If You're Not Paying for it, You're the Product - Anon
The idiom "knowledge is power" has never rung truer than in this modern digital age, although today it might be more apt to go with "data is power". The increasing digitization of our daily lives has seen the amount of data produced on a global level increase exponentially. China's sheer scale, its early adoption of new technologies, and its penchant for convenience only intensify global trends towards comprehensive digitization of our lives and the production of vast amounts of data as a valuable byproduct. China's openness to consumer and mobile tech has seen rapid digitization of its supply chains, methods of social discourse, retail, banking, and payments etc.
Data, interpreted correctly, can provide us with useful guides on our marketing strategy, China new product development, product placement, and positioning etc. and ultimately refine our China market entry strategy. China is amassing more data about consumers than any place in the world. But is there a dark side to all this, can data and new technologies be leveraged to manipulate consumer purchasing decisions and is this already happening in China? Can China's vast social media networks be harnessed to damage your brand and impact the success of your market entry strategy? What about China's regulators, is there any useful metrics they can use to gauge the efficacy of their efforts to improve food safety in China?
Metrics to Ascertain the Success of China's New Food Safety Regulations
The 2018 China Food Development Conference was held on November 20th, 2018. During the meeting, the Xinhua Network Public Opinion Monitor and Analysis Center released a report detailing online public opinion data (sourced from data on online traffic, search queries, keyword searches etc.) about China's food sector in 2018. For the most part, the report showed a significant reduction in traffic surrounding major food safety issues, which is a good indicator that China's efforts to improve development and enforcement of food safety policies and standards are paying dividends.
The most contentious findings were:
- Substantiated food safety issues (strong evidence to support the event occurred)
- Unsubstantiated food safety issues (rumors about food safety issues without strong supporting evidence)
- Brand safety
Leveraging Technology to Influence Purchasing: Astroturfing in China's Food Sector
In China's food sector we have seen a worrying trend towards utilization of public opinion data (particularly that relating to the safety of certain foods, the integrity of the supply chain or the potential for certain food ingredients to negatively impact health) to play on the fears of consumers and manipulate them towards purchase of certain products. In fact, the problem has become so severe that China's market regulator has no explicitly forbidden the use of KOLs, influencers etc. to endorse or recommend health-related consumer products. Let's look at a few examples where online rumors have translated to a significant change in market dynamics.
At the time of the radiation leak from Japan's Fukushima Daiichi nuclear plant in 2011, rumors were rife about its impact on China's supply chains particularly food safety. Rumors spread online about how iodized salt can be taken as an effective anti-radiation antidote and that sea salt in the supply chain was polluted. This disinformation was spread through Wechat official accounts and the feeds of millions of individual accounts. Iodized table salt sales skyrocketed in many provinces, like Zhejiang, Guangdong, Anhui, Jiangxi, etc. Many of the stakeholders were actually actively involved in disseminating the rumors and profited by temporarily jacking up prices. On March 17th, 2011, the National Development and Reform Commission released an emergency notification to regulate the market and clarify the rumors.
According to the Food Rumor Management Report 2017 released by Health China, 72% of the food rumors are transmitted by Wechat, 21% are from Weibo (a Chinese App equivalent to Twitter). Why do Wechat official accounts engage in this? These articles usually adopt clickbait headlines to attract attention and end with ads. Once the accounts get more than 5,000 followers, they can charge for ads. If the owner of the account has 10,000 followers, then he can get RMB 2000~5,000 yuan as the reward for the products promotion as affiliate marketers.
In September 2017, in a case heard by an Inner Mongolia court, Jianghong Internet Technology had released a video called "Excessive Carcinogens Detected in Mengniu Dairy". Within a few days, this video was forwarded by 1,073 Wechat official accounts, which misled people to believe it was official news. Some accounts even got more than 100,000 views. Among these accounts, five of them belonged to this Jianghong Internet Technology Company.
Weaponizing Food Safety Rumors to Shape Consumer Preference
What your enterprise can do to combat the negative impact of online rumors? Although corporations are keen to shape consumer purchasing decisions through the online dissemination of unsubstantiated food safety information, there are also high profile examples where enterprise have been on the receiving end of digital smear campaigns which have wreaked havoc on their brand image and bottom lines.
Chinese millennials are all familiar with the "KFC 6-Wing Chicken" rumor and its cyclical appearance online and now in our Wechat Moments (individual social media feed for each Wechat user). In June 1st, 2015, KFC sued ten Wechat official accounts for damages due to their involvement in the dissemination of this rumor, demanding RMB 3.5 million yuan. Joey Wat, CEO of KFC China said, "The rumor began in the first half year of 2015. Up to the end of April, over 130 official accounts had more than 100,000 views. Actually, the compensation we claim is far more below the damage and loss to KFC, but we would like to take this opportunity to warn these rumor mongers."
In 2018 Starbucks was also a target and implemented a masterful response strategy.
In this case, Starbucks adopted three steps to squelch the rumor.
First, report the 澳洲 Mirror (Australia Mirror) to the Wechat platform. This article has been defined as a rumor on the evening of April 1st, based on evidence submitted medical authorities. Later, some influential and verified accounts like "Yunwuxin" also stood out to support Starbucks.
Second, Starbucks China sent declarations to all media to clarify the fact and emphasize their insistence on providing reliable food and drinks.
Starbucks clarified the rumor through the Wechat assistant applet.
Basically, Starbucks solved this problem within 24 hours by using the same systems which had started the rumor, specifically by harnessing the power of other popular Wechat accounts (like Dingxiang Doctor).
The Upside of China's Vast Social Media Networks
Although it seems that social media is a source of many problems it can also be a hugely useful tool to improve brand recognition in China. By analyzing the data, corporations are able to pinpoint consumer pain points and design marketing strategies. There are numerous high profile examples showcasing how this can be a successful strategy. For example, through the influence of KOLs.
Photo: Zhang Dayi
KOLs can be a useful tool to increase sales volumes. Zhang Dayi, who was formerly a model exemplifies this strategy, and is now an icon in Weibo. She began her clothes E-commerce business in 2014. She made 46 million USD within 1 year and became the first Taobao shop whose 11·11 sales surpassed RMB 100 million yuan. According to official data from Alibaba, in 2017, on November 11th, the Double-11 Festival, the sales amount of her shop reached RMB 100,000 yuan in one second and broke through the RMB 100 million yuan mark in just 30 minutes.
You can see why she is so popular from her Weibo. She shares her daily life, beautiful pictures with her fans like friends, and is happy to discuss the clothes and products she sells. Not only on Weibo, icons like her will also promote products through Wechat, live stream, applications like Tik Tok, etc.
Of course, enterprises have noticed the influence of KOLs and Internet celebrities. In 2018, Baidu cooperated with Papi Jiang (a famous celebrity in Weibo) during the World Cup. Papi Jiang wrote an original song for Baidu, introducing the activity rules during the World Cup, which obtained more than 100,000 views in Wechat and occupied the Weibo hot topic rank in 2 hours.
In ending we can take another example of the fickleness of Chinese netizens and why brand perception is maybe the most important factor to successful market entry in China. Recently Dolce and Gabanna were forced to abandon a multimillion-dollar show in China and had their products withdrawn from the majority of China's major e-commerce platforms due to a simple yet fatal slipup. Overnight the company lost tens of millions of dollars and is still reeling. This cautionary tale of how a giant of the luxury goods sector can be dethroned overnight by the force of China's netizens should be enough to ensure that all stakeholders take their digital strategy and online image very seriously.