Arun Sudhaman 16 Jan 2019 // 6:43AM GMT
The rise of China's Greater Bay Area holds considerable economic potential for such cities as Hong Kong, Shenzhen and Guangzhou. Amid the rise of China technology giants like Huawei, Tencent, BYD and ZTE, the 'Greater Bay Area' now involves a master plan to integrate cities in the subregion into one business hub.
That kind of transformation, of course, brings opportunities as well as challenges, not least in terms of how it is reshaping business storytelling and brand innovation for companies focusing on the region. And while it is trite to say that every company is a technology company, there is no question that every company is being changed by technology, in ways big and small.
To understand these shifts better, the Holmes Report partnered with H+K Strategies last month to convene a roundtable of senior communications pros, uncovering a wealth of insight into how the rise of technology in the world's fourth largest Bay Area is transforming public relations and marketing strategies.
Adam Harper, head of communications for Greater China, HSBC
Michael McComb, VP, communications & sustainability, SAP Greater China
Stephen Thomas, head of group brand & communications, AIA Group
Fiona Parker, Asia-Pacific technology director, H+K Strategies
Jo Wong, head of integrated marketing services, H+K Strategies
Moderator: Arun Sudhaman, CEO & Editor-in-Chief, The Holmes Report
What follows is an edited transcript of the conversation that took place in mid-December in Hong Kong. Parker started things off by exploring how the rise of technology, wrapped around a buzzworthy phrase like "GBA", is changing the ways that organizations are communicating.
"I think GBA, like digital transformation and all those things that have come before it, is a bit of a runaway train," said Parker. "Everybody’s jumping on board but nobody’s really sure where it’s going and the companies that communicate this are the ones that have the courage to have a clear vision and a clear narrative and actually talk about where we are going and help define it rather than just jump on the train and try and hang on."
There are particular implications for Chinese companies, noted Parker, who are often unaccustomed to the spotlight they are now attracting on the global stage. "Not all brands here are quite ready to communicate on a global stage," explained Parker. "Bigger companies have the security, brand equity to fall back on and big communication teams, but there are a lot of companies out there, in particular start-ups, [for whom] it’s a whole new game."
Technology changes everything?
"It really does depend on, not so much the technology, but getting out of our own way"
"The next product generation or the next big news announcement or the next big press release is not what’s driving market momentum," pointed out Parker. So while the Greater Bay Area (GBA) offers a convenient bandwagon in communication terms, the need for consistent engagement with stakeholders remains a pressing challenge. And that is something that is constantly being addressed by the companies around the table, particularly as technology helps to reshape market opportunities and brand perceptions, while also serving as a disruptive challenge to existing models.
Adam Harper (AH): "For us the Pearl River Delta is a strategic priority, it has been for quite some time. It’s a very natural sweet spot for us strategically and if you look at the sheer scale of the opportunity as well – it’s a $1.5 trillion economy today if you put it together, we think it could be a $2.8 trillion economy by 2025. When it comes to the challenge of communicating that I think you’ve got to look at who your customers and your audiences are in this part of the world. For us there’s a very strong focus on banking, increasingly affluent individuals in the GBA — people in the PRD are over two times more affluent than the average for mainland China — and then of course the very large and growing technology and innovation sector. Maybe to give you a couple of examples of that, we are setting up some special teams that focus on smaller, innovative companies in Guangdong and in Hong Kong, we formed the innovation fund to support innovative companies in the PRD and we are introducing a lot of digital propositions basically for companies in that space as well as consumers."
Stephen Thomas (SH): "We are a company that is celebrating our centennial year next year — seen as a very conservative, stable, well-established company, all good attributes for a life insurance company. In more recent times, the rise of some of China’s internet giants in the Greater Bay area, has seen some of the Alibabas, the Tencents, start to make forays into the life insurance sector in different forms and this in turn has given rise to questions about our own business model when [there are] potential disruptive threats to it. We’ve got a very big agency force around Asia and we see that as a very strong competitive advantage. However, we also recognise the world has changed and continues to change at pace and we need to embrace and adopt technology and innovation in a way that helps to involve our business model and to give customers the experience that they want, how they want it. We are certainly equipping our agency force to be much more digitally enabled than ever before and we are seeing a lot of productivity gains and growth gains as a result of that. We are also using technology to increase the efficiency of our backroom operations. Then thirdly we are looking at what are potential new models that are based on online distribution of our services and to that end we brought on board our first group chief digital officer earlier this year who sits on our group executive committee and reports in to our CEO to help us in that space. So I think we are very active in addressing how to better harness technology to improve our business and to continue to grow and I think also what that necessitates is how we tell that story, and we are getting an increasing number of investor enquiries, media enquiries, around how we are addressing potential disruptive threats."
