Daniela Bartscher-Herold

“Innovation as a USP in China” – how German companies are staying in the fast lane despite fierce Chinese competition.

When President Xi Jinping visited Germany last year he proposed to make 2015 the “year of innovation cooperation between Germany and China.” Back then no one could have foreseen that China would be facing a deepening economic crisis in 2015 but in highlighting innovation I feel that China’s president has highlighted a factor that will be pivotal to the success of German companies over the coming years when it comes to increasing profit and market strategies for China. This applies equally to producers of branded food items and consumer goods and mechanical engineering sector companies.

There are now around 5,000 German companies active in the Chinese market. And innovation can become their new USP. It’s no longer enough for German companies to “just” convince with their quality and experience. For a great deal has also changed in China in recent years – Chinese companies are no longer production service providers and manufacturers of cheap mass products. They have learnt from Europe and the West, copied a great deal in impressively painstaking detail and are ultimately producing at a substantially lower cost. In terms of price and product, more and more Chinese companies are becoming serious rivals. In order to avoid ceding pole position to forward-looking Chinese companies, German firms must strike out in new directions. And be prepared to develop new business models. In this context, unexpected moves are increasingly being considered, including “out-of-the-box” expansion and innovation – some of these are extremely audacious moves that do not even provide synergies with the company’s core business but which are demanded in China.

For example, a company is prepared to add a completely new product to its portfolio that doesn’t yet exist in this form but is perfectly tailored to the needs of consumers in the Chinese market.

Such as the “lunchbox for women.” This was designed for an entirely new type of woman in China – the “woman@work” target group. The modern Chinese woman is proud to work and illustrates this with a trendy insulated mini handbag in which pretty little nutrition snacks in eye-catching packaging and a mini cola light bottle are carried to the office. This product not only satisfies young Chinese women’s need for a fashionable accessory but also ticks the calorie awareness and healthy eating boxes. For part of the box is also a healthy muesli bar for the office. So the manufacturer of this box has done everything correctly: they have recognised the trend and the fact that millions of working, fashion- and figure-conscious women regard such a stylish, low-calorie accessory as a must-have.

The Chinese are often ahead of us in consumer research and are faster to reconsider their position and strike out in pioneering new directions: for example, the Chinese domestic appliance manufacturer Haier recognised that China’s most important food, potatoes (for some time now China has accounted for one in four potatoes grown worldwide), must be washed prior to sale in the local market if they are to sate the hunger of 1.3 billion people. Some farmers had been doing this in their washing machines. Haier spotted the gap in the market and reacted quickly. In western China a market for washing potatoes AND clothing was launched, sales of which swiftly hit the million mark. An example of an innovative approach by a Chinese company which illustrates how easy it is to offer alternatives to what is currently on offer by identifying the market’s needs. When a company conducts consumer-oriented research, this is perfectly executed application innovation.

Another Chinese company achieved similar success with the marketing of a “portable cooking station” – for what could be more obvious than offering China’s estimated 350 million migrant workers the opportunity to prepare meals whilst on the go. A prime example of target group innovation and the perfect demonstration of how a company can successfully innovate in its own country. “Disruptive ideas” is the name given to such pioneering and ultimately profitable concepts which bring innovative ideas to fruition.

However, German companies should also be seeking niches in sectors in which the Chinese have long been market leaders such as wind energy. China may be in the process of becoming world champion in the production of offshore wind power but it has huge maintenance needs – and this is precisely where German companies can take advantage: by identifying where China has technology gaps and helping to fill them. When major companies pinpoint the potential in maintenance and technical support, a German company can swiftly become an indispensable knowledge partner. Do the Chinese have modern helicopters and offshore vessels for maintaining their installed capacity offshore? Definitely not. And these are precisely the interfaces where action must be taken and innovative approaches adopted to create new, successful business models.

The boss of a German consumer goods company remains relaxed in the face of China’s economic woes, stating recently: “China is and will remain the engine room of the global economy.” The company’s cosmetics unit is continuing to achieve double-digit growth rates in China. But here again inventiveness is required and a reconsideration of the purchasing behaviour of Chinese consumers. In China cosmetic products are increasingly being bought online rather than in supermarkets or pharmacies. And naturally the needs of the digital consumer are completely different to those of the customer in a store. How do you reach the “digital native consumer”, who until now has been able to smell the shampoo bottles in a store or test hand creams and body lotions for consistency and fragrance? Here a great deal will depend on brand presence and packaging – both need to be so effective and convincing that the online buyer feels no need to test it.

