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Keep your friends close, and your enemies closer.

Sun-tzuChinese general & military strategist (~400 BC)

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Intro 1Point of departure.

China will grow for the next 20-30 yrs and eventually become the biggest empire ever.

Will dominate all industries by 2040. Delete your Eurocentrism not too late.• “Perhaps of greatest significance to foreign companies is the rapid transformation

of Chinese enterprises form competitors in China for China market share into global competitors for market share, assets and resources around the world” (De Woskin - 2008)

Tough competition? Or can coopetition can be the key word?In whatever industry you are working: hurry!

Growing nationalism in China. Resulting in protectionism in more and more sectors.

• Oil, gas, aluminium, electronics, media and …cars, airlines, pharma, telecom

• Domestic market protection, privileges, easy credit for going global A 5000 yrs old and wealthy empire with a temporary fallback of only 150 yrs.

Pride.

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Intro 2Learn Chinese. Become Chinese. Marry a Chinese. (But also: remain “bi”).

Not only when you’re into B2CBe legal and learn how not to be, although you have to.Be patient. Be flexible (adapt). Get ready for ups … and downsBeware of the numbers. Keep the numbers in mind. Scale!

• 2007 stats show the Chinese Internet at a staggering 182 million.

• China would see a growth of 34.1% -- and by the end of the Olympic Year, 2008, we'd see 244 million online.

– DCCI, part of the Chinese Internet Association.

GuanxiThink (1) product (are you unique?), (2) sales/guanxi, (3) brandingThink in segments ( geographical, income, media usage …)Think digital

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1 example only of this emerging (world-) power.Chinese government (1.4 trillion usd)

$3 billion of China’s national savings into Blackstone for 8% of the sharesChina Development Bank.

$2 billion in Citigroup. Kocht deel van Barclays

China Investment Corp $5 billion in Morgan Stanley investeerde $20 billion in CDB “om actiever te kunnen worden op de internationale

markten”Citic Securities Co.

$1 billion in Bear Stearns. China Life targets Prudential, Aviva, AXA en …het Nederlandse ING. Ping An (de tweede grootste verzekeraar in China)

Nov 2006: 4% in Fortis.

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The segment targeted by i-merge

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China’s middle class strong80,000,000

According to Hou Yunchun, director of the Research Office of the State Council about 6.15% of the population were considered middle class, and the number was still rising.

根据相关部门的调查，中国人口的 6.15% 可以被认为是中产阶级，而且这个数字还在上升中。

National Bureau of Statistics (NBS) defines middle-income households as having an annual income between US$7,792 and US$65,790.

国家统计局定义的中产家庭年收入范围： US$7,792 － US$65,790.

McKinsey argues Chinese middle class incomes would be the equivalent of between US$13,500 and US$53,900.

麦肯锡主张中国中产阶级的年收入应该相当于 US$13,500 － US$53,900

19 June 2007

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Of course there aren't 1.3 billion consumers in China. There's a "survival China" and a "consuming China". The consuming China is still relatively small as % of the total population (specialists mention 12-15%). But in absolute figures it is massive. 150,000,000 at least. These spending, consuming, car buying households are probably all on the web through a broadband home-connection.

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China's richest love swimming, BMWs and France tours (1) 660 Chinese US dollar millionaires interviewed

Of the 660 surveyed - each with at least 10 million yuan ($1.37 million) in personal wealth - 18 per cent are interested in a space tour, and 11.7 percent say that cruising on luxury yachts "would become part of their life".

China's demand for luxury goods accounts for 12 percent of the global market, according to Goldman Sachs. And with an annual 20 percent increase, the Chinese are expected to become the world's largest consumers of luxury goods by 2015.

Swimming edged out traveling as the favorite form of recreation

Golfing ranked third in the list of most favored recreation as China's rich view it as a good chance to socialize with their peers

France is considered the best foreign travel destination

Thirty-six percent of the millionaires listed modern artwork as their priority for collecting, but only 16 percent said they favored antiques, citing the difficulty in telling counterfeits from genuine articles.

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China's richest love swimming, BMWs and France tours (2) German luxury car brand BMW was selected as the best overall luxury brand, followed by French luxury

goods trademark Louis Vuitton and German carmaker Daimler AG's premium brand Mercedes-Benz.

If Chinese can afford a higher-level car, they will go for it, even if it means borrowing money from their family. Image is much more important in China, especially compared with India. ﾓ Research by Volkswagen last year found that average Chinese carbuyers spent twice his or her annual salary on the vehicle. Two years ago Su Tianping, a junior manager at Pudong Development Bank in Shanghai, bought a QQ, the microcar made by Chinese company Chery, which was a sales phenomenon in 2005. However, he sold it a few months ago.It was OK to drive around home, ﾓ he says, ﾒ but driving a QQ to clients or to a party was a loss of face.

Cartier topped the jewellery brand list

British financial group HSBC was considered the best bank for offshore personal banking.

The report said 68 percent of the millionaires, surveyed between May and November last year, are confident on the outlook of China's booming economy for the next two years.

Stocks and property were the top two investment options, selected by 33 percent and 26 percent of millionaires respectively, it said.

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Bubbles can burst. But is is a bubble?Beijing's housing price index has dropped significantly in the last month of 2007: down 10%

in the first week of December, another .75% in the second week, up 13% in the third but tanking 20% more in the last week, according to statistics from the China Real Estate Index Research Institute ( 中国房地产指数系统研究机构 ).

At the end of last November, the average price in Beijing was 15,162 yuan per square meter. A month later, the price dropped to 12,180 yuan.

