Let the states of equilibrium and harmony exist in perfection, and a happy order will prevail throughout heaven and earth, and all things will be nourished and flourish.

–      Confucius

The path into Chinese commerce can be more of a slippery slope. The various digital platforms and different sales channels are loaded with their own particular idiosyncrasies. But your foray into the world of Chinese commerce is going to be a lot smoother if you work to gain an understanding of their culture. qqqqqqq

As China opens itself up to the world, adherence to cultural norms is becoming less rigid, particularly among young Chinese people working for international companies in China. But when looking to do business in China, it’s safer to stick to the more traditional rules of etiquette.

The political and philosophical history of China has led to a society unlike any other in the world. If you don’t understand the nuances of relationships, social structures or body language, then you risk looking crass or offending people, which could potentially derail an advantageous partnership.

The Facebook case

Even larger organisations aren’t immune to a cultural faux pas. It’s no secret that Facebook have been looking to expand their operations into China and have been seen attempting to woo the Chinese government. Over the course of their courtship, CEO Mark Zuckerberg has learnt Mandarin and the Facebook team have developed tools that can suppress information in China, so that Facebook adheres to China’s notoriously rigorous censorship laws.

In his zeal to enter the Chinese market Zuckerberg has also caused some controversy. In March 2016, he posted a picture of himself and other Facebook delegates jogging in Beijing:

At the time the picture was taken, authorities claim that air pollution was 15 times higher than the standard recommended by the World Health Organisation. Far from seeing it as a nice gesture, Chinese citizens viewed the move as not understanding the climate. One commentator remarked: ‘For someone who keeps proclaiming his love and interest in China and wants to make it big, you sure don’t know anything about our country. For one, everyone in Beijing has to wear a mask. We don’t take air pollution lightly, like you do.’

However, this example doesn’t seem so bad compared to an earlier transgression.

In 2015, Zuckerberg made headlines when attending a state dinner, he asked President Xi Jinping to name his unborn daughter. His overture was declined, the president responding ‘it was too weighty a task.’

It’s unclear why Zuckerberg thought this was an appropriate request. In Chinese families, it is common for the parents-to-be to ask a senior member of their family to name a child. However, this honor is usually only bestowed to a very close blood relative.

By asking this favour of President Xi, Zuckerberg was seen as being naive of Chinese culture. Even though he didn’t mean to, His request implied that he considered himself equal of the president. The Chinese see Zuckerberg as a younger man who runs a company of around 12,000 staff, whereas President Xi is responsible for the health, wealth and future prosperity of 1.5 billion people.

Both of these failed gestures can teach us a valuable lesson: no matter how well-meaning your intentions are, if you fail to grasp the way in which relationships, hierarchy and values in China are inseparably intertwined, you risk coming across as naive at best or arrogant at worst.

So how can you avoid those mistakes when looking to do business in China?

Guanxi 关系

Guanxi is often wrongly translated as ‘relationships’, but the English word doesn’t capture the many intricate layers of the Chinese expression. If the two characters are translated separately, they roughly come out as ‘joint chain.’ Business Insider’s definition expands on this saying, ‘fundamentally guanxi is about building a network of mutually beneficial relationships which can be used for personal and business purposes.’

In the west, we see our relationships as very distinct. Business relationships tend to be formal and finish when we leave the office. In China however, these lines blurred. Your circles interconnect:

This intertwined system of relationships is seen as a way of upholding societal cohesion. Given the grey area that exists between the rule of law and its enforcement, guanxi is a way of making sure societal behaviour is kept in check. To do this, Guanxi draws on 3 Confucian principles values essential to Chinese culture: balance, harmony and saving face.

These principles are particularly expressed in the way favours are given and received, summed up in the Chinese proverb 礼尚往来, 礼尚往来 meaning ‘courtesy demands reciprocity.’ If you’ve asked a favour of a person, then it is absolutely essential that when they ask for a favour in return, that it’s repaid. It is considered a grave offence not to reciprocate and leads to ostracism for the person who neglected to repay the favour and their family.

Building these kinds of relationships are essential when looking to enter the Chinese market. Many Westerners make the mistake of rushing into China with their ‘objectives checklist’ and want to hit those goals ASAP. This is absolutely counter-intuitive to the Chinese. The focus can’t be on just the business result, but rather there also needs to be an investment in interpersonal relationships. These connections are often forged over the course of lengthy dinners and tea ceremonies. You’ll find that, as opposed to the ‘business lunch’, there won’t be a lot of shop talk conducted over the course of these events, rather it’s seen as a chance to build rapport.