This is where the empathy and know-how of package designers and marketing pros really come to the fore while trends and patterns in China must also be constantly taken into account and approaches adapted in order to fully satisfy the needs of the Chinese online consumer and increase sales. The European cosmetics company will then be well placed to achieve its sales goals.

In addition to product innovation and opportunities for differentiation from the Chinese competition, local requirements must naturally also be taken into account in operational execution – particular characteristics in the Chinese R&D departments of German companies but also the demands of Chinese companies with regard to localisation.

The balance between “innovation as a USP” and the commitment to “R&D localisation” needs to be maintained and stable. This will ultimately determine whether German companies enjoy long-term success in China.

About our guest author: For more than 20 years Daniela Bartscher-Herold, EAC Consulting, is advising German companies in China. Her lecture at the “International Roadshow China” (Serviceplan, Munich – 17. November 2015) will deepen your knowledge about the value of innovation for German companies acting in China.

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Per Juul Poulsen

21. October, 2015.

Finally back in 1985, just a few hours after he left 1955, Marty McFly travels thirty years into the far future, to October 21st, 2015 to save his unborn kids from tearing his family apart.

The plot might be hard to follow if you never saw the movie but, to keep it simple, the hit sequel “Back to The Future Part II” takes us on a journey into the 2015 that Robert Zemeckis and Bob Gale imagined in the mid-80s. Flying cars, video conferencing, biometric security & payment, autonomous drones, holograms, self-tying shoes laces and of course hover boards. This is how 2015 was meant to be.

Since the premiere of the movie, a whole generation of hopeful fans has been looking forward to these inventions and a few of them even became reality. The camera drones are already here, although the dog-walking version seen in the movie still isn’t around. Hover boards have been invented in different versions, although so far just as marketing stunts. Pepsi created a limited edition “Pepsi Perfect” bottle, and we might even see a limited edition of Nike Power Laces. But why are we so fascinated by the imagined gadgets from a 1989 blockbuster hit?

We love the technology because we love the story.

Back to the Future was a love letter to the 50s, and watching it today is also a love letter to the 80s. From the music to the fashion to the simple good-versus-evil storytelling, it makes us think of what we thought was a simpler time – which really wasn’t any simpler than today; we just didn’t pay taxes back then when we were kids.

The story of a teenager in love and his relationship to his family captures us, because we’ve all had the “I must be adopted” discussion in our heads as teenagers, when looking at our parents. What if you could change who they were – or what if you could have gotten to know them on eye-level as teenagers? Time doesn’t really matter when it comes to human nature. Some things just never change.

Technology has brought us faster computers, the Internet, social media, smart devices and a plethora of ingenious inventions. But when we close our laptops for the day, we jump on our bike (invented in 1817) or take the subway (1863) or drive our cars (1769) and go home to our families. We hunt a paycheck instead of livestock, live in modern caves and cook over modern fire, but the basic things are still based on creating and supporting a family and keeping them alive. And everyone knows about the wonder, imagination and insecurities of being a teenager in love.

So tonight, find a location in your neighborhood that shows the “Back To The Future”-trilogy – there’s more than you might think – or invite your family and friends to your home cinema. Turn of your smartphone and send a kind thought back to the days where video rental was something you did at a store, before social media or even the Internet was invented – and remember that something never changes. And tomorrow morning when you get to the office, remember the person you wanted to be when you were younger. Sit down, open your computer, and if you want to sell something – don’t start with the technology, start with a great story!

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Per Juul Poulsen

The story of Beacons

Following an afternoon full of presentations and panels concerning the Bluetooth Low Energy technology at the 3rd Beacon Summit at our head offices in Munich, I got into a discussion with two other attendees. It was clear that all of us understood how this technology works: A small sender (Beacon) sends out a signal that almost any mobile device can read/detect. If your mobile device has Bluetooth activated and is within about 30 meters of the sender, it can read/detect the signal. If you have the right app, the signal can be interpreted and used to identify where you are and send you messages.

