 • View online
Hello from Beijing & Hamburg,
here it is: the very first issue of the ChinaBriefs Update with links & stories from Digital China that we thought might be interesting to share:
  1. A welcome note from the CEO of electric car startup Byton, who explains why ChinaBriefs’ mission is so important.
  2. What Western Marketers Can Learn from China.
  3. Influencer Marketing in China.
  4. Re-thinking the health insurance business model.
  5. Amazon vs. Alibaba - where is the difference?
  6. Two event recommendations for the first week of June.
But as we wrote last week, everything is a process! We want to develop this project very much together with you - our readers. We are looking forward to any kind of feedback!! So pls send us an email (feedback@chinabriefs.io) or leave a comment on one of our channels on TwitterFacebook and LinkedIn.
Thx & best wishes
B. & M.

1 - Welcome Note from Byton's CEO.
Hello from Nanjing!
Byton was founded 2016 in China to combine affordable, premium and intelligent electric vehicles for the future of autonomous mobility with a new business model, which encompasses smart products & digital services and mobility services. 
Since then we developed our first models and built the complete infrastructure of a car company including a brand new factory in Nanjing. In Q4-2019 the delivery of the M-Byte will start at a price point of 45,000 USD - less than 4 years later. 
We did this as a Chinese company that feels at home on several continents with offices in China, Silicon Valley and Germany. But as a global business, we often find that in the West a lack of knowledge regarding China and its overall development still persists - which is very unfortunate as China does present a fantastic learning opportunity to all of us trying to overcome and improve upon our current way of thinking and doing in the digital age: we can learn new tricks like how to combine long-term thinking with fast action or how to replace siloed approaches with ecosystem philosophies.
But for this we need a more profound and encompassing view on what is really happening on the ground in China. This is precisely why I find ChinaBriefs such an exciting project as it helps to make sense of what is happening over here today - even for people who never thought that China might become relevant for them too. Because China is not only important for those who want to export to that market or import goods made in China. To the contrary, China will increasingly move center stage and affect most of us and our lives, directly or indirectly. 
It’s never too early to start deepening one’s understanding of this country. ChinaBriefs is the perfect starting point for this journey. I have known Mirko and Björn, the people behind this project, for many many years and trust that they will do a brilliant job of fulfilling their mission to bring China knowledge and understanding closer to our minds and our hearts. I would like to wish them all the best and much success for the future!
Nanjing, May 14th, 2019
Daniel Kirchert, CEO Byton 
2 - Marketing I: China vs. the West.
Marketing & brand communications are often different in China, because the approach is very different: 
What would Western marketers do if they were told to drive immediate awareness without using traditional advertising—no radio, TV, digital, billboard, print, or other common channels? This is where many in China start. They believe that virality through socially engaging content is faster and cheaper and yields better results than advertising.
There are also four areas where the structure of China’s market fundamentally differs:
  1. Media Giants - three companies (Baidu, Alibaba and Tencent - short BAT) are totally dominating the media market. What does that mean? “Imagine if Amazon, Bank of America, Google, Facebook, Activision Blizzard, CNN, and ESPN were all owned by one company!”
  2. Closed-loop data - “the BATs’ vast data ecosystem allows an integrated view of customers’ lives across all channels. With this holistic understanding, the marketer can create programming that ties shopping, gaming, news, reading, video-watching, and celebrity-following habits into smarter, more contextually relevant engagement.”
  3. Mobile-First / Mobile-only - “China’s mobile-centric platform has enabled marketers to focus on content-based experiences that will connect with consumers and change behavior quickly. “The Chinese approach starts with thinking about content, information, and knowledge that could be engaging and shared,” (…) It isn’t about advertising and price promotions.”
  4. Focus on speed - “The speed at which they work is intimidating,” (…) “It’s hard to comprehend how big of an impact it has.”.
This analysis comes from a very interesting article by Kimberly Whitler in the current issue of the Havard Business Review. Her advice for western brands:
  • Adopt a mobile-first mindset.
  • Go all-in on a social, viral approach.
  • Move from promotions to content-based engagement.
  • Shift from channel management to cross-platform integration.
  • Question the value of planning versus speed.
Check out the complete article on HBR.org:
What Western Marketers Can Learn from China
3 - Marketing II: Influencer in China aka "KOLs" .
Influencers are called KOLs (=Key Opinion Leader) in China and cooperations with KOLs for marketing purposes are really big business over there - with an estimated value of over $17 billion in 2018.
If you compare influencer marketing in China with the West you will find three key differences:
  1. The Chinese consumer in general has more trust in people than in brands because of many scandals and fake or unsafe products. Therefore recommendations from a trusted influencer carry a lot of weight.
  2. Social Media services in China are much more integrated with eCommerce services, so buying something via Wechat has very low barriers and higher conversion rates. Many KOLs are even building their communities right on eCommerce sites like Taobao or Tmall.
  3. The close proximity to all relevant supply chains makes it easy for KOLs to start their own product lines (e.g. fashion or cosmetics).
And this is not just theory: KOLs like Becky Li (7.5 million followers) are able to sell 100 cars in just 5 minutes through a simple promotion or Dayi “Big Eve” Zhang “(20 million followers) pulls in a staggering $220 million in annual GMV (gross merchandise volume) solely from digital channels”.
From impression to sales on WeChat (via Parklu).
From impression to sales on WeChat (via Parklu).
Ruhnn - the Influencer Incubator.
An interesting player in the KOL marketing space is Ruhnn - an Alibaba-Backed influencer incubator which just finished a successful IPO on the NASDAQ in April 2019.
Ruhnn’s business model (“influencer + incubator + supply chain”) capitalizes on all three differences mentioned above with an interesting catch when it comes to developing its own product lines (from Forbes): 
“Rather than trying to predict what consumers will like and then selling it to them, Ruhnn uses audience preferences and purchasing behavior to guide product development from the start.
For example, when creating a new line of clothing, the influencer will first let their followers preview items, ask them what colors they prefer, and get their feedback. For those items that seem popular, they will offer them on pre-sale, which allows them to get an idea for how many they should make. Because of the company’s close proximity to factories (Ruhnn is headquartered in Hangzhou), the items can be produced and shipped within a week or two with low logistics costs.”

