China has plenty of headroom for growth says WPP boss Bessie Lee
China offers a huge market and growth opportunities for international brands. An emergent middle class, connected by new devices and media, has an insatiable appetite for consumer and luxury goods.
This is the view of China’s WPP CEO Bessie Lee speaking at the House of Lords, in Westminster, London. Ms Lee delivered the annual CIPR International Maggie Nally memorial lecture this evening.
Maggie Nally was the first women President of the CIPR in 1976, and was instrumental in the formation of the CIPR International group.
The lonely generation
China has a population of 1.35 billion people. Its one-child policy, implemented in the 1980s as a means of curbing population growth, has created "a lonely generation that has grown-up without siblings".
According to Ms Lee the under-35s actively want to connect with peers to make friends and discuss the expectations of their fathers, mothers and grandparents.
Mobile phone adoption has reached saturation of one device per person. The majority of these devices are based on Google’s Android operating system and are made by local manufacturers.
Major international brands such as Apple and Samsung are playing catch-up alongside 11,000 competing handsets typically priced around $300.
Internet penetration will shortly hit 50% in China, compared with approximately 90% in the UK and US. Mobile and desktop Internet usage is expected to reach parity by the end of 2015.
“China has plenty of headroom for growth,” said Ms Lee.
Digital literacy: don’t underestimate the Chinese consumer
US social media firms are banned by the Chinese government in favour of local network WeChat.
New forms of media and Internet-driven technology have been adopted enthusiastically by consumers in a bid to connect with each other and as a reaction to government information control and censorship.
“Facebook, Twitter and YouTube have been blocked since 2009. Media such as BBC, Bloomberg and CNN are blocked from time-to-time,” said Ms Lee.
The Internet may be nascent but it is already well established within Chinese culture.
Ecommerce is 12-years old and already accounts for 11% of total retail. Smart phones have reached mass adoption in seven-years.
WeChat is used by 600 million consumers and will shortly celebrate its fourth birthday.
“Western brands make the mistake of assuming low levels of digital literacy in China,” said Ms Lee.
Emergent middle class
China’s gross domestic product (GDP) per capita has grown from $270 in 1979 to $7,500 in 2014.
This rapid wealth creation is fuelling consumer retail demand both in store and online. Alibaba is China’s leading business-to-business and business-to-consumer online ecommerce platform.
“Chinese consumers spend an average of £840 per year online on an average of six items,” said Lee.
Word-of-mouth is the most trusted form of media according to Lee. Social networks are used to find new brands, products and reviews.
Agency opportunity
Ms Lee advised brands to create their own media and track data to understand and build long term relationships with customers.
“I suggest that any brand starts building its own database of consumers,” she said.
Agencies need to embed technology as part of their service offer and provide clients with an integrated media-to-ecommerce solution.
Ms Lee acknowledged the challenge of recruiting and retaining talent in China but suggested that it wasn’t insurmountable.
“We talk about a talent shortage but we’re a county of 1.3 billion upwardly mobile people,” said Ms Lee.
Employees are fickle and easily lured by new titles and money. Ms Lee suggested that agencies needed to hire outside the major cities of Bejing and Shanghai to tackle this issue.
