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Direct Marketing News From Hong Kong

How About the HKDMA Expanding to Include International Members Interested in Accessing the China DM Market from Offshore?
 
On January 25, Gene Raitt, who agreed to chair the Hong Kong Direct Marketing Association temporarily until a new chair has been found, introduced Ruth Stevens as the HKDMA luncheon speaker that day. Ruth is currently Chair of the Direct Marketing Club of New York, a professor of marketing at Columbia University’s graduate School of Business and is teaching at Singapore Management University for the Spring Semester.
 
Before she spoke, Gene in his initial remarks, described the apparent interest expressed in the USA, Hong Kong and elsewhere in forming a Greater China DMA to include the DMA’s in Hong Kong, China and possibly Taiwan. This topic was discussed at a recent HKDMA Exco meeting at which just four of the Committee were present (I was one of those unable to make it).
 
If I had been present I would have expressed reservations about this “Greater China” concept. I voiced these concerns with Gene over lunch earlier last month.
 
I don’t want to go through here all the nitty-gritty detail we discussed, but my own view (for what it’s worth) is that putting China, Hong Kong and Taiwan together into one single “DMA” pot is like mixing together chalk, cheese and papaya. Each of these markets have some fundamental incompatibilities and quite different sets of priorities which would make any joint DMA an uncomfortable mix – to say the least.
 
Most of the international direct marketing companies I know (with just a few exceptions) who have been through the bureaucratic nightmare of establishing a legal presence in China, of appointing local staff and starting from scratch have almost universally had an expensive experience (which was not a profitable one).
 
The alternative has been to mail into China from offshore (eg. Hong Kong). You can mail with a national perspective through Hong Kong Post and all your mail gets delivered – instead of mailing nationally from one point within China paying the post office in one city and expecting the post office in another province to do all the work delivering the mail but not sharing in the income. What happens? Not all your mail gets delivered.
 
In China you’re not dealing with a single business partner throughout the nation. You’re dealing with many different provinces in which the local business branch is autonomous and you have to renegotiate deals province by province.
 
In China (perhaps more than in other countries) if something can go wrong – it will. But the numbers are large and therefore the potential cost (i.e. potential loss) is also large if things go wrong – and they usually do.
 
Of course, the option of potential interest to all of us is how to grow the China market step-by-step from offshore and get your money out without investing in a local presence.
 
There are reliable ways in which branded third parties can receive your response locally in China, process payments and pay you offshore in a convertible currency less their commission.
 
This is being widely practiced, and I believe a very important role for the HKDMA in the future could be to set up networks in China in order to facilitate safe access to the China market for mailers who want to build a customer base there but prefer to remain offshore for the time being.
 
Gene Raitt sits on the US DMA Board and you may like to contact him if you’re based in the USA and feel strongly about ways to access the China market. (His email address is: Eugene.Raitt@aig.com)
 
I should add that whoever agrees to chair the HKDMA in the future, especially if a larger role for the Association is adopted as described above, that person should be a full-time Chinese speaking CEO – supported by sponsorship from inside and outside Hong Kong. There’s no way such a wider role can be led and managed by a fully employed executive on a part-time basis.
 
* * *
 
The Perennial Challenge of Cleaning
and Refreshing List Data
 
Meanwhile back to Ruth Steven’s presentation at last month’s HKDMA luncheon.
 
Her stimulating talk was focused on B-to-B direct marketing and her perspective was from what’s happening now in the U.S. market.
 
Apparently US$868 billion is being spent on DM-driven sales in the USA – but B-to-B has been growing at 6.2% compared with growth in consumer DM of 4.4%.
 
One of the biggest problems affecting the growth of B-to-B direct mail, however, is unclean data. (Have you heard that before?). The Data Warehouse Institute in the USA has calculated that bad customer data costs U.S. business over US$600 billion a year in postage, print and staff overheads. Of course, response rates are also damaged. Since business address data is changing at 4%-6% monthly, this will continue to be a challenge in the USA – and the USA will be no different in this respect from other major markets.
 
Ruth claims that in the U.S. email no longer works for B-to-B prospecting (spam has ruined it) and postal mail is securing lower cost, better enquiries.
 
Finally, the offer. Some things never change. In B-to-B, information-based offers work best. The free newsletter, research report, case study, article reprint, book, demo CD or, of course, the 10 Tips Document on “Making Your Business More Profitable”. Such offers can be geared to the primary interests of your target audience and the incremental cost is low – or even zero.
 
Ruth Stevens can be contacted at ruth@ruthstevens.com.
 
* * *
 
More About List Data
 
A further word about list data. I had a chat the other morning with one of the major suppliers of international “cross-border” data to the international list brokering industry (such as it is). He will remain nameless because I think he would prefer it that way.
 
