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Luxury in the digital age: the challenge of balancing “slow time” and “fast time”

At Luxe Pack Shanghai 2017 held in April, Ifop CEO Stephane Truchi and Luxurynsight CEO Jonathan Siboni shared their views on how luxury brands should adapt to the digital era in a conference entitled “The Digital Transformation of Luxury”.  

While 50% of Chinese domestic luxury consumption will be generated online by 2020, it is of the utmost importance that luxury brands remain abreast of digital innovations and place them at the very heart of their development strategies.

Although luxury brands are forever more accessible and time has speeded up subsequently to the development of digital technologies, Stephane Truchi places emphasis on how important it is for luxury brands to maintain their focus on the traditional values of luxury which include one to one relationships with clients, a physical point of sale, sensoriality and paying close attention to clients’ needs in particular through advice and direct contact.

In this way, the challenge facing brands today is to bring these two worlds together and create a balance between “slow time” and “fast time”, while preserving the essential dimensions of luxury such as mystery, rarity, excellence, expertise and occasionally keeping a distance from the digital universe by focusing on interaction, dialogue and ephemeral actions.

Finally, Stephane Truchi closed the conference by outlining three key strategies to ensure that luxury brands maintain their exclusivity in a digital world accessible to everyone:

  • Create an irresistible desire – brands need to expand their range of visual, written and video materials with remarkable content, thereby revealing unknown facets to clients, fostering intimacy with new generations (millennials), and opening new channels via influencers.
  • Deliver a unique experience via new technologies and initiatives to ascertain a seamless service, while creating an opportunity for interaction between the digital and the physical worlds and tapping into social interaction.
  • Foster a close relationship with clients based on the latest advances in technology such as chatbots, thus encouraging automatic interaction between clients and the brand, ensuring personalisation of support services and providing the opportunity for real-time interaction with a community.
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When social and commerce merge

In March, the China Connect conference dedicated to Chinese digital trends was holding its 7th edition in Paris. The motto of this edition was « Crack the codes » i.e how to uncover the dynamics of a specific, fast moving market which is in many ways leading the West when it comes to digital habits and models.

The explosion of Live Streaming

A key trend this year is the growth of mobile live streaming… maybe later than in Western countries but much faster and stronger! This new form of entertainment has found a place in people’s daily life, especially among the younger generation, and in the strategies of brands of all sectors. Its development is different from what can be seen in Europe and the US thanks to..

  • its scale: 200+ mobile applications such as Ingkee, Huajiao or Douyu which have been downloaded over 50 million times each, and a total of over 350 million regular users of live streaming platforms to date
  • its interactive dimension: live streams are not simple videos that one watches, most of the times they consist in interactive cessions during which fans formulate questions, express demands, interact with the person in the video and offer virtual gifts
  • its monetization: via paid virtual gifts – from a few cents for a hug or flowers to a few hundred dollars for a sports car or a yacht – thousands of streamers earn a very decent revenue while platforms such as Huajiao collect 30% over each transaction

Check out this demo by WSJ

KOLs: a whole new media

The KOL phenomenon – key opinion leaders – already very strong in China has amplified with the development of live streaming. Made of famous or less known celebrities (such as Melilim Fu who participated in the conference with her orange hair and outfit) as well as average individuals with a small audience of loyal followers, the crowd of KOLs is now considered as a media of itself and an essential touchpoint for brands wishing to develop their visibility and engagement with consumers, especially in industries with a strong affinity dimension such as luxury, cosmetics and automotive.

Brands’ campaigns play on the various levels of the KOL pyramid (a few celebrities on top, many influencers on the base) to develop strategies that mix prestige or impact actions with proximity.

The specificity of the KOL media resides in the fact that it appropriates the discourse of brands. Some refer to it as UGC 2.0: creating brand contents for which celebrities and influencers become the main channel.

The convergence of social and commerce

As previously mentioned on this blog site, WeChat, the social network and service platform used by over 700 million Chinese, has taken the world leadership in terms of social commerce e.g integrating purchase opportunities within conversations.

