China. We all know it's a huge market and that it will be part of our business efforts in the future.  

But at our recent Digital Outlook 2015 event I think even the most savvy were surprised at the scale of the Chinese market - and how different it is to the West.

Luckily, we had guidance from two industry veterans who have helped many Western brands break into the region.

  • Kestrel Lee, executive creative director of George P. Johnson Greater China who has led digital, social media and integrated campaigns for global brands such as Mars, Unilever, L'Oreal, HP, Apple, Microsoft, Adidas, Volvo and Standard Chartered.
  • David Lee, head of ecommerce at Electrolux who has more than 20 years of experience digitizing the retail industry and working with Dell, BenQ, HP, and Motorola.

Any marketer who is interested in building their brand in China - or just learning about the biggest market of the future - should read on.  

Popular sites in China

In order to understand the China ecommerce landscape you have to first become familiar with their sites and services which are not so well-known in the west.

Taobao is China's largest C2C (consumer to consumer) and ranks 8th on Alexa, globally. It's similar to eBay, but is arguably more culturally significant.  

Its parent company is Alibaba - which has a market cap ($251 billion) similar to Amazon ($246 billion).

Also run by Alibaba is Tmall - a B2C site which allows companies to establish virtual storefronts on its site. It is popular with Chinese consumers who are increasingly looking for top-quality branded merchandise.  

With an Alexa ranking of 15, it's a great place for global brands to access the China market - if they get it right.

And finally there's WeChat - the messaging app developed by Tencent. Similar to WhatsApp, WeChat is becoming the de facto messaging tool for Chinese consumers and has over 500m active users (in league with WhatsApp's 700m).  

Its impact has been enormous and any brand with a large Chinese customer base will be using it to a great extent.

Some eye-popping numbers

Taobao has 1bn products for sale on its site and its parent company, Alibaba, had $250bn in revenue in 2013 - which dwarved Amazon's $75bn.

On one day, Singles' Day (11/11/2014), Taobao had $9bn in sales.  If that sounds like a lot, it is.  

Compare it with 'Cyber Monday' (1/12/2014) in the US which had 'only' $2.65bn. Needless to say, any brands who want to access the China market must have a Taobao and/or Tmall strategy.

Key points

At the Outlook event, David and Kestrel spoke about many aspects of the Chinese consumers, but here are a few key points:

Getting started

With a market as large as China (1.3bn+), it's tough to know where to start. But both David and Kestrel agreed that targeting to tier one cities (Shanghai, Beijing, Guangzhou and Shenzhen) was not a good idea.  

The reason is that consumers there are 'tapped out' - and marketing there is very sophisticated already. Instead, Kestrel suggested marketers look at capturing the younger consumer many of whom have moved west to tier 2-6 cities

Kestral also noted that O2O (online to offline) is much more important in China than in the west - so your digital brand should lead people to a physical presence.

Finally, they both said that your value should not be in offering the lowest price, as you will not win against existing Chinese brands!

Product display

The display of products on Chinese sites is very different from Western sites. As Westerners, when we visit Chinese ecommerce sites, we are overwhelmed by all of the visual 'noise' - and find it hard to focus.  

Have a look at Taobao and then Amazon for an example:

 

Taobao looks 'busy' - even cluttered - to Westerners.  But to the Chinese consumer, Amazon looks too sparse.

Instead of whitespace, Chinese consumers want a lot of information on the page so that they can easily compare many products.

So, when launching in China, brands should engage a local agency to help with design.

Getting through to Chinese consumers

Kestrel instructed us to forget being a Western 'aspirational' brand.  If you try that, you are trying to appeal to a middle class that does not exist in China.  

Instead, position a middle-tier brand as luxury brand - which is a strategy that Coach is now using there.

He warned that Chinese consumers are 'hourglass' consumers - they buy products at the top and bottom, but nothing in the middle.

Also, to be successful brands have to connect with your consumer on an emotional level - they must start with why.

Typically Chinese consumers talk about the emotional side of a product, and they are not as interested in abstract product benefits and scientific proof of effectiveness as in the West. 

Avoid 'lifestyle' framing

Another difference is that Chinese consumers are not interested in seeing the products framed in a 'lifestyle', they want you to just show the product.