How to develop guanxi

There are a number of ways that you can start to develop guanxi. The biggest is to have a space or a full-time commitment in China. In addition to that you need to partner with a Chinese-born person and task them with establishing those connections, the language and the in-country knowledge. If your business needs to get the government on side, then hire someone who had experience dealing with the government, or even better, someone who has once worked in government.

It’s also really important to have patience. The Chinese have a long-term view of relationships, so when initially approaching them with your idea, have long-term objectives and goals built into your proposal. And even though you might be bristling to burst into the Chinese market, you need to remind yourself that the Great Wall of China wasn’t built in a day.

Gei Mianzi 给面子

Gei Mianzi or ‘saving face’ is loosely the prevention of causing shame or embarrassment, but it runs a bit deeper than that. The China Culture Corner likens the concept of ‘face’ to ‘reputation and feelings of prestige within their business and family circles.’ The concept of face is intrinsically linked with hierarchy and authority (much more than in Western culture).

If you are hoping to do business in China, you must be attuned to the nuances, otherwise you may inadvertently create embarrassment for a would-be partner. Understanding Gei Mianzialso means understanding how hierarchy, guanxi and the sense of self interplay. It’s highly complex and it can take some time to get your head around.

However, if the idea of causing great offence is making your palms sweaty, be aware that Westerners are not held to the same standard as Chinese. And as values become more open, the rules are starting to shift, particularly where there is exposure to larger international communities. If you stick to the following rules you should be ok:

1. Show more deference to older people and more senior stakeholders. You can do this by making sure you’re spending more time speaking to them, giving them the most valuable gifts (if you are giving gifts to others) and be seen to be more compliant to their requests. There are also particular phrases you can learn that convey the appropriate level of respect.
2. Strive to give face whenever possible, especially when seeking to do business.
3. Don’t openly criticise or upbraid someone, particularly in front of their colleagues, friends or partners.

If all else fails, follow the advice that your mother gave you: be polite and respectful to everyone and you can’t go wrong.

Body language

You can also charm (or cause offence) by knowing the conventions surrounding body language and conversation.

It doesn’t matter if you are doing business in Brisbane or Beijing, there are just some gestures that are considered incredibly rude across cultures. Whistling, clicking your fingers to get somebody’s attention are all rude. Smiling, like in the west, might not just be a signal of pleasure, rather a way to smooth over tension or unease.

However, there are a few gestures which will be particularly displeasing to a prospective Chinese partner. Whereas it’s not uncommon to greet a business associate here with a hug, kiss or an effusive pat on the back, your Chinese contact may be very uncomfortable with that level of touching. Handshakes are becoming more common, but don’t go in with a very firm handshake, it may be interpreted as a sign of aggression.

Conversation

When you’re getting down to business (or relationship building) there are also a few things to remember about conversation. There are quite a few topics that are off the table. For example, it’s best not to say anything negative about China. It’s also safer to steer clear of about topics regarding the independence of Tibet and Taiwan.

To avoid loss of face, make sure you rephrase your point a few times, in several different ways so that the meaning is very clear. If you see your Chinese associate nodding and smiling, it might not mean that they’re agreeing with what you’re saying, it might be merely politeness or encouragement. There also might not be a tendency to come outright and say ‘no’ (because to do so would may cause you to lose face). Instead they may be indirect or vague, offer excuses (such as they need to refer to their boss). So be aware that if you think a meeting is going very well, it might just be politeness.

Business cards

When you are interacting with partners, make sure you remember to bring your business cards. A business card is a shorthand way of showing of who you are and allows your prospective partner to understand your rank and place at a glance.

At the start of a meeting, business cards are exchanged (with two hands), one side printed in English, the other printed in Chinese (often Mandarin, but simplified Chinese if doing business in Mainland China).

When you receive the other person’s business card, it’s important to study it to show deference, and don’t put it in your pocket and when you hand yours over, make sure the Chinese side is up. Never just leave a pile of cards and tell meeting-goers to have at it. Also make sure that your business card is impeccable. No smudges dog-ears and creases.

Gifts

Bringing gifts is another way to build guanxi, because it demonstrates respect. Local specialities from your home region are always appreciated, as is alcohol, souvenirs, notebooks, food and tea. It’s also typical to send your business partners a gift around certain Chinese holidays, like mooncakes for the Mid-autumn festival. There are a few things to remember when giving gifts. They include:

• Make sure the more expensive presents are given to the more senior members of your party
• Don’t give an outrageously expensive gift if the receiver can’t afford to reciprocate
• But don’t be stingy either, otherwise you may cause a loss of face (For example, if you’re offering a bottle of wine, make sure it is a good bottle)
• The presentation of the gift is as significant as the gift itself. It must be beautifully wrapped
• Avoid wrapping your gifts in white (the colour of death) or write a card in red (also death)
• Give the gift with both hands.