By combining online payment solutions like AliPay and WeChat payment with live streaming platform, China is amplifying the convergence between commerce and social. With the « click to buy » function, the subscriber to a live stream can in a single click purchase the garment worn by the person (KOL) in a video or the product or service he/she is talking about. In a country where 9 out of 10 people online access internet on mobile this generates a lot of spontaneous purchases. For brands, developing affinity, federating communities generates naturally sales. And they cash in!

Once more, China demonstrates its strong ability to innovate and take the lead, not exactly in the development of new technologies but rather in their usage and monetization.

Article written by Christophe Jourdain initially published in Siècle Digital

Made-in-China

The « Made in China » takes revenge

For a long time Chinese-made products were associated with low-cost and poor quality. The toxic chairs” sold by French distributor, Conforama, gave stinging allergic rashes to some 400 customers. The harmful dyes t-shirt” which sent a little girl in hospital stuck the knife deeper.

Fed up with the scandals, the world’s second-largest economic power has decided to shed its cheap image.

Inspired by countries such as Japan which used to have a connotation of low-end during the 50’s, China is working on changing its reputation. Manufacturers are seeking to move upmarket by offering qualitative and innovative products whilst maintaining competitive prices.

This initiative is supported by the Government, setting measures for quality control in order to reassure importing countries. It has implemented norms and regulations in its domestic market and created two entities, the AQSIQ and CNAS to supervise the procedure.

Investing in the future is part of the plan. The Government has allocated a more prominent budget for its universities to retain Chinese talents and attract foreign students. R&D is at the very heart of the new Chinese strategy.

The path from imitator to innovator, China conquers the world

China was viewed as the world’s “workbench” rather than as a global innovator. Now it can be proud of its technology sector. The Middle Kingdom has developed its own brands. It no longer plagiarizes or produces for others, it creates added-value items appealing to foreign consumers.

Lenovo is the perfect example of the Chinese success story. In 2013, the brand beat its American competitor, Hewlett-Packard, becoming the world’s leading PC maker operating in 160 countries. Lenovo wants to position as premium by offering top quality and advanced products yet produced with the soul of craftsmanship.

Huawei is another good example. When Samsung and Apple avoid to communicate on product origin, Huawei proudly spells it out at the back of its packaging.

In 2015, the brand announced earnings up 33 per cent from previous year, reaching 5.4 billion €. Still far behind Samsung and Apple, Huawei is however catching up very quickly.

To climb up the value chain and boost sales, Huawei and Leica partnered to set up a new R&D center to be situated at Leica’s headquarters in Germany.

The rise in unexpected fields

Not content to succeed in China, some brands dream of taking on the world.

Chinese brand Herborist is one of the few premium cosmetic brands with international ambitions. The brand reworked its positioning, combining Chinese identity with international design codes. In 2015, Herborist opened its first French store in Paris on the famous “avenue de l’Opera”. The store features a spa, offers a tea ceremony and Thai Chi classes. The brands flashes the Chinese chic in Paris.

The national preference

There was a time when one needed to purchase French to be elegant, American to be cool and German to be strong. This time is over for the Chinese. Buying local is seen as a patriotic deed.

The study “Future of China” conducted by Ifop for OMD showed that 40% of the Chinese prefer local brands and 25% always purchase them, mostly for the quality. Only 9% declare to favor international brands because of their superior quality.

That is all the more true in lower tiers (Tier 3, 4 and 5) where international brands are not always available.

Local brands have the advantage to better understand the population’s needs and they also benefit from a larger distribution channel allowing to meet demand faster than international competitors.

The emergence of emotional-value brands

The emotional drivers play a more and more important role in the purchasing process of Chinese consumers.

The economic boom over the past 3 decades, the access to new products and the growing internationalization transform the Chinese population. They are increasingly sophisticated and tangible product benefits (price, quality etc.) are no longer sufficient to trigger purchase.

Chinese brands know now how to engage and convert consumers. “Lifestyle” brands such as Icicle, Zuczug and JNBY use their proximity to appeal to the Chinese.

Icicle is a clothing brand inspired by Chinese traditional values, endeavored to bring harmony between human and nature. Zuczug is worn by Chinese celebrities and JNBY, inspired from Chinese modern art, opened several concept stores in big cities including Paris.

A unique case: the Chinese footwear brand, Feiyue, was copied by… the French!

