Marketing in China 101: The Digital Revolution
Are you ready to expand your business in China? Many Western brands want to enter this booming market to scale their business, yet are unaware of how fierce the competition is, and the best path into the Chinese customer’s heart.
Over the past decade, China has shifted from an industrial culture to one of the biggest consumer cultures in the world, with a booming economy, increased domestic income, and a fast growing middle class. Due in part to Chinese family structure, oftentimes it is the children of these newly wealthy Chinese that spend the most. These wealthy children, or fù’èrdài (literally meaning “rich second generation), are willing to spend disproportionate amounts of money to show off their status and economic power. Individuality is key for these young spenders, choosing items and brands that show off their unique status and lavish lifestyles. Penny Pan is a Senior Marketing Specialist with over a decade of experience, and brand names such as Moschino, Roberto Cavalli, Miss Sixty and more recently New Look under her belt. She says these “millennials are bombarded with choices of different social media channels, and because of their growing influence all traditional media outlets must now have an online presence.” But, what does that mean in China?
Most brands in Western countries employ the same usual suspects- Facebook, Twitter, and Instagram- for social media and digital marketing campaigns. In China, these sites are largely unavailable to the public due to carefully monitored restrictions on the internet, known as “The Great Firewall”. Instead, a digital revolution has happened in China, leading to wildly popular platforms popping up that have changed the game. With these new platforms has risen a generation of marketers that deeply affect the way that brands develop consumer trust.
For outside brands looking to appeal to this new type of Chinese consumer and marketing landscape, it can be a daunting process- what worked in China 10, or even 5 years ago does not work now. Fear not – we’ve compiled a breakdown of all the key players in China’s marketing world today.
WeChat, Weibo, and a Cashless Society
Since Facebook, Twitter, and Instagram are all blocked, you may ask yourself “what do the Chinese use to communicate?”. The Chinese answer to social media can be varied, but there are a few tech giants that rise above the rest.
Weibo: The Chinese Twitter
China’s answer to Twitter is Weibo, the country’s most popular micro-blogging channel. While Weibo’s interface differs greatly from Twitter, many of the functions are the same. Users can post in real time, and tag their favourite celebrities or companies in order to get direct B2C (Business to Consumer) communication. Most Chinese brands make their official announcements via Weibo, and develop partnerships with celebrities and influencers to connect with more consumers. On the flip side, people are often drawn to the site to find out more about gossip on their favourite celebrities. What sets Weibo apart from Twitter is the live-streaming feature, which allows influencers and celebrities to directly sell products through their channels. It is also popular as a news portal, offering a variety of political and social news unavailable on regular or state owned news channels.
Scan my WeChat!
Now, let’s talk WeChat. WeChat is top of the pack as China’s all-purpose messaging service. First released in 2011, WeChat is a mobile messaging app developed by the Chinese company Tencent, which caters to nearly 1 billion monthly users. With those numbers, it’s impossible for any company in China to ignore. WeChat has developed multiple functions that cater to the tech savvy new generation. It combines WhatsApp’s instant messaging, voice, and video calling functions, with Facebook’s photo and update sharing capabilities. You can essentially organise your entire social life all within one program: keep in touch with your friends, post your latest updates, and even use it as a Tinder-like dating app. As Tencent plans its international expansion, the platform has been released in multiple foreign languages. Because of this, even foreign business owners now scan each other’s WeChat, instead of exchanging business cards.
Cash? Credit? Not in China
One of the most game-changing features on WeChat in the WeChat wallet, which connects your bank account to the platform. With your money at the tip of your fingers, the possibilities are endless. WeChat has jumped on this, creating mini-apps within the platform to pay for product delivery, buy your rail or flight tickets, top up your phone, and even pay your utility bills just by scanning a QR code. Nothing of this scale has yet been developed in any Western countries using just a single app.
We can’t talk about WeChat wallet without talking about its biggest competitor: Alipay. In 2013, Alipay (Chinese: Zhifubao) overtook PayPal as the world’s leading mobile payment service, a title it holds today. Founded by the Alibaba Group and their founder Jack Ma, Alipay was initially made as a way to facilitate payment on Alibaba’s online Amazon-like platform, Taobao. Now, it caters to businesses and apps across all platforms, and is a critical tool when designing a business platform in China.
