---
title: "Ten Years of Turbulence: Evolution and Trends of China's Marketing Path"
description: "Ten years to sharpen a sword, ten years is a small cycle; 'thirty years east, thirty years west,' thirty years is a large cycle. Examining a small cycle, such as the past decade (2012-2022) of China's marketing, requires placing it within a larger long-term context to better understand its origins and trends. The longer the cycle, the more significant the patterns."
author: "胡志刚 郭立新"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-10-08"
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# Ten Years of Turbulence: Evolution and Trends of China's Marketing Path

> Ten years to sharpen a sword, ten years is a small cycle; 'thirty years east, thirty years west,' thirty years is a large cycle. Examining a small cycle, such as the past decade (2012-2022) of China's marketing, requires placing it within a larger long-term context to better understand its origins and trends. The longer the cycle, the more significant the patterns.

Ten years to sharpen a sword, ten years is a small cycle; 'thirty years east, thirty years west,' thirty years is a large cycle. Examining a small cycle, such as the past decade (2012-2022) of China's marketing, requires placing it within a larger long-term context to better understand its origins and trends. The longer the cycle, the more significant the patterns. In terms of historical continuity, the commercial development of the recent decade has evolved from the accumulation of the previous decade. According to the small and large cycle theory mentioned earlier, we focus on three specific time periods: the recent decade (2012-2022), the preceding decade (2002-2012), and the next decade (2022-2032).

**01**
**A Phased Description of Two 'Decades'**
The decade starting from 2002 saw China embrace its best historical opportunity period amid reform, development, and stability, witnessing sustained economic and social development with rapid compound growth.
This was a vibrant decade. Prior to this, with the goal of establishing a socialist market economy system with Chinese characteristics, China's economic and social development truly entered the fast track. In 2001, China's accession to the World Trade Organization (WTO) was a landmark event. Subsequently, the two major economic cycles, domestic and international, mutually reinforcing, opened a golden decade for China's development. Many entrepreneurs at the time often said: 'It's truly a land of gold!' I still remember a cover article in the magazine 'Sales & Marketing' titled 'Dancing with Wolves,' telling the market that as long as you get involved and dare to try, you can seize opportunities.

### **2002-2012: Business Begins with Opportunity**
We call this golden decade the 'decade of opportunism.'
Most of China's well-developed enterprises today laid their foundations during this period. The entrepreneurs who emerged in this decade should be considered the first generation of entrepreneurs with an international perspective after the reform and opening-up.
For business, opportunism is not a derogatory term. The most distinctive feature of entrepreneurs is their courage and ability to seek, discover, and seize opportunities amid risk. In terms of personality, courage and boldness have special charm, and entrepreneurs demonstrated this charm through their actions in the surging market. The opportunities of the golden decade stemmed from social development and transformation, as well as from entrepreneurs making accurate judgments based on the situation and acting on them; the two complemented each other.
The most important contributions of entrepreneurs in this process include:

**1. Timely insight into market demand and creation of effective supply.** The supply shortage caused by long-term planned economy created a huge demand gap. Once this gap became explicit and legalized, it transformed into enormous market power.
In the decade of opportunism, the most important thing was not whether entrepreneurs could see these potential demands, but how they broke through institutional and systemic constraints to create supply and meet demand, turning opportunities into reality.

**2. Meticulous cost control.** The Chinese people, just emerging from subsistence, were extremely price-sensitive, and the international market at that time valued cheap labor and factor market resources.
As I mentioned in my article 'My Views on Chinese-style Marketing,' most first-generation and even second-generation entrepreneurs had an urgent desire for wealth but were frugal in their own consumption desires. This awareness was passed on to employees and even the entire society. The huge gap between this creative desire and consumption frugality formed an immeasurable cost advantage for Chinese enterprises during the golden decade.
This cost advantage was not technical and therefore not replicable; some called it a strategic cost advantage.

