Q&A WITH CATHY AND RUDY：What's ahead for China?

Q: How has the country changed?

Rudy: There are definitely complex problems in system development and servicing people’s needs in modern China. On a product level, there is a very high expectation and a rather blind openness to things. Personal expectations, social expectations are just one part. There is also collectivism where people collectively build an expectation around things.

Individuals in China are still within a family unit but outside of that it is collective. They’re growing beyond family. The one child policy is really starting to affect modern society. The desire for community and to be connected is not being met through family.

Q: Does that explain why social media has taken off?

Rudy: Social media is an accelerator until trust is broken when it becomes overly commercialized.

Cathy: Chinese people are extremely community-oriented. However, the community is looser now. There is no physical community at all. People move around a lot and don’t stay with their family. My generation has four parents to take care of and there is no shared living community for support. Nobody knows their neighbors anymore. When I was a child, neighbors shared food, took care of kids and watched each other. That doesn’t happen now.

Virtual communities are definitely growing online but they are having a shorter life when the next “something” shows up and gets lots of followers. People shift attention very quickly. Weibo to Weixin (We Chat) for example. Weibo is not as popular as it once was because of new competition. Online communities grow quickly and move away quickly.

Q: What else are you noticing about today’s generation?

Cathy: Most of our generation doesn’t have a brother or a sister and parents tend to get sick at the same time.

Rudy: That problem is shaping decision making around where today’s generation works since they understand they have to take care of parents in future. It is a big part of the guiding decisions for 30-somethings that are driving today’s workforce.

Cathy: It isn’t severe yet since parents aren’t so old yet. Our generation is built on learning and teaching from books. They are educated but they can’t use their hands for survival. Thirty-somethings need people to serve us by cooking, and washing clothes and changing light bulbs. We are not a very independent generation since we lack basic survival skills.

Q: What does this mean for brands in China?

Rudy: Without a strong family community, consumers collectively buy and use products. It make brands have to be more nimble since there is a high possibility of consumers changing to another brand or product very quickly. Customers evaporate. Companies need a strong pipeline of product development to fill the gap. With customers disappearing, there is a huge business challenge.

Cathy: Five to ten years ago, foreign companies could build awareness quickly and there was a lot of room for fake brands with a few foreign words in their advertisements to ride along on that awareness. Today, Chinese people are smarter. They don’t just accept whatever exists. People are more aware and will research things online to check all the different angles.

Rudy: Modern and urban environments are changing sure but the biggest changes involve e-commerce in rural environments. The role other users play is an even more important role. Rural consumers go online and see someone that else has bought a product and they want it too. It builds trust around brands in a collective way. Sometimes it is in an impulsive sort of way since often they don’t really need the product.

Cathy: With e-commerce globally, retail is being destroyed.

Rudy: Retail hasn’t really existed in some people’s mind. They think e-commerce is the new retail. E-commerce is part of the ecosystem, rather than a disruption to a former ecosystem.

Cathy: Chinese like shopping online.

Rudy: Sure. Shopping online involves data, it is convenient and there are no worries about poor service, poor transportation or poor air. All are barriers in China to traditional retail. If there is a guy on a bicycle who can bring a consumer the toothpaste he wants, all the better. Wow..and it doesn’t cost him much more.

Q: So are brick and mortar stores going to go away?

Rudy: Traditional retail just needs to be reframed. It will evolve into more of an entertainment experience.

Cathy: Stores will be about the display experience and then the products will be bought online. It is a whole new way of interaction. Salespeople will become “experience officers.” Not for every product but a lot of them. Companies will need to understand how to best leverage this change.

Q: You mentioned pollution as one reason people are changing their shopping habits. What else will change?

Cathy: The environment is a big problem. Three years ago it was never discussed but now people bring up pollution publicly all the time. As a result, people are consuming products differently. There is a greater awareness of what materials are used and the importance of recycling.

Rudy: This will drive an interesting trend in the future. People will use their hands in craft. If they question the source of products so deeply, they may want to create it themselves. This will force a very big change in habits and relationships. Cleaning and cooking differently will make a home more of a safe zone. Perhaps there will even be barriers around the outside. What are the products and services that can control that? Food preparation and gardening will be a massive trend. It will be interesting and I am very optimistic about these changes.

Q: What about healthcare? What changes do you see there?

Cathy: There is a big problem in healthcare with lots of evolution. Dramatic change is underway. Hospitals are quickly becoming equipped with more Western equipment. They are trying to get closer to international standards. They are starting to use IPad apps to monitor patient situations.

Rudy: Every hospital in China will develop apps to solve their own problems but unfortunately they won’t all be linked together. Technology is becoming a competitive advantage for hospitals. Hospitals need to look at how they are serving the needs of their patients. We will see them become more customer focused, while still dealing with the constraints of high volume.

Cathy: Chinese are becoming more and more sophisticated. People are willing to pay for quality. Rich Chinese already use international hospitals to get proper healthcare and service. A company recently contacted us since they were looking at adding a modern internal hospital. Very different since internal or community hospitals are not so popular. Chinese would rather wait in line half a day at an international hospital to get a five minute dialogue with the doctor instead of more personal service at a smaller hospital. It is a great opportunity for community hospitals.

Q: What trends do you see in innovation in China?

Cathy: Innovation is a big thing. People are talking about it on a government level and on an artist level. It is becoming a word that I am starting to get sick of and I am confused. I was one of the first people in China to advocate for innovation and design and sadly the terms are now being overused.

The Chinese government is starting to pay attention and promote innovation. Unfortunately, the quality of the types of businesses getting on board to receive favored policy and government funding is not always good.

At China Bridge, we have a calm attitude. We know we offer good service. We strive to be the best and to be competitive. We don’t rely on government support.

Rudy: There is no clear direction on why some people get funding or not. The government needs to learn to better understand the differences between innovation, ingenuity and design. Then they should decide where to invest.

Cathy: Billions of dollars have been given out by government. I have reviewed the criteria. The grants require a certain style of writing and format. People who get government money are really into this game and they are very good at it. They study policy and funding opportunities every day. Then they create something that meets the current style and taste. It is a big problem in China.

Rudy: Today, we talk less about innovation and more about making changes that are valued by consumers or organizations. Change needs to be meaningful and has to have a purpose that can be measured. Doing it different doesn’t always work but success comes from making something better than it was before through ingenuity or a disrupted innovation or service.

Companies run into a big issue when they don’t understand what the problem is they are trying to solve at the very front-end when they create an initiative. They often start with a hope or wish but sometimes they don’t really have a problem that needs to be solved. Some of the biggest tech companies have amazing engineers creating very cool aspirational products but they aren’t based on a need. The best companies purposely drive innovation when they have a purpose.