Many Chinese companies are using AI to perfectly tailor their offers to customers and are now making inroads into the rest of the world. The fact is, China is developing into the leading economic nation in terms of economic progress, not least driven by artificial intelligence, according to Prof. Dr. Claudia Bünte, international marketing and branding expert, mainly for three reasons:
- Lots of residents means lots of data
With 1.4 billion inhabitants, China has the largest population in the world and almost a billion of them are “mobile only”, i.e., online with their smartphone. This creates a lot of unstructured usage data, which, if analyzed correctly, gives new insights into the everyday needs for retailers and manufacturers.
- Privacy allowing linked analysis of data
China has a data protection law that allows linked analysis of data. Combined with AI, this creates deeper insights into customer requirements than in other countries. Since January 2021, China has tightened personal data protection. Nevertheless, the analysis possibilities for Chinese companies remain greater than those of other companies.
- Clear government focus on AI development
The one-party government in China has developed its own 5-year plan for AI. The declared goal is to make China the world leader in AI by 2030. This strategy includes many very detailed measures, and experts attest that China has a lead of around three to five years over Europe when it comes to digitization.
Companies like Alibaba, Tencent and WeChat are making intensive use of this deep digitization of everyday Chinese life intensively with the help of AI – also when optimizing communication and marketing measures for their hundreds of millions of customers. They offer their goods and services in integrated, so-called platform ecosystems.
With these platforms, it is possible to target and analyze customers from search to payment in a single ecosystem. Through linked data analysis using AI, these companies understand their customers better, plan advertising strategies more individually, design campaigns more creatively, address them individually, and measure performance in the segment-of-one, for instance, down to the individual. This is how the so-called "new marketing" is created, e.g., marketing in real-time.
Customer data is evaluated by AI in real time and can even be immediately converted into campaigns with the help of AI and then used individually. The success of each individual communication measure is evaluated directly by AI. The inevitable result is that customers feel better understood, appreciate the fact that shopping is easier for them, so they buy more in this ecosystem, the system receives more data, and an analysis and optimization cycle starts.
Anyone who works in advertising in China without AI loses because their offers are not calculated so perfectly to the wishes of the customers or are not played out as punctually as the increasingly spoiled customers now expect. With the help of AI, Chinese companies are learning to understand customers really well. Once the Chinese market is saturated, those same companies will want to keep growing – outside of China.
While these companies (must) comply with the data protection regulations of the respective countries, their offerings have been optimized based on Chinese customer data in such a way that they are likely to be better suited to the needs of local customers than the offerings of foreign companies, which are only slightly AI-optimized.
It is therefore worth gaining experience with AI in your own country in order to be prepared for competition from China. Already showing ambitions to gain a foothold abroad, Alibaba is bringing its own extensive, sophisticated AI ecosystem toolkit. If these assessments are correct, it doesn't seem to be a real option to wait too long with your own AI approaches in marketing and advertising, since AI in seen as a crucial success factor in marketing.
By Daniela La Marca