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These days, it’s hard to shake the feeling that everything is changing. Unfortunately, we cannot provide much more stability – because things are about change. This edition of SEO News for the month of October asks the question of whether the Internet as we know it will still exist in ten years, and explores what Google has planned for the next 20 years.

1) The Brave New World of Google

Major birthdays are a welcome occasion to take stock and look ahead. It’s no different for companies and institutions. The search engine Google is currently celebrating its 20th anniversary. Consequently, the Head of Search, Ben Gomes, who was promoted just a few months ago, has attempted to construct a grand narrative in the form of a blog post. Gomes’ story begins with his childhood in India, when his only access to information was a public library, a remnant of Britain’s long-vanished colonial power, and finishes with the modern search engine. Gomes suggests that personalisation, automation and relevance are the cornerstones of a quality product that, according to him, still follows the original vision: “To organize the world’s information and make it universally accessible and useful”. But is this goal being sacrificed globally on the altar of proportionality? SEO news will take up this question again below, with regard to the double standards in dealing with China.

An interesting issue for everyday SEO work, however, is a paradigm shift which Gomes believes will be groundbreaking for Google over the next 20 years. The Head of Search confirms the vision of an invisible and omnipresent information, solutions and convenience machine. According to Google, the transformation to this ubiquitous service is to be followed by three fundamental processes of change. First, it’s about even stronger personalisation. At this level, Google wants to try to evolve from a situation-dependent provider of answers, into a constant companion. According to Gomes, users’ recurring information deficits and ongoing research projects will be recognised, taken up and handled. This is to be achieved, above all, by a restructuring of the user experience on the Google results page. All sorts of personalised elements will be found here in the near future to help users make their journey through the infinite information universe more efficient. The user not only gets to know themself in this process, more importantly, the search engine gets to know the user – that goes without saying.

But before any criticisms can arise, we move swiftly on to the second paradigm shift: The answer before the question.

Google has set out to identify and prepare information relevant to the individual user, even before they have formulated a search query at all. The key element here is technological. Following “Artificial Intelligence” and “Deep Learning”, a technique called “Neural Matching” should be especially helpful: It links the representation expressed by text, language or image with the higher-level object or concept. This represents the continuation of the concept of semantic searches and entities with new technological concepts, and is exceptionally consistent from a business perspective.

The third pillar of the change should be a greater openness to visual information in the search systems. The visual search has great potential for users and advertisers, as we have already discussed several times before. Google is immediately taking action, introducing a complete overhaul of its image search, as well as the integration of its AI-driven image recognition technology “Lens” into the new generation of in-house “Pixel” smartphones. The interesting thing about Google’s anniversary publication is what it doesn’t mention: The voice assistant Google Home. This is a good sign that, despite all market constraints, Google is not distancing itself from its technological DNA and allowing itself to be pushed into a competition with the voice market leader Amazon. Contrary to the publicised hype, voice software is yet to create a huge stir in the search world.