The “Made in China” Feiyue by Shanghai Shenglong Shoes are sold 39 rmb (5€) in the country. The French copy is sold 80€ by Feiyue Shoes Holding and was seen in magazines worn by Orlando Bloom and Poppy Delevingne.

To conclude, the “Made in China” is more and more associated with quality.

The Chinese manufacturers have realized that fast and low-cost production no longer generates growth. Chinese brands are able to build innovative yet still cheaper smartphones, tablets and PC. Leaders in the technology sector have fierce challengers!

The reputation of “Made in China” is slowly improving but actions must be taken by the Government to fight the scourge of counterfeiting, detrimental to the development of Chinese companies abroad.

 

Article written by Thi My Nguyen, Market Research Manager at Ifop Asia.

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Hot trend in China: Live-streaming apps turn Nobodies into Internet Celebrities and offer unique money-making opportunities.

 

A pretty woman casually dressed, eating noodles and talking about the makeup she is planning to buy. A handsome man gazing at the webcam in silence. A lady singing a cappella in her living room. What do they have in common? Hundreds of thousand followers.

The Live-Streaming craze is sweeping across China. Millions of regular people are now sharing bits of their lives with the world seeking for fame and expecting to gain cash.

Yizhibo, Xiandanjia, Douyu and Ingkee are some popular apps among the 80 apps for live streaming available in China, and the number is growing all the time.

Why these videos which seem meaningless have so much success?

These apps allow people to peek into the lives of strangers and interact with them to an unprecedented extent. The viewers can send pop-up messages to the streamer and “tip” them with virtual presents they buy from the apps. The streamers can then exchange their presents for cash.

On Ingkee, one yuan (0,10€) buys 10 “diamonds”. Tipping a beer will cost you 1 diamond, a Ferrari 1200 diamonds and a yacht 13140 diamonds.

Competition between streamers is fierce, a raking based on the number of followers and the number of “diamonds” is accessible. Some accounts have reached many millions of diamonds.

It is necessary for brands to conquer the Live-streaming world.

These Internet celebrities are highly influential leaders among the young generation and they receive money from brands for broadcasting their products.

The apps are already used for commercial purposes. Individuals and companies use them for selling makeup and skincare products.

Celebrities also broadcast to interact directly with fans.

L’Oréal has a live-streaming account and offers sessions of live show with the brand’s muses.

Ingkee, is only one year old but has been ranked No. 1 on Apple’s China app store multiple times. Ingkee says over 50 million users have downloaded its app. Douyu claims 120 million active monthly users.

Live-streaming apps are a great opportunity for brands to reach customers beyond geographical limitations and at low costs.

Article written by Thi My Nguyen, Market Research Manager at Ifop Asia.

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Acceleration, individualization & socialization thanks to digital

The new aspirations of China’s middle class (part 2 out of 4)

 

Chinese people are very much attracted by technologies and most urbans are frantic users of smartphones. China is now the number one e-commerce market in the world and, leveraging the power and simplicity of local platforms such as TaoBao, Tmall, WeChat, etc., its consumers are together with South Koreans the most advanced of all in terms of mobile purchases.

Digital allows middle class citizens to satisfy their quest for consumption experiences that are:

  • instantaneous, via the real time dimension of internet coupled with the efficiency of parcel deliveries throughout the country,
  • personalized, thanks to algorithms taking into account consumers profile and historical behavior to provide individualized offers,
  • and shared, via the social dimension of internet and the consultation of peers’ opinion not only before but also during the act of purchase.

It brings the satisfaction of “shopping smart”, a high expectation among the middle class, and spreads across even the most daily tasks as shown by the success of the YiHaoDian website and application selling fresh food delivered within three hours.

Amongst the young, the quest for emotionally rich experiences goes primarily through digital and represents a key lever for brands. In secondary cities where a lot of companies have no presence nor distribution, digital provides individuals with an access to brand consumption which they can’t find in their physical environment, and brands with an opportunity to develop without investing massively into retail. Nowadays these secondary cities are the engine of the country’s growth. So the brands that are not yet on Tmall or other digital platforms relevant to their industry are not only missing the train of digital commerce but also the development of the economy into peripheral cities and the interior of the land: they are out of the game!

