Patrick Xu runs WPP in China. His central correction to the way the market is discussed outside it is that China cannot be read as one market at all. He describes it as a continent, differentiated across market levels, consumer groups and geography.
His account of how the market moves is the phrase he keeps returning to. You do not analyze your way to certainty and then act. You test, and you feel for the next stone.
Key findings
- Xu explains China’s speed as leapfrogging rather than acceleration. The country did not build out landlines before mobile, or a mature modern grocery trade before e-commerce, so each successor category arrived without an incumbent to displace.
- He is explicit that recovery demand has to be bought, and that the price is margin. His example is restaurants in Wuhan taking on delivery at a higher cost per order because the alternative is an empty room.
- Asked what will not revert, Xu points at his own parents. They are in their late seventies, had barely used e-commerce, learned it during the shutdown, and in his view will not go back.
- He reads the shape of the recovery against the 2003 outbreak, which he lived through in China. That one recovered in a V. This one, he expects, is a U, and the new normal holds until a vaccine exists.
The road is busier than before, and the subway is half empty
The measurement Xu offers for how cautious people remain is a traffic index. Congestion in Shanghai, Beijing and Guangzhou had passed its pre-crisis level, while subway volumes stood at roughly half.
His reading is that people are buying their own transport rather than traveling more, and he expects the same caution to show up as demand in health and insurance.
Selling houses on a video call
Xu’s example of demand created rather than waited for is a Chinese property firm that put its sales force onto social media and virtual tours during a full lockdown. He reports sales more than doubling in the month.
A second example is a commerce platform that put marketing resources behind the merchants it hosts rather than behind itself: promotions, live streaming, coupons, flash sales and content, funded centrally to move the merchants’ goods.
The one he tells at greatest length is smaller and more concrete. A restaurant group WPP works with turned the problem of feeding an office back into a business: one grouped delivery to a campus of thirty five hundred people, ordered in the morning through an app, rather than hundreds of individual drop-offs.
What the delivery system did when everybody used it at once
Xu describes himself as someone who could go three or four months without entering a supermarket. The behavior he did not predict was people going back to physical stores at the start of the outbreak.
The cause was infrastructure rather than preference. With everyone confined at once, the delivery network was overwhelmed, and an order that could be placed could not be fulfilled in any useful time.
Poverty as a market question
Asked how the multi-stakeholder argument lands in China, Xu names two places where he thinks it has consensus. The first is environmental: clean water, clean air, a safe neighbourhood, alongside economic prosperity rather than instead of it.
The second is the anti-poverty campaign, and here his example is commercial. A social commerce platform connected farmers in remote areas, where the transport infrastructure is poor, to urban buyers, raising the growers’ incomes by selling their produce rather than by subsidising them.
He adds that customers are aware of which platforms do this and spend accordingly.
Inputs on one side of the screen, outputs on the other
Xu’s answer to how marketing, sales and technology should work together is that the question is malformed: e-commerce is not a separate expertise sitting beside the market, it is part of the market.
The method he describes is deliberately crude and deliberately continuous. Every input on one side of a large screen, every output on the other, dialled up and down until a working model emerges.
The important half of the rule is what you do with the model once you have it. Xu says it must be held lightly, because three or six months is enough for it to stop being true.
The capability is built by putting young people in front of the new channel and having them teach the rest of the firm what they found.
Do more and talk less
Asked what went wrong in China, Xu says he saw no major missteps, and offers a rule that explains why. Where a brand had a genuine and relevant social message, it made it. Where it did not, it kept its head down and looked after its own people.
The interviewer supplies the counter-example from his own market: a highly profitable travel company that pressed its partners hard and then applied to a government relief fund, and was punished in public for it.
What kept him awake
Xu runs eight thousand people in China, and names people as the only thing that kept him awake. The response was a crisis leadership team assembled early, and communication he describes as needing to be repeated past the point of sufficiency.
The concrete provision was a professional support program for staff, which he says mattered because the stress was real rather than rhetorical.
Scope and limitations
This is one executive’s account of one market, recorded in mid 2020, and the figures in it are his own or drawn from third parties he names in passing rather than from research. The forecast of widespread autonomous delivery within twelve to eighteen months is attributed to an analyst and offered as a prediction.
Source
This page summarises HGS #2: Patrick Xu (CEO, WPP China), by Frank van den Driest, 2022-02-16.