2) The end of the networked world

Oh, how everything is connected: The individual, the world, technology and democracy. More and more aspects of our existence are digitised or transmitted via digital channels. In this process, it always comes back to bias. The well-known tech companies are acting as the pacesetters of this upheaval with their platforms. It may not be too long before Facebook, Amazon or Google establish themselves as the quasi-institutionalised cornerstones of our social and economic systems. Even today, the real creative power of these companies often exceeds the capabilities of existing state regulations. And search engines are at the centre of this development as a human-machine interface and mediation platform. The most relevant shopping search engine Amazon, for example, is changing not only our personal consumption habits but also the appearance of our cities and landscapes, with its radical change in the retail sector. The convenience for the consumer has resulted in empty shops in the inner cities and miles of faceless logistics loading bays in the provinces. Meanwhile, global populism has cleverly used social and informational search systems to accurately position and reinforce its messages. Facebook and Google have contributed at least partially to the sudden and massive political upheaval in one of the largest democracies in the world. Maintaining their self-image as pure technology companies, Google, Facebook and the like, however, have so far persistently refused to accept responsibility for the consequences of their actions. Apart from public repentance and the vague announcement that they are looking for “technical solutions”, they have shown little openness to adapting their strategies to the intrinsic systemic dangers. So the interesting question is: do global technology companies have to represent those values of freedom and democracy that have laid the foundation for their own rise and success in the US and Western Europe? Or can companies such as Google or Facebook be flexible depending on the market situation, and utilise their technological advantage in dubious cases in the context of censorship and repression? Currently, the state of this debate can be seen in Google’s project “Dragonfly”. Since Mountain View has refused to censor its product content, the global leader has been denied access to the world’s largest and fastest-growing market. When Google ceased all activities in China in 2010, the People’s Republic was forced to do without it, and managed pretty well. China has managed just fine without competition for its own flagships Baidu, Tencent and Alibaba. According to consistent media reports, Google has been working for several months to restart involvement in the Middle Kingdom, with the blessing of the government in Beijing. Under the working title “Dragonfly”, Google is reportedly planning to launch a Search app and a Maps app. Working closely with the Chinese authorities, and under state control and censorship, these apps are expected to pave the way for future, widespread activities for Mountain View in the People’s Republic. It just goes to show that Google is prepared to play the game, if the price is right. This approach can be seen as pragmatically and economically motivated. Particularly in light of the fact that the Chinese authorities recently granted Google’s competitor Facebook company approval, then withdrew it after only one day. Rampant discord in the West and cooperative subordination in Asia: former Google CEO Eric Schmidt outlined the consequences of this double standard a few days ago in San Francisco. Schmidt told US news channel CNBC that he expects the Internet to divide over the next decade. He predicts a split into a Chinese-dominated and a US-dominated Internet by 2028 at the latest. Apparently, Silicon Valley has already given up on the vision of a global and open network for the world. However, the consequences of this development will be felt by every individual.

Corinna Gleich, Junior Digital Media Planner at Plan.Net Media, has travelled to China to work for three months as part of an internal company exchange programme. She’s been at the House of Communication in Beijing for four weeks now, and is starting to feel at home in China’s capital city. We asked her to write about all about the surprises that living there has brought so far. This report is based on her experiences during the first four weeks.

When I arrived in China, the first thing I had to come to terms with was that my phone was as good as useless – Google, Facebook and Instagram were all blocked and WhatsApp didn’t work. I could get around this with a VPN, though. Speaking English wasn’t an option, hardly anyone here can speak it and that meant me having to work hard to learn Chinese. At first, I could only pay for things with cash (German bank cards aren’t usually accepted and there are only a few ATMs that work with Visa, for example), so I had to open a Chinese bank account as soon as possible to be able to pay using WeChat Pay. I needed to have a local mobile number before I could get a bank card. Luckily, this was quick and cheap to set up. I could set up WeChat with my new number and get a bank card (I was lucky in this respect, too, as the rules for bank cards were recently changed and foreign nationals now have to have lived in the country for at least a year to be able to request one). Getting money into the account from back home was the next challenge, but WeChat had that covered. WeChat makes it easy for another user to transfer money; this money doesn’t go into the account, but rather into the WeChat Wallet. Everything’s done on your mobile here – which is why there are a few more handy apps to help you go about your day, such as Alipay (WeChat’s biggest competitor and which has more users in some cities), Didi (Uber), Ofo (for cycle hire), Air Matters (an air pollution analyser), Dianping (Yelp), E (for ordering food) and translation apps.

The office in Beijing is located right inside a shopping mall. The work day in China is almost exactly the same as in Germany. The only thing is you have a much later start. Turning up between 10 and 12 is normal; you just work longer in the evening to make up for it. It’s also not unheard of to just take a power nap while at work. There are lots of cushions and cuddly toys dotted about to make the place comfortable. They drink coffee here too. You can order food and drinks round the clock. Generally speaking, the food is much cheaper than in Germany – three euros gets you a decent meal. You can also have bubble tea and other drinks delivered. Delivery people race on their scooters at breakneck speed, up and down streets and even steps!