It is a very simple and fairly robust technology that anyone can use. Many companies have already stepped into the Beacon market and even Apple, Facebook and Google are investing heavily. A lot of people are investing a lot of money, a lot of time and waging their businesses and quality of life on this technology.

So what can you do with it? Well, there are a couple of standard showcase ideas. Indoor Navigation and Retail Push are the most common scenarios. Say you arrive at the airport and need to go to gate G49. You have no idea where that is, but by using Beacons, your location and the location of the gate are known and our app can easily get you from where you are to where you want to go. The same basic idea with a twist accounts for the other scenario: You enter a retail store and instantly get a notification on your mobile device telling you that the blue jeans are on offer. The jeans are located right next to you, on your right. – And here’s a 5€ coupon to sweeten the deal.

After two minutes of polite small talk, my fellow attendees and I got into an interesting discussion: Are indoor navigation and retail coupons that interesting? And if it works that well, why isn’t it already everywhere?

Sometimes we tend to geek out about the possibilities and forget the actual use case. We wait for a technology to solve our problems, missing the fact that our problems might actually just be the symptoms of a larger one.

Say you are a retailer. You sell jeans. You want people to buy more jeans. If your solution is to point your customers to the exact jeans you want to sell, give them a 5€ discount, lean back and wait to see your sales numbers soar, you have a bigger problem.

Why we buy stuff is simple: Maslow’s hierarchy tells us we have needs concerning physiology, safety, love/belonging, esteem and self-actualization in that order.

How we choose what to buy falls in those just-to-the-right-of–the-middle categories. We buy stuff to find and signalize belonging and to gain esteem from our peers and ourselves. So we don’t (just) buy jeans because we wouldn’t survive the winter without them, but also because we would become outcasts and lose our self-respect if we went to work without them.

What exact kind of jeans we choose doesn’t really matter on the account of needs. Of course if you produce jeans and want to increase your sales, it matters to you. But not to me. I just want to show up at work wearing jeans.

However, telling a great story will help move my opinion from one product to another. And that will change my attitude. People stand in line for days to get the latest iPhone but complain if there’s more than five people in front of them at the supermarket. Why? Because the story of the iPhone is better than that of Broccoli*.

So instead of just offering me a 5€ discount, tell me the story of your product. Let me know where I fit into that story and what my role is. Engage with me on an emotional level. And before you go buying Beacons because it’s the Next Big Thing, take a step back and answer these questions first: What kind of story do we want to tell, and what technology might help us tell it in a way that is relevant for the end customer? How do we engage with our customers, take them by their hand and start telling a story together?

Beacons might be a vital part of the solution, but don’t expect the technology to deliver the sales by itself. The story is more important than a technological framework. And if you need help with figuring out exactly what the story should be, how to tell it or what technology fits in where, I know a great agency for that!

*Actually, the man-made(!) vegetable Broccoli has an extremely interesting history. So maybe Broccoli has to have a talk with it’s advertising agency about telling the story in a better way?

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Per Juul Poulsen

SXSW – Trends 2015

What are the big trends of the South By Southwest this year? As expected, numerous offers from the fields of virtual reality (VR), augmented reality (AR) and wearables were represented with head mounted glasses, bracelets, necklaces and watches in every other booth; this trend has definitely been enforced. True to: “Simply place your order and fly”,  remote controlled flying drones were everywhere – from finger-sized models to those with  10kg payloads. Electric Skateboards, driver-less cars and autonomous robots that communicate across the Internet – everything was there in Austin.

But many companies and start-ups still are struggling with implementation: playing air guitar with a wrist strap that converts movements in music? Yes, it is fun, but what’s next? Measuring your fitness stats? – no problem, but how does that help me improve my performance? Drones and driver-less cars have high value, but what meaningful applications are there and who is responsible if something unexpected happens? How do we make sure we do not only produce “one hit wonders”? And what is a “wearable”?

Wearables are, as Lauren Bowker of “See the Unseen” in London aptly describes as, “packaged in plastic, connected to our mobile electronics”. Where are the haptic experiences – where is the magic?

It is at this point that the discussion becomes interesting. Each trend has a counter-movement. At best, this counter-movement recognizes the potential of the new trends and brings it into our everyday world.

