Features

Marketers must align their worldview with China to achieve success

In his first interview since joining consultancy firm Prophet in Hong Kong, Tom Doctoroff discusses his departure from J. Walter Thompson and why Western brands must march to a different drum to succeed in China

You were with J. Walter Thompson in Asia for 22 years and you were CEO for the Asia-Pacific region for the final three. Why did you decide to leave after all this time?

“I felt it was time to let go and of course I was sad. It was my home for a long time and I absolutely love the people and I made relationships that will last forever. But in terms of where the industry was going and the structure of holding companies, I felt it was time to explore new opportunities.”

Was there anything in particular though that motivated your decision?

“Long story short, you what know the role of the holding company is becoming. I wanted to work in an environment without some of the constraints that are dictated by financial realities of holding companies.

“The commercial landscape is evolving and one reality became very clear to me: all companies, universities and nonprofits are all looking for collaborators, who can bring different types of people together to solve problems. I was then looking for a company that is built to collaborate and Prophet is that. There is a one global P&L and the cultural brand stretches across nine different offices, and talent-sharing is seamless.

“The people at Prophet know who they are and they know what they want to be for clients. What they’re doing makes the brand more than just communications, more like an enabler that is on the cutting edge.”

You have many years of experience in China and have seen it go through many waves of change. Brands and the marketing/communications industry are of course queuing up to get a foothold in the market. Is China on its way to becoming a world hub for these industries?

“China is developing scale in terms of the middle classes and what it produces for the mass market. But what China has not figured out is adding brand value to its products. What China is doing is occupying the mass market with price value and profits. But you are not seeing breakthrough innovation and that means China and the West need to collaborate. There are opportunities for partnerships and their business environments are complimentary.

“However, when it comes to digital, there are a series of walled gardens. And this is when it becomes monopolistic. This is a challenge for marketers: to play by the rules of China’s online community.”

By that, are you referring to the BATS – Baidu, Alibaba, Tencent and Sina?

“Yes. Basically they have these huge [online] malls with their own digital ecosystems. It’s not like in the West where, alongside Amazon, the top 20 e-commerce sites are brand-specific. China’s e-commerce platforms are these huge online malls.

“But that does not mean we should be fearful of China? No, not if we know our strengths. If we reach out and collaborate, then it is win-win. They do scale and we do value-added, and there is plenty of opportunity for all parties.”

In terms of collaboration though, just how easy is it for global brands to penetrate and work with local brands? And how will the current political climate affect, for example Trump’s relationship with China?

“The Chinese do not play favourites; they will deal with different types of companies fairly. And they are pragmatists. When it comes to doing business, politics doesn’t make a huge difference. The Chinese are always looking to occupy their own piece of the sky. But they are not aggressive; China does not want to take over or conquer. It wants to stand tall on the world stage, shoulder-to-shoulder with the United States.

“But they are focused on their own people, elevating living standards and securing stability. It’s not an expansionist power. So when you look at how commerce and politics intersect, for example the relations between China and Korea, the effects are going to be minimal except in a few specific industries – like travel for example. But Korean brands will remain just fine as the Chinese consumers are pragmatists. Plus Chinese brands are not as cool as Korean brands.”

Given this pragmatism and China’s positioning as major player on the global stage, do you anticipate things becoming easier for businesses to set up in China in the near future?

“It will not become easier because China has a different worldview. It marches to the beat of a very different drum. The relationship between the individual and society is fundamentally different from the West and it impacts everything from the role that brands play in life, the hierarchy of corporations and the way trust is established – which affects contract development and negotiation.

“All these things are challenging for someone who does not open up to a different way of viewing things. If you do not bring your operations, your mentality and your brand into alignment with this worldview then you make many major mistakes, from pricing to rent negotiation. But the Chinese are extremely adept at establishing a strong negotiating position. Although unless people become more open to understanding [China] then it will not get easier than it is today.”

How will changing political dynamics in Hong Kong following the election of Carrie Lam affect both its relationship with China and businesses ?

“In my opinion, Hong Kong began changing years ago. Now what you’re seeing is a much greater number of mainland Chinese living in Hong Kong. In Prophet for example, 50 per cent of our Hong Kong staff are mainland Chinese. That’s very natural. I don’t want to call it a ‘mainlandisation’ but you have got a very fluid mix of Chinese and Taiwanese alongside Hong Kong people. It’s very multicultural in a Han Chinese context. But there is no question that Shanghai and Beijing and other cities have stood up [as competitors to Hong Kong].

“I don’t think [the election] will have a major impact. Hong Kong knows where its bread is buttered. What the Hong Kong people are asking for is intelligent leadership, not ideological leadership.”

You have been with Prophet for a month now. What’s your vision for the upcoming year?

“As a partner in the company, my vision is not the driving force. Instead, it’s Prophet and the partners’ vision for how we develop opportunities in China and beyond. We are going to be very aggressively strengthening our on-the-ground mainland presence, bolstering our digital capabilities inside our Asia offices and we also need to be focused on the type of companies that need Prophet’s services.

“These companies will be in industries where a lot of education is required and there is a lot of complicated brand architecture such as financial services, hospitality, travel and telecoms. To do this, we should be very selective about our clients. It will be easier to develop this brand-focused mindset with international clients who are moving into China, but that doesn’t mean we shouldn’t look at local companies. We just want make sure we work with those looking to elevate the value of their brands rather than degrade them through mass-market and e-commerce-driven commoditsation.”

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