As the second-largest consumer economy in the world, marketing trends in China are shaping the global economy. China saw sales of consumer goods reach 6 trillion USD in 2020 (as reported by China’s Ministry of Commerce), making it an attractive market for anyone willing to expand their business overseas. If you’re thinking of entering the Chinese market or growing your existing presence in China, we have the best marketing advice for China to help you get started.
The long struggle with the COVID-19 virus has indelibly impacted the mindsets, lifestyles and behaviors of Chinese consumers. This article summarizes the shifts that have happened in the Chinese market and the new opportunities that have been created as a result of the pandemic.
1. Take A Digital First Approach
Consumers and businesses in China have accelerated their use of digital technologies as a result of COVID-19.
China was already a digital leader in consumer-facing areas— accounting for 45 percent of global e-commerce transactions while mobile payments penetration was three times higher than that of the US. This digital penetration has grown even more as a result of the pandemic.
As per the McKinsey’s mobile surveys, about 55 percent of Chinese consumers are likely to continue buying more groceries online even after the pandemic.
Nike’s first-quarter digital sales in China increased 30 percent on year after the company launched home workouts via its mobile app. Chinese Real Estate Platform, Beike reported that property viewings on its virtual reality showroom in February increased by almost 35 times compared with the previous month. (Source)
2. Consumers Focus On Quality Over Quantity
Chinese consumers are now seeking quality in their necessities, while focusing on value-for-money in other categories.
In a post-epidemic survey by McKinsey, close to half of Chinese respondents showed an intention to live more frugally. They are seeking value-for-money when selecting products. 36 percent of respondents said they are willing to spend more for better quality products.
The sectors in which consumers increased their net purchase intention by the largest degree are essential, health-oriented products, such as sanitary and health products, fresh food, and life insurance.
At the same time, there’s a negative purchase intention towards non-necessities such as hair and beauty products, and large home appliances. (Source)
3. Livestreaming Is The New Way To Reach Chinese Consumers
Since the epidemic began, Taobao (Chinese online shopping platform) has registered 30,000 livestreaming merchant accounts every day, leading to a sevenfold growth in accounts.
KPMG and Ali Research had projected that the total scale of China’s e-commerce livestreaming industry would reach $307.12 billion in 2021 (1.995 trillion RMB). And it seems like the trend is going to continue even in 2022.
Automakers have taken to launching live stream videos on platforms like TikTok, Alibaba’s Tmall, and their own mobile apps. They are now using the digital channel to introduce models and features to consumers, field questions, and sell vehicles, which in some cases are then driven directly to consumers’ homes. (Source)
4. Assist Online Campaigns With Offline For Greater Impact
When launching a campaign, see how you can use it to target Chinese consumers offline as well as online. Such an approach creates a much bigger impact.
Lululemon hosted “Summer Sweat Games” (夏日乐挑战) – different sports competitions and challenges in various stores and communities across the country in cities such as Beijing, Tianjin, and Chongqing. The same campaign was run on Douyin by inviting celebrities.
From social media figures alone, the campaign was a winner with the hashtag “#summer music challenge” (#夏日乐挑战) circulating over 17,000 times. By fusing music and exercise and engaging through different sporting events such as Yoga and core endurance exercises on social media, the campaign attracted a lot of publicity on and offline. (Source)
5. Health-based Campaigns Have A Huge Potential
The pandemic has driven Chinese consumers towards more health conscious purchase decisions.
More than 70 percent of respondents in McKinsey’s COVID-19 consumer survey said they will continue to spend more time and money purchasing safe and eco-friendly products, despite pressure on disposable income as a result of the economic slowdown.
Consumers buying behavior has over-indexed on healthy products. Around 75 percent of consumers expressed strong preference to exercise more and eat healthily post crisis. (Source)
6. Social Commerce Is A Hit For Beauty Brands
Beauty brands that had established social commerce infrastructure in place are able to expand sales during the crisis by quickly shifting resources to online channels.
For example, Perfect Diary, a fast-growing local beauty brand, intensified customer engagement during COVID-19 on its existing WeChatbased social channels. By driving higher sales, they were able to lift the brand’s valuation to $2 billion during their April fundraising round, which was double the valuation achieved last September.
Beauty brands like Estée Lauder and L’Oréal have also leveraged their social commerce infrastructure (for example, the enterprise version of WeChat) to activate and empower their beauty consultants to better reach and engage consumers. (Source)
7. Campaigns With KOCs Are A Hit For Fitness Brands
Taking advantage of an increase in demand for in-home wellness and fitness services, leading Chinese workout app KEEP was able to launch hundreds of influencer marketing livestreams featuring key opinion consumers–everyday consumers whose value lies in perceptions of reliability, trustworthiness, and independence.
