The trend of Chinese brands rising has arrived. Guochao, new consumption, Generation Z... With the significant improvement of China's comprehensive national power, consumers no longer blindly trust "foreign brands," and high-quality domestic brands are emerging like mushrooms after rain. But in the face of huge opportunities, only a few brands can ultimately stand at the forefront, and there is an urgent need to summarize and refine a methodology suitable for the rise of Chinese brands. To this end, the China Advertising Association and the Management Modernization Working Committee of the China Enterprise Confederation, together with Focus Media, held the "National Brand Development Summit Forum" in Shanghai on September 25. Heads of national brands such as Mengniu, Snow Beer, Feihe, Bosideng, Bloomage Biotechnology, Miaokelanduo, Swan to Home, and Ulike shared their experiences and insights on the rise of Chinese brands with hundreds of entrepreneurs and executives present, discussing the methodology for the rise of Chinese brands. Some guests proposed that for national brands to stand out, they need to escape vicious price competition and traffic competition. The key lies in creating differentiated value and winning consumers' active choice. However, the current challenges in brand communication are information fragmentation, high communication uncertainty, and fast customer forgetting. In response, Jiang Nanchun, Chairman of Focus Media and Black Horse Mentor, pointed out: First, brands should use centralization to counter fragmentation. For example, investing sufficient communication resources in the high-frequency and closed space of elevators can easily ignite a brand. The rapid rise of Bloomage Biotechnology's brand Runbaiyan is the result of strategic cooperation with Focus Media. Second, use repetition to counter forgetting. The essence of publicity is repetition, and the essence of the audience is forgetting. The national cheese brand Miaokelanduo adapted the children's song "Two Tigers" into an advertising jingle, which was explosively spread through Focus Media's elevator media, achieving over 100% growth for three consecutive years and topping market share. Third, brand advertising should use certainty to counter uncertainty. Brand advertising must adopt media communication methods that are highly certain, highly controllable, and can be repeated and accumulated over the long term. This is the key to breaking through "involution." "In the new decade, China's first demographic dividend has ended, but the dividend of people's hearts is unfolding; the traffic dividend also ended in 2018, but the dividend of the rise of Chinese brands is fully unfolding." Jiang Nanchun stated at the forum that today's Focus Media is moving towards covering 500 cities, 5 million terminals, and 500 million new middle class. "We will jointly witness and promote the great era of the rise of Chinese brands. I believe that Chinese brands worth tens of billions and hundreds of billions will continue to be born." The following is the transcript of Jiang Nanchun's speech at the forum: Today, I think each company has its own R&D in product strength. I think for Chinese enterprises, there are generally two directions: First, innovate and create differentiated value; Second, through marketing, become the first choice in customers' minds. We are now facing very big challenges: the demographic dividend and traffic dividend are getting weaker, the total retail sales of consumer goods has hit an inflection point, and China's production and supply capacity continues to rise. This has led to today's China entering an era of homogeneous competition and involution in all industries. The biggest characteristic of the involution era is stock game, with both volume and price declining. Everyone thinks they can gain volume by lowering prices, but competitors lower prices faster, eventually leading to a situation where both volume and price decline. There are usually two methods for growth in China: one is to promote sales when business is bad, which may be effective initially, but becomes ineffective after too many promotions; or engage in traffic, if you seize the traffic dividend, it may also be effective initially, but cheap traffic is limited. When you need greater growth, ROI often becomes inverted. At that point, whether you want growth or profit becomes a painful proposition. There is only one way to solve this problem. The essence of consumer goods has not changed. We have heard many new terms today, but they have not changed the essence of the consumer goods and service industries: consumers make choices based on brand awareness. The core elements of Chinese commercial warfare have actually changed significantly. In the early days of reform and opening up, whoever had high-quality supply would win. In the second stage, 20 years later, it became a war of channels. Whoever had the most extensive channels