Novalia from the UK did not invent anything new, but made, with a clever combination of small computers and conductive ink, printing interactive – a familiar and at the same magical feeling as if a magazine has suddenly turned into a tablet.

Imogen Heap put sensors on gloves. In this way a musician can use digital instruments, and control effects or music just with movements. A choreography can become a piece of music, a concert can be a performance, music videos can be accentuated with movement data computer-generated graphics.

But back to Lauren Bowker. Her work-collective, See The Unseen, works with futuristic materials, code, and chemistry to make the magic in our world visible. Together with their clients they have created products that respond to pressure, wind, humidity, temperature and interact with many other factors. The starting point of their evolutionary history was a jacket that changes colour by absorbing CO2 making visible to what degree the wearer is exposed to air pollution. Now, five years later, See The Unseen is ahead of its time with fascinating products that appear magical.

That’s what I as Innovations Director at Serviceplan seek; The point at which the interaction, the world of adventure and not the technology comes first. For me, the trends of tomorrow not only revolve around technology, wearables, Big Data, or drones, but especially valuable usage scenarios. It should not be about who makes what gadgets, but about how we bring  the future magic into our everyday lives.

About South By Southwest

Taking place annually in Austin, the Texas “Festival Style Conference” South By Southwest (SXSW) comprises three conferences in the fields of music, film and interactive. With an extensive program of lectures, workshops, networking and a variety of different trade shows and award shows, the SXSW Interactive with more than 30,000 visitors to the most visited part of the festival.

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Godfrey Madwadri

The Creative Exchange #1

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Servus!

My name is Godfrey Madwadri and I’m 26 years old. I’m an artist and graphic designer from the town of Nimule in South Sudan, where I work in my own small scale design and advertising company.

Currently, I’m at Serviceplan Campaign advertising agency in Munich for a 3 month internship to learn about advertising and ways to improve my business.

Everything started a year ago with Mrs. Anne-Felicitas Görtz who came to my country to talk to me about my business and to publish an article about it in the German magazine „Brand Eins“. From this article Mr. Oliver Palmer from Serviceplan found out about me and invited me to come to Germany for an internship at Serviceplan.

I arrived one month ago and so far, it has been a very interesting experience. It was not easy in the beginning, especially the cold weather, meeting a lot of people and learning about this new culture, but now with time and the help and hospitality from the Serviceplan people, I’m truly feeling at home. Workwise, I have worked on different clients already, designing logos and thinking about creative ideas and also worked on my own artworks. In my free time I went around Munich (Starkbierfest!), as you can see in the pictures, and watched the FC Bayern football matches. Easy to say, I am already a big fan and hope they will succeed in the Champions League!

This is just to introduce myself. In the following weeks, I will continue to write more about myself, my experiences here and also tell you about my homecountry of South Sudan (one of the youngest countries in the world which was founded on 9 July 2011).

I’m interested in your questions!

Godfrey

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Vadim Chekaev

On the road #3 – Moscow

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We have 25 employees in the office. The office is situated near Park Gorkogo (on Sadovaya Ring), which is now a center of the city.
Daily life in Moscow does certainly have its crushing features that dictate how we work, live and socialize.

The phrase “10 points” referring to Moscow traffic gridlock (10=paralyzed traffic) has become a stock phrase in Muscovites’ conversation.  Navigating Moscow’s streets is quite an experience at the best of time – in winter, it’s downright remarkable. In winter, unlike the rest of Europe, we live on summer time (two hours ahead of standard time), and this extra hour of darkness make what is already a challenging commute even more “entertaining”.

I arrive in the office around 10 am. Few people are around but all are beginning to filter in slowly but surely – having battled the traffic on the highway, or tightly pressed crowds on the metro attempting to squeeze through turnstiles and comparably packed trains… now all waiting for the sun to peep over the horizon…

I grab a coffee and settle down at my desk for the client and internal mails that await me, and for the review of the new business pitch document that the team has worked on and that needs to be couriered before noon today to meet the application deadline.

