The 3 Problems Ruining Brand-Agency Relationships in China

    The rapid development of China’s digital ecosystem has put a heavy strain on the brand-agency relationship. Agencies open up about the most common problems and how to avoid them.
    Photo: safriibrahim/Shutterstock
    Lauren HallananAuthor
      Published   in Retail

    Choosing a digital agency in China is difficult and many brands struggle to find the right one. Yet even with the right partner, China’s rapidly changing digital environment, combined with language barriers and cultural differences, can put a great deal of strain on the brand-agency relationship.

    To understand how some of this stress can be alleviated, we spoke with several agencies to get their perspective on the most common problems and misunderstandings that occur when working with international clients in China and what can be done to resolve them.

    1. International Clients Dictating Strategy for China#

    One of the main problems that all agencies cited was brands’ lack of understanding about the China market, especially when it comes to the modern Chinese consumer.

    “Brands still think that being international is enough. That brand heritage is enough. But these days, Chinese consumers are so savvy and they are spoilt for choice, either domestically with their own challenger brands or international brands that are in China, or via cross-border channels, or through travel,” explained Elisa Harca, Regional Director & Co-Founder of Red Ant Asia. “For a brand to resonate in China, it now needs to work harder to tell its unique brand story in a compelling way that maintains its brand DNA, but touches the hearts and minds of the Chinese consumer.”

    Troy Sun, Senior Digital Planner at Reuter Communications agrees. “Many international brands do not have a sufficient understanding of the Chinese consumer – they don’t realize that they have so many options and have become very sophisticated. Being a luxury brand with over 100 years of heritage is not enough to interest young Chinese consumers. You must tell a story, which is relevant to them, to make a mental connection but never in an ingratiating way. Local content creation is always a key priority for us.”

    Brands’ desire to simply adapt a Western content strategy to fit China is also a source of conflict. Based in Italy, this is a problem that Emanuele Vitali, Founder of East Media constantly faces. “European brands tend to think that China needs a localized version of their global strategy. But in fact, the China market needs its own strategy.”

    Also centered in Europe, Mr. Fausto Caprini, CEO of Digital Retex, faces the same problem. “One of the typical misunderstandings is to underestimate the richness and complexity of Chinese culture by simply using the same symbols or images that work in a Western story. This also happens when designing engagement models or delivering a successful customer experience for the Western world, which might not be as effective for the Chinese market. Brands need to be aware that, on average, Chinese consumers are younger and more digitally-savvy than Western ones; this requires a more sophisticated approach to digital media.”

    2. Incorrect Expectations#

    Establishing expectations and keeping an open channel of communication from the beginning is crucial to maintaining a healthy brand-agency relationship. Some of the most common misperceptions that agencies must correct right away are related to budgets and expectations on returns on investment (ROI).

    “I always have to tell international clients to raise their budgets and lower their expectations – which is a really tough thing to have to say, but it’s the truth. Unfortunately, China is such a competitive landscape and well-developed market, and all brands want a slice of it, that it makes it incredibly costly,” explains Elisa Harca.

    “The comparative activities outside of China are typically 50 percent of the cost of marketing in China. KOLs, paid ads, search etcetera, are all so much more expensive in China, and the quick wins and low-cost digital channels we see in the West aren’t really replicable in China. But what we can see is that, when brands are patient, and can invest just that bit more, it does pay off. But, it takes time.”

    3. Slow Adoption of New Practices and Technologies#

    Agencies often play an educational role, helping brands understand China’s various social media platforms, what kind of content works best, and which KOLs are the most influential. And while brands may be hungry to learn, they’re oftentimes slow to adopt new practices and technology.

    Emanuele Vitali says, “There is a reluctance to acknowledge how fast China is growing digitally. Often, it is hard to convince clients to react quickly to the trends. Especially in Italy, brand headquarters go through a long time to make a decision.”

    Jiaqi Luo, also of East Media, added, “On top of reluctance, there’s also a lot of skepticism. When introduced to a new platform or tech feature, Europeans tend to be skeptical towards it. The constant need to verify a platform or a trend tremendously slows down the process and is detrimental to conducting business with China.”

    It can be hard to convince brands to try something new when they don’t fully understand it, says Troy Sun. “Sometimes it’s challenging for people outside of China to fully grasp and understand the power and influence of apps such as WeChat, Weibo, and RedBook, which have permeated consumers’ lives in every way when there are no equivalents in the West.

    How to Resolve These Issues#

    While there is no way to avoid these issues entirely, there are some ways to reduce their impact.

    Effective collaboration and transparency is the foundation of a healthy brand-agency relationship, but instead of merely advocating for open communication, Alex Duncan, co-founder of KAWO, believes that agencies should create systems to constantly keep clients informed. “Agencies being too closed about what they are doing can easily lead to a breakdown in trust. We’ve built automated weekly reporting into KAWO to try and make this effortless.”

    Setting expectations, in the beginning, is not enough, agencies must consistently update brands as the environment changes. “It’s a real challenge as the marketing in China is getting more and more expensive. For example, we see KOL fees increasing every quarter, and that is not always reflected in ROI,” explained Elisa Harca. “It’s a constant conversation about optimization.”

    Client education is paramount for Reuter Communications. “We invest a lot of time and effort to keep our agency ahead when it comes to trends in China’s luxury industry. We invest in our own research, have partnerships with data and technology companies, and are speaking with China’s big tech players such as Tencent, Alibaba, and Weibo on a regular basis,” shared Troy Sun.

    “We share case studies and best practices internally – when any of our team member notices a new campaign, new content or new digital products or trends, they will share in our company WeChat group and summarize key takeaways. If that information could be of interest to our clients, then we will of course be sharing it with them as well.”

    However, transparency and communication are just building blocks to create the most important elements of a successful brand-agency relationship – trust and respect.

    Alex Duncan describes it well. “The agency should have respect for the client knowing their own brand and how they want it to be portrayed. The client should respect the expertise of the agency and avoid being too controlling or heavy-handed. Treating each other as equal partners and recognizing the contribution each has to play.”

    The takeaway#

    • Open communication is crucial and requires agencies constantly keeping clients up to date
    • Expectations need to be set early, but constantly revised
    • Agencies must respect brands' understanding of who they are, while brands must trust agencies' knowledge of the market.
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