What was fascinating was to hear that the demand for postal address data was declining and there was now at least 50% greater demand for telephone numbers.
 
Mailers then use call centres to make offers to these files in order to generate postal addresses from them which are both current and “qualified”. The end result in terms of prospective buyers who convert is (for most mailers) justifying this more expensive and time consuming means of gathering fresh data.
 
* * *
 
How to Avoid Bulk Mail Penalties
 
As the Euro, Sterling and Aussie dollar have continued to strengthen against the U.S. dollar, so international, cross-border mailers have been encouraged to print, lettershop and post mail internationally from Asia where currency values are more closely linked to the dollar.
 
The upside is a significant saving in production and postal costs for customer acquisition mailings, but the downside is you can’t be too cavalier about simply delivering your mail to an Asian postal administration for entering into the international mail system and expecting it to arrive in full at the particular rate negotiated with that postal operator or postal administration.
 
Every experienced mailer knows about bulk mail penalties applicable on Developing Countries (DC) mail sent to Industrialized Countries (IC’s) for local delivery. Volumes of direct mail delivered to any one country is limited to 1,500 items a day or 5,000 items in two weeks.
 
The justification for this? ICs complain that their cost domestically of delivering lightweight mail is higher than the compensation they receive for foreign mail received from D.C’s under the UPU terminal dues system. This may be so but in all fairness they should add into their total calculations the full postage paid by responders to bulk mail, the subsequent response received from the mailer (including product fulfillment) and the full postal rate correspondence generated and exchanged over the lifetime of that customer relationship. Direct mail these days keeps the postal industry going.
 
However, right now bulk mail volumes from DCs are being closely monitored by receiving postal administrations in the following countries (and there may be more): Japan; Germany; France; Australia; UK; Korea; Greece; Switzerland; Canada and Thailand. The USPS doesn’t care how much mail they receive from where – they’re more interested in identifying scurrilous, misleading or illegal content.
 
After talking to some leading international postal operators (who would like to see their mailer customers receive full delivery of their volume mailings without direct mail penalties being imposed) there are clearly some rules which can be followed:
 
· Always get your mail mixed with other mail in many different mixed mail bags.
· Spread your mailings over as long a period as possible.
· Test handwritten addressing. (This can be done cheaply in the Philippines where envelopes can be printed, addressed with handwriting and sent over to your printer in Hong Kong or Shenzhen). One mailer told me recently that response to handwritten addressing doubled if deliberate mistakes are made in the addressing! (More authentic?)
· Use live stamps. (At least one reliable postal administration is willing to do this). Live stamps can deliver 20% lift in response.
· Use different company names if it’s a B-to-B mailing and drop the ‘Undelivered’ address.
· Use different envelope designs.
 
Incidentally IC’s may not want to deliver your bulk mail, but many small and developing countries will be more than happy to do so because they earn more from the overseas mail items they receive and deliver under the terminal dues system than from domestic mail. Maybe that’s why we get full postal delivery from smaller countries and much higher average response rates!
 
* * *
 
Spam Filter Over-Efficiency
 
I’m all for efficient spam filters but recently we’ve found that more of our private one-to-one emails (especially to the USA) are ending up in junk mail boxes – and take some time for your overseas colleague to find even when you follow up in a timely and efficient way. More of our U.S. sourced email is also ending up in our own junk mail boxes here.
 
If you don’t hear quickly from your contact – it’s worth following up in a couple of days (don’t just assume inefficiency on their part) – and do review your non-provocative subject line. This can be a key element in one-to-one email (and, of course, bulk email) getting delivered – or not getting delivered.
 
* * *
 
Reason Tells Me Printed Matter Should Be “Printed Matter”
Until It’s Entered Somewhere/Anywhere into
the International Mail System When It Can Then Be Called “Mail”
 
Canada Post doesn’t agree with the above statement. However, at the end of October last year the Minister of Transport in Canada tabled a key amendment to the Canada Post Corporation Act which would allow any carrier to take direct mail packages produced and printed in Canada as “printed matter” and drop that material into the international mailing system outside Canada. Until now, this has been the exclusive privilege of Canada Post. Canada Post is not happy at all about this amendment but, of course, the mailing industry is thrilled at the prospect of a change in the law.
 
The proposed amendment has been introduced by Parliament, it will have a 2nd reading shortly followed by approval (hopefully) from the Standing Committee on Transport and then sent back to Parliament for enactment.
 
There’s an important principle at stake here because other postal administrations we know have been beginning to take the same position as Canada Post by litigating against mailers who were printing and lettershopping direct mail materials locally and taking these materials and dropping them into the international mail system outside their home territory (either for cost or efficiency reasons). I hope the example set by the Canadian Government’s decision to force Canada Post to amend their position on this will be followed by other postal administrations elsewhere.
 
* * *
James Thornton
Managing Director
 

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