Michael McComb (MMC): "It’s absolutely changing how we go to market. One is the emergence of these rather large Chinese technology companies. Are they our competitor or are they our potential partner? In a lot of cases they are both and so we have aligned with, for example, the likes of Alibaba recently. When it gets down into the sub-region of the Greater Bay Area...we still, I think, are in some ways hampered by the organisational design of Hong Kong as a market unit, China as a market unit, and the two don’t necessarily collaborate as they need to on this sub-region, which in itself should almost be a market unit. You need to break the organisational walls down in order to really take advantage of some of these opportunities. It’s really just a matter of getting our own act together because certainly our customers are pushing us to get that done. Swire Group and others are saying, look, we want to think big, we want to be a part of this story, we want you to be part of it with us and we need to be able to take advantage of that whether it’s an innovation, prototype or pilot project, that sort of thing, those conversations are happening. It’s definitely presenting a lot of opportunities, I guess my key message is it really does depend on not so much the technology but getting out of our own way."
And, of course, these deliberations are given added complexity by the breadth of communications channels that now exist, which caused H+K's Wong to caution brands about focusing too much on the technology instead of the person.
Jo Wong (JW): "I think one of the weak areas that a lot of brands are yet to tap into is the omni-channel strategy. Are you delivering the messages that are targeted to your audience no matter which touchpoints they have? I think brands have yet to maximise these opportunities currently that customers are looking for and seeking from brands that will treat them as a person."
Reshaping the customer experience
Wong's point was expanded into a broader discussion of how digital is reshaping the customer experience. As McComb explained, that requires companies to ensure their front-end and back-end systems are seamlessly integrated, in a world where consumers increasingly expect a full digital purchase process.
MMC: "I think the view that we have is that managing the data and understanding the multiple touchpoints is that we are trying to not be creepy, to be compliant with GDPR and China cyber security law, but then also to really drive a better experience for customers. Give them what they want, as much as they want, when they want it, how they want it, where they want it. That’s the Holy Grail because the omni-channel blasting and messaging, as emotional as it might be, that’s only half the story. The other story is do we have the right product in size, the colour, the shape, at the place that they want it, when they want it, is it in stock, do they know it’s in stock, can they get it easily and is it successful and mobile? So that’s what we are trying to connect and I think there’s an enormous opportunity with GBA, with its manufacturing and supply chain provisioning, and then also this growing domestic consumer economy."
AH: "Making sure that what people experience with digital is relevant to them and allows them to express themselves as individuals is really important and I think that’s been one of the keys actually behind the success of [HSBC app] PayMe in Hong Kong. It’s a mobile wallet that has done very well here, has over a million users. It’s very integrated to people’s social media world. We’ve also rolled out some chatbots in the Pearl River Delta. These are ways of responding to common customer enquiries — they use machine learning and they are intelligent and that’s been very well received as well because it saves a lot of time for us then in the call center and saves our customers a lot of time as well."
Trust in technology
"The absolute potential threat, reputation-wise, to the company is a data breach or a cybersecurity issue arising"
While the promise of technological innovation is clear, there are also significant concerns that have arisen, whether they relate to data, privacy or the prospect of job losses due to increasing automation. Addressing these challenges is critical for any communications strategy, not least in terms of their crisis planning.
FP: "I think any kind of ambivalence about this is long gone, people understand there is a clear and present threat and it’s never going away but that doesn’t mean that everybody’s ready to respond effectively. I think private sector public sector collaboration here is absolutely critical, especially in the context of Greater Bay, because we have to take consumers with us on a journey where they feel safe. I think senior spokespeople have an obligation to stand up and to address that head on. One of our clients in China has said to us there is no privacy in China. So how do you balance that?"
MMC: "I think the assurance that we are trying to communicate internally and externally is that SAP is moving at China speed and we have a number of different issues related to that. You’ve got regulatory pressure, you’ve got the privacy and data security issues, cloud migrations and so forth, which are kind of unique in the context in the situation to China and do we have the developer resource [that is] really adequate to keep that going at the pace of some of our peers in China. But I think when it comes to the Greater Bay Area then it comes down to some organisational issues. As you said, it’s kind of a public private issue. Are we going to harmonise data platforms and how are we doing cross-border data flows? I don’t think that yet is quite as strong as the physical infrastructure."
