Chinese New Year : Celebrating the Traditional & the Modern in the Year of the Dog

Chinese New Year Instore theater

Greetings from Shanghai where the pace of life is slowly returning to normal after the Chinese New Year festivities, which kicked off on February 16th.

I’ve long enjoyed CNY celebrations in cities around the world. However, the experience of my first Spring Festival in Shanghai is one I will not soon forget.

The 15-day festival is the most important holiday on China’s cultural and retail calendars. For reference, it's interesting to know that Chinese families spent close to $100B on CNY shopping and dining in 2014– almost double what was spent during American Thanksgiving.

A CULTURAL TENSION

Among other things, I observed the festival to be a study in contrasts. On the one hand, there is a strong cultural imperative to return home for a traditional celebration with family members. I still have a hard time wrapping my head around the fact that homeward-bound Chinese travelers make almost 3 billion trips annually during the New Year celebration, creating the world’s largest human migration.

However, the idea of duonian, or “escaping” from the Spring Festival is also gaining popularity throughout China. Growing numbers of urban professionals enjoy escaping the mainland for international vacations, while migrant workers are increasingly forgoing trips home to skip the financial burden of the gifts expected to accompany their arrival.

PepsiCo's Quaker Chinese New Year displays

Travel home or escape? Cook a traditional meal or dine out? Shop at customary markets or online?       Give time-honored gifts or foreign goods? Or even an English couplet?

The interplay between 4,000 years of tradition and a decidedly modern lifestyle was at play throughout CNY preparations and celebrations this year.

At many points during the festival, I encountered people expressing aspects of this duality – a deep yearning to honor tradition mixed with a desire to infuse their holiday celebrations with contemporary goods and experiences.

AN OPPORTUNITY FOR BRANDS

I also observed several companies actively helping Chinese consumers reconcile this cultural tension. They represent great examples of how a brand can deepen their relationship with consumers during moments that matter, by answering unmet needs and desires with delightful solutions.

WeChat:

Image: Caixin Global

I’d be remiss not to start with WeChat’s reinvention of the hongbao, or cash-filled red envelope customarily exchanged during CNY celebrations. In 2014, the company launched a Red Envelope App, which allowed users to digitally participate in the customary gifting. 

WeChat drew on the traditional iconography of the red packet, so the app felt familiar and rooted in tradition. However, a novel innovation allowed gifters to send a lump sum to a group to be dispersed in random amounts, adding a new element of surprise and luck.

By all accounts the idea was a cultural hit, and exchanging money via the Red Envelope app has become a modern tradition (and a clever way to drive WeChat trial and use). In 2017, approximately 46.6 billion red envelopes were exchanged – an incredible 33 envelopes for every person in China. Aptly, The China Post declared that, “even grandma is ditching hongbao for WeChat’s digital red envelopes.” 

TABAO:
Chinese New Year preparations customarily include family shopping trips to local markets to buy fabric for new clothing, décor items, gifts, candies, and the ingredients for holiday meals.

Today, consumer goods are abundant throughout the year, families live further apart, and shopping trips are rapidly shifting to hypermarkets and online. Yet, many still yearn for the time-honored market experience.

Last year, the eCommerce website Taobao acknowledged this tension with a beautiful redesign of their user interface for the CNY holiday. The seasonal overlay drew inspiration from a famous, Song-dynasty era painting of a traditional Chinese market, Along the River During the Qingming Festival. 

Image: Dragon Social 

Taobao created an animated, interactive interpretation of the art that became their homepage during the festival. Users could shop the animation, either by clicking parts of the picture corresponding to what they wanted to purchase or by using a search feature. 

This creative website redesign was an insightful solution to help shoppers reconcile a longing for the traditional market trip with the ease and convenience of accomplishing their holiday shopping online. 

NOKIA:
During the festival, there is no shortage of nostalgic advertising that explores the increasing difficulty of pausing one’s busy life to return home. 
(See here, here, and here, but have your tissues ready). 

Image: Nokia China

This year, Nokia did something less expected with their holiday advertising, which launched the Nokia 6 just ahead of the CNY. The campaign features a dutiful son who is a busy actor, unable to return home for the New Year. 

His mother, unsatisfied with a video call, surprises him on the set of his film with a home-cooked meal, and the pair enjoy a warm dinner together.

I love the way that Nokia suggests an unexpected solution to a common consumer dilemma, by reimagining the idea of the “return home” and opening up new paths to family togetherness.