It’s also very important that the gift isn’t construed as a bribe. Some Chinese businesses set a cap for their employees, so discretely enquire about the parameters. When dealing with government, make sure that the gift isn’t too over-the-top, for example luxury goods can ring alarm bells. If you aren’t sure, it’s always best to ask the advice of a local.

China is now the second-largest source of tourists to Australia

But what is attracting Chinese tourists to our shores – and how do we motivate them to keep on coming? In order to attract these individuals, it’s essential that we first understand who they are and what differentiates them from other tourists.

Who are they?

Whilst we welcome an impressive number of Chinese tourists each year, we don’t have a clear understanding of the typical Chinese traveller. That said, a survey of 3,170 tourists by the World Tourism Cities Federation found there are a few clear characteristics of the Chinese traveller:

They are young and have money to spend. The typical Chinese traveller is aged 26-35 years, with over 56.2% of travellers falling into this age group which is known as the “Millennials”, representing their life-long value to the travel industry (50 years of travel time).  The majority of these travellers are only children who have a greater amount of financial freedom thanks to support from their parents. These individuals are seeking a quality experience and aren’t simply looking for options that provide value for money.

They’re parents. With children at the centre of typical Chinese family life, it’s no surprise that 59.3% of Chinese travellers are parents. These parents desire to provide their children with opportunities to see and experience the world and are searching for family-centric experiences which they can all enjoy together. They want to find child-friendly accommodation, age-appropriate meals and child-friendly activities that will see them heading home with lifelong memories.

They’re independent. An increasing number of Chinese travellers are breaking away from the traditional group tour options and opting to head out on their own. Whilst this segment is growing, the biggest issue for these travellers is the lack of quality information for those of them planning their trip online. In order to capture this market segment, it’s vital that Australian businesses localise content for Chinese people and the types of holidays they are researching.

What influences their decision-making process?

Chinese travellers are turning to the internet more and more when it comes to researching, planning and booking their trips. 90% of Chinese travellers (according to Tourism Queensland) are using the web to educate themselves on their travel destinations and local brands in the area before their holiday.

The web is still the most preferred way to book, however, the popularity of Apps has quickly risen; making them a possible future option for Chinese travellers to choose and compare travel products.  A survey of  more than 4,200 internet users and online travel bookers by Ctrip in over 30 cities in China in 2015 revealed that 52% of them would choose to use travel apps, mainly due to the convenience in browseing information, the ability to save-as-favourite at any time as well as the more attractive promotions available there. 86% of those surveyed would choose to use the web to select and compare travel products due to the comprehensive way websites are able to display information and 39% are influenced by referrals from their friends/colleagues or family/relatives. Only 18% of travellers surveyed said that they would still visit a travel agent to compare their options.

With so many consumers searching for information online, Australian companies have an incredible opportunity to attract the attention of Chinese tourists. A successful online marketing strategy will allow companies to tap into the Chinese tourism market and entice more travellers to enjoy all that Australia has to offer.

Australian companies have an incredible opportunity to attract the attention of Chinese tourists

It’s essential that Australian businesses create more official Chinese-language websites if they want to communicate effectively with these travellers and attract them to our country.

Changing tastes

Group travel has always been a popular option for Chinese tourists in Australia as it simplifies the process of securing visas, booking hotels and deciding what to do whilst in the country – but Chinese consumers are slowly breaking away from this tradition and preferring to head out on their own.

Group travel restricts flexibility and doesn’t cater to individual interests or needs. A set itinerary constrains travellers to typical destinations and activities and doesn’t allow them to enjoy lesser-known cultural experiences such as outdoor activities, local food and wine, museums and shopping.

These restrictions have seen travellers preferring to plan their own holidays – giving them the freedom to choose where they stay, what they see and what they do whilst in Australia. Although this market segment is still relatively new, it’s growing and has great potential for development – especially as these individuals are scouring the internet for ideas and inspiration when planning their trips.

A desire to explore

Australia’s natural beauty is no longer the drawcard it once was for Chinese travellers. More experienced Chinese tourists think of themselves as explorers and want control of their itineraries. They respond well to brands that make them feel special; they desire a more fulfilling holiday experience. They seek out unique experiences which are worth writing home about and which make them stand out in their social circles.