 

Article written by Christophe Jourdain, Ifop International Director.

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M-commerce is booming nowhere else as much as in China!

China is the first e-commerce market in the world*. What is striking is how quickly habits shift towards mobile, to such an extent that the major part of online shopping is now done through a mobile device. This trend is a great change for brands.

Alibaba dominates the Chinese ecommerce with 80 % market share and more than 350 million active buyers a month. With two main platforms Taobao (CtoC) and Tmall (BtoC), the group realizes an annual transaction volume higher than Amazon and eBay altogether: it is a monster! Indeed, in one year, between the second quarter 2014 and the second quarter 2015, purchases on mobile increased by 125% for Alibaba and their proportion raised from 33% to 55% of all transactions: a boom!

The growth of m-commerce is explained by numerous factors, including the huge appetence of Chinese consumers for digital, the power of local e-commerce platforms and payment solutions, the weakness of physical trading outside the big cities, etc. (see also Why are Chinese consumers so Digital?). It speeds up the transition to a consumption-led economy and contributes to the growth of both rural and peri-urban areas. It is thus greatly encouraged by the government and benefits from a snowballing effect.

There is lots of indication that the growing practice of m-commerce anticipates what will happen, at a slower pace, in most of the others markets in the world. What is currently happening in China has to be followed closely. But what exactly does that change?

Initially, the shift from physical trading to “traditional” e-commerce (not mobile) extended the purchasing time to every moments when consumers are using a computer, and the shopping location to all the places when they have access to a desktop. This evolution meant also a larger amount of information, of influence sources, of comparison means, of collaborative solutions, allowing everybody to buy in a “freer and smarter” way. Nowadays, the shift towards mobile purchase as observed in China goes one step further.

With smartphones and consumers like bosom buddies and permanently connected to the internet, we really move to a 24/7 commerce. Chinese consumers go mad for social networks such as WeChat (one quarter of the population logs in more than 30 times a day) or Weibo and other e-commerce websites such as Taobao or JD.com, they are in a quasi-permanent purchasing mind, searching for bargains. Consumer can also switch and be in a selling situation, which multiplies transactions and compels brands to find a space on the mobile media if they want to exist. The permanently connected smartphones make online commerce more and more part of consumers’ daily life and expose them to more and more products categories, e.g. the growth of YiHaoDian (“Number 1 store”), an online shop specialized in fresh food products (fruits, vegetables, seafood) providing a user-friendly app offering delivery within 3 hours from purchase.

M-commerce is social by nature. Most of the Chinese consumers use their smartphone to post pictures and comment their purchase on e-commerce platforms or social networks: they are much more active than the Americans or Europeans. They also share their experiences via dedicated apps such as XiaoHongShu (“little red book”) where girls flaunt and comment their purchase, creating communities of interest in the latest trendy studded shoes or about the new smooth-eyebrow product. Their reviews influence other netizens and are considered by e-commerce platforms which emphasize on the best-rated products. The consumer is now in the center of the offer deployment process instead of the brand and the distributor.

Moreover, with his smartphone the consumer can instantly ask his network of friends for recommendation. He is never alone during the purchasing process: word-of-mouth not only plays a key role prior but also during the purchase.

M-commerce is also going further with customization. When connecting to an e-commerce website, consumers are recognized and their preferences recorded during their previous visits are taken into account. Taobao illustrates it by giving its consumers access to their “footprints”, the history of actions on the website, which allows to target them offering products and discounts matching their needs. The mobile dimension adds geolocalisation, continuity and instantaneity. Digital manages to flip over positions: the consumer, often anonymous in the real life, becomes a well-known and taken into account customer in the virtual space.

But mobile also stimulates the convergence with the physical shop: both have complementary roles in which purchase experience, service, branding and customization are increased via the complementarity of touchpoints. For instance, convergence is seen with QR Codes, much more used by Chinese consumers than Western ones, to find information, promotions, services, and reviews in the physical store… or even to the online store! This convergence is also seen in the payment process, with e-commerce payment solutions such as Alipay and WeChat Wallet which are now adopted by physical stores like Walmart or Carrefour. Easier, quicker, more secure than cash or credit card, containing full and instantaneous information about the consumer, these mobile payment solutions are growing in all sectors of physical daily life such as, in Shanghai, in millions of grocery stores, taxis or restaurants.