These new payment methods have clearly changed the way people make purchases in China. You can now go for months without the need for cash. Even small convenience stores and Mom/Pop shops and restaurants will have a handy QR code, allowing you to use your Alipay or WeChat account. The need for debit and credit cards has been surpassed, and many of these shops don’t even bother with card readers. Cashless payment is king in China so it is essential that your business jumps on board in your move over to China.
One of the biggest changes to come from this increasingly cashless state is the explosion of online shopping platforms. “Digital payment systems like Alipay and WeChat make purchasing online an easier and more convenient, leading to a sharp increase in online sales” says Penny. Taobao, mentioned above, is the online shopping mall of Alibaba and has completely revolutionised the way people shop and consume in China. Taobao acts as a marketplace for big brands, while also providing a platform for smaller companies to sell their brands. One of the biggest days of the year is 11.11, aka November 11th. Originally created by a group of university students celebrating single life, Alibaba jumped on to make it one of the hottest online sales days in a year. In 2017, sales exceeded $25.3 billion USD- far outstripping Black Friday sales and any related competition. These sorts of sales days are important to keep in mind when planning a marketing campaign in China.
KOL Culture
KOLs, or Key Opinion Leaders, are the China-equivalency to the Instagram model- beautiful, content heavy, and brand associated. What the KOL has over the Insta-Influencer, is that many KOLs are either trained or incredibly well-read about the products they endorse. Mr. Bags, a young male KOL who primarily promotes (you guessed it) handbags, has an encyclopedic knowledge of luxury handbags. His extensive knowledge and excellent taste has built him a customer base that expressly trusts his opinion. This sort of consumer trust is one brands often cannot develop on their own. For consumers looking for products, usually the only place they need to go for what is the best quality, trendiest, or most flashy product is their favorite KOL. KOLs are called wang hong in Chinese, which roughly translates to ‘internet star’. A top KOL (especially those with millions of followers) can charge as much as 300-500K RMB (equivalent of £35-57K) for a single post on their WeChat account. For many high fashion brands this is only pocket change when they consider that amount is going towards potentially tens of times that in sales via these KOLs’ channels.
Who are the consumers following these KOLs? All signs point to the millennial generation as to why KOL culture has taken flight. Millennials are now the dominant purchasers of today, and many are wary of celebrity endorsement. For decades, brands would slap a famous person beside a product and watch sales soar – this is no longer the case. “The younger generation is especially impacted by celebrities and KOL’s (Key Opinion Leaders) in China”, says Penny. This generation appeals much more to KOLs who understand their industry, and communicate it honestly through their live-streaming platforms, or through appearances at events and video content. Many KOLs will only choose to work with brands that directly correlate with their personal brand and knowledge, and KOLs that ‘water down’ the type of products they represent risk losing their customer trust- in other words an influencer who will stand behind anything for money is no longer a trusted source, but rather a product themselves. Of course, as with all influencer culture, many KOLs are still beautiful girls or boys who use their image (in addition to knowledge) to promote both themselves and products.
How to succeed in the Chinese market?
Do your research! Know who you’re targeting, and perhaps enlist the services of a local agency to understand how to move forward. Penny’s advice to succeed in the Chinese market is to implement localised strategies.
“Your content should be user-oriented and adapted to your targeted customer market. Chinese social media is constantly changing, so in order for you to have an effective social media campaign you must follow the social trends, constantly adapt and keep an eye out for the new marketing tools.“
Whether it’s the agency you work with, or the eventual KOLs you bring in to represent your brand, know that every choice should be made with careful consideration. Know who will buy your product, and develop a comprehensive strategy to reach these consumers through online shops, WeChat Campaigns, or KOL strategy. Many Western brands come into China thinking that traditional PR equations will work: Celebrity+Product=Sales. These millennial consumers “care about how you tell your story to them” says Penny. “You need to find a way to differentiate your product and make your brand stand out. With creative ideas and by using the right channels there are plenty of opportunities for all.” In other words, innovation and credibility are important when it comes to brand perception, and the Chinese millennial consumer is a savvy customer. You have one shot to make it count, so don’t be afraid to think out of the box.