and high penetration would win, because everyone could produce high-quality supply. Today, channels are homogenized. Where you are, others are too. If it's offline channels, we can see each other competing in the same arena; online, there are even more choices, an unlimited shelf. So when we find that channels are homogenized and production is oversupplied, what is the core of true commercial warfare? It is the war in consumers' minds. Consumers face so many choices, and the era of consumer sovereignty has arrived. In this situation, every brand must answer one question to win the battle for consumers' minds: What is the reason consumers choose you over your competitors? This is the ultimate battle for consumers' minds. The core competition of true commercial warfare is in consumers' brains. Today we see too much traffic, as if traffic is the foundation of business. In fact, traffic is just the result of a brand winning people's hearts. Traffic is not the foundation of business. Taobao has traffic because it is the "universal" Taobao; if you can't buy something anywhere else, you can always find it on Taobao. Why does JD.com have traffic? Because you can buy in the morning and receive it in the afternoon, fast delivery. Why does Tmall have traffic? Because brand flagship stores are all on Tmall. Every platform with traffic has traffic because its brand has won people's hearts and formed a correct perception. It has traffic because of that, not the other way around. Don't put the cart before the horse. Today we talk too much about algorithms. There are many algorithms, and many traffic platforms require continuous iteration of technology to keep up with algorithm changes. But no matter how good your algorithm is, can you outsmart the platform's algorithm? In this situation, why can only brands survive on platforms? The reason is simple: because brand is a true algorithm. "Calculating" people's hearts accurately is the real algorithm, a higher-level algorithm. "Calculating" people's hearts accurately is the foundation of business growth. In consumers' minds, if you cannot form designated purchase, price wars, promotion wars, and traffic wars are just a matter of time; they are inevitable. Every brand must find a reason in consumers' minds to choose you over others. When customers have such a need, can your brand become their first choice reflexively? I think this is the foundation of all business. The consumer goods market has not changed in 30, 50, or 100 years, and it will not change because of today's flourishing traffic or waves of traffic dividends. There is a consensus on traffic platforms: Sales = Traffic × Conversion Rate × Average Order Value × Repurchase Rate. Traffic needs precise distribution, finding low points and dividend conversion rates. How to achieve conversion? How to increase average order value? Can I form better repurchase? What is my private domain traffic connection? Are these important? Yes, but they are just "tactics." What is the "Tao"? The Tao is people's hearts. Why do brands like Estée Lauder and L'Oréal still live well on platforms? Because they are big brands, brands deeply rooted in people's hearts. Only when a brand is deeply rooted in people's hearts can it be a continuous free traffic source. What are the biggest characteristic indicators of these brands? Brand self-generated traffic accounts for 70%, and the remaining 30% is traffic advertising, but their conversion rate is still three times that of others because of their high brand awareness and recognition. These brands may only promote three times a year, such as on March 8th, June 18th, and Double 11, while many Chinese brands promote all year round. When Estée Lauder launches a new product, like the ninth generation of the Little Brown Bottle, it can further raise prices. This is the brand's premium capability. Commercial warfare is not that complicated in the end. It depends on: What is the proportion of your brand's self-generated traffic? What is the conversion rate caused by your brand awareness and recognition? What is the product premium capability caused by your brand momentum? What is a brand? Build trust and reduce transaction costs. Second, create transaction premiums. Brands have not changed, and the way to win commercial warfare today has not changed either. In today's Chinese market, there is only one method: seize the future 500 million urban consumer population, create differentiated value, seize the innovation time window, build your brand's core competitiveness, enter consumers' minds, and finally win the mental property rights of consumers. Only then can the true rise of Chinese brands be achieved. From the communication industry perspective, under the new situation, there are three important trends in Chinese brand communication. 