11 am, already time for real-time update on Moscow gridlock again, to decide on how to make it on time to the progress meeting on the major campaign with the key client. “10 points”, according to Yandex (a leading Russian internet search portal that provides daily, real-time updates on Moscow gridlock), the city does not move. The heavy snow has come. It comes every year, and every year it’s a surprise.  Is it not better to abandon driving and hop on the metro to get anywhere on time?

12:00, a disaster check – the courier delivered the pitch document just a couple of minutes before the deadline, hurrah!

1 pm at the client now. Not too late for the meeting. The clients are happy with the layout but still not happy with the copy.  No time for lunch. But a coffee at the client’s was good. I am heading back to the office now. “10 points” on the Moscow roads, it isn’t getting any better.

However much the roads are widened, however many new interchanges are built, the speed of traffic drops from year to year, but the speed of business does not, on the contrary, it’s getting faster and faster. A new brief just came in from the network, not allowing enough lead time for it!

3:30 pm.  I am still on the way to the office. It’s getting dark already – and still so much to get done.

Review with creatives afterwards on the key campaign and with planning on the urgent new business opportunity. And afterwards, there is a new job candidate waiting to share his experiences and work examples.

I am leaving the office late.  Traffic density index is down to 7 now – hurrah! Tomorrow is another day.

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Jan-Philipp Jahn

On the road #2: Dubai

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“We welcome you on board this Boeing 777 on our way from Hamburg to Dubai. The languages spoken by our cabin crew today are Arabic, English, French, Swedish, Finnish, Spanish, Italian, Portuguese, Serbian, Korean, Thai, Mandarin, Cantonese, Filipino, Hindi, Malyalam, Farsi and Sinhala…” Even the EMIRATES flight to Dubai gives you a foretaste of what the city has to offer – superlatives and a melting pot of cultures.

I have lived in Dubai for two years, and it took me nearly six months to get used to the rhythm of the city, its climate and its culture, not to mention my new workplace.

Dubai is one of the seven emirates of the United Arab Emirates (UAE), not the capital – that’s Abu Dhabi – nor is it an independent state with lots of oil, as I originally assumed. Also, Dubai does not consist entirely of sheikhs, desert and camels. Not entirely – though they do exist, of course. Out of all the United Arab Emirates, Dubai is the emirate of superlatives: the Burj Khalifa, the tallest building in the world; the Burj Al Arab, the most luxurious hotel in the world; and the artificial islands forming the Palm Jumeirah off the coast – these are only a few of the city’s remarkable construction projects.
But if you think Dubai’s going to stop there, you couldn’t be more wrong. Dubai never tires of planning ever more ambitious projects, such as the Mohamed bin Rashid City, Taj Arabia and the Dubai Modern Art Museum for 2013.

Dubai’s economy has seen formidable growth for decades as a result of its liberal economic policy. Its inhabitants are not taxed directly – only alcoholic drinks are taxed, at 30%. There is no income tax, and, with a few exceptions, no VAT. About 80% of the total population are expats, who come from all continents to work in Dubai. There are also more and more of us Germans.

At Plan.Net Middle East we have 25 employees from 14 nations. Our biggest clients are BMW, MINI, RR, Continental Tyres and the insurance company Takaful Emarat. Our agency is located in Dubai Media City, the regional hub of media corporations such as Leo Burnett and Y&R, as well as the big television companies NBC, BBC, FOX, etc. Dubai Media City is a free trade zone, meaning that we do not need a local sponsor to act as a sleeping partner for the company.

The summer in Dubai is certainly one of the greatest differences. It poses real challenges for me, as a northern European. In general you can divide the year into two halves. The first is warm, the second is hot. Temperatures of 40° – 45° are not uncommon in summer, which means that your clothes are wet with sweat the minute you step outside. Just imagine: the day begins, the sun is shining, I leave my tower block with my nice apartment on the 20th floor, step out of the door, and the first thing that happens is: a wall of heat. My shirt, my whole suit, is sticking to my body. Beads of sweat on my brow. Very neat and tidy! And have I mentioned the 80% humidity? Quick, into the taxi.
It doesn’t even cool down in the evenings, and the day’s activities are based on moving from air conditioning to air conditioning. They do a lot to make life in summer more attractive: for instance, the Dubai World Trade Centre is converted into Dubai Sports World. Running, football, basketball, tennis – everything is offered for free, and anyone can take part. And there is always the option of travelling to one of the neighbouring countries, such as Oman, Sri Lanka, India or Lebanon.

