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What digital companies and publishers should learn from China

China, thanks to its closed ecosystem, is a market publishers would do well to study in more depth to see the future of media consumption. Fabian von Heimburg, a German entrepreneur based in Shanghai, shares some of his observations with us here. 

Fabian is co-founder and managing director of Hotnest, a digital advertising and big data analytics platform focused on the Chinese market. Hotnest’s digital advertising platform, using big data and machine learning, connects millions of local and international brands with agencies and freelancers in China.

Fabian spoke to FIPP contributor Felix Mago off stage at the recent Digital Innovators’ Summit 2017 in Berlin. (Join FIPP for our next event: the iconic FIPP World Congress, taking place from 9-11 October 2017 in London. Discounted pre-agenda bookings are available until 30 April, with savings of £800 or more on eventual rates).

Platforms

According to Fabian, mobile is a given in China and the major lesson rather lies in how platforms in China operate. 

“We’re not even talking about mobile and digitalisation anymore, it’s a given. While there may still be what we can call a transitional generation in the West (using laptop/desktop and mobile), many Chinese users skipped laptops and desktops and went straight to the mobile phone. This in turn means that the eco-system in China is a good indicator for digital trends to come in West because of the different user behaviour and advanced mobile platform environment.”

It radically impacts how people consume. “People do not use desk- and laptops outside of work, and they stream absolutely everything to their mobile phones. We might still think a laptop, with its larger screen, is more convenient, but my friends here don’t even think like that anymore. For them the mobile phone is simply everywhere, like it’s an extension of their reality.”

Fabian von Heimburg ()

With mobile accepted as a given, “the interesting thing is how the platforms here integrate virtually everything, from content, to social, to video, to e-commerce, to medical records, and more (according to Fabian you can expect to see the same happening with VR, AR, etc., too). As content producers you really need to think of how you exist within these platforms, because it will increasingly be very difficult to survive outside of them.”

It is behaviour you see “in virtually everything”, he says. “Everything is really integrated. You virtually live your whole life on a platform like WeChat – purchasing and paying for things to making doctor appointments and consuming content and games. You don't need to use Internet browsers anymore. Everything is conveniently integrated. I believe it is something that will have a similarly big impact in western markets and you can already observe some of that in the digital consumption habits of teenagers in the USA and Europe.”

He says while a platform like WeChat is well-known internationally, there is in fact a very well developed ecosystem with “a variety of multi-billion dollar companies, with very innovative business models and extremely innovative features that no-one outside of China knows about. 

“Anybody who is truly interested in digital innovation and the user behaviour of the future should really take a closer look at the Chinese eco system.”

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Media fragmentation

Fragmentation in the media landscape is a trend everywhere in the world, but Fabian contrasts what he sees in markets such as the US and Europe, where “apart from legacy media companies, you have some new media companies like BuzzFeed, Vox Media, Quartz (which was also at DIS 2017) and others that have attracted big VC investment and have become quite big in the last years.”

“China of course also has large legacy media companies, but very few large, new media (publishing) companies”, says Fabian. “It’s a completely fragmented market. What you see are all kinds of small teams with social media accounts.”

These new media companies “basically make up the new media market in China. Sometimes the influencer is one individual, sometimes they have a team of 20 supporting the individual brand.”

Importance of brand and voice as differentiator is a fact of life. “Remember, China is huge. There are millions of these new media companies, many, many more than in for example Europe or the US. They understand the importance of having your own voice and brand if you want to be heard.”

One major problem in Europe, the USA and China that comes with this fragmentation is that “you see a lot of fake news because there are less and less centrally controlled big media companies around vetting news that go into circulation in the new media landscape. 

“You only have these small groups and it is very difficult to know what is real and what is fake from their output. One of the outcomes of this is a lack of public trust in new media companies.

In China, “platforms are more and more pushed into the role of media regulators, something that WeChat and other Chinese platforms are already putting a lot of effort in.”

Aggregation, vetting and trust

He believes it is “increasingly difficult to develop media companies at scale” in this environment and that it “is a trend that will only accelerate. It will be difficult for players to develop revenues in the hundreds of millions of dollars, because there are so many of these smaller players around delivering content to users at a similar level of quality.”

For him, the opportunity lies in using big data and machine learning to aggregate in a smart way and address the issues of trust. “I think the best thing you can do as a publisher, or if you want to become a big media player, is to aggregate all of this content, and vet and rewrite stories – a kind of centralised platform but with editorial capacity to address the issues of trust.”

See Fabian's presentation at DIS 2017

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