Niche tours for interest-based activities are increasingly popular with Chinese tourists. Wine or beer tasting tours, golfing getaways and ocean fishing voyages, among other tours, give these tourists the opportunity to enjoy a value-adding experience and many are choosing travel holidays which allow them to experience the food, culture and activities Australia has to offer.

A love for shopping, food and sharing their adventures

Wherever they head, Chinese travellers love to shop far more during their trips than tourists from any other country. Many travel destinations have picked up on this trend, launching special promotions and shopping-guide services targeting Chinese travellers to capitalise on this opportunity. For example, a number of department stores in Japan launched a 5% discount promotion for China Union Pay Transactions – and some even accept mobile Wechat payments during the Chinese National Holiday.

Chinese travellers also love to discover and enjoy delicious food on their travels. The difference between Chinese travellers and other diners is that their stomachs naturally prefer hot foods over cold. The majority of Chinese travellers still miss Chinese food whilst away from home and are willing to search far and wide for Chinese restaurants at least once during their trip.

Another common behaviour of Chinese travellers is sharing their adventures, which is something they love to do. Whether they’re snapping a shot of the view or their food or taking a fun selfie, these tourists love to share their moments with friends during the trip through social media services such as Wechat. With this in mind, it comes as no surprise why they rank free wifi as an important service they’re looking for at destinations. These travellers also make their decisions based on price, security, ease of obtaining visas and the experiences available in the country they travel to.

Time window of travel

Unlike travellers from Western countries where it’s common to travel all year round, the majority of Chinese travellers will plan their trips around public holidays – particularly the 7-day public holidays such as National Holiday and Spring Festival. When two public holidays are close enough together, many Chinese will take the opportunity to travel, taking the days off between the two holidays to enjoy a longer trip. For example, Chinese travellers to long-haul destinations such as Australia, the US and Europe increase by more than 150% YoY from late September until early October as Mid-Autumn Day and National Holiday are very close together at this time. There has been a rising trend in recent years for travellers to avoid the crowds during this period by planning their trip either several days before or after the public holiday. Despite that trend, the Ctrip report on “2015 Chinese Travellers’ Tourism and Vacation Report” found that 28% of those surveyed still chose to travel on or around the National Holiday period. This long public holiday is still the highest peak season of Chinese travel each year.

The essentials for reaching these tourists

In order to encourage these tourists to our shores, we first need to understand them and connect with them. We not only need to talk to them in their local language – but we also need to be connecting with them using the most appropriate local media channels.

Whilst Western social media platforms such as Facebook and Twitter are banned in China, the Chinese love social media and are the most active social media population in the world. Chinese travellers want to see more travel information on their favourite Chinese social media platforms such as WeChat, Weibo and some local community sites.

A well-defined social media strategy will not only allow businesses to connect and engage with their Chinese audience, it will also provide them with a direct line of communication for consumer queries and complaints and provides the opportunity to discover more about their target market such as their needs, desires and concerns.

Chinese travellers want to see more travel information on their favourite Chinese social media platforms such as WeChat, Weibo and some local community sites.

Australian websites need to be more accessible. We need to speak their language, on their terms and share information that interests them. The drawcard of Chinese tourists is not only their numbers, but their spending power. These visitors spend the most of all international visitors to Australia – and their visitating is helping to drive economic growth and the creation of jobs in our country.

Whether you’ve hailed an Uber car, hired someone to walk your dog, rented an instrument or a DVD, traded products on a buy/swap/sell page, enjoyed a social dinner through ShareWithMe or rented a holiday home through Airbnb; this is the “sharing economy”.

The sharing economy is a system that takes the “what’s yours is mine, what’s mine is yours” idea and adds a fee; the government has been singing its praises for creating “micro-entrepreneurs” and economists are impressed by the ability to put “excess capacity” to good use.

It’s a sector that is growing fast and one that more and more businesses are looking to involve themselves with. An increasing number of organisations and individuals are increasing their sales and profits by sharing access to resources they do not actually own.

San Fransisco based Airbnb is a prominent example of the sharing economy, in which people rent beds, rooms or properties through private individuals, rather than your standard hotel chain. Since its launch in 2008, more than 4 million individuals have used the service and Airbnb have seen their gross bookings grow at over 300% year over year for the past four years. The company claims to have more than one million rooms available and is currently valued at $20 billion dollars, falling only slightly short of Hilton and Marriot, but miles ahead of other hotel chains around the globe.

Similarly, Uber is expecting a threefold rise in global bookings this year (estimating $10.84 billion in global bookings) and the company is expecting to see that number rise to $26.12 billion in 2016. The ride hailing service, which currently operates in over 50 countries around the globe, is somewhat of a poster child for the benefits of the social economy with its explosive growth.