**3. Flexibility that keeps pace with the times.** Whether in the Chinese market or Chinese enterprises, the level of specialized division of labor was not high enough, which was a shortcoming in global competition.
However, we must also dialectically see the other side. The global market is a dynamically evolving system with different types of industrial upgrading and transfer. How a newly emerging developing country accepts this transfer and finds its own starting point largely depends on its systemic efficiency.
Principles like 'dare to try' and 'don't argue,' which may not align with professional spirit, achieved a holistic awareness beyond professional boundaries for enterprises and entrepreneurs in the early stages of market opening.
Along with reform and opening-up, Chinese enterprises and entrepreneurs have kept pace with the market, maintaining flexibility that keeps up with the times. This flexibility is a special manifestation of entrepreneurial innovation under China's specific historical conditions.

**2012-2022:**
**Business Succeeds through Professionalism**
Business based on opportunity and opportunism cannot rely solely on opportunity; success ultimately depends on professional capabilities. From 2012 to 2022, this was precisely the decade when Chinese commerce and marketing transformed from opportunity to capability. This is manifested in the following aspects:

**1. Concentrated R&D investment advantages driven by market scale advantages.** All specialization relies on R&D investment as its foundation. The faster the market relies on scale to form concentrated investment, the faster it transforms into industrial clusters and supply chain advantages. Our success in infrastructure, home appliances, and communication equipment manufacturing led by Huawei in this decade is proof.

**2. Brand specialization practice under the guidance of positioning theory has helped Chinese enterprises avoid many detours.** Positioning theory was born in the United States in the 1960s but flourished in China in the early 21st century. This benefited from China's huge market size, where numerous enterprise practices were carried forward.
In June 1969, Jack Trout published an article titled 'Positioning: The Battle for Your Mind' in the American magazine 'Industrial Marketing,' first mentioning the concept of 'Positioning' in business. Subsequently, Jack Trout and Al Ries wrote a series of articles on 'The Positioning Era Cometh,' published in the American advertising 'bible' 'Advertising Age,' causing a sensation. Its influence spread from advertising to marketing, corporate strategy, and other fields.
Jack Trout and Al Ries
In China, marketing theories that can make a name for themselves are, in a sense, all versions, refinements, or extensions of positioning theory, such as Ye Maozhong's 'conflict' theory and Hua & Hua's 'super symbols.' So why is positioning theory 'blooming outside the wall' and more sought after in China than in the United States?
Ultimately, it is because the background of positioning theory highly aligns with China's market reality. Positioning theory emerged in an era of overcapacity in the United States, so it turned to seek to occupy consumer minds. In the past two decades, China happened to experience a process of continuously improving manufacturing capabilities and increasing specialization.
It can be said that diversification based on core capabilities, especially manufacturing capabilities (limited and concentric), was the common experience of most successful enterprises in this decade. Therefore, it is not surprising that positioning theory, born to solve overcapacity problems, flourished in the global manufacturing center.

**3. Late-mover advantages in digital capabilities.** For future competition, enterprise digital capability is an essential foundational capability. Fortunately, most Chinese enterprises were born at the right time, and some even enjoyed the market dividends of internet technology from the start. Companies like Alibaba, JD.com, and ByteDance are themselves darlings of the digital wave. In building digital capabilities, they have reached the forefront of the world, achieving their late-mover advantages.