Another thing that takes a bit of getting used to is the culture. The Muslim month of fasting, Ramadan, and the public holidays Eid al-Fitr, Eid al-Adha etc. are actively celebrated in the agency. At these times daily life practically comes to a standstill. In the agency the working day is reduced to six hours, and the lunch delivery service stops. If you want to order a coffee at Starbucks you have to knock on the closed security blind, which is then pulled up barely a metre (so as not to let out the smell of coffee), and slip underneath.  We drink water in darkened rooms, and we don’t eat anything in the agency, out of consideration for our Muslim colleagues. It’s a good opportunity to lose a few pounds, but in the end everyone is glad when it’s over.

Our life at the agency is not much different from that in Germany. The meeting culture may be somewhat more relaxed, but the pressure on brands to succeed is just as high in this region as at home. Many of our clients see Dubai as an emerging market, and as a ticket to the Asian and North African markets.
Many big European brands have Dubai as their headquarters for the region.

If you believe the theories regarding the future of economics and politics, and if I can trust my own gut feeling, Dubai can look forward to an interesting future. Its economic development, stimulation and construction run in parallel with its cultural evolution.  This is making itself felt in drastic increases in the cost of living, including the explosion in rent prices.  Hello tomorrow.

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Serviceplan Group

Sustainability and advertising

Anna Gauto, editor at “forum Nachhaltig Wirtschaften”, spoke to Pavan Sukhdev and Florian Haller on advertising and sustainability. Pavan Sukhdev is a former manager at Deutsche Bank and founder of the “Corporation 2020” sustainability campaign. Florian Haller is CEO of the largest independent advertising agency in Europe, the Serviceplan Group. Both will speak at SusCon 2012 in Bonn.

 

Anna Gauto: Advertising does whatever you ask of it. Is advertising blameless?
Florian Haller: Advertising is not blameless. It is responsible for how a brand is perceived. Our task is to support and guide it with this in mind. For this reason, advertising cannot be blameless.
Pavan Sukhdev: Advertising is certainly not blameless. Advertisers like to think of themselves as experts, who cater only to the needs of their clients. In order to break through the system of reckless consumption, however, both advertising agencies and the companies they represent must consider the message they are sending out.

 

Today, companies are effectively adopting the concept of sustainability for advertising purposes. How has sustainability become a sign of a company’s prestige?
Haller: The trend towards a sustainable way of living comes from people, not companies. Well-managed brands are using this desire for sustainability as a business opportunity.
Sukhdev: We have numerous hard-working writers, scientists, entrepreneurs and citizens to thank for the fact that environmental issues have become so prevalent. How the term sustainability has become so popular, however, is a mystery to me. It is often used incorrectly. It actually describes activities which have been practised for centuries. Companies must be able to account for any claim to being sustainable. This is why the standardisation and regulation of ratings, rankings and seals of quality is necessary.

 

Cigarette advertising shows that selling well does not automatically mean selling something good. Does advertising need a conscience?
Haller: Advertising per se is an instrument which can be used in many different ways. For this reason, advertising as such is neither moral nor immoral. Advertising is, however, a powerful instrument, which can be used to turn a moral concept into a business opportunity.
Sukhdev: Advertising does need a conscience, but we shouldn’t leave it to the industry alone to develop it. We need to ask ourselves which advertising techniques are excessively misleading and what sort of information should be included on product packaging.

 

There is an increasing demand for ecological products. Has consumer behaviour changed advertising or is it the other way round – has advertising influenced consumers?
Haller: I don’t think we can overestimate the influence of advertising. The need for sustainability has been shaped by reports on climate change and wildlife conservation as well as numerous food scandals. For two years we have been using the Sustainability Image Score to investigate which companies in Germany are perceived as sustainable. This allows us to determine how the public perception of a company’s sustainability affects its brand value and therefore its corporate success. One important finding is that companies should not only use the opportunity to put sustainability into practice, but to discuss it intensively and professionally, at the same time winning over consumers. They must practise what they preach.
Sukhdev: When it comes to the ever more popular topic of sustainability, consumers have far more influence over advertising than the other way round. One should encourage the other. Read more

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