A major disconnect that exists in many of the Asian markets is that, while there is huge potential for the affiliate channel in Asia, there is a dearth of big brands working through this channel. Why is this the case?
China, in particular, poses a rather obvious question -- why has there been so little online market penetration for Western brands in China? Some have tried to come up with easy answers such as, "Chinese don't generally pay on credit, and this is how most transactions are done online."
Despite the low use of credit cards (only 5 percent of the Chinese population has them) the sheer numbers are staggering -- after all, 5 percent of 1.5 billion is still 75 million people. Besides, there are other payment methods such as Alipay, the Chinese equivalent of Paypal.
No matter how it is sliced, a population of 1.5 billion people, growing annually by 30 percent, certainly has the potential to consume a lot of products. Many Chinese are clamouring for Western style products too. Obviously, China is a coveted market. So going online and moving products and services in China is a no brainer -- right?
The reality is, very few, if any, big brands are successfully marketing online in China at the moment, and even fewer are doing it through the affiliate channel.
Some factors that contribute to the dearth of online success are obvious, and they are not restricted to online conditions. One of the factors is the undervaluation of the Chinese Yuan, which results in a trade imbalance between China and the West because of the cheaper currency and less attractive exchange rate for the Chinese consumer.
Traditionally, China's lower labour costs and cheaper production of goods often means that they are of a lower quality than foreign goods. However, there is a definite trend of increasing quality of Chinese goods. The label "made in China" once automatically inferred something cheap and of questionable value, but this does not resonate as strongly today. So if you can buy high quality goods for a cheaper price from a local Chinese producer, it is hard to see foreign brands making an immediate impact.
There are also the regulatory concerns, which poses plenty of red tape for foreign firms to wade through; not just from the Chinese government, but from each individual province and each local authority, making certain products very difficult to bring to market.
Adding to this list of challenges facing online marketers is the slow loading time for foreign sites as compared to sites hosted in China. With little brand awareness, the lack of offline advertising of foreign brands within China means online advertisers have a lot more work to do. Put these factors together and you have a pretty good idea of why the "big population = big opportunity" equation isn't that simple in China.
Cultural issues pose a challenge too. Accor Asia markets in China with the tagline "Accor -- we build smiles". That language works in China, even though "building smiles" is not a likely phrase in English. In Europe, the tagline is conspicuously dropped from all banner advertising -- same product, different marketing.
Years ago, the big blunder that gained fame was the Chevy Nova marketing adventure in South America. Chevy Nova ("No va" meaning "it doesn't go" in Spanish) was an unfortunate name to have for a car. Similarly, Pepsi's campaign "Come alive with Pepsi" was translated to the Chinese as "it brings your ancestors back from the grave" -- a bit too dark for a marketing message about soda pop!
More subtle examples of cultural differences might be the incredible tolerance the Chinese, Japanese and Koreans have for graphics and creative that are pink, playful and cute. The widespread use of kitsch iconography and cartooning in Asian advertising is striking. In the West, a campaign like Hello Kitty is considered childish, yet, we know that cute sells in Asia almost as powerfully as sex sells in the West. A cuddly stuffed animal might seem an odd item to put on the dashboard of a luxury sedan in Chicago, but in a city like Hong Kong or Tokyo, almost every BMW, Mercedes and Volvo in sight has one.
Then, there are the quirky translation issues such as the tendency of Asian advertisers to pluralise words: "available for both mens and womens" or "training for staffs" and the like. One Chinese company, when describing their long-standing track record to a Western audience, referred to themselves as having a "glory past".
You can bet it cuts both ways -- a literal translation of your company's marketing slogans for a country like China won't work very well. If such phrases as "available for mens and womens" and a "glory past" grind your sensibilities, think for a moment about how strange some of your marketing messages are going to sound in Chinese; especially when placed in the hands of a translator who has limited appreciation for cultural nuance and the subtle differences in marketing language -- you need to trans-culturate, not just translate.
Unfortunately, a lot of marketers in the West can't market to the Chinese as well as the Chinese can market to themselves. And it isn't a question of industry, intelligence or skill, it is a question of culture. They get it -- we don't. They know why something sounds silly or odd in their native language -- we don't. On an intuitive level, they are way ahead of us. In the subtle art of marketing, intuition counts.
However, that potential weakness in Western marketing efforts presents the greatest opportunity for affiliate marketing in particular. While there isn't such thing as a universally appealing product, there are many ways to market the same product to different audiences, and it is the ability of local web masters who understand and can communicate to unique niche markets that can make all the difference in how a product is received. The product can be foreign, but the marketing must definitely be niche. The environmental movement has the saying: "Think global, act local", but the logic of affiliate marketing turns this on its head: If you want to act globally, you have to learn to think locally.
Affiliate marketing, by its very nature, is diffused. The affiliate channel, through thousands of small individual sites, can present a product to the consumer in a cultural context which the consumer understands. Foreign products have the potential to be marketed at the local level, in the local language, in a manner consistent with the local culture.
We believe the best hope of addressing the numerous challenges that face online marketers in penetrating China and other Asian countries will come from the affiliate channel. It isn't the technological side of online marketing that presents a barrier. Already, Asia is far ahead of their Western counterparts in the use of mobile technologies.
Almost everybody has a cell phone in Asia and they all know how to use it in a sophisticated manner. So a technologically savvy audience is out there -- but can you communicate successfully with it? For big brands that want to work through the affiliate channel, the future in Asia is bright. Your company just needs to be prepared to work through some of the challenges.
Chris Sanderson is CEO of AMWSO. Read full bio.
William Hamson-Wong is director of Asian marketing for AMWSO. Read full bio.
