NAME: Madalena Wong
COMPANY: Oracle Added Value
POSITION: Founder and CEO
EDUCATION: University of Hong Kong, BA Sociology
IN HER HANDBAG: Purse, Pen, Nokia mobile phone, BlackBerry, Plane ticket

With the economic downturn now a global one, many multinational firms are turning their attention to China, hoping to offset falling sales in their home markets.

CIB caught up with Magdalena Wong, CEO and founder of market research firm Oracle Added Value (艾德惠研市场调查), who for over 20 years has traveled throughout China, from the most urban of cities to the remotest of villages, taking the consumer pulse.

Wong began her career in market research, and was involved in creating China’s first market research agency. She helped household brands like Procter & Gamble, Unilever, BAT and SC Johnson break into the Chinese market and was also instrumental in establishing retail audit and measurement standards in China.

In 1994, Wong set up her own company, Oracle Market Research, which was subsequently acquired by UK advertising conglomerate WPP in 2005. Today, her company, Oracle Added Value, has over 250 staff working in Beijing, Shanghai, Guangzhou and Hong Kong.

You began your career in 1982 at an agency called Survey Research Group. During this time you helped set up the first market research agency in China. How did you go about setting up a firm in what was then a new area in China?
In 1984, clients started asking us to go to China to explore the market for them. At that time, my first client was Procter & Gamble . . . and everyone that started off at that time tended to pick Guangzhou as their headquarters because it was close to Hong Kong . . . it was unusual for multinationals to set up in China. A lot of the rules were not established at that time, the government had a lot of control and so we all operated from Hong Kong.

Where did you expand to from there?
The key market was Shanghai. Shanghai was first because Beijing was the capital city and auditing was not too open.
Then, after a couple of years, we contemplated setting up [several] joint ventures that had business units [on the Chinese mainland]. We were not allowed as a wholly-owned company, so right from the beginning we had to set up joint ventures with [government statistical bureaus] . . . They were silent partners. We used the staff of the state statistical bureaus to collect information [so that] it became legitimate.

How has conducting consumer research in China changed since then?
[Back then] the government was more sensitive and so we had to be very careful because questionnaires had to be checked by government officials before we fielded them. When we went out to do interviews, people could be very sensitive and could report us to the resident committees. Sometimes we had to explain to the resident committees who we were and why we needed to collect information.
Now we have online [research resources] and there are more SMS surveys. So there are more digital [methods]. But the bulk of data collection is still [done] face-to-face or on the telephone. In the 1990s it was all face-to-face.

In 1993, you moved from market research to advertising. Why?
I had been in the business for 11 years and I felt it was enough. As with a lot of researchers, we want to look at the client side, the other side, of the business, so at that time I was headhunted by JWT  [to be] their strategic planning director.

But you left after a year to set up your own firm. What made you decide to go it alone?
After I joined JWT, I felt all the more that I was for research. I wanted to concentrate in one area, and I really enjoyed speaking directly to consumers . . . I always felt my expertise in the market was focus-group discussion. I think it reflects my sociology background.
Even in my year as JWT’s strategic planning person, I was based in Hong Kong but I wanted to move to [the Chinese mainland]. I wanted to be closer to the market and I saw that at the time there were very, very few research agencies. I thought, ‘this is a virgin market, so there must be good business here, and a huge opportunity for a boutique house which really does tailor-made research work.’

WPP acquired your company in 2005? Why did you decide to sell?
There were actually four companies who approached us. At the time it was an industry where there were very, very few operators in the market . . . I spoke to all of them because after seven or eight years I felt it was time to go to another step, that is, to go towards another path of development because, as a small company, I think that’s the ceiling. As an entrepreneur, I think that is about it, after seven or eight years . . . In fact, even after four or five years, there were companies speaking to us, but I was not interested.

Has WPP’s acquisition changed Oracle’s direction? Does a part of you long for the early days of independence?
It has changed, but not substantially. I think WPP’s philosophy is [to] buy good companies which they feel have potential in the market . . . they don’t necessarily want to change the DNA of that company. They want those companies to protect their own equity.
But naturally we changed. And I love that change as well. We are on the path to becoming an agency that is more brand-development skewed. So we are not a mainstream research agency but do work that is more, I would say, premium.