Or ….

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China is the social network country

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Also in China (like in the US): online video & social networks.

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Evolution of advertising (1)

Human media and recommendation > advertising. See research i-merge | Sinomonitor. Social networks. Growing in usage and as mutual recommend

ation platform for brands. Off- and online conversations (dialogues) beat push-advertisi

ng (monologue) in persuasive power. Mass collaboration grows to also build shared knowledge on

brands within a community

Fragmentation (lots of media) both for consumer and brands. Media are everywhere.

• Become very intimate on mobile device. Media 24/7. Anytime. Chaos for the consumer, the (media-) planner and the brand.

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Evolution of advertising (2)Segmentation.

For # reasons (relevance of brands message for consumer is of utmost importance). Media should be targetted and carry relevant messages.

Next phase is hyperpersonalisation. Virtual face 2 face

Be as relevant as possible Link message to context (place, time, content)

• Be close to POS / MOS Link message to consumer behavior (interest, search, friends …) Push less. Let consumers pull more. They’re in control. Let them opt-in

Measure. Data. Databases. Datamining.

Mobile>Web>Offline

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The 3 moments of truth for a brand

acquisition

retention

recommendation

conversion

1. Is the advertising (relevant) (creative) (impactful) (persuasive) enough for me to even consider buying the product

2. Is the product / service fully delivering the promises made during the pre-usage period?

3. I am so happy about my choice that it is very likely I will recommend the brand to friends, colleagues, neighbours …

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Measure the Recommendation Power of your brand!

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The value of the 3rd moment of truth

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Recommendation behavior in China

2

43

38

125

No one 1-5 people6-10 people

11-20 people

More than 20 people

On average, one consumer communicates in one month with 8 people about brands.17% of the consumers talk about brands with more than 10 people monthly.

Mean:8 people

(%)

i-merge | sinomonitor research

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Use data to find recommenders. And communicate with them

The starting point for all excellent interactive brand campaigns (with a high ROI), is the creation of acontinuously growing interactive database withcustomers (friends, fans...) & prospects, that iscontinuously updated and enriched.

Mobile can help you build that database

8Unidentified prospects

Identified prospects & clients

database

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How to evaluate media?

8

TvcNewspaperMagazines

OutdoorPR

Exhibition…..

Dm…..

WebsiteBannerGames

I-dm…..Bbs

Blogs…..

POS……

Mobile

1. Digitalness2. Interactiveness - dialogue3. Database enrichment potential 4. Targetting Power5. Personalisation potential6. Branding power7. Sales power8. Ubiquitness9. Penetration & usage by evangelists10. Price

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Mobile.The 2nd most important medium in people’s mind*

80%

4%

1%

15%

Newspapers TV Mobile phone Internet

i-merge | sinomonitor research

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Still a very small market. Lots of opportunities to make a good impression.

Total advertising spending 2007 [guesstimate]

all media $ 37 – 50 billion

internet $ 600 – 1,000 million [2007:182 million internet users/2008:244 million]

mobile $ 100 million [500 million mobile users - 90 million use mobile internet]

• Predicted growth of mobile advertising

» 2006: $65 mio

» 2007: $100 mio

» 2008: $142 mio

» 2009: $193 mio

» 2010: $243 mio

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Use mobile in an integrated campaign

Fully integrated database driven & interactive marketing communication have a unique value to buildconsumer knowledge at the individual levelof identified prospects and clients 8

newspaper ad

Coupontvc

Loyalty program

mobile

banner

i-newsletter

ambassador incentives

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8What can interactive advertising do?

1.Awareness Build up awareness for (new) brand or product or service

2.Cognitive Inform & educate consumers about cognitive facts & figures of the brand

3.Emotion, values Upload emotion and values. Empower the “Added Perceived Value”.

4.TrafficGenerate traffic to site & to real POS either to register or to buy

5.Trial Get a sample or a 1st time purchase

6.RepeatStimulate repeat purchase

7.LoyalGradually build loyalty (buy more often, get bigger share of wallet)

8.Advocate Make advocates, ambassadors who promote/recommend your brand

Data base

acquisition

retention

recommendation

conversion

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Past ad-investments were largely pre-traffic based using mass media …

Awareness了解

Cognitive 辨识

Emotion情感

Traffic引导Trial尝试

Repeat重复

Loyalty忠诚

Advocacy拥护

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Awareness了解

Cognitive 辨识

Emotion情感

Traffic引导Trial尝试

Repeat重复

Loyalty忠诚

Advocacy拥护

Future ad investments should be traffic & post-traffic based, inviting people to act and interact.They will be more on POS too!

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The data potential of recommendationthrough social networking. TVC Newspaper Magazine Radio Outdoor Events Web Mobile

…..

P1 P2P3P4P5P6

P7P8P9P10P11

Human media

•Influencers•Well networked•Positive experience testimonial•Expected to be honest•Trusted source

Consumer interaction database keeps track of # data concerning allthese interactions

•Who saw, clicked, forwarded•Where did it happen•What was the interaction•When did it happen•How often action/interaction•Size of network•Kind of message•Sales•To whom he recommended and what’sthe profile of the receivers

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The Mobile IM marketIn  2007 the number of actual online IM-users exceeded 126 million,

over 90% of the total number of netizens in China. China has become the most developed personal IM market in the world.

The number of mobile IM users is expected to be 40 million at the end of 2007 from 16 million at the beginning of 2007.

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The growing field of digital

500 mioMobile users

172 mioInternet users

120 mioWeb chatters

40 mioMobile chatters

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Registration Requirements