**02**
**Three Driving Forces of Marketing Transformation and Their Chinese Practice**
Marketing transformation is the result of market forces interacting and influencing each other.
Philip Kotler, the 'father of marketing,' pointed out in his classic masterpiece 'Marketing Management' that there are three powerful forces causing marketing changes: technology, globalization, and social responsibility. We use this as a dimension to sort out the practices driving China's marketing transformation and attempt to summarize them in three ten-year phases.
Philip Kotler
### **2002-2012:**
### **Market-Driven Technological Innovation Surpassers**
From the mid-to-late 1980s to China's WTO accession in 2001, the domestic market further opened up. Through introducing foreign investment and joint ventures, China gradually introduced and acquired more foreign technology, while multinational companies found investment directions and markets for their technology.
This process was vividly described as 'exchanging market for technology.' Whether the market actually brought technology and how effective it was is debated across different industries.
Generally speaking, technology is divided into R&D technology and manufacturing technology. Objectively, through opening the market and joint ventures, China's manufacturing technology improved significantly. This laid a solid foundation for China to become the global manufacturing center and cultivate independent innovation capabilities.
After WTO accession, the era of 'exchanging market for technology' ended, but it prepared the initial conditions for technological development in the decade from 2002 to 2012. First, new technologies and new products cultivated new markets, activating huge demand; second, from a systemic innovation perspective, an industrial ecosystem conducive to technological innovation was formed.
Especially in the era of the knowledge economy (a term from 1998), the information technology revolution based on knowledge and mental labor opened the windfall for China's internet development, injecting internet genes into China's marketing practices.
In the following decade, internet companies soared: In 1998, Sohu and Tencent were founded; in 1999, Alibaba and Ctrip were founded; in 2000, NetEase, Sohu, and Sina were listed on Nasdaq, and Baidu was founded; in 2006, Youku was founded; in 2007, JD.com was founded; in 2009, Weibo was launched; in 2010, Meituan was founded; in 2011, Xiaomi and WeChat came into being.
Although we can say that the first-generation iconic enterprises of China's internet industry can find counterparts internationally (mainly in Silicon Valley), China's huge population base and internet users provided the most important fuel for their development: data.
As of June 2022, China had 1.051 billion internet users, with an internet penetration rate of 74.4%. The growth rate of mobile internet users is even faster, currently reaching 1.19 billion. Meanwhile, the user scales of six major internet industries/scenarios—mobile social networking, mobile shopping, system tools, financial management, travel services, and mobile video—all exceed 1 billion. Today, we can even say that Chinese internet companies have bid farewell to Silicon Valley and even show signs of surpassing it.
There are three reasons:
First, a large number of large companies and innovative models have emerged in China's internet industry that have no counterparts in the United States, such as ByteDance, Pinduoduo, Kuaishou, YY, Momo, and Xiaohongshu, which have no strictly direct and complete counterparts in the United States;
Second, many innovations from Chinese internet companies are being exported back to the United States. For example, Facebook specifically 'borrowed' from TikTok to launch its competing product Lasso;
Third, Chinese internet companies have made substantial progress in going global.
Now, the demand of China's unified market with super-large economic scale and super-large population can finally become the traction for technological innovation. As people's consumption lives become increasingly digital, Chinese enterprises' digital marketing practices are extremely active, with many new marketing methods emerging. The marketing methods of Chinese enterprises have been greatly enriched and endowed with internet genes by the times.
Kai-Fu Lee, Chairman and CEO of Sinovation Ventures, predicted in a TED talk that by 2030, artificial intelligence will bring $16 trillion in global GDP growth.
China's key advantage in AI development—data advantage—will help China make great strides in fields such as computer vision, drones, speech recognition, speech synthesis, and machine translation, and will have the world's most valuable companies.
It can be asserted that China's practices in internet marketing are more diverse, richer, and even more advanced than those of other developed economies.

### **2012-2022:**
### **Winners in the Global Value Chain (GVC) Specialized Division of Labor**
The main economic realization of globalization is the global value chain and specialized division of labor, which connects production, sales, service, recycling, and other processes to realize the value of goods or services, regulated by the network linkage of production factors globally.
A typical theory about value distribution is the 'smile curve.' From the smile curve, it can be seen that enterprises engaged in product R&D, parts production, market sales, and after-sales service can obtain higher profits, while those engaged in assembly have lower profit levels.
However, in the decade when China became the global manufacturing center, it unexpectedly flattened the 'smile curve': on the one hand, it pursued branding strategies, extending to the right end of the smile curve; on the other hand, it expanded upstream into components, exerting force on the left end.
The root cause lies in the fact that intelligent manufacturing and industrial internet not only improved production efficiency but also restructured the value chain combination mechanism, enabling Chinese enterprises to gain new marketing methods after possessing manufacturing specialization capabilities.
For example, cross-border e-commerce, cross-border live streaming, and independent sites require strong supply chain capabilities to efficiently respond to dispersed, small-volume, high-frequency market demands, which is precisely the advantage of intelligent manufacturing's flexible production. It can be said that on this basis, Chinese enterprises flattened the 'smile curve' and became winners in the global value chain specialized division of labor in this decade.
In 2021, China's cross-border e-commerce exports reached 1.44 trillion yuan. It is expected that by 2025, this track will reach 2.5 trillion yuan. Under traditional trade models, Chinese brands had no mindshare among overseas consumer groups, the cost of entering overseas sales channels was extremely high, and market promotion and brand communication costs were even higher.
At the same time, Chinese enterprises' advantages in manufacturing capabilities and supply chains could not be leveraged, making international brands exclusive to multinational companies in developed economies. Before cross-border e-commerce, there were only a handful of Chinese brands that could go global. But after the rise of cross-border e-commerce, enterprises can leverage platform advantages to interact with information through video, images, and text, allowing consumers to have a fuller understanding of the brand.
It can be said that the DTC (Direct to Consumer) business model of cross-border e-commerce has given full play to Chinese enterprises' manufacturing advantages and internet marketing genes.
In this context, the competitive advantage of Chinese manufacturers and enterprises is no longer simply cost advantage or extreme cost-performance ratio, but based on the DTC business model, transformed into a new brand development model based on agile manufacturing, agile marketing, and agile logistics.
In May 2021, data from app tracking companies App Annie and Sensor Tower showed that SHEIN replaced Amazon as the most downloaded shopping app on iOS and Android platforms in the United States. SHEIN has up to 600,000 products for sale, with up to 6,000 new products daily.
The real tide of the times is not just cross-border e-commerce, but China's all-round going global. It can be expected that in the next decade, a batch of Chinese fashion brands will stand on the international stage, competing with international big brands like LV and Hermès.