How does China fit into the global market research picture?
We are not as fast as Western countries — the developed research market — in terms of innovation. The thought leadership is more in the West. They have a lot of best practices that we can borrow, but the beauty of it is, the best practices from outside may not work well here, and so we have to adapt.
And agencies from outside cannot compete with local agencies or local brains on consumer insights. [So the question then becomes], how do you do it, and how do you tie in the knowledge with the client’s plans, to make the best recommendations for them? We blend things together

With the global economic downturn, do you see China having more importance for WPP – and for your own clients?
Our chairman Martin Sorrell had the foresight some years ago, already, to realise that China was the future. He put a lot of emphasis on developing this market . . . and set up a very good plan for expansion. So now that there is a financial downturn, China is still one of the few areas or territories that the group feels will contribute a lot to make up for [the downturn in] Europe and the US. 
It’s the same for my clients across the board. It’s very interesting looking back over the years. It took many companies more than 10 years to break even [in China, but] in the past five to 10 years many companies are now making very good profits here. But with the global downturn, I would expect China cannot escape. No matter how good China is, it is going to suffer.

And Chinese consumers? Can they really be encouraged to spend more as the rest of the world cuts back?
With the impact of globalization and the internet, people all around the world are sharing news, views and feelings much, much more than in the past. This is especially true for developing markets like China. I agree it is less vulnerable, as the economy is still largely regulated by the government, and consumers are much more confident about the future than people in other markets. But they can feel the pain, and they will surely cut down on what is unnecessary.

Your first client, P&G, is held up by many as a classic example of how a foreign brand can succeed in China. What did it do right?
When they want to enter a [new] market, they spend time understanding [it] from all angles. From a business environment, then with the government and also with consumers. [P&G] live and breathe with the consumers. They are very meticulous in listening to what consumers say and what they need. More than 20 years ago, they went with us into the field and they were very diligent in taking the consumer’s pulse. And they have not stopped, they have only increased the intensity.

Where do other foreign brands fall short?
Some of my other clients branch out into too many brands and too many areas, which does not necessarily help them. A direct comparison is another consumer goods company (Wong withheld the name) that right from the beginning looked at shampoo, toothpaste, food, ice cream and detergent – too many products. They made perhaps too many acquisitions at that time . . . Their resources were spread too thin, too ambitiously and the focus was not as sharp as Procter’s . . . I think focus is a good lesson for everyone. You need to focus so that you know how to build a big brand here. And once that is built, then you have a lot of knowledge that you can lend to your future development.

What else is important for a foreign brand’s success in China?
Their regional strategy – how they set up their distribution. I think distribution is king in China. Procter were very successful in distribution because, even almost 20 years ago, they spent a lot of time building their network all over China. Bigger, first-tier cities, then second-tier, rural areas. And they put a lot of pressure on the distributors to help them. That is, they helped the distributors to grow, and then the distributors had to help them and their dealers.
Another good example  is [chewing gum brand] Wrigley. I often go to rural areas in China, and one product I always see on shelves is Wrigley. Their salespeople virtually have to ride a bicycle to deliver the product to the small shops. You cannot imagine how far-reaching they are. It’s very impressive.

How about local brands? Is the formula for success the same?
Yes. We recently did a paper on ‘premiumization’ and I think the best examples of ‘premiumization’ are Chinese brands. Foreign brands, when they enter the market, they are already on the premium side. Whereas the local brands, they are always the cheap local brands with [poor] packaging – the product could be good, but the packaging and the advertising are bad.
But local brands are getting more and more confident. If you look at brands like Yili (伊利), despite the melamine [scandal], they are a very confident brand. Also Mengniu (蒙牛). If you look at their strategy, how they made use of Super Girl (Mengniu was the hit TV show’s main sponsor) to build the brand, they know how to touch the hearts of local consumers.

Is there a particular Chinese brand that stands out?
Many consumers tell us about Haier (海尔). They’re a national brand people feel proud of. Advertising helps, but it is their after-sales, and the quality [of the products] themselves [that account for Haier’s success]. No matter how old your fridge or washing machine is, no matter how small the spare parts are, they can come and fix it. I can’t see any other electrical appliance [manufacturer] able to compete with them on their distribution, range of products, and also the quality-price equation. And I think Haier is ready to go out of China to other parts of the world.

Which consumer sectors do you believe have the greatest growth potential in the coming years?
Everything that is health-related. [The Chinese] always feel there are health risks related to the environment, the food. Because once you are sick . . . very few people can afford to go to a hospital, so they really invest a lot of money in keeping healthy. Be it spas, nutritional supplements or health equipment.

Finally, as a woman CEO and entrepreneur, what is it like being a female executive in China?
The Chinese are very egalitarian in the job market, women are given sufficient respect and opportunities, and there is no discrimination at all. I think [the reason why] you see more male CEOs is only because women don’t want to do it, not because they are not given the opportunity. If anything, I think being a woman is an advantage. There are too many males in corporate life. The fact there are so many male CEOs puts us in an advantageous position. I enjoy being a woman in business.

Warning：The use of any news and articles published on eChinacities.com without written permission from eChinacities.com constitutes copyright infringement, and legal action can be taken.