Western companies looking to expand their brands into China often face significant challenges in doing so successfully.
Many companies have struggled to compete with favored local competitors, and some have even been forbidden from entering the Chinese market in the first place.
Take, for instance, Facebook. Despite the efforts of its CEO, Mark Zuckerberg, who has learned to speak Mandarin and even reportedly asked Chinese President Xi for baby name suggestions, the world’s biggest social network is blocked by China’s so-called Great Firewall.
But according to one Wall Street analyst, there’s a “massively untapped market” for American digital businesses in China.
During an IAB webinar, Pivotal Research Group’s Brian Wieser revealed that there are billions of dollars in digital ad spend now being directed by Chinese brands at American consumers.
Wieser says this spend has gone unnoticed to date.
Based on Wieser’s analysis, Chinese brands are spending $5 billion on Facebook to reach consumers outside of China, primarily in the US. In total, he estimates that this spend from Chinese brands now accounts for nearly 10% of Facebook’s ad revenue. And he suspects that Chinese ad spend is also benefiting other large players like Google and Twitter.
So who are the Chinese advertisers spending all this money to reach US consumers?
Based on his analysis of Facebook’s filings with the US Securities and Exchange Commission, Wieser says that the advertisers primarily fall into two camps: Chinese businesses that are now operating as global brands and organizations that are endemic to China, such as tourism agencies.
The rise of Chinese brands
As Wieser sees it, the interest of Chinese advertisers in reaching consumers outside of China could create significant opportunities for lots of American companies.
“It may be an opportunity for all sorts of media owners to find new money to bring into the United States,” he stated.
The good news for digital media firms in the US is that this trend appears to be in its infancy. Chinese manufacturers, for instance, are increasingly cutting out the middleman and selling direct to consumers through Amazon, which, while not mentioned specifically by Wieser, has built a billion dollar advertising business and would seemingly be among the best positioned to take advantage of growing Chinese ad spend.
Amazon’s marketplace provides perhaps the best evidence of the rise of Chinese brands. Take TCL, for instance. Hardly a household name, this Chinese brand manufactures televisions that consistently rank among Amazon’s best sellers.
Such success stories are increasingly common and as more and more Chinese brands seek to woo directly to consumers in large export markets, the number of opportunities for businesses that can help them reach consumers will only grow.
For that reason, media sellers in countries like the US would be wise to start exploring how they can position themselves to take advantage of these opportunities.