AH: "We commissioned a survey on this last year which showed that actually mainland China has one of the highest rates of trust in technology in the world, which perhaps wouldn’t come to too much of a surprise to people here. It’s clearly been a very sensitive issue in many parts of the world including Hong Kong. I think that the challenge for us in our business is to show people actually how technology can be used to better protect them, frankly. Yes, of course, protecting data security and privacy is really important but from a comms perspective being able to show people that technology can protect them and can protect the financial system is a constructive way of going about it."
ST: "We often say no chatbot, no website, no app will replace a well-informed, senior, caring agent who can guide a person through a fairly complex product offering which is life insurance. Having said that, for me the absolute potential threat reputation-wise to the company is a data breach or a cyber security issue arising. We are actively addressing that not only through having the right protocols in place internally but actually to have the senior executive team personally involved in scenario exercises as such. Now we can’t obviously predict what the exact issue could be in the future but we can, I think, get a much more robust footing in terms of how we react to what a potential cyber security breach would mean for AIA. For me as a communicator, that potential crisis and issues management piece is vitally important and hopefully one that will stay in the background but one that we need to be ready for."
AS: "How are you handling technology seen as a potential threat to workforces that are used to working in a certain way, and are we now seeing increased automation and the rise of AI as a threat?"
ST: "We’ve got a very large agency force but I think we have over the last eight years since we did our IPO in 2010 we’ve invested very heavily in that agency force. We’ve told them about the ability for them to work more productively and ultimately more successfully by using the digital tools and platforms that we provide them. We’ve been cognizant of that question arising but I think we’ve been careful to make sure we are communicating how we want to harness the power of technology at the company in a way that’s beneficial for them."
MMC: "We kind of have two viewpoints on it. One is that technology will just augment and make people more efficient, more accurate, faster at doing what they do. But then you’ve got the sort of replaced human and whether it’s AI replacing customer service reps or smart manufacturing lines replacing assembly workers and so forth, we’ve been seeing that for quite a long time, that’s not a new thing. But when you have machine learning and AI and some of these other advanced technologies, in certain cases replacing jobs and changing business processes altogether, that is disruptive for businesses. The aim and the counsel that you give is just that they need to be moving into higher value jobs. Of course, you see instances where you are going to have mass layoffs, but we see more forward looking companies who plan and are looking at restructuring job opportunities so that people can actually have much more fulfilling work that ultimately requires more skill, more human capability than the technology. In that case we’re looking at the re-skilling of people, certainly in the Greater Bay Area and certainly in the manufacturing industry. You’ve got people who aren’t necessarily highly skilled workers and if they’re going to be replaced by automation, the prospect of them moving into some higher valued skill-based job is nil. So re-skilling is something where, in terms of the corporate responsibility platform, that’s what SAP is looking at: how do we help our customers re-skill people in the digital environment?"
AH: "I think you see a similar dynamic in our business as well. We’ve more than doubled the number of people working for us in the Pearl River Delta since 2015 but we haven’t increased our branch network. We’ve still got 50-odd branches in the Pearl River Delta and 64 in Guangdong and these people are working digitally, they’re developing new applications, they are mobile sales people who are going around with digital tools very much like AIA to talk to people about mortgages and so forth. If we were doing this ten years ago we would be building a lot more branches. We’re still hiring loads of people today but we’re getting them to do different things because of technology."
AS: "Presumably there’s a difference between Hong Kong and mainland China. It seems like trust in tech is less of an issue in perhaps other Greater Bay Area markets than it is in Hong Kong. Is that necessarily the case?"
MMC: "So you have issues like GDPR and China’s cybersecurity law and that’s a big issue for us in terms of counselling compliance in those issues. I think it’s also trust from a consumer point of view — am I trusting companies to do what they should be doing with my data and do you have privacy? The expectation of consumers on the Mainland is entirely different from what it is here. Again, harmonising those two worlds in a Greater Bay Area scenario is going to be a really interesting challenge."