Technology is making the sharing of assets cheaper and easier than ever before and allowing individuals and organisations to share assets on a much larger scale – so it’s no surprise that economists are predicting the sharing economy will be the next big thing for the next 10 years.

The sharing economy has become the next growth sector to invest in. It’s a sector that is growing and expanding daily, with Compare and Share’s What We Know About the Global Sharing Economy study finding that an estimated $28 million is invested in sharing economy start-ups each and every day. 28% of the world’s adult population are members of sharing services with a huge percentage of individuals choosing to share goods rather than own them.

In this collaborative economy, consumers either get what they need from each other – or they pay for access to goods and services rather than own them.

But not everyone’s so happy. Just as the eCommerce boom raised a lot of questions 15 years ago, the sharing economy is raising those questions once again; is it safe? how do we regulate it? what about business? who pays the tax?

When a new idea pops up in the business world, controversy is bound to happen and regulations and jobs simply need to evolve accordingly. Sharing is the new buying and savvy business owners are exploring ways to embrace rather than escape this trend.

The Economist predicted in 2013 that, just as online shopping had forced retailers to change the way they did business, “so online sharing will shake up transport, tourism, equipment hire and more”.  We are in the midst of a global economic, political and social shift towards greater sustainability – meaning we’re owning less and sharing more.

But if we’re sharing more, what does that mean for businesses who are selling the products to begin with? Overall demand for first-time purchases may shrink for products that consumers can use communally, however, companies can consider creating their own platforms to encourage users to share their products – and thus benefit from the sharing of resources that they do not actually own.

The real opportunity for companies is to evolve their services to increase the value that consumers (and those they share with) can gain from using their products. This expands the scope of interaction with consumers; moving from a simple buy/sell transaction to a long term relationship throughout the entire user experience. During this process, companies also have the ability to gain more insight and data into how their products are being used and shared over time. The more companies know, the more helpful they can become.

The sharing economy is not just a passing trend, it’s an ecosystem that will shake up the way we all buy and consume. Whether it’s developing a new sharing start-up to further encourage the sharing of resources, or transforming the way we develop products to better meet the needs of this sharing revolution; the sharing economy is one trend we all need to be paying attention to.

1- More online agent consolidation should be expected We are in a marketplace where scale and technology are crucial. There is increasing pressure on margins, and costs for customer acquisition continue to rise. All this is leading to a natural consolidation, just to allow OTAs (Online Travel Agencies) to compete in this space. In the next 5 years we will reach a state of equilibrium involving 5 groups:

• 3 major international players: Expedia (with Hotels.com, Trivago, Hotwire, Wotif, Travelocity and now, Orbitz), Priceline (with Booking.com, Agoda, Kayak and OpenTable) and TripAdvisor (which now operates more than 25 travel brands).
• 1 major player in Asia (most likely Ctrip or Rakuten)
• 1 major player in South America (Decolar being well positioned to achieve that)

2- The next battle will be about vacation rentals.

Major players, from Airbnb and HomeAway to Priceline and TripAdvisor, have tapped into only about 1/5th of the addressable $100 billion vacation-rental and alternative-lodging market (Evercore, April 2015).

While making good progress in this space, both Priceline and Tripadvisor are still significantly lagging behind the first two in terms of inventory – especially in the “vacation rental by owner” segment, i.e. property managed directly by owners. The only way they could catch up with the leaders would be to either acquire one of them (most likely HomeAway as AirBNB’s valuation makes it too expensive) or team up with a 3rd party inventory management system like MyVR.com or FutureStay.com.

3- The gap between generalists and specialists will increase

Large OTAs will remain generalists, that is, focussing on the actual booking experience; this will allow niche specialists to emerge. In recent years we have seen a number of new entrants offering traveller-centric tools or content. For instance, Routehappy.com helps travellers find “the happiest flight experience for the cheapest price” focusing on amenities such as comfortable seats, Wi-Fi, in-seat power and entertainment. Another example is the Singapore-based Quotient TravelPlanner, which provides its customers with private and highly customised holidays.

This will continue in the foreseeable future as OTAs have bigger fish to fry; they will be focusing on scale in order to acquire even more customers, thereby leaving smaller players to cater to bespoke needs.

4- The distinction between pure player and bricks and mortar will disappear over time.

