Pablo Mauron is the general manager of the China office of Digital Luxury Group, a 360° digital and consulting agency for luxury brands with offices in Shanghai, Geneva, Paris, and New York. On the day we meet, the 34-year-old Geneva native is presenting the case study of a marketing campaign for Montblanc at the China Luxury Summit in Shanghai. The campaign, “Daban” (English: “big boss”), revolves around a Hot or Not-like app developed to promote Montblanc’s flagship Meisterstück pens, in which users vote either daban (representing sophistication, elegance, and leadership) or tuhao (a popular and disparaging term for nouveau riche) for images uploaded by fellow users. As an example, Mauron pulls up his own profile, exhibiting a less-than-brag-worthy score (more tuhao than daban).
It is perhaps this self-deprecation and willingness to take certain things less seriously that has been instrumental to Mauron’s ability to head up DLG’s China business. The Shanghai office opened its doors in 2012 with a predominantly local team and currently generates a significant portion of the company’s global business. On working in China as a foreigner, Mauron suggests: “Be humble enough to realize that you will never completely understand the market and that’s why you need to be supported by strong local talents.”
Over coffee, Mauron discusses the ubiquity of KOLs, the real impact of the corruption crackdown, and the growing sophistication of Chinese consumers.
What are some China-specific services you offer?
When we do social media here, we emphasize much more on content creation, storytelling, and brand building. You don’t have the same assets you have overseas; brands don’t have a lot of ready content for the China market. The usage is not the same, practices are not the same, but in the end, it impacts more the tactics and the implementation than the nature of the service. It is similar for other digital marketing activities—for example, SEO follows the same principles in theory, but practically speaking, a lot of things differ.
Another thing that is different here is that in the end, even if e-commerce is a reality for luxury brands, the fact is many are not ready to operate their own e-commerce platform here. Third-party e-commerce platforms have more importance here. We have an increasing number of brands seeking support to leverage properly on these third-party platforms to complement their e-commerce strategy.
What Burberry did with Tmall recently was a very good example of that.
You sent fashion blogger Peter Xu to Baselworld. What is the importance of KOLs (key opinion leaders) when it comes to product endorsement?
I don’t like to speak about KOLs because it became such a buzz word in China. At some point, every blogger was calling himself or herself a KOL and anyone in China could have been a KOL.
I feel you work with KOLs for a very specific purpose; you want to tap into a specific community and it’s just about expanding reach into that community or you want to gain in credibility and develop your brand positioning through their image. Ideally, you want to do both, but not every KOL is relevant for this. On the other hand, it’s less and less impactful because audiences are more skeptical about the authenticity of messages. It doesn’t make KOLs less relevant, just more challenging to work with and get a good return on investment. So it’s important to pick the right KOLs, ones who have credibility and a relevant position for the brand. It’s more important than before to be careful when selecting them. The audience is very aware of how it works. If it’s simply to ask them to share content such write something based on a press release, it’s not impactful anymore. Now, there needs to be deeper engagement and content creation. Working at a very basic level such as basic post or repost on Weibo is not sufficient anymore; it requires a stronger commitment to develop projects such as a photo shoot or the design of a capsule collection.
We have different KOLs serving different purposes. Consumers are becoming more sophisticated and it’s not as easy as before. I think they are much more skeptical of promotional messages. Before, KOLs were the easy way of working around that. Now, KOLs can have the ability of making things more challenging and more legitimate as well. It’s good.
In your annual World Luxury Index, you list the ranking of most-searched luxury brands on the internet in China. What are some general trends in the past few years based on these findings?
We have started to observe more stability. In the first reports, there would be massive change in the top 10 brands one year to the next thanks to a TV show or successful commercial campaign. It was very volatile. Now, there is more stability, but at the same time, we see a kind of fatigue of the mainstream brands. Once again, consumers are becoming more mature. Also, from the younger generation, there is a growing concrete willingness to stand out from the crowd and be different, which presents a risk to well-established brands. So there is more stability on the one hand. We can say now we have iconic luxury brands in China that are at the top and will stay at top for at least a few years, which was not true in the past. But while the market is becoming more mature and developing its own taste, there is a lot of opportunity for innovative brands to find their own niche and audience.