Eventually, let’s note that the Chinese m-commerce mostly goes through multi-brand platforms and apps. Nobody wants to go on the slow-debit internet to look for a brand own website then go to another one to compare, type-in the 16 digits of your credit card, etc. when all brands are available on the same app with one-click away payment. This creates the necessity for brands to be present on Tmall-like platforms, WeChat stores, etc. and generates new positioning challenges as, for example, it is not obvious for a lifestyle or luxury brand to sell its products in a space where it stands alongside a multitude of mass market players.

Thus, a crucial challenge for Western brands is to grasp this revolution as fast as possible in order to gain new clients, many clients!, in China now, and to be ready to gain even more clients everywhere else tomorrow.

Article written by Christophe Jourdain, initially published in French in Siècle Digital.

Tags: digital, e-commerce, m-commerce, store

(*) According to Bain and company

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A particular relation to health

Boosted by improved standards of living and the development of medical infrastructures, Chinese citizens’ health and life expectancy improved drastically over the last thirty years. But the relationship the population developed to health is complex and has been impacted by repeated incidents in the fields of food safety and access to health services. This article presents some of the main specifics of the Chinese relation to health as observed in recent market research studies conducted among citizens and doctors in large urban areas of the country.

 

A vision of health deeply rooted in local culture and tradition

How health is approached is a central element of the Chinese culture and way of life. It is greatly influenced by the Taoist philosophy which encourages respecting nature’s life cycles and a nutrition approach that balances yin and yang. But what is really different from what can be observed in most other countries, Western ones in particular, is a holistic, enlarged, inclusive vision of health.

In this vision, mental health and physical health are deeply intertwined, much more associated to one another in people’s mind than elsewhere. The body is approached « outside in » but also « inside out » with the notion that what feeds external signs is before all the inside. In this way, physical appearance, for example skin tone, is handled as much via nutrition and lifestyle (sleep, no sun exposure..) than via cosmetic products applied to the surface of the skin.

In the posture of the Chinese, the notions of prevention, anticipation and harmony are more prevalent than the notion of curing what is not going well. Rhythm of life, nutrition, traditional medicine, feng shui, etc. all contribute to this approach. The population is therefore naturally in a position of anticipated management of one’s health, more than Western people who tend to approach health via a curative angle.

The impact of China’s development model

The rapid growth and opening of China to the outside these past thirty years have had a significant impact on the way citizens approach heath. Pollution and the effects of the environment on one’s organism have become major preoccupations for the Chinese who have become the world’s most worried population about the state of the environment. 53% of them even consider that « the effects of society on environment are so great that it is not possible for people to have an impact at the individual level » (GlobeScan 2012). One simple reason to that: large Chinese cities are amongst the most polluted of the planet and their inhabitants experience the consequences in their daily life. For them, the degradation of the environment is not a theoretical concept but rather an experienced reality with very concrete consequences: micro-particles concentration in the air forcing people to wear masks, water improper for consumption, developing allergies, etc.

The relation of the general public to health is also confronted to Western influence and a lifestyle model – individualized food portions, high in meat, the development of leisure activities, motorized commute, etc. – which impacts local habits. This is considered by the population as both a danger – perturbing ancient habits that have proven benefits – and the opportunity to solve or bypass certain problems specific to the Chinese society, for example in the field of food safety.

This vision is confirmed by doctors who see in two typical signs of the developing consumption society – the rise in pollution and in stress levels – the factors which consequences on citizens’ health will most rise over the next 10 years.

Food safety is a very sensitive issue

Following a number of crisis associated to contaminated food products over the past few years, Chinese consumers show more and more distrust towards the quality of what they eat. They are particularly careful about meat, seafood, fruits and vegetable. And a survey by the Chinese Association for Sciences and Technology shows that 70% of them think genetically modified food is dangerous for heath.

In sensitive segments such as baby food and dairy products, consumer from major cities turn more and more to foreign brands whom they associate to safer production processes and ingredients. Local brands keep an edge when it comes to proximity with consumers and having products that fit local taste.