Key Takeaways:
Influencers promoting their own products is nothing new in the West. But the low barriers for conversion, the tight integration with the supply chain and the idea of developing products together with fans & followers is a totally different ball game - especially considering the sheer scale of the phenomenon.

More about Influencer Marketing in China:
More about the Influencer Incubator Ruhan:
4 - Mutual aid - a fully digital Health Insurance.
Ant Financial (the company behind Alipay - one of the two dominant mobile payment systems in China) offers a wide range of financial services. One is Xiang Hu Bao (which has no English name and roughly translates as “taking care of each other”) - a new, very basic kind of health insurance.
If you are 19 to 49 years old and reasonably healthy, you can register for the service in order to receive a cash payment contributing to your medical expenses, when you fall critically ill - up to 300,000 yuan (about US$45,000).
It only covers very dire situations. So this is not an alternative to a real health insurance. But the innovative business model uses digital tech in very interesting ways:
  • There are no monthly premiums. Instead the system uses a Crowdfunding-like approach: the sum, paid out to cover healthcare costs (+8% fee for Ant Financial), is split evenly among all users. The bills come in every two weeks and amount rarely to more than a few cents - for 2019 the fees are capped at 188 Yuan (about $28). So the service is very cheap, because it is basically just a feature in a mobile app and does away with most of the overhead cost of a traditional insurance.
  • The mobile app is also used to resolve conflicts between customers and the service - using Crowdsourcing: disputes over claims are resolved by juries consisting of hundreds of thousands of pre-approved users, who vote on whether to pay or not.
  • To combat fraud, the service is using Blockchain technology for all relevant transactions.
Xiang Hu Bao already has 63+ million users as of last week, but its aim is to provide basic health plans for 300 million people in the coming two years. And as always in China, when the Alibaba-Ecosystem offers a service, Tencent invests in a competitor: in this case it is called Waterdrop, functions in a very similar way and claims to have 70+ million users.

Key Takeaways:
The idea of providing a much needed service by efficiently using digital tech and splitting the necessary costs without much overhead among all users, is probably an interesting approach for many business models.
An app for China's rural-urban health gap
An app for China's rural-urban health gap
5 - Amazon vs Alibaba
At the World Economic Forum Jack Ma, Chairman of Alibaba, explained the differences in business models and thinking between Amazon and his company: for him it is Empire vs Eco-System.
According to Ma, Amazon has built an empire and wants to control more or less the whole value chain itself. Alibaba on the other hand has created an eco-system. It wants to enable lots of partners to earn lots of money and only provides the core systems by itself. For him it is a more efficient way to grow very fast.
Andrew Ross Sorkin, the moderator, asked Jack Ma a very Western question: “Which model is the right one?” And he gave a very Chinese answer: “Probably both. A world where only one model is the right one would be very boring!” 👍😉
Jack Ma on how Amazon and Alibaba differ | CNBC International
Jack Ma on how Amazon and Alibaba differ | CNBC International
6 - Last, but not least: Two Partner Events.
During the first week of June there are two events we would like to recommend:
  • Digital Kindergarten in Hamburg, Germany (June 6th 2019), where we will have a workshop on DigitalChina (20% Discount Code: DKx20).
  • Marketing to China Conference in London, UK (June 5th & 6th 2019) is an independent marketing conferences dedicated to the China market - bringing chief marketing officers, marketing professionals, vendors, and marketing technology and service providers together for practical insights and meaningful connections. (20% Discount-Code: CHINABRIEFS)
CU there?
DIGITAL KINDERGARTEN in Hamburg, Germany - 6.6.2019
Marketing to China Conference London
Did you enjoy this issue?
ChinaBriefs Team

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