Do you think wealthy Chinese consumers have moved beyond conspicuous consumption?
There was a big trend in the past to oversimplify and say Chinese consumers liked to buy what would be seen, shown, to show their success with concrete symbols of wealth. Now it becomes more difficult to say. Some wealthy Chinese consumers will do that, but with the more mature and sophisticated consumers, experiences will become more appealing—luxury lifestyle, food, and beverage. Trends with tourism are evolving a lot with the new generation as well. Going to new places; no more group travel.
I think potentially the crackdown on corruption had an impact on sales, but not interest. Besides, a main percentage of purchases are done overseas—a trend that will increase—and that is also the interest of our reports. This shows us that if China is slowing down, the Chinese are not.
Which brands will succeed and which will fail in this time of flux?
The successful brands are the ones that managed their growth and didn’t expand only for short-term revenue. Plenty of big brands are suffering because they became too popular too quickly. Chanel for example, resisted expanding too quickly and was not influenced too much by the low- hanging fruit, which explains the fact that they might be less challenged than other big brands that are suffering from a certain saturation.
As Chinese consumers become more sophisticated, they seek greater exclusivity and authenticity. What type of brand messaging appeals to this?
If you look at Weibo, and I don’t know whether the problem stems from brands or agencies, the market is focused primarily on KPIs, which leads brands and agencies to work on campaigns to serve the sole purpose of recruiting more fans or generating more buzz. This leads to campaigns completely disconnected from the core brand message. When you see a luxury brand put out a campaign about reposting a message to win a brand’s item, for instance, that might work for quickly growing a community, but there is a lack of qualitative consideration. Such numbers-driven campaigns could work for fast-moving consumer goods brands but not luxury, in my consideration.
Why don’t you think there is a homegrown international luxury brand yet and what will it take for one to develop?
I think “made in China” is still a challenge. There is a know-how here in terms of craftsmanship that is not recognized overseas. There is a global perception of “made in China” that needs to be developed.
I think we have proof every day that creativity is here, innovation is here. No matter what we like to say from a more overseas standpoint, we’re definitely in a country with strong innovation.
In terms of branding, there is a lot of work; brand image, message.
I feel there is a learning curve that goes fast. It simply relates to the fact that the first Chinese brand appeared at the end of Communism. There simply is not the same history and experience as it was in the West. Iconic luxury brands in Europe and America are sometimes 100 years old. In China, anything with more than 10 years of history is already quite old. Of course, in China, there is a strong concept of tradition, heritage, and culture, but applying that to a commercial enterprise is a concept that is very new. I believe that is one reason. Building and promoting a brand is a new concept that at the local level has existed only a few years and at the global level is even more recent.
What has been the greatest challenge in starting the China office?
The key challenge, and it is very logical, was to win the trust of the local teams. As a laowai working for a foreign company, it is not easy to convince local teams that you can potentially help them at various levels. The other tough challenge is to concretely face the fact that a lot of your assets are not relevant in China.
However, luxury brands realized quite fast that our goal was not to apply a Western recipe to the Chinese market, but more to leverage on our understanding of our clients and their industries in order to build and conceive relevant digital marketing operations. The fact that I am the only foreigner on the China team definitely helped to get that trust as well.
What advice would you give to a foreigner thinking of starting a business in China?
Be humble enough to realize that you will never completely understand the market and that’s why you need to be supported by strong local talents. No matter your skills or experience, I really think it’s impossible to make it in China if, as a foreigner, you are planning to leverage on your assets only. You need the help of people who were born and raised here.
At the same time, it is important to not go for the other extreme. In the end, we are a foreign company, working for mainly foreign brands, our culture and differences versus a local company can also be a strength for our clients, so it’s important not to deny this.
It always comes back to the importance of having a good balance in China: between who you are and what you aim to bring as a foreigner on the one hand, and what you need to question or challenge about you and your business to make it successful on the other. It sounds like the billion-dollar question that most luxury brands are still trying to answer.