1. Use centralization to counter fragmentation What ads do urban residents come into contact with most every day? First is internet ads at 95%, second is elevator ads at 79%, third is TV ads at 51%. Obviously, internet ads have the highest contact rate. But can the fragmented internet ignite a brand? Why don't we feel that the internet can ignite brands so effectively? What brands are actually ignited by the internet? Because the internet creates massive amounts of information. No matter how much a brand invests, it is just a drop in the ocean. Consumers recall that more than a decade ago, many daily chemical giants had their ads all over TV. But today, these giants may invest billions in advertising each year. What ads do they actually run? Can you remember? The ads you remember may still be from 10 years ago. So when brands and the internet enter the fragmented internet world together, no matter how much you invest, it's just stars in the sky. Because the mobile internet is the galaxy, the space. In space, it's hard to ignite. The internet doesn't need to ignite brands; we do precise traffic. Are precise traffic ads important? Yes, they are important for improving transaction efficiency. But internet traffic cannot build a brand or break out of the circle. Breaking out of the circle means the brand must eventually form a social consensus. Just now, Ulike's President Pan made a point I strongly agree with: What is precise distribution? Goods finding people is precise distribution. Goods finding people is not a brand; only people finding goods is a brand. When it comes to down jackets, you think of Bosideng; milk powder, Feihe; milk, Mengniu; beer, Snow. Why have all of you here today achieved sustained success in the market? In one sentence, the core issue is that these brands are people finding goods. When you have a need for this category, your brain reflexively makes them the first choice. I think this is the foundation of all business today. Social seeding is also important. Marketing is not just one thing; it includes brand advertising, social seeding, and traffic harvesting. But can social seeding ignite a brand? From 0 to 1, social seeding is feasible, especially in the era of dividends. But when revenue exceeds 200 million, can you effectively break out of the circle? You will find that you need large media, centralized media to break out. The biggest challenge of social media today is seeding. Everyone knows they need to seed, so we are like planting grass on a grassland, unable to find our own grass. So when the dividend period just begins, you must seize the dividend. But today, the dividend has passed. Doing a standard action is far from enough. The dividend of seeding has long ended. The era of planting trees has just begun. If you cannot turn your brand exposure into a big tree that is familiar to everyone, consumers will not be able to see the grass you planted. When a brand is strong enough, everyone will notice the big tree and the grass under it, and people will actively search for you, leading to more precise personalized recommendations and distribution by more media after searching. Focus Media is one of the most important centralized media facing the urban mainstream population in China. The latest research data shows that Focus Media has exceeded a daily coverage of 400 million people. In 2018, this data was still a smaller number, 310 million, but today we see this number has become 401 million. China's urban population is 600 million. I think Focus Media is a centralized platform that can ignite 400 million urban mainstream people. It reaches them repeatedly and effectively on their必经之路 (must-pass paths). Without high-frequency reach, it is difficult to enter consumers' minds. Why doesn't Focus Media, with a market value of over 100 billion, expand horizontally, such as into bus shelters or bus ads? Because I believe that placing a person in a unique space like a closed elevator makes the reach effective and mandatory enough. When I decided to found Focus Media in 2002, I thought no one wants to watch ads. Advertising is an anti-human industry. Watching TV, watching shows, watching phones, watching content—no one wants to watch ads. When do consumers actively watch ads? I later discovered that only when waiting for the elevator or riding the elevator do consumers actively glance at ads. Out of 100 people passing by, maybe 40 to 50 people will actively glance at the ad in that scenario. At that time, I only had 50 million RMB, and I invested it all at once. I felt I couldn't find another place with such a scenario where ads become a part of your life. So what is the communication trend today? We hear many new concepts rising. Today, I will use three words to return to the essence. This communication trend is called using repetition to counter forgetting. Everyone says that new consumers cannot accept repeated reach; they want effective interaction, etc. These are all important, but let me say something more fundamental. Professor Daniel Kahneman, in his book "Thinking, Fast and Slow," wrote about