David emphasized this point with his own experiences, stating that product pages which simple show a product being used vastly outperform product pages which features the customers' environment or lifestyle.

Ecommerce is a leisure activity in China

Another difference is that ecommerce itself is considered a leisure activity in China. It's not just easier or cheaper - ecommerce is something the Chinese consumer actually enjoys doing.

Though it's difficult to nail down exactly why, David suggested that it involves the thrill of getting things in the mail.  

Ecommerce, in China, means buying presents for yourself - which is the whole point of the 'ecommerce holiday', Singles' Day.

So products that exploit this feeling will do very well - so packaging, delivery, service are very important to the Chinese consumer.

Media buying is very different in China

To further capitalize on its platform, Alibaba launched an online ad exchange - Alimama. And because Alibaba's reach is so vast, Alimama owns the CPM/CPC in China, not other platforms or agencies (or Google!)

Alimama is quite sophisticated though, and can be difficult for novices to use effectively.

So, David's recommendation is that Western brands should find people who know how to buy local media when starting out in China.

Storytelling is very important in China

Finally, in addition to the information-dense product page, Chinese consumers love a story around a product.

So much so that some brands produce 'microdramas' which tell a short story around a product. David gave an example from his company that was 30 minutes long - and had over 8m views.

He then said that through extensive testing, they found that the long-form video perform outperforms 30 second 'viral' spots.

And, he added, comments about the video are vital to knowing whether you are getting your message through and should be closely reviewed.

So...

China has the potential to be one of the biggest markets for brands - and yet Western brands often waste millions of dollars trying to 'break into' China.  

After these talks, I can see why. China is very different from the Western markets - and so it takes a radically different marketing approach to be successful.

Hopefully this brief overview of these excellent speakers have given you a head-start - and I'd love to hear any more questions or thoughts in the comments!

Jeff Rajeck

Published 13 January, 2015 by Jeff Rajeck

Jeff Rajeck is the APAC Research Analyst for Econsultancy . You can follow him on Twitter or connect via LinkedIn.  

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Comments (7)

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Pete Austin

Pete Austin, CINO at Fresh Relevance

No mention of partnering? Is that felt to be a bad idea now?

almost 3 years ago

Jeff Rajeck

Jeff Rajeck, Research Analyst at EconsultancySmall Business

Hi Pete - At the event, Kestrel talked about using local talent a number of times - is this what you mean?

almost 3 years ago

Pete Austin

Pete Austin, CINO at Fresh Relevance

@Jeff. I was interested with your views in using resellers or partnering with local companies, vs going direct. My understanding was that China was one of those countries where a local partner was almost essential, but maybe this has changed. We have customers in a lot of countries, but not yet China.

almost 3 years ago

Jeff Rajeck

Jeff Rajeck, Research Analyst at EconsultancySmall Business

When you're selling branded products, I think it's essential to have a local partner in Asia to get started. Even Singapore (where I am) is different enough to warrant a year of working with a local agency to figure out the market. For example, ecommerce here is still very basic (see David Moth's recent post on this)

For SAAS or other digital services, I think that if you have a product the market needs - and can handle local payments and language - then I think the need for a partner is greatly diminished.

My own experience of helping a tech product trying to enter Singapore via a partner was quite poor. The local sales and marketing stopped pushing it the second one of their other, more established clients complained. They would have done better had they developed their own digital home here and handled customers directly - even remotely.

Sorry for a long-winded answer - but having been here for 10 years it's something I think about a lot!

almost 3 years ago

Pete Austin

Pete Austin, CINO at Fresh Relevance

@Jeff. Thanks. Exactly what I wanted.

almost 3 years ago

carlo crighton

carlo crighton, CEO at ActtaoDigital

@Jeff + @Pete - we subscribe to the ideal that the hybrid model is needed nowadays; a local agency with international expertise who can partner on all levels and manage channels to market anywhere is sought by both Chinese outgoing and International incoming clients.

@Pete - feel free to get in touch with me in Beijing at www.acttao.com if you would like some support and partnering (in/formal) given your comment above.

almost 3 years ago

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Joshua Steimle, CEO at MWI, Inc.

One year later and WeChat now has an additional 150 million active users, see http://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/.

almost 2 years ago

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