Streams teaching yoga, collaborations with global brands to promote in-home fitness tools, and question and answer sessions on fitness topics such as postpartum body recovery attracted 56 million views within a week, more than tripling KEEP’s daily active users compared with pre-crisis levels.
Fitness coaches curated WeChat groups and managed daily training sessions, offering tips and guidance to attract new traffic and maintain user engagement during lockdown. (Source)
8. Build Trust to Win Chinese Consumer Market
Trust is vital as consumers navigate an uncertain information environment, with 89 percent reporting that they are turning to brands that they trust.
One-third of consumers switched to new brands during the pandemic, driven by factors such as availability, convenience, price discounts, and product promotions, as well as perceptions of safety.
Three-quarters of Chinese consumers also stated they have convinced other people to stop using brands they felt were not acting appropriately during the pandemic. On the other hand, 82 percent of consumers said they recently started using a new brand because of the innovative or compassionate way the brand responded to the crisis. (Source)
9. Don’t Just Sell, Engage Through Omnichannel Marketing
Chinese consumers increasingly demand an omnichannel experience. However, they want more than just to be sold to online.
One premium apparel retailer has deployed a range of solutions, including enabling sales reps to use WeChat groups to reach out to VIP customers with individualized products (supported by a CRM system), launching social media shows with Key Opinion Leaders (KOLs), and ramping up content marketing.
International brands should view online as a must do and start setting digital key performance indicators, while considering the role and interaction of different online and offline channels, including direct-to-consumer, social commerce, ecommerce marketplaces, and physical channels.
Clarify whether each channel’s role is for brand-building, consumer engagement, or to drive sales, and allocate investment accordingly. (Source)
10. Virtual Consultations To Reach Chinese Customers
During the lockdown period, companies deployed an array of digital tools to stay connected with customers, even in sectors that traditionally rely on physical interactions. Virtual interactions have now become the commonplace now and there are multiple ways in which B2C and B2B brands are leveraging them.
For instance, a leading real estate company launched “virtual showrooms” and online consultations through a dedicated WeChat mini program. It saw the number of agent-facilitated property viewing sessions on its virtual reality showroom increase by almost 35 times month-on-month.
The same impact is seen in the B2B space. Pharmaceutical sales agents are able to meet with physicians online instead of in-person, opening the door to further such interactions in future.
11. Focus On Branding For Chinese Audience
For companies in China, it’s important to have a strong E-reputation. Chinese consumers are always looking for reliable products and services when purchasing online. They are well aware of counterfeit and poor quality products. They have an eye for quality and make smart purchase decisions. So, how does a company go about building a brand in China. Here are a few pointers to focus on –
- Invest in building a strong online presence: SEO, SEM & Wechat.
- Have a strategy to grow visibility on Baidu (most popular search engine) through campaigns
- Use WeChat to build a connection with your community and stay engaged.
- Use Weibo to increase brand awareness and go viral.
- Use Chinese forums and blogs to educate your audience.
- Partner with KOLs and KOCs to advertise your brand.
12. Combine KOL with KOC Marketing Strategy
KOL (Key Opinion Leaders) or Influencer marketing used to be one of the major trends to emerge in social media marketing in China. However, China’s consumers today, especially the digital natives of Gen Z, are seeing KOCs (or Key Opinion Consumers) as more ‘real’.
KOCs are different from KOLs in the sense that they have fewer followers and are more approachable and relatable. They are seen as everyday consumers and their recommendations gain more trust.
A smart strategy would be to increase brand exposure through KOLs and then using KOC marketing to more target specific consumer groups.
13. Lower-Tier Cities Are An Emerging Target Market
More than 1 billion consumers are living in 228 towns of the Chinese lower-tier markets, accounting for 72% of all consumers, and its market size was about 1.719 Trillion yuan. (Source)
Lower-tier cities in China are now an integral market with a huge proportion of the Chinese population and increasing spending power. You can directly target China’s lower-tier cities through different forms of digital advertising.
A report by Luxe Digital shows that 45 percent of Chinese consumers in lower-tier cities were interested in purchasing luxury brands, versus 37 percent in Tier-1 cities. (Source)
14. Build Your Brand’s Private Traffic
Since attracting online traffic has become more and more expensive in China, a term called ‘private traffic’ has emerged as a top marketing buzzword. What exactly is private traffic? It’s a means to own the audience. For instance, Western way of building private traffic would be through E-mail lists or blogs.
However, in China, ‘Private Traffic’ refers to the traffic generated on popular social platforms such as WeChat Official Accounts, WeChat Work Group, WeChat Moment and WeChat Mini Program, and other messaging-based platforms like QQ. (Source)
By setting up exclusive WeChat mini-program clubs and WeChat groups, foreign brands are able to reach customers easier and at a lower cost.
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