how humans think. He said there are two systems in the human brain: System 1 and System 2. What is System 1? What is 2+2? The intuitive response is 4, which is System 1. What is the second system? What is 27×38? This is called the rational thinking system. You need to burn your brain. He said that most of the time, humans judge the world through System 1, because the human brain can only consume 20% of the body's energy, so it has a self-protection mechanism; it cannot burn too much energy. So the brain's protection mechanism is basically to handle events with System 1, occasionally using System 2. So Professor Daniel used 40 years of psychological research to prove that the assumption "human decisions are rational" is not valid. Humans are the most irrational animals, most easily influenced by intuition and cognitive biases. Why can intuition and bias affect humans? Because System 1 is the "availability heuristic." The criterion for System 1 judgment is not truth or fact. The information that is fastest and easiest to recall has a greater impact on judgment. "Afraid of getting heaty? Drink Wanglaoji." Is Wanglaoji the most effective for reducing heat? "Tired and sleepy? Drink Red Bull." Is Red Bull the most refreshing? I don't know. But you can only recall it, and that's enough. "Availability" is what you can recall; it becomes the truth. Whether it objectively conforms to facts is another matter. Information that cannot be quickly recalled will never become any part of truth or fact. So Professor Daniel, as a Nobel laureate in economics, said in his Nobel lecture that if a piece of information appears repeatedly and does not bring you bad results, it becomes a safe signal. Over time, safe becomes good, and familiar becomes likable. This is the mere exposure effect. He said a point: How to make consumers remember a concept or a thing? He said there is no other method, just four words: repeat constantly. Because humans cannot distinguish between familiarity and truth. Familiar things make you relax cognitively and make comfortable, easy judgments. 2. The essence of communication is repetition Consumers fundamentally do not want to watch ads. The essence of consumers is forgetting. So low-frequency brand communication cannot keep up with the speed of customer forgetting. We sometimes hear about "frequency capping," etc. I think in today's complex information environment, 3+ or 5+ is completely insufficient to produce sales results. You may need 20+, 30+, or 50+ to be effective. Previous advertising theory said 3+, 5+. This theory was from 1969 when people were exposed to a certain amount of information per day. Compared to today, the difference is at least 10 times. It may need to rise to 30+ or 50+ to be truly effective. You need to concentrate superior forces to strike competitors most effectively, and be the first to cross the "brain threshold" and break through the "blood-brain barrier" in consumers' minds. How to enter consumers' brains? Your brand concentration must be high enough. If you do a variety show with a 0.4% rating, does doing 10 of them equal 4? No, it equals 0. Only a show with a 4% rating equals 4. The reason is simple: consumers' threshold is 90 points. 20, 30, 40, or 50 points, no matter how many times, equals 0, because it doesn't reach the threshold and cannot enter consumers' minds. People may see about 100 news items a day, 3000 in a month. Can anyone answer which 30 news items they watched in a month? Can you recall? Out of 3000, 30—even for news, not to mention ads, you can't recall. What news do you actually remember? It's viral news. If the news is not viral and repeatedly seen, it cannot cross the blood-brain barrier and become your memory. But once you cross the threshold, it will be remembered forever. "Nongfu Spring is a little sweet." This ad hasn't been used for 7 years. In our 7 years of cooperation with Nongfu Spring, we have always used "the porter of nature." But "Nongfu Spring is a little sweet" was "planted" in the past and is hard to change. It has firmly become part of your mind. So low-frequency brand communication cannot keep up with the speed of customer forgetting. When the world is fragmented, you are also fragmented. If you cannot focus and break through, concentrate superior forces to form cognitive advantages, you will always find it difficult to change the market landscape. I am very proud that Focus Media, in a closed space where consumers must pass, repeatedly and frequently reaches them, actually boosting these high-quality brands, establishing consumers' sense of security and trust, ultimately making consumers recognize these high-quality brands, and in repurchase, they are confirmed again, becoming standards, common sense, and unthinking choices. Why do I often say unthinking choices? Because the brain establishes conditioned reflex fast thinking. True brands are unthinking choices, deeply embedded in consumers' subconscious, becoming