search
Back

Nielsen Commits to Drive Business Success in China in the Digital Age: CKGSB roundtable

October 02, 2015

Yan Xuan, president of Nielsen Greater China, told the October 2 roundtable session “New Consumption Trends in China” at CKGSB's New York offices that the rise of Ecommerce can help bring more consumption of goods to people in China, particularly rural residents. That assistance would fit with the government's effort to rebalance China's economy away from exports and investment and toward consumption to create sustainable long-term growth.

Key roundtable discussants: Professor Baohong Sun and Mr. Xuan Yan.

Yan Xuan, president of Nielsen Greater China, told the October 2 roundtable session “New Consumption Trends in China” at CKGSB’s New York offices that the rise of Ecommerce can help bring more consumption of goods to people in China, particularly rural residents. That assistance would fit with the government’s effort to rebalance China’s economy away from exports and investment and toward consumption to create sustainable long-term growth.

“If you think about the opportunity to get more and more consumer goods delivered to over 700 million   of the Chinese consumers living in rural areas, you are doing a great benefit to these consumers,” said Mr. Xuan, who has led Nielsen’s business in the Chinese mainland, Hong Kong, Taiwan and Macau since May 2011.

“Our partnership with Alibaba helps these consumer-facing companies more precisely understand the needs of Chinese consumers,” Mr. Xuan told the gathering of invited guests. “Especially rural consumers. Their preferences, their purchasing power, their needs. [We can] get them the brands that they look for and they trust.

“This is about using the technology and advanced big data processing methodology Nielsen has to generate the actionable insights from data we have and that other companies provide to us, to help companies realize their full potential and help Chinese consumers to have a better life,” he said.

Respectable company

Besides Mr. Xuan, the roundtable included Huining Cao, a CKGSB Professor of Finance, Baohong Sun, the Dean’s Distinguished Chair Professor of Marketing and the Associate Dean of Global Programs at CKGSB, and Alan Chen, CKGSB’s Director of Business Development.

Nielsen, which has been in business for 92 years, is “a very respectable company,” Professor Sun said in her opening remarks. “It is a company that is about all industries. They have an overview about what’s going on in China, but more importantly, it’s speaking from the data. It’s hard evidence about what’s going on in China.”

Professor Sun said data has moved into the spotlight as China’s economic growth outlook remains a key issue in the global economic conversation.

Amid its transition to a more sustainable economic structure based on domestic consumption rather than trade and investment, growth in the world’s second-largest economy has slowed steadily over the past five years. In mid-October, a report from the National Bureau of Statistics said that China’s economy expanded by an annual rate of 8 percent during the 12th Five-Year Plan (2011-2015) period. That pace was slower than the 10 percent growth of the past three decades but was still higher than world growth of around 2.5 percent.

President Xi Jinping has said that China needs at least 6.5 percent economic growth in coming years to become “moderately prosperous,” and to achieve the government’s goal of doubling the economy’s size by 2020 from its 2010 level, Xinhua reported.

Nielsen’s data is “just a way to look at China,” Professor Sun told the New York gathering. “If there is a 7 percent growth rate, we want to know where the 7 percent comes from.”

Allowing Mr. Xuan to discuss China consumption trends in the more intimate roundtable format was a way to promote “interaction and dialogue” on an important topic in a knowledge-enhancing way, she said.

“Hopefully this session gives some answers to our business questions,” Professor Sun said. “I’m sure there are more questions, and more importantly [there is], more interest in China.”

To start the roundtable, Mr. Xuan gave a presentation that showed online shopping is popular and flourishing in China. He cited statistics illustrating that growth of China’s Ecommerce sales has outpaced that of the U.S., increasing 50 percent last year in China versus a 17 percent rise in the U.S. Online shopping’s share of total retail sales of consumer goods in China reached 10.6 percent, compared with 8 percent in the U.S.

With more options for consumers thanks to new technology, both browsing and purchasing with e-tailers are increasing, and shoppers across China are participating in the trend. In rural areas, online shopper penetration increased 41 percent from 2014 to 2015.

Growth in digital shopping, however, has reduced in-store shopping, emphasizing the importance for all retailers to enter the online space. Shopping at hypermarkets – or superstores carrying a wide range of products under one roof – dropped 13 percent. Mobile purchases in general surged 48 percent in China and 33 percent in the U.S. The greatest online opportunities in China are in impulse food (such as snacks and chewing gum), baby care and personal care products, the roundtable was told.

Mr. Xuan said local Chinese are challenging multinationals by using a winning formula of a stronger relationship with local retailers and distributors and a strong presence in rural areas and lower city tiers. Locals also are beating multinationals to the punch by speedily going to market – and being willing to fail fast – and by embracing a made-in-China-for-China philosophy as exemplified by the number of local brands targeting the luxury market in areas such as premium mineral water.

Baohong Sun, Dean’s Distinguished Chair Professor of Marketing, Associate Dean of Global Programs led roundtable discussion after the presentation of Xuan Yan (second right), Nielsen Greater China President.

Profit engine

In the next few years, Nielsen’s digital strategy in China is expected to become a major profit engine for the company as digital and mobile usage ramp up. “China is a mobile country,” Mr. Xuan said in an interview before the discussion began. “The fact that China did not have the benefit of technologies in the ’70s and early ’80s actually turned out to be an advantage for China. That lack of technology allowed China to leapfrog several generations of technologies.

“For example, China wasn’t burdened by copper wired telephones and desk phones,” he said. “China wasn’t burdened by slow-speed Internet connections. China went straight to GSM (Global System for Mobile Communications) … and now 4G [mobile telecommunications standard].

“You also have a very young population in China that were born into the Internet age and the digital age and they take mobile technologies for granted,” he said. “So now, over 60 percent of Chinese mobile users access the Internet through their smartphones.

“You also have close to 900 million people that have smartphones that are constantly upgrading to the next generation of technologies and devices.”

In the interview, Mr. Xuan described the products Nielsen is co-developing with Alibaba. Founded in 1999 by CKGSB alum Jack Ma, Alibaba is the world’s largest online and mobile commerce company by gross merchandise volume and the parent of Taobao Marketplace, China’s largest online shopping destination and Tmall.com, China’s largest third-party platform for brands and retailers.

The Nielsen-Alibaba partnership’s two co-developed products are OmniChannel, which gives business customers a 360-degree view of online and offline sales, and New Offer Advisor, which leverages both Alibaba data and Nielsen software to increase Alibaba platform users’ understanding of the complete consumer online journey – how online shoppers respond to ads and web pages, and more specifically how they regard and assess products before making purchase decisions.

“Big data to some extent can tell you how things are, but they are incomplete,” Mr. Xuan said. “As big and powerful as some big players are in the Ecommerce world, they only capture the data and transactions on their own platform. They do not represent the whole Ecommerce universe.”

Tencent partnership

Nielsen also has a partnership with Tencent, the world’s largest social media platform. Nielsen’s privacy-protected access to Tencent’s massive user data enables the measurement and precise tracking of online ad campaigns and determining their success in reaching intended targets.

Before joining Nielsen, which is most often associated in the U.S. with television audience ratings, Mr. Xuan spent two decades in the U.S. and China as an executive with AT&T/Lucent, Microsoft, Oracle and Qualcomm. Born and university-educated in China, Mr. Xuan went to the U.S. in the 1980s as a Richard M. Nixon Scholar and received his Juris Doctor degree from Duke University School of Law. He also attended Harvard and Stanford Business Schools’ executive management programs.

Understand China from the inside

Subscribe to our monthly newsletter today!

Understand China from the Inside

Subscribe to our monthly newsletter today!