I remember in 2000, while working for the GDS Amadeus, that the emergence of online travel marked a revolution in the shopping for and buying of travel. At that time it was seen as the Holy Grail and every analyst was predicting the end of the offline travel world. 15 years later, guess what? Players like Flight Centre or The Travel Corporation are still there and doing extremely well. Flight Centre alone has had normalised return on equity averaging 26% over the last 10 years, 28% over the last five years and 33% over the last three years.

So despite the growth of online, offline is far from dead. Quite the opposite, stores are now the new black in the e-commerce world. While these might sound counter-intuitive, more and more online pure players, looking to get closer to their consumers, open brick-and-mortar stores: Amazon opened its first store last February in Indiana on the Purdue University campus and Google now has a shop in London where people can obviously buy Android phones and tablets but also virtually travel to any part of the world through an immersive large screen using Google Maps technology.

Physical presence offers many benefits for those online players:

• Offline consumer experiences (holding a product in your hand, feeling the fabric,…)
• Better logistics and consumer service offerings (especially storage and shipping centres)
• Brand relationships (giving consumers a space to experience the company while simultaneously growing strong, trusting and lasting relationships with their customers)

It is not that different in the travel industry. While obviously here logistics and offline consumer experience are not that relevant, online pure players like us will still have to enter this space to be able to service certain needs. Try to book a perfect trip online if you are time poor, or a multi-segment family trip, you will see that the experience is less than ideal and that it takes up a lot of time. Having offline presence would help OTAs to push their brand further and offer a better consumer experience through advice and expertise.

The fusion between online and offline has already started with the leading Indian OTA MakeMyTrip that operates 60 retail stores, the Australian offline player, HelloWorld, which reoriented its strategy around online distribution through its partnership with Orbitz or CVC, the largest travel agency in Brazil, which announced earlier this year the purchase of the #2 OTA, Submarino Viagens.

So to give you some insight into just how impressive the culinary scene here is, HotelClub (sounds familiar? ;-)) put together this definitive Gourmet Guide to Hong Kong:

Produced by HotelClub Hong Kong

For years the Internet in China has been regulated by what we describe as the Great Firewall. China has been blocking online searches of politically sensitive terms, smothering embarrassing news events or simply access to most social networks like Twitter, Facebook and YouTube.

Over all these years, this confined environment has favoured the emergence of a parallel online eco-system. It would be too long to go through all the Chinese online players, but let’s spend some time on the key ones:

Baidu (www.baidu.com)

Founded in 2000, Baidu with 87% of market share is the largest search engine in China. Listed on NASDAQ since 2004, its market cap is currently around US$ 40Bn. Similar to Google, Baidu offers a complete set of search services (web, vertical, social and mobile). In 2011, Baidu invested in Xunar (the largest online meta travel search) and in 2012, they launched their Mobile Cloud computing division.

AliBaba (www.alibaba.com)

Alibaba.com, the flagship company of Alibaba Group, is the world’s largest online business-to-business trading platform for small businesses. The company’s English language international marketplace (www.alibaba.com) serves to bring together importers and exporters from more than 240 countries and regions.

TaoBao (www.taobao.com)

Founded in 2004, Taobao is China’s equivalent to eBay. Part of the AliBaba Group and with 80M unique visitors per day, TaoBao is the largest marketplace in the country. In June 2011, Alibaba Group chairman and CEO Jack Ma revealed that Taobao will be split into three different companies: Taobao Marketplace (a C2C platform), Tmall.com (a B2C platform; then called Taobao Mall), and eTao (a shopping search engine). The private joke is that you can really buy ANYTHING on TaoBao, including a temporary boyfriend!

Boyfriends and girlfriends available for rent on Taobao

AliPay (www.alipay.com)

Launched in 2004 by AliBaba group, Alipay isChina’s Paypal. With 50% market share, Alipay is the biggest online payment platform inChina:

• 500 million active registered accounts as of the end of 2012 (four times the size of Paypal’s)

• Exceeded 20B RMB in a single day on the 1.11.11
• On average, 11M daily transactions

RenRen (www.renren.com)

Like FaceBook, RenRen.com started as a social networking platform for college students. Now open to the general public, it still remains most popular with students. Renren’s platform includes the main social networking website renren.com, the online games centre game.renren.com, the social commerce website nuomi.com and has around 170M active users.

Sina Weibo (www.weibo.com)

Usually described as being the Chinese Twitter, Sina Weibo is, I think, actually more the hybrid son of Facebook and Twitter. With a 140-character limit on page posts, it is definitely considered a micro-blogging site; however, the services that it offers are closer to those of a Facebook on steroids (page, customisation, chat, video,…)! A few stats:

• 1.3hrs average use per day
• > 309M active account holders
• 1.6B page views per day
• 130,000 brand pages

Youku (www.youku.com)

Launched in 2006, Youku is a YouTube with no limitations! It allows users to upload videos of any length but also offers a video library of popular films, TV shows and clips. It is even quite common for some movies to be available first on Youku before the official launch date in cinemas!