PEPSI:

Pepsi’s “Bring Happiness Home” campaign is a fourth and final example of the insightful updating of CNY tradition. Each year, the brand partners with award-winning talent to produce a short film that celebrates CNY and explores the idea of a “happy family.” 

This year’s production, Thunderbolt Parents, is a musical comedy that tells the story of two generations of love and dreams. It sagely reminds “young people” across generations that we will find our parents much cooler (and more complicated) than we imagine if we only make an effort to understand them.

Image: Pepsi, 2018

Over the past 7 years, Pepsi’s launch of a short film has become a CNY tradition in its own right, signaling to consumers that the Spring Festival is near. 

This year’s project has already garnered over 600 million views, along with a noteworthy amount of social media buzz.

I appreciate the way that Pepsi, true to its fun-loving spirit, uses a star-studded cast and karaoke-worthy tunes to refresh the idea of the traditional reunion dinner. Pepsi joyfully reminds consumers that, with a little heart, celebrating the New Year with family can be a lively, modern affair. 

THE YIN & YANG OF MODERNITY AND TRADITION

These examples are four sparks that illuminate how an insightful blend of the customary and the contemporary can result in a delightful updating of tradition. 

Rapid technological innovation and increasing prosperity are contributing to moments of cultural change in cities around the globe. This is certainly true in China during the Spring Festival and at other times throughout the year as well. 

I believe brands, especially multinationals, are at their best when they can help consumers forge new ways forward while also helping them retain what is important from the past. 

The most successful will approach this opportunity with the perfect blend of fresh thinking and humility – a mandate that will be at the core of my work in the year ahead.

Happy Year of the Dog to all. Xin nian da ji! (Have a prosperous New Year.)

China: Grocery Markets Are Thriving Online and In Real Life

The Chinese grocery retail market is one of contrasts.

Shoppers have flocked online in the past several years, and the $41B Chinese e-grocery market is the world’s largest by a wide margin. Retailers of all sizes have taken note and are making big bets in this arena.

Despite the explosive growth of e-commerce, brick & mortar grocery stores still play an integral role. While over half of Chinese households do buy groceries online, a full two-thirds still say that going to the grocery store is a fun, engaging experience.

I experienced this thriving retail culture during my recent visit to Shenzhen & Hong Kong, and have four insights to share about the dynamic Chinese market.

#1:  Traditional outlets dominate, but global retailers are making strides.

The Chinese grocery market is highly fragmented, with the top ten retailers accounting for less than 7% of the volume. Domestic players have leveraged their nuanced understanding of local consumers to outperform global competitors in recent years, but the multinationals are making strides to catch up.

Larger retailers are succeeding by finding ways to make the western supermarket format uniquely Chinese. They are introducing live food offerings similar to those available in traditional Chinese wet markets.

Store: RT Mart

Store: RT Mart

Many are developing new food and beverage innovations tailored to local palates and events, such as Chinese New Year.

Others are even re-thinking their footprints and building flagship stores in large shopping districts so they can be integrated into the daily retail experience. 

Store: Vanguard
Photo Credit: IGD Retail

#2:  Hypermarkets are struggling while small formats are flourishing.

Convenience formats are booming in large part due to their ability attract young, middle-class shoppers who are increasingly affluent and time-pressed. Big box retailers who have experienced slow growth in larger formats are testing smaller ones, like Easy Carrefour and Tesco Express.

Store: Tesco Express
Photo Credit: IGD Retail

 Global and regional players alike are succeeding by adding western concepts like ready-to-eat and carryout options to these smaller formats.

Store: Metro My Mart
Photo Credit: IGD Retail

And, in a nod to the multi-channel landscape, some small format stores like Metro’s My Mart are attracting shoppers by serving as collection points for online orders.

Store: Metro My Mart
Photo Credit: IGD Retail

#3:  Retailers are using “store within a store” concepts to expand offerings.

Categories like wine, cheese, bakeries and coffee are relatively new in China. Savvy retailers are building these out as destination areas within larger stores, in the process attracting a growing segment of middle-class shoppers.

Others, like CRV’s Ole, are creating specialized sections of imported products – another relative newcomer on the Chinese grocery landscape – often grouped by country or cuisine type.

#4:  A focus on food safety creates loyal shoppers.

China has been hit by a wave of safety scandals in recent years, and grocery retailers are finding success by reassuring customers about the provenance of their products.

Large players like Carrefour are leveraging their sourcing capabilities to expand private label offerings that carry a safe halo and are marketing that to their advantage.

Startups like Farm Direct are finding success via vertical ownership of farms and retail outlets, which allows confidence in the safety of their products through control of the entire growth/distribution/retail process. 

