Thursday, November 16, 2017

Why China's 'New Silk Road' Is The Ultimate In Sophisticated Marketing Strategies

https://www.forbes.com/sites/nusbusinessschool/2017/11/16/why-chinas-new-silk-road-is-the-ultimate-in-sophisticated-marketing-strategies/#6629cfc77a2a

NUS Business School ,  

 CONTRIBUTOR

 

POST WRITTEN BY

Xueliang Chen

Xueliang Chen is an adjunct senior lecturer of marketing at the National University of Singapore (NUS) Business School.

the publicity machine for OBOR has gone into overdriveBy positioning the project as a new Silk Road, for example, the OBOR brand is evoking an age of adventure, cultural exchange and shared prosperity.

(Photo by Jason Lee-Pool/Getty Images)

In March this year, representatives from 65 countries gathered in Beijing for a two day summit to showcase China’s $1 trillion One Belt, One Road (OBOR) trade and investment project.

Dubbed “the new Silk Road,” OBOR aims to build a network of trade routes connecting Asia, Africa, the Middle East and Europe – a collective GDP of $2.1 trillion and 4.4 billion consumers.

In the months since, the publicity machine for OBOR has gone into overdrive . Documentaries have focused on the history of cities in the network, while analysts have highlighted China’s need to absorb excess domestic capacity, sustain employment and cement strategic ties to support its "Peaceful Rise" as the region’s economic powerhouse.

With China making a concerted push to expand its economic sphere well beyond its geographic borders, what opportunities or challenges does this present for businessmen and corporate executives?

Age of adventure

Stripping away the complexity and political narrative of OBOR, we find a marketing strategy that delivers sophisticated branding, meaningful product segments and a sustainable business model.

By positioning the project as a new Silk Road, for example, the OBOR brand is evoking an age of adventure, cultural exchange and shared prosperity.

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The Silk Road brand is deeply embedded in history and carries positive memories of the productive exchange of goods, culture, religion and friendship that formed a bridge between Eastern and Western civilization.

Visitors (C) look at a replica of sailing fleets exhibited along side of a replica of a 15th-century treasure ship used by legendary Chinese explorer Admiral Zheng He dominated at the new maritime museum in Singapore on October 6, 2011. (ROSLAN RAHMAN/AFP/Getty Images)

It comes too with brand ambassadors like Venetian explorer Marco Polo and Chinese admiral Zheng He, whose Ming Dynasty treasure fleets visited ports as far as the east coast of Africa in what is portrayed as a model of peaceful trade and prosperity.

The entertainment industry was one of the first to recognize the allure of the Silk Road. In 2015, Chinese megastar Jackie Chan produced the action movie Dragon Bladewhere he starred as a Silk Road frontier general who protects a city of flourishing traders from a corrupt Roman leader. While one might criticize the propagandist nature of the story, Dragon Blade was a $65 million marketing investment that yielded a box office return in excess of $120 million.

Value proposition

Great marketing strategies need to offer meaningful Customer Value Propositions that are anchored in market insights. Likewise, every economy needs a strong value proposition for sustainable growth.

For the emerging markets of Central Asia, the Middle East and Africa, as well as the newly industrialized countries of Southeast Asia, foreign infrastructure investment is a key priority to drive economic transformation.

While many casual observers view OBOR as another trade agreement, its vision runs far deeper. It aims to build sustainable long-term markets by first investing in the trading nation’s infrastructure, followed by investments in education, healthcare and technology to win over the local "consumers."

For businesses and corporate executives contemplating where and how to compete in OBOR, the answer can be found through strategic segmentation, dissecting the opportunities by market, industry and projects.

Open platform initiative

Aligning competencies and competitive advantage against a product/market segment is a good starting point. After all, the essence of a marketing strategy is about the concentration of limited resources and focusing effort into an area that provides the greatest chance of commercial success.

At the highest level of thinking by the Chinese government, OBOR is, by design, an inclusive open platform initiative. While the early economic participants may be the partner cities and ports, the intent is to make OBOR the standard platform for international trade.

For example, by helping countries like Sri Lanka build a coal-powered energy power plant, it will help meet the energy needs of a developing economy while creating a long-term customer for China, which produces 48% of the planet’s coal.

In this photo taken on June 2, 2017, Asian Infrastructure Investment Bank vice president Thierry de Longuemar speaks during an interview at the AIIB offices in Beijing. (Photo by GREG BAKER/AFP/Getty Images)

To fund the many initiatives associated with OBOR, the Asia Infrastructure Investment Bank (AIIB) was launched in tandem to provide the required financing to close infrastructure deals with partnering countries.

Similar to the model adopted by automotive companies who have an in-house financing arm, AIIB aims to be a profit contributor to the initiative. As with all complex deals, the consequential up or downstream business in financial, legal and insurance services will follow closely, furthering the economic impact.

At the core of OBOR, China is offering a simple “Economic Rejuvenation in a Box” partnership, anchored on its competitive advantage in accelerating infrastructure using its own economic resurgence as a model.

This is supported with a clear branding concept, industry/market segment sizing and borrowed business models that add up to making OBOR China’s ultimate marketing strategy

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