Stories that resonate
"The challenge for us as communicators is trying to find stories that resonate around the GBA specifically"
The discussion concluded by considering one of the key challenges for any company aiming to develop a technology narrative — being able to move quickly enough to adopt new approaches and respond in a nimble fashion, whether in terms of the story being told, or in terms of the ways that story is being told. And that issue takes on heightened complexity given the multiple markets and channels involved in the Greater Bay Area.
FP: "I think it’s a very difficult balance and one would say our clients probably do struggle with that quite a bit just in terms of a pure communication brief. We’re trying to have an approach that is 60:30:10: 60% is the stuff you know is coming so it’s product launches, it’s major partnerships, it’s M&A, it’s results, announcements. 30% of it is anticipated — you think it’s going to happen but you don’t know. A virtual banking licence is coming down [for example]. And 10% is just stuff that is coming out of the blue. Actually, I think the bigger companies often respond better because they have whole teams that they can get on the challenge whereas if you’re small you might have fewer barriers in terms of democracy but actually you’ve also got fewer resources to throw at something quickly."
AH: "What we are trying to adopt is what we would call a newsroom culture, within our communications function where we think and act and write and produce video or whatever it is like journalists, with a view to competing directly with external media. So whether that’s for our employees eyeballs or for our customers, recognise that we are in direct competition with very professional producers of content in the media market. You have to be really timely now when you are producing and releasing, distributing your own content. When it comes to channels in mainland China, WeChat is ubiquitous, as we all know, and I think you know we use that to good effect, but for me the issue really has never been getting to your readers. The challenge for me is being nimble enough to be timely and then being compelling enough to hold their attention in this very crowded market."
ST: "We are certainly mindful of the need to be nimble, the need to be forward looking and aware of the external environment and how to best navigate forward. As Fiona said, I do think it is sometimes easier for a large organisation. From the viewpoint of AIA we are very much focused on telling the story of what we are doing to help our customers, to have a positive impact on our customers and our communities and at the same time, of course, explaining to our investor audience what we are doing to embrace technology in a way that makes best sense for our business, but all the while being driven by this purpose of helping people live healthier, longer, better lives. I don’t know if that really answers your question but I think it translates to a need to be very active and dynamic but doing so in a way that is creating traction for the business in the right way."
MMC: "I think the challenge when you’re looking at mainland China, where does that go in terms of paid, owned and shared? We’re probably going to have to look at our global investment in China. And you don’t want the 'airport plan' that everyone else does, we need to get more innovative. Then you have the owned media and we’ve got sap.com in China, we’ve got our WeChat channels and so forth but there’s got to be more than that that we need to experiment with. You know, how do we go from looking at using weibo and microblogging, which we’re not, to things like video platforms and relevant, engaging content. Then the whole earned thing, we’ve got our head of China just saying nobody reads newspapers anymore. But we need to be thinking, what is our PR strategy? We need to be trying to balance driving the standard coverage of product launches and looking at different emerging journalistic influencers. Then our shared strategy — is it shareable, do we expect sharing when it’s not reasonable to be expecting sharing? We don’t have a comprehensive Bay Area communications strategy. It’s very much still Mainland and South China is part of that, and then we have Hong Kong and Macau, which are very different. I think it’s worthy of looking at that as a comprehensive opportunity."
AH: "I think the challenge for us as communicators is trying to find stories that resonate around the GBA specifically and particularly the stories that bring to life the connectivity between different places. Obviously one of the strengths of the GBA is that it’s got these different cities that are leaders in different areas. You’ve got your financial centre in Hong Kong, your innovation centre at Shenzhen and so on and so forth. So for us we’re trying to follow the money, the trade, the investment and migration and we’re looking for stories that connect those spaces. So you look at Shenzhen: huge R&D spending, big sharer of tech for the Chinese economy, how could that be helped by closer collaboration with universities in Hong Kong? That applied research connecting with the entrepreneurs, the supply chains in Shenzhen gives you the basis for a very compelling story that is specific to the Greater Bay Area."
MMC: "To try to find out those connective tissue stories is the easiest way and then just find the participants and the production of resources to get those stories done. That is a great story. For us it’s around the smart city angle and we are thinking about how can we work, and make a smart region. That’s a fantastic opportunity."
ST: "One of the things we are looking at is air quality in China and Greater China and working with Leeds University to do a study on that. I think one aspect of the Greater Bay Area we didn’t really touch on is the need to attract the right talent. I think having the right living environment is going to be important and so things like being able to talk about air quality as a means of people having a healthier, better life is, from our point of view, an important story to tell."