Tencent QQ and Qzone (qzone.qq.com)

QQ provides customers with a popular instant messaging software service (similar to MSM), online social games, music, shopping, micro-blogging, and group & voice chat. At the end of 2012, there were 785 million active user accounts with approximately 100 million users online at a time.

The following infographic by CIC describes pretty well the social media landscape in China:

The main reason for my silence was my travel schedule. Over the last few months I have had to go several times to Asia and especially to China, delving into its amazing online landscape.

For hundreds of years, Asia accounted for about half of the world’s economic activity. Then, as Western economies industrialized, this region fell behind — down to only 8 percent of the global economy in 1970. This trend began to reverse in the 1980s, and today, the region accounts for just over 1/5th of global economic activity and is the second largest travel market in the world (behind Europe but ahead of North America). There are innumerable consumers in this region seeking to buy travel products they have never had access to before, and there is an immense amount of financial capital in the region, which favours growth.

The picture below on the left was taken just 30 years ago. Back then, Shenzhen (situated just across the border from Hong Kong) was a small fishing village with a population of about 25,000. Today (picture on the right), Shenzhen is an ultra-modern megalopolis with a population above 10 million.

This is a good representation of the growth the region has experienced over the last few decades. If you had been in the region ten years ago, you wouldn’t recognize it today.

When I was there a couple of months ago, Beijing was a reminder of the two faces of Chinese growth: activity was booming, but the city was just going through one of the highest record days in terms of pollution. Another example of this amazing growth: according to calculations by Vaclav Smil for an upcoming book on materials in modern civilization, China put more concrete into its roads, factories, bridges, and buildings in the three years between 2009 and 2011 than the US did in the infrastructure that it built during the entire 20th century!

The growth of the Chinese online space over the last 5 years has also been mind-boggling, allowing this country to have now the largest online population in the world.

Here are a few stats:

• 564 million Internet users (twice the size of the US base!), 42% penetration rate
• Average time spent online: 20.5 hours per week
• 451 million search engine users, 80% penetration rate
• 420 million mobile Internet users, 75% penetration rate
• 309 million Weibo users (hybrid of Twitter and Facebook), 66% using mobile Weibo
• 242 million Internet shoppers
• 2.7 million websites, increased by 17%

And my favourite one:

In Nov 2012, Taobao.com (Online Market Place) reached US$160B sales – more than the combination of eBay.com and Amazon.com in the US!!

The following infographic by Go-Globe summarizes pretty well some current stats and trends about the Chinese online space:

In November 2012, Monitor was unable to pay its bills and was forced to file for bankruptcy protection. Why didn’t the highly paid consultants of Monitor use Porter’s famous framework to save themselves? An interesting reading from Steve Denning: Click here

NC: Tell me how you first got involved in recruitment, especially recruitment in the digital space.

I was hired directly into recruitment from university 30 years ago. I joined Aquent, the specialist creative and digital recruitment company 12 years ago, and so have been very close to the evolution of the digital industry and of the digital recruitment space. I have such a high level of belief that this sector will boom in the coming years, that we spun off the permanent search division of Aquent to form Firebrand Talent Search, which specialises in digital and online marketing placements.

NC: What has surprised you most about working in this industry?

If you mean the recruitment industry, nothing; 30 years exposes you to just about everything that can happen. If you mean the digital industry, the rate of change continually surprises me.

NC: What do you find most challenging about this industry?

The most challenging aspect of both the recruitment and the digital industries is a lack of skills and talent.

NC: What’s the best/worst thing to happen since you started working in recruitment in the digital space?

The best thing is that it is constantly growing, evolving and companies are investing in digital marketing, driving tremendous opportunities. Without doubt the worst thing to happen was the global downturn in 2008 from which the economy has still not recovered and which makes recruiting an exceptionally tough business to be in.

NC: If you could change one thing about the recruitment industry, what would it be?

The dumb and counter-productive practice of companies multi-listing job orders with many recruiters, which leads to recruitment firms competing on speed instead of quality, which in turn drives down the perception of our industry, our margins and our reputation.

NC: When your friends/family find out that you are in recruitment, what do they say or ask?

Sometimes they ask if I can find them a job, and sometimes they ask if I’m crazy.

NC: What do you think will change about recruitment over the next five years?