Shopping mall right next to the office with big screens on the ceilings

The way people interact with and consume media here is completely different. Everyone wants to stand out from the crowd without really worrying about data protection. Live streaming is the big thing over here; you can watch a person eat their dinner, for example, and send them virtual gifts that you have to buy. This is how live streamers make their money. There’s a parallel for everything – WeChat is like Facebook, Sina Weibo like Twitter, Youku like YouTube and Nice like Instagram. There’s shops on every corner (I’ve never seen so many shopping centres in such close proximity), and great importance is attached to brands; Western brands are particularly fashionable. German brands (some that I didn’t even know existed) are seen as must-haves in electronics. Owning an iPhone is the norm here.

Work and everyday life aside, sightseeing in Beijing is amazing for a tourist! There’s so much to discover and ticket prices are only around two to three euros. Public transport is cheap, too (the subway and bus are around 50 cents a journey). You can also travel to nearby big cities (e.g. Shanghai, Hangzhou) in no time with the high-speed train. A highlight for me so far was the Summer Palace, which is just outside of Beijing on a small hill surrounded by a lake. I was actually quite disappointed by the Forbidden City; the architecture was very impressive, but there wasn’t much to see in any of the buildings and some were closed altogether. Hangzhou is definitely the place to visit for nature lovers (around five hours from Beijing by high-speed train); it’s rare to see so much green in a city, even in Germany.

Corinna at the Summer Palace

 

Another tourist attraction: The (crowded) Great Wall

My main takeaway from this experience so far is that Beijing is so much more than just a big city; you have to get used to the crowds and fast pace of life here. To me, China and Beijing are like a completely different world. If you want to discover something totally new like I did, you’d really love it over here.

By Björn Portillo, Managing Partner at hmmh

Several years ago, experts predicted the end of over-the-counter trade. That is to say, it would not be able to exist alongside online trade in this new digital world. However, this viewpoint has once again shifted as connected commerce concepts are slowly but surely taking hold. Previous online “pure players” such as notebooksbilliger.de or mymuesli have even set up stationary concept stores, and now find themselves in the product ranges of large retail chains. But what are the reasons behind this change, and which innovations are bringing retail back into the game?

In order to understand the “how” and “why” of this paradigm shift, we are embarking on an economic and cultural journey that will take us to the USA and China, before returning to Germany.

Packing our bags in Germany

Many companies and agencies have worked hard to promote technical development and harness innovations to simplify our day-to-day lives. Concepts for interactive consultancy solutions, as well as mobile consulting via smartphone, mobile payment or augmented and virtual reality, are well-developed enough for implementation in stores. But these opportunities are often not exploited in this country. Why is this? Is it down to retailers who ignore the potential due to traditional reasons? Or perhaps it is a scepticism of all things new and a distrust of technology itself? Are German store owners, their customers, or even both, wary of innovation?

The risk-averse, conventional German likes to carry out research and product comparisons, particularly online. The product and the context then determine where they make purchases – sometimes online, sometimes offline. A decisive factor is that they feel well-advised and well-informed, and that they are able to closely examine their desired product.

Technical hurdles and a lack of acceptance

Not only do traditional retailers need to offer a range of products that is varied and constantly available – they must also provide the right setting for brands and products in order to present these to each customer. However, attempts to implement connected commerce concepts often fall at the first hurdle – Internet access for the customers. Furthermore, the use of different systems that cannot be easily combined is another reason why retailers are often faced with such great challenges. That makes it difficult for retailers to recognise their customers, and impossible to collect relevant data, offer comprehensive advice or provide a quick and simple payment process. Except for a few individual examples.