### **2022-2032:**
### **Commercial Forces Contributing to a Community with a Shared Future for Mankind**
As a grand background, in recent years, China has proposed building a 'Community with a Shared Future for Mankind' and emphasized jointly addressing challenges faced by humanity on the basis of respecting diversity, equality, and mutual benefit, to create a better future.
This common interest view of sustainable development has received widespread attention and positive response from various countries. Specifically in the business field, it means that enterprises must consider consumer interests and social interests in their business operations. At this level, the complete interests of 'people' become a constraint for enterprise marketing.
As Philip Kotler emphasized in 'Marketing 3.0,' enterprises must treat consumers as 'people' with independent values, thoughts, and complete spiritual personalities, not just consumers who purchase products or services.
In other words, in the era of Marketing 3.0, consumers not only pay attention to the functionality of products but also pay more attention to whether the production process of enterprises conforms to the common interests of mankind.
As corporate citizens, social responsibility is the boundary of corporate marketing activities. Marketing activities must consider their moral, environmental, legal, and social connections. Chinese enterprises have made significant progress in building marketing ethics, but there is still huge room for improvement.
In recent years, environmental protection and energy conservation have become new windfalls and tracks that enterprises pay close attention to, and have also become important marketing themes for enterprises to respond to social concerns.
Taking the home appliance industry as an example, according to the prediction of the China Household Electrical Appliances Association, by 2022, the estimated scrappage of old home appliances in China will exceed 200 million units. The Ministry of Commerce and other ministries have launched and carried out the national 'trade-in' activity for home appliances, while promoting green and smart home appliances to the countryside to meet consumers' upgrading needs for low-carbon, green, smart, and fashionable home appliances.
Midea Group, as a representative of the home appliance industry, released its green strategy to the public at the end of 2021, building a full-process green industry chain around six pillars: 'green design, green procurement, green manufacturing, green logistics, green recycling, and green services,' elevating environmental responsibility to a corporate strategy.
According to media reports, in September this year, Midea launched the 'Green Power Action' with major measures such as hundreds of millions of yuan in green subsidies and one-stop full-process services. Enterprise marketing practices show that with the gradual standardization of policies and regulations and the continuous enhancement of consumer environmental awareness, the contradiction between economic and social development and ecological environmental protection can not only be continuously resolved but also transformed into a driving force for enterprise development in the new era.
In summary, in the new era, enterprises must shift from consumer-centricity to human-centricity, and their profitability is closely related to their sense of corporate responsibility.
We optimistically foresee that future market demand and enterprise organizational forms will pay more attention to business concepts and business ethics, which will form the underlying logic of new business. The new business ethics facing the future will give birth to a fairer, more transparent, and more emotional and warm business.