Here again, the vision of health professionals echoes that of consumers. A very large majority of doctors (77%) consider that the presence of harmful ingredients in food will represent a serious threat to the people’s health in the years to come. This level of concern makes China stand out among 9 countries spread over 3 continents in which Ifop conducted a survey on health concerns.

Tensions about the national health system

Cases of medical staff being physically attacked by patients appear regularly in the news and are being discussed abundantly on social media. As a matter of fact a certain tension has developed between patients and doctors over the past few years, primarily associated to the opacity of the health system, which reforms are badly communicated, as well as to hectic schedules in hospitals.

As a typical example a patient with skin infection recently interviewed by Ifop in Shanghai described: « I don’t think the doctor paid enough attention to my condition. I waited an hour and a half to meet him, we had a 5 minute discussion, he barely checked me out and he handed me a prescription without explaining it. »

Even if the Chinese go to a family doctor on a day-to-day basis, hospitals are the place of choice when one is really ill. Over-attendance of these combined with limited resources contribute to growing tensions.

An evolution towards digital health

In order to take control of their health and alleviate their worries consumers search for information on internet. They share their experiences on numerous discussion platforms or interact directly with local or foreign doctors on dedicated sites such as www.haodf.com

The Chinese are very much advanced when it comes to digital habits: very active on social media they are among the world leaders when it comes to e-commerce and mobile application usage. This affinity with digital tools translates in the field of health into the development of online purchases such as on the dedicated Tmall site www.yao.tmall.com and growing usage of personal health applications such as Lifesense.

Major healthcare players now ought to take this aspect into consideration to optimize how they communicate with their audience and develop services that bring substantial value to consumers.

Opportunities for French players

In this Chinese health landscape, French companies, especially those in the food industry, services to patients and connected devices have great opportunities to meet the local public. They should not hesitate to display the guarantees of harmlessness and efficacy to which the Chinese are very sensitive. And as always in China, a very diverse country geographically and socio-economically, they should design a segmented approach to their market if they want to be really successful.

Article written by Christophe Jourdain and Chunxiao Huo – Originally published in French in CCIFC’s magazine Connexions

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Consumers are over-exposed and expect more relevance from mobile ads

With the proliferation of mobile devices especially smart phones world over and more specifically in China, consumers have taken to using them like nobody’s business. So much so that now smart phones have overtaken traditional desktops and laptops as the No 1 device for accessing internet.

With this constant access to the internet comes the need to stay connected, do shopping, find information etc. All this focus on their smart phones by consumers also means marketers want to get a slice of their attention. We therefore now see digital media budgets of marketers grow exponentially.

A consequence of this explosion of spends on digital media is that consumers are constantly bombarded with advertising on their mobile devices. IFOP Asia along with media powerhouse OMD China conducted a survey on Chinese people’s attitude towards mobile advertising and found that consumers on average are exposed to 8.5 mobile ads a day. As a consequence, nearly 90% of consumer’s feel mobile advertising is an annoyance with a common refrain being that the ads are not relevant or a waste of their mobile data.

But this doesn’t mean they are completely against this form of advertising. In fact near universal numbers (94%) feel it’s a fact of life / necessity and even 3 out of 4 respondents feel some of these ads are interesting. This study has also found that ads on smart phones have the biggest influence on purchase intent ahead of devices like PC, Tablets and Phablets.

So the question is how to make the ads relevant to consumers. The study found that consumers connect to mobile ads that are practical, entertaining and unique. Themes that are not completely exclusive to mobile advertising.

In a nutshell, marketers would definitely need to invest in mobile ads, better target with those ads and make the ads more relevant or specific to individual consumers needs.

Beauty-skincare

SELF Beauty White Paper 2014 : the transforming habits of Chinese women

Ifop Asia recently partnered with SELF (悦己), the well-known women lifestyle magazine, on the edition of the White Paper 2014 which was released in its December issue. The magazine wanted to gather insightful knowledge about the Chinese beauty consumers and asked us to investigate Chinese women’s needs on anti-aging, whitening, foundation as well as their perception, acceptance and usage towards the latest products, new concepts, and new trends in the beauty universe.

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