A further challenge: although German consumers place great importance on being able to test their desired product – ideally even trying it out in a private setting – and also expect comprehensive individual consultation, they are often not willing to share their personal information.

Off to the USA

The land of opportunity – is this also the case when it comes to store innovations? If so, which developments have already taken hold? With a significantly higher population across a land area 25 times the size of Germany, it is difficult for us to sum up the average US citizen. What we can say, however, is that the average citizen is open to new things, thinks practically and is always on the lookout for a bargain. They like to use their credit card at the small business around the corner, and their thick coupon booklet is the most valuable companion when it comes to the weekly shop. Perhaps the most important drivers of innovation are the thriftiness and desire for convenience of the American people.

Ideas are tested and optimised

Every day, new concepts emerge that are aimed at giving US citizens the shopping experience that they want. At the end of 2016, Internet giant Amazon opened its Amazon Go grocery store in Seattle, where customers do not need to wait in queues or make physical payments. All thanks to a motion detection system installed in the store – the so-called “Just walk out technology”. Payments are via PayPal and the Amazon.com account. However, the store is closed for the time being due to technical issues with the motion detection and tracking of more than 20 customers at the same time.

Amazon Go

Amazon Go – Shopping without having to queue up at the checkout: just walk into the store, put the item in your bag and then leave. Source: Amazon

This example shows that not everything needs to go to plan first time round for innovative companies. Whereas in Germany it is frowned upon to make mistakes – which means that attempts are not even made to try and establish new concepts – the successful principle of “trial and error” applies over in the USA. Courage is rewarded.

US retailers know what their customers need

In contrast to the cautious mentality of German offline retailers, the US market offers numerous examples of its digital transformation. For example, the retail giant Walmart is buying up online shops and start-ups, and in doing so is making strides towards e-commerce. The other big player in the stationary retail sector, Target, offers its customers a practical app that not only allows them to manage coupons easily using their smartphone, but also provides them with in-store navigation to show the direct route to the desired product. Other concepts are already being tested. Unrestricted data allowances in mobile phone contracts are making it much easier to use these services.

“Whether it be artificial intelligence in the form of multiple interfaces, robots in the store, speech assistance through in-ear consultants or delivery to your front door without you even needing to be in: these trends in the US market are not necessarily compatible with the German market due to the differing mentality of consumers”, explains Nicolas Roemer, Chief Business Development Officer at Serviceplan US.

Moving onto China

Anyone who has visited China will be aware of the people’s affinity for technology, and their group-oriented way of thinking. They will also have an image of the typical urban landscape before their eyes: millions of people on the streets with their smartphones out enjoying unlimited data volumes. Driven by progress and further development, new concepts catch on quickly in this society.

A step ahead when it comes to innovations

For years, retailers that have also enjoyed success with e-commerce have been looking for ways to combine the online and offline worlds with one another. Pioneers on the market such as Alibaba.com recognised the unfolding “mobile boom” in China, and came up with concepts to match the mentality and the new purchasing behaviour of the Chinese people. The result was futuristic stores with sophisticated technology. For example, a self-service store called “BingoBox” was opened in China’s Guangdong province. Although nowhere near as complex and extensive as the Amazon Go store, it was adapted to the demand for mobile shopping. As the Amazon Go store was being trialled in the USA, Alibaba.com was already introducing a sophisticated variant of the fully-automated store concept in China: the “Tao Cafe”. Here, customers can log in with their smartphones and pay at the checkout cash-free thanks to facial recognition.

Tao Cafe

Tao Cafe – purchasing through facial recognition: The cash-free café combines automatic optical sensors and facial recognition for quick payment. Source: VCG Photo or CNR

The era of staff-free shopping

Cash-free stores and automated services have become part of everyday life in Chinese shopping centres, as quick payment via smartphone continues to boom: 6 in 10 customers now pay for their shopping using their phone. This represents great potential for Chinese retailers. Payment service providers have a good understanding of Chinese social interaction, and combine the popular payment method with social media functions. For example, users of WeChat Pay can follow the official WeChat account of the respective retailer in order to get advice or ask questions. Users can also exchange information with one another and provide recommendations. The way we see it, the retailers there seem to act like private individuals. They know that customers identify much more strongly with brands and connect a lot more emotion to them than people in Germany.