a part of it. 3. The trend is to use certainty to counter uncertainty Everyone wants to bet on the hottest variety show of the year. If you bet on a hot show at a low price, it must be useful; you are lucky. If you write an article that goes viral today, congratulations, but the success rate is very low, hard to replicate, and can only be encountered by chance. Everyone waits every day to see if they can hit the hottest variety show, etc. The sunk cost is huge. Marketing cannot be done by gambling. The core is to use a certain media logic, with specific media, to win against the uncertain market. What is certain media? Back then, many people asked me if I was so sure about Focus Media. I said it would definitely work, because I don't need to produce any programs. These 400 million people pass by the elevator entrance every day. Today is like this, tomorrow is like this, and it basically won't change. What really affects whether you can effectively reach is your content. Focus Media's reach to 400 million people is a certain result. Look at the top ten advertising slogans for two consecutive years in 2019 and 2020. This research on consumers' cognitive channels shows that in the first year, 81% came from elevator media, and in the second year, 83% came from elevator media. This is a relatively certain fact: a person repeatedly watches on one channel. So when your content is good enough, it will be remembered. The internet has many choices, TV has many choices, and fewer people are watching simultaneously. Investing in advertising is like investing. Doing repetitive, accumulable things allows you to enjoy the compound interest of time. Many companies have made many hits. Can you ensure you will make these hits again next year? Some people seize the dividend every time. Can you be sure you will seize the dividend next time? I think brand is the continuous dividend and can enjoy the compound interest of time. Focus Media's mission and opportunity is to boost the rise of Chinese brands in today's era of national trend rise. Focus Media was founded in 2003, listed on NASDAQ in July 2005, and returned to the A-share market in 2015. Focus Media actually occupies the core life, office, entertainment, and other scenarios of the mainstream consumer population. We use 2.5 million terminals to cover 80% of the main office buildings and 70% of apartment buildings in cities. Today, in China, Focus Media has become a centralized media that is must-pass and high-frequency in consumer life scenarios. Among China's TOP 100 brands, 87 have chosen Focus Media. I also thank these leading brands for treating Focus Media as their most core ignition platform. In the next 5-10 years, I hope we can fully boost the top companies in 100 industries, comprehensively help these Chinese brands achieve brand ignition and sustained sales breakthroughs. The time window for the rise of Chinese brands has actually arrived. Our supply side is increasingly mature. Our supply side is not just manufacturing; we have strong R&D capabilities, like Mr. Zhao from Bloomage Biotechnology just now, and our strong channel capabilities. Today, the internet has also brought simpler channels to reach the whole country. From the consumer side, I believe the rise of national confidence and cultural confidence among the new generation of consumers has also brought a new time window for the rise of national brands. Use differentiation to replace homogeneity, value war to replace price war, and brand drive to replace traffic drive. I think this era has arrived. In today's era, everyone must take their destiny into their own hands. Brand is your true destiny. After 20 years of development, we have witnessed the unstoppable rise of Chinese brands. Believe in the times, believe in China. Sometimes the economic environment also has many fluctuations. We encountered fluctuations 10 years ago, 15 years ago, and when we started our business in 2003, we encountered SARS, and later in 2009, the financial storm. But 10 years later, everything is fine. So I think believing in this era and believing in China is the greatest opportunity and business path. In the new decade, China's first demographic dividend has ended, but the dividend of people's hearts is unfolding. The traffic dividend also ended in 2018, but the dividend of the rise of Chinese brands is fully unfolding. Today's Focus Media is moving towards covering 500 cities, 5 million terminals, and 500 million new middle class. I believe that together with all of you here, we will jointly witness and promote this great era of the rise of Chinese brands. I further believe that Chinese brands worth tens of billions and hundreds of billions will continue to be born. Indeed, at every moment, we face market uncertainty, but what is uncertain is always the market environment. What is certain is the great ambition of the rise of Chinese brands of everyone here today. Are you "watching" me?