The recruitment industry will be heavily affected by social media and other competitors of the 3rd party recruiter model. However, specialist, niche recruiters who develop sophisticated strategies to locate and recruit top talent will thrive.I believe job boards are going to become increasingly ineffective and they will evolve their business model, possibly to a “pay-per-click” pricing arrangement. Certainly for recruiters, banging an ad on a generic job board will be the least differentiated thing you can do in talent sourcing, so that channel will deliver fewer and fewer quality candidates. Increasingly I see a move towards “active” social media recruiting. I don’t mean simply “engaging” with random people on Twitter in the hope that one day you will recruit them, and I certainly don’t mean using social media as a de facto job board. I see the intelligent use of video, for example, as a recruiting tool. Companies, including recruiters, will spend big on sophisticated video, showcasing work environments and opportunities, and this will be integrated with blogs, websites and social media. The nirvana will be recruiting videos going viral! But it won’t only be employers using visual technology. We are already seeing the emergence of the multimedia CV and this will grow. Candidates will use video and other technologies to showcase their talents.

It’s pretty clear that the use of recruitment-based apps created for iPhones, Android and other mobile devices is growing. But I might be a bit of a contrarian on this. Yes, it’s going to boom initially, but developers will need to keep developing sophisticated applications with new and innovative features, to keep people coming back to their phone to look for jobs. Two other trends I can see coming: much more money spent on employer-branding as employers realise traditional recruiting methods no longer work; and also I see someone developing an über-cool online candidate-referral system – I’m not sure what, but a kind of  ‘Groupon’ for recruiting.

NC: If you weren’t in recruitment, what would you be doing instead, or what would your life be like?

If I was not in recruitment, I would now be retired and my life would be a lot less stressful and a lot less interesting.

NC: Can you tell us a few words about Finder.com.au?

Frank and I found that comparing financial products out there was too overwhelming and that Australian consumers could be paying more than they should. Finder.com.au provides a one-stop comparison service for various financial products such as credit cards, personal loans, home loans, saving accounts, life insurance and is now expanding into mobile phones and broadband. Our point of difference in the market is that each site specialises in its own niche. We provide step-by-step resources to research, compare and apply for products. Our sites offer unique comparisons for credit cards, home loans, savings accounts, personal loans, life insurance, broadband and forex trading, and our newest one compares mobile phones. We offer calculator tools and guides to help users through their comparison process.

NC: Did you put in more or fewer hours than you had anticipated?

I would put in more, but unfortunately I have to sleep. I try and not sleep but I get a bit tired after a few weeks! I love our office; we have created a neat little paradise and are planning on building another soon too. Perhaps we should eventually move to Silicon Hills?

NC: How do you think your business will change over the next 5 years

It will be bigger, better and help out and save consumers more. We will have more niches operating and helping more and more Australians every day. It’s a lot of work building a niche so we are going to need a few more people to help us achieve that. I think we will have a group of A-players all striving to create the best comparison service for Australians.

NC: What advice would you give another person who wants to start an online business?

• Be innovative – produce fresh ideas
• Persevere – If you have an idea stick with it and push it until you achieve your goal
• $1 – Just try and make $1 of profit. I am talking $1 in your bank account after you have been paid, you have paid all of your expenses, you have paid your tax and the $1 of profit left over is in your account. Just focus on that and do it in a small-scale manner first, then don’t be smart, just try and make $2 and repeat.

NC: Tell me how you first got involved in the digital space?

I was building sites while I was still studying at university so I grew up with this stuff. I just took to the internet naturally as I had played with computers as a kid and I am quite creative and love visual technology. I loved special maths at uni and I am pretty good with reverse-engineering things and figuring out how to do something that I don’t know how to do. That was a recipe for internet 101, but then I learnt a lot of marketing from Michael Kiely and I spliced that onto the internet and got 100% into internet marketing.

NC: What do you find most challenging about this industry?

Not building sites fast enough, processes and systems development and finding talented staff to join our badass crew.

NC: What’s the best/worst thing to happen since you started working in the online space?

The best thing is more people are going online! There are more people for us to help coming online and comparing products. Comparison as an idea is growing. The worst thing is that Internet Explorer is still dominant and causes us so many pains in our development and the display of our sites. However with a lot of the newer CSS techniques you can get around some of the problems.

NC: Tell me about someone who has influenced your decision to work in this space?

Jeff Bezos, he has made a monster online business. He persisted and innovated in consumer products even. That kind of scope has inspired me to build Finder.com.au into a monster business as there are so many opportunities there. Maybe we could even think of going into space at some stage!