The hype surrounding mobile payment in China has been a strong driver behind the development towards connected commerce. For retailers, this method of payment not only drives revenue, but is also a new form of communication and interaction – both online and offline. A prime example of an optimal, integrated user journey.

Back to Germany with our bags full

When it comes to implementing connected commerce concepts, the Americans and Chinese in particular show us how it’s done. Apple Pay and Samsung Pay are essential for this, as are large mobile data packages at low rates, which allow 360°retailers to offer integrated services in the store via smartphone. However, German retailers still find it difficult to take this step. The seamless customer journey still has clear barriers, and customers themselves have played a part in creating these. The cautiousness of the German people, the data protection barriers and the inhibitions regarding the use of existing technology need to be dismantled. “Many German retailers feel that their hands are tied and that they are trying to perform a difficult balancing act”, reveals Björn Portillo, Managing Partner at hmmh. Here, it is important that they have the right partner by their side. They can then develop options and methods that offer consumers added value, and in return consumers will be happy to make their data available.

Whereas Germans still worry about making mistakes and therefore often act too late, a different error culture dominates in the USA. “Test, optimise, then test again – these steps are part of the innovation process and are ingrained in the mentality there”, says Nicolas Roemer, Chief Business Development Officer at Serviceplan US. “Even if a concept doesn’t quite work out and needs to be scrapped, it doesn’t mean the brand is doomed. Quite the opposite – bravery pays off.”

In China, it is the urge for progress that drives the digitalisation of over-the-counter retail. However, it does not make sense to simply copy innovations and force ourselves to apply them. “Together with retailers, we must first determine which problems of the target group we want to solve. Only then should we look at which innovations we use and how we use them, so that they actually catch on”, says Björn Portillo.

We are aware of the needs and fears of German customers, as well as the technical challenges faced by retailers, and already have approaches for individual solutions. Experienced international agencies are just waiting to be given the go-ahead.

I met Jørg our CFO in the lift. He raised his eye-brow, looked at me who was holding a handful of packages from Taobao, asking sarcastically “what did you buy again?”  I shamefully couldn’t answer, because I had already forgotten.

Every night before I go to sleep, I will browse on Taobao or JingDong as relaxation… and always find something inspiring or something interesting that I want to give a try. The lady’s privilege of “window-shopping” now has becoming “pad-shopping”.  One day without buying some little things makes me feel guilty. “It is almost equal to the guilt of not contributing to society” I told Jørg. As a matter of fact, shopping online has become a ritual for Chinese. It’s about buy buy buy, but not what to buy!

Compared to my German colleagues, who lived a quite reduced and settled way, our Chinese colleagues are more unsettled and adventurous. The cost of trying-out is just so low that we can easily convince ourselves “why not?”, and then adjust the risks and uncertainties into possibilities.

Since the country doesn’t have a glorious industrial background, nor any successful history regarding modern economic development before opening-up, Chinese can “travel light”, jump and leap forward just from scratch, and explore wildly. This is why you see Taobao is more popular than Amazon, WeChat is more than Whatsup, and Didi is more than Uber. A country without even a proper credit system, now is able to develop the world’s best online payment system, and makes cash-free penetrate to the most rural ends of China. It makes it accessible to peddlers and grandmas.

We Chinese learn fast, and change fast. For a country named as “the People’s Republic of Change”, change is the only thing unchanged, and change has stealthily taken us to the next “future”.

This “future” is already happening now in China! Please come to join me at the China Roadshow 2017. I would like to show you how Chinese are upgrading their life with more disposable income, and how the future way of living and doing business are embarking new marketing potentials.

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.