China’s rising e-commerce adoption rates, evolution into a cashless society of mobile payments, and obsession with mobile messaging app WeChat make it clear that it’s essential for brands to stay on top of constantly developing digital trends in this crucial market.
At L2’s 2017 Digital Leadership Academy in New York on July 20, Danielle Bailey, L2’s head of APAC research, and Jo Lu, L2’s APAC client strategy director, presented on the top digital strategies brands across sectors can take for success in the China market. The two-day conference featuring speakers from NYU Stern, the Kellogg School of Management, Harvard Business School, and L2 was attended by individuals identified by their companies as high-potential emerging leaders.
One of the main takeaways of the China presentation was that “all the digital roads in China lead to commerce,” said Bailey, whether it’s a branded promotion or integration with celebrities and key opinion leaders (KOLs). Online sales are a key part of this, since “e-commerce is commerce in China,” she stated, pointing out that e-commerce penetration in China is already higher than that of the United States with more consumers shifting their spending online. With these trends in mind, below are five keys for winning in the China market that were covered in-depth at the event:
With a wide range of capabilities including mobile payments and ticket and cab booking, top mobile messaging app WeChat has become a “digital ‘Swiss Army Knife,’” said Bailey. One of the main features brands should look to is WeChat commerce, which rose from a 15% adoption rate in 2015 to 31% in 2016. It’s especially important for the CPG industry, where a quarter of total online spending is now made through WeChat. Luxury brands should also consider opening a WeChat shop or hosting a limited-time sale, which “can be a great way to capture CRM information, get people into your funnel, and start to market to them in other ways,” ultimately helping to better “understand your target customer,” said Bailey.
Omnichannel features such as in-store item availability listings online, in-store pickup of online orders, and online store appointment reservations are “very nascent” on brands’ China sites, said Bailey. In addition, brands should not just keep loyalty programs limited to brand sites, but integrate them with brick-and-mortar stores, WeChat, and e-tailers such as Tmall because these places are “actually where people are likely to make their purchases.”
“The Chinese consumer is not the consumer in mainland China,” said Bailey. “It’s really a global consumer.” As mainland China accounts for 7% of luxury goods sales globally but Chinese nationals account for 30%, digital efforts to target the cross-border Chinese shopper remain crucial. “One thing to keep in mind is that duty-free shopping or even cross-border shopping does not start when they’re outside of China,” said Lu. “It’s much more planned behavior.” Brands need to get into the mind frame of Chinese consumers before they travel, with digital strategies such as promotions through Alipay’s travel channel, international store locators on WeChat, and search ads on travel-related terms.
Previously used mainly by celebrities in China, livestreaming “has now become mainstream,” said Lu. She noted that it “is particularly popular among young Chinese consumers who are mobile-savvy, and looking for real-time, interactive, and reality content.” In order for brands to get the most out of livestreaming campaigns, they must integrate them across platforms rather than making them a “one-time event,” explained Bailey. She said that China is a “sugar-high market,” which means brands can easily generate a “huge spike around a ton of media spend for a particular event, but at the end of the day, what you’re trying to do is create a sustainable, long-term relationship with consumers.”
Celebrity and KOL Amplification
In China, brands hiring local Chinese brand ambassadors should not only think about how to “use them as a face of your product, but leverage their digital reach,” advises Bailey. For example, the top 10 Weibo posts by brands in the watches & jewelry category between October 2016 and March 2017 all featured a Chinese celebrity. Young male stars referred to colloquially as xiao xian rou (小鲜肉), or “young fresh meat,” are particularly popular. “We see a lot of male celebrities attracting the most engagement,” said Lu. “Of these top 10, seven of them actually feature male celebrities.”