**03**
**From the Future of Marketing to Field Coexistence**
Starting from 2023, the next decade will be a decade of internet popularization and IoT explosion. We believe that in most consumer goods industries, as long as they are related to manufacturing, with the degree of specialization of Chinese manufacturing, functional technology and production itself will inevitably become a social resource similar to quasi-public goods.
In other words, for any innovative enterprise, product manufacturing or supply chain integration itself will no longer be a problem.
Business innovation will unfold at a new level: returning to the user perspective, recreating scenarios, and integrating into an ecological field where scenarios serve as the background and multiple subjects interact. The field economy is the main arena for business development in the next decade.

**First, return to users.** To clearly illustrate this issue, we intentionally distinguish between consumers and users as two different concepts. Users in the IoT scenario are different from traditional consumers.
In traditional scenarios, the process of a consumer purchasing and consuming a product is an isolated individual process. Under IoT technology, users and products have a certain connectivity, interactivity, and feedback. Consumers are even one of the designers of the product.
Therefore, users' behavioral habits are closely related to the functional characteristics of the product. In this context, marketing will be completed collaboratively by enterprises and users, or become what Philip Kotler calls 'collaborative marketing.'
That is to say, in the era of the Internet of Everything, marketing activities must be user-centric and incorporate users as an important factor into product development to achieve collaborative innovation.
Therefore, we believe that the opportunities for business development and evolution in the next decade will arise from the reconstruction of the relationship between products and users.

**Second, recreate scenarios.** The IoT will bring different technologies into different work and life scenarios. Every traditional technology has the potential to play new roles in new work and life scenarios. For example, refrigeration technology used for food preservation and temperature control may be applied to biomedicine and aerospace.
Recreating scenarios is the most extensive and fundamental path for future business innovation. It stems from a re-examination of user needs, integrating the functionality of technology into the functionality of scenarios, seeking integration, iteration, and breakthroughs between products. Scenarios are both products and channels; they are both user scenarios and scenarios for business innovation entities.

**Third, integrate fields.** The ecosystem is a widely accepted organizational concept. In the future, enterprises can only survive in such an organizational system—to qualify for survival, they must contribute to a larger system and establish their own ecological niche in the ecosystem.
Field might be a more accurate expression than ecosystem. The field economy will be the main form of future business organization. Scenarios are the basic carrier form of fields, but scenarios are static, while fields are dynamic. A field may depend on one scenario or on different or numerous scenarios. Fields are the connectors, applicators, and recreators of scenarios. Fields are formed by multiple actors interacting, dividing labor, and cooperating with each other; one party's behavior is influenced and constrained by multiple parties.
Field integration will follow these principles:
First, the personification of products and product scenarios will enhance the value of integrity as a business quality. Second, the contract and public service spirit required by the principle of ecological co-construction will make saving social resources the foundation of win-win business, and green environmental protection will become the basic responsibility of business entities. Third, product design styles follow the aesthetic requirements of fun. One manifestation of fun is personalized customization; tolerance and diversity will become the value propositions of more brands and enterprises. Fourth, dispersed scenarios mean more casual connection methods. Working from home, multiple identities, and time freedom become choices for more people, thereby achieving 'free association of free people.'

**04**
**Calling for Entrepreneurial Spirit in Marketers**
The market is the battlefield for entrepreneurs. Entrepreneurs are the executors of marketing functions, and entrepreneurial spirit is a special expression of how entrepreneurs organize and manage business activities.
Since China's reform and opening-up, the evolution of commercial development and enterprise marketing has also been a process of continuously highlighting entrepreneurial spirit. The connotation of entrepreneurial spirit has different manifestations under the constantly changing environment of Chinese market practice.
If we view thirty years as a large economic cycle and ten years as a small cycle, we will find: In the first decade, the enterprising spirit of risk-taking and pursuing success helped Chinese enterprises complete the first stage of tasks. Chinese entrepreneurs, daring to be first, vividly interpreted 'risk-taking is the nature of entrepreneurial spirit.'
In the second decade, the professional capability of striving for excellence and perfection became the guarantee for enterprises to move from temporary opportunism to long-termism. In fact, the best strategy for enterprises to cope with uncertain environments is to adhere to long-termism and do what they are good at.
We believe that in the new round of field economy competition, a holistic view, design capabilities, and ubiquitous social responsibility will become the more conscious pursuits of Chinese entrepreneurs, helping them accomplish the glorious historical mission of 'a Community with a Shared Future for Mankind' through business goals.

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