Depending on who you ask, China has overtaken, or will overtake, the US as the world’s largest economy.
And as the Chinese economy grows in size and stature, companies are increasingly interested in how their brands can be a part of it.
The media landscape in China is different from the rest of the world’s, though, and it can be difficult for international marketers to keep up.
To help out, Econsultancy recently held a Digital Outlook event in Singapore and invited Fern Chiang Kong, Senior Trainer, Econsultancy to give an overview of the China market in 2019 and tell marketers what they need to know to be successful in the country.
Below is a summary of his presentation, but for those who are looking for more information, Econsultancy is holding a Fast Track Digital Marketing in China Course, led by Mr. Kong on April 11th in Singapore. For more details and to reserve your seat, please visit the course sign-up page.
Unlike elsewhere, social commerce is a big deal in china
While the ‘buy buttons’ on social platforms failed to take off in most countries, in China social commerce is big business.
Analysts estimate that products sold via the social commerce leader, WeChat, will total 1 trillion Yuan (US$150 billion) in Gross Merchandise Volume (GMV) in 2019. Close behind, however, is newcomer Pinduoduo (PDD) which transacted over US$100 billion in merchandise in 2018. Combined, these two approximately match Amazon’s reported global GMV in 2018, $250 billion.
And, according to Newrank & Youzan, as reported by WalkTheChat, the number of ecommerce links in WeChat Official Accounts has grown by more than 60% each year for the past two years.
So, what should marketers do to benefit from the rise in social commerce in China? According to Mr. Kong, it may be too late to capitalize on the major platforms as competition has grown fierce, making it difficult for all but the strongest brands to be heard above the noise.
Instead, he advised, brands should look for emerging social commerce platforms, like Xiaohongshu, which have a much smaller ecommerce footprint but offer a more realistic opportunity for challenger brands to gain followers in China.
Marketers should also avoid the hard sell on social media and instead learn to ‘seed’ their products. Seeding involves using emotional advertising, creating interest through showing what life could be like with your product and encouraging sharing and referrals, with incentives if necessary.
By now most marketers are familiar with influencers or ‘Key Opinion Leader’ (KOL) as they are known in China. But, while in most countries KOLs are used to generate awareness, in China they deliver value for brands through the whole purchasing funnel.
According to GartnerL2, KOLs are used for continuous consumer engagement by the best-known global luxury brands. Out of more than 13,000 KOL posts analyzed, 77% were for one of 10 luxury brands with 33% for Chanel, Gucci and Hermes alone.
Brands in China sell via KOLs as well. In 2017, Mini hired Becky Li, a KOL with nearly 5 million followers, to promote a limited-edition Cooper, valued at US$280,000. Within 4 minutes, all 100 available were sold and full payment was made within the hour.
And, like elsewhere, KOLs help brands with product launches, too. Last year, Neutrogena retained 张大奕eve to launch a new range of beauty products. Within four hours of the launch, 20,000 pieces were sold through social channels.
Mr. Kong, however, recommends that brands tread carefully with KOLs in China. Those seeking to use KOLs as part of a marketing campaign in the country should work initially with top-tier talent via a reputable agency such as iconKOL or Parklu – and seek guidance from local expertise when designing a KOL campaign.
Chinese consumers are increasingly buying online goods abroad
Historically, Chinese consumers made almost all of their purchases through local vendors. As recently as 2014, fewer than 2% of Chinese shoppers had made a cross-border purchase.
Since then, however, international ecommerce penetration has risen sixfold to 10.2% in 2017, according to a recent report from Deloitte China, the CCOIC and AliResearch (part of China’s Alibaba Group). Additionally, the number of people using Tmall Global, Alibaba’s portal for international brands, is 10x greater in 2017 than it was in 2017.
And, it’s not just the amount of people shopping internationally which has changed, but what they are buying as well.
While ‘mother and baby products’ was Tmall International’s largest category in 2014, ‘cosmetic and beauty care products’ was the most popular product group with Chinese cross-border consumers in 2017. This change indicates a move from buying international brands for quality and safety to shopping abroad for products with strong branding and differentiation.
Because of this change, brands who have not researched opportunities in China should start exploring their options to take advantage of its potential, according to Kong. Companies new to China should first look at participating in internationally-focused marketplaces before setting up operations domestically.
And, finally, going it alone is not recommended. Mr. Kong ended by pointing out that international brands which have enjoyed success in China have relied heavily on local agencies which specialize in helping foreigners navigate China’s ecommerce ecosystem.
A word of thanks
Econsultancy would like to thank Fern Chiang Kong for proving attendees with an overview of China’s digital landscape – as well as all the marketers who attended Digital Outlook 2019. We hope to see you all at future Econsultancy APAC events!