Store: Farm Direct

Tech-savvy competitors like previously mentioned MyMarket offer systems like Star Farm, a food traceability system featuring QR codes that allow consumers to track a product’s journey from source to shelf.

Store: Metro My Mart
Photo Credit: IGD Retail

The Takeaway

In my travels, a recurring theme is that a deep understanding of local consumers and their tastes engenders success.

As I’ve written before, brands can be global in their values but need to localize quickly to maintain relevance in a global world.

China: Shenzhen Redefining “Made in China”

Last week, I was in China.  It was my first trip to the city of Shenzhen.  I found some great learnings on the role Shenzhen plays to the Chinese economy vs. Beijing/Shanghai.  China watchers – analysts, investors and government officials alike – would like to see the country cement their superpower status by becoming a global innovation leader. The government has spent hundreds of billions of dollars against this goal, but, to-date, most agree that few distinctly Chinese “innovations” have emerged.

A recent visit to Shenzhen allowed me to consider what “innovation” really means in the context of China.

Academics Lindtner, Greenspan & Li argue that maker-entrepreneurs in Shenzhen challenge the commonly held binary of a western innovation (‘designed in California’) versus low-quality production (‘made in China’). They assert that Shenzhen’s burgeoning maker culture represents a new type of innovation, and one that is uniquely Chinese. After spending a week immersed in the city, I find this a fascinating viewpoint.

Western tech entrepreneurs have flocked to Shenzhen recently prompting The Guardian to dub it “China’s Silicon Valley.” The city’s vast manufacturing complex – situated in markets like Huaqiangbei – make it a one-stop-shop for turning an idea into a sellable product.  (Oculus Rift’s VR glasses & the Pebble smart watch were born here.)

Shenzhen manufacturers find various ways to capitalize on their infrastructure: make knock-off products that slightly improve a branded version, copy Kickstarter concepts before they hit the market, or even produce extra units of branded products to sell sans logo. Increasingly, the manufacturers create new brands aimed at the Chinese market like ascendant Xiaomi.

These practices stem from the oft-maligned shanzai, or counterfeit culture. In it, Shenzhen’s web of producers and makers operate as an informal network and a culture of sharing – much like the open-source software community in the U.S. New media platforms like WeChat mean they can collaborate to make new products 24/7 with unparalleled agility.

This is where – as Lindtner and others point out – Shenzhen maker culture gets interesting. The simplistic view is that Chinese factories simply crank out cheap copycats thus the narrative that the country needs to ‘catch up’ when it comes to innovation. On the ground, however, something distinctively more complex is happening.

As entrepreneurs engage in the process of bringing their ideas to life, they are transformed. Through tactile interactions with the parts, the components and the manufacturers who will put them together, the designs evolve. They get better and more interesting. And, their Chinese ‘makers’ gain their own unique views about ‘who’ the products should be for and the needs they could serve. Increasingly, they are inspired and equipped to bring related concepts to life.

These makers may be departing from others’ initial ideas but they are entrepreneurs in their own rights. They are constantly thinking about what ‘could be’ – what is upmarket, what the market needs, and how they could serve unmet needs. Using their knowledge of the manufacturing process and their connections in the shanzhai community, they move with speed impossible for more established companies to imagine. They take products to market in a manner akin to the celebrated “fail fast, fail cheap” mantra of Silicon Valley – a mentality that has yielded innovations like Siri, Tesla, and self-driving cars.

Shenzhen’s maker culture is increasingly on display in venues like the fast-growing Shenzhen Maker Faire (2016 show happening soon) and in an exploding number of maker and incubator spaces.  It is a culture represented by the phrase “innovate with China” that graces the walls of Seeed, Shenzhen’s first maker space (and now a $10M a year business).

This all suggests that perhaps Shenzhen (and China) is a culture with a very different perception of innovation, one that is collectivist (like many aspects of Asian life) versus the more individualistic western concept. Perhaps China doesn’t need to “catch up” but is creating its own unique culture of innovation. It is a nimble one that may have more in common with western software design protocol where products are shipped before they are perfect and companies look to “iterate fast” with consumers.

This culture might even inspire western entrepreneurs, who face the reality of needing to “just start” with a new innovation if they are to have any hope of staying ahead of the competition.

This leaves us to wonder what exciting possibilities emerge when design happens at the site of production? Where the boundary between imagining & making blurs, there may be new offerings, new brands and new consumer markets for the makers of Shenzhen – and their western collaborators.