An Expert Shares Key Insights on the Chinese Market
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An Expert Shares Key Insights on the Chinese Market

Over the past 40 years, China has grown faster than any country in the history of mankind. It continues to grow at a rate equal to or exceeding the rest of the world. This exponential growth has made global brands sit up and take notice. Yet despite the huge rewards that can come from expanding into China, getting a foothold can be difficult, in part because China is an incredibly diverse country, steeped in history and culture that need to be respected.

In this blog post, we’ll look at some of the key considerations when moving into this potentially lucrative market. We’ll also share insights from Arnold Ma, the founder and CEO of Qumin, a digital creative agency focused on helping western brands understand the Chinese marketplace.

The challenges of entering the Chinese marketplace

The first consideration when looking to enter China with your brand is no different than for any other market—is there a demand for your product in China? Are there Chinese consumers who want your product, and are they able to consume it?

Ma is quick to point out that the biggest challenge is understanding Chinese people. Next, you have to go back to basics and not just translate your message, but look at it with the same fresh eyes you did when customizing your content and product for your home market. “Rather than translating what you’ve researched and discovered and tailored for the audience in the west, you should do exactly the same process from scratch, but in China.”

So, what is the culture like and how does it affect product marketing in China?

Collective vs. independent culture

In order to sum up the difference between Chinese culture and those of the west, Ma says it’s a mindset: collective instead of independent. In China, the focus is on the whole, and in the west, it tends to be more on individuals. Each has their advantages and disadvantages. “One advantage of an independent culture is that people are more responsible; they grow up faster in the sense that they learn not to rely on other people around them very quickly, and they mature a lot faster in general. The advantage of a collective culture is like when you are thinking about something, even if it’s a purchase of a product or service, you normally think about the family as much as yourself.”

Because of this shift in thinking, marketing strategies that put more emphasis on the benefits to the family unit, as opposed to just the individual, should perform better.

Social media platforms

The social media platforms and search engines that dominate much of the world—Facebook, Instagram, Twitter, Snapchat and Google—are banned in China. For the business community, the only consistent international platform is LinkedIn, which still only ranks 9th in social media usage in China. Several other platforms have been created within China for the Chinese market, and brands must be ready to invest the time in using them.

Here are the top five social media apps marketers should know about:

  1. WeChat—China’s WhatsApp with 1.1 billion monthly active users;
  2. Weibo—Going one step further than Wechat, 465 million active users post, share and interact, but also get updated on trends and news;
  3. Douyin—China’s TikTok lets its users quickly create short videos, perfect for going viral among the other 200 million daily users; and
  4. Xiohongshu—Also referred to as Little Red Book, or simply RED, this is the e-commerce and social media platform for Gen Z females: 70% of its 300 million users were born after 1990 and 80% of them are female.
  5. Bilibili—This video-sharing website is based around animation, comics and games and attracts over 170 million monthly active users.

From zero to mobile—technology leapfrogging

As with some other emerging nations, China has largely bypassed the home computer market. Most social and e-commerce platforms that were developed in the west were originally designed for desktops and later adapted to mobile. In China, because internet penetration is still low, it was only when 3G capabilities came along that a wider consumer audience began to use the internet that was never going to use desktop computers.

Ma says “When iPhone 3G launched, or when the first Android phones launched, they had proper mobile experience capabilities; there really wasn’t any legacy behaviour. Most people didn’t have the internet. So, their first impression of the internet was on a mobile device, which means from scratch, people like WeChat were able to build platforms purely for mobile devices.” Because of this, a browser-based approach is far less attractive to the Chinese consumer. Apps and websites must be optimized for mobile from the start.

The world’s oldest social network and influencer marketing

Over the past decade, with the rise of social media, influencer marketing has taken off all over the world. Celebrity endorsements have exploded as they no longer need to filter their message through media channels. Nowhere in the world is this celebrity-worship culture more prevalent than in China. The reason for this is that Chinese culture has what is known as Guanxi, a social network that goes back thousands of years and is deeply embedded in the Chinese psyche.

Ma offers an example: “In western or independent cultures, when we need something, we go to Google. Sometimes you might get a recommendation from a friend, but most of the time you kind of just research it yourself. If you need a plumber or electrician, you go directly and search for them. This doesn’t happen in China. You never work with someone unless there’s someone in between who can facilitate that relationship. So, people don’t just go on the internet and search for a plumber or a doctor or electrician; they’ll always go to someone in their network. If they don’t know someone, they’ll ask someone and then that person tends to facilitate the relationship. So, you’re never really working with a stranger, which kind of happens in the west. That’s a Guanxi network.”

And so, influencers become important. People feel they “know“ influencers. They trust their content and they trust them as people. Their recommendations are a wider extension of the Guanxi network and hold more weight with consumers in China than in other countries. Brands entering the market that have (or can build) the right celebrity relationships can draw on the celebrity’s brand loyalty and legacy as if it were their own.

The “creator” marketing model

There is a risk that this influencer marketing will become over-saturated as more western brands enter China and influencers dilute their reputations by recommending a number of different products, especially if they’re in the same category.

This is where Ma suggests a stronger route: adopt a “creator” marketing model. This is where you build media assets for your brand instead of building official brand accounts. The leverage can be substantial because the platforms are relatively new and growing organically, so brands with the best content can still win over brands with the most money.

“Rather than building an official brand account for a hotel, we could build them an account about gaming because they want to target the Gen Z audience in China and there’s 500 million gamers in China. So, we’re essentially building a media account that is just doing gaming content where the brand is part of the conversation, rather than just a brand talking to the audience about how great this hotel is,” suggests Ma.

He goes on to say that once you hit a targeted number of followers, you then create other accounts. For example, one could be based around fashion and another around food, all targeted at Gen Z. “All of a sudden, a year later, we have three or four accounts that are essentially our own influencer that we own. Every penny we invest in these accounts becomes an investment in the future.” Ma likens it to buying and owning, as opposed to leasing and renting, which is like dealing with influencers: you have to keep paying.

Prada takes luxury to China

Take Italian luxury house Prada, for example. For years, they had been selling with little success in China through their own e-commerce channel. In 2019, they decided to really target China. They launched on two Chinese e-commerce platforms—Secoo and JD.

The following year, in 2020, they embraced the celebrity culture and created a campaign that featured one of the country’s most popular male celebrities, Cai Xukun. In less than two years, they considerably strengthened their position in the Chinese luxury goods marketplace, increased their sales (despite COVID-19) with 2020 showing double-digit growth on 2019 according to Reuters, and ran one of the most successful advertising campaigns of the year with #Prada520 gaining 600 million views and generating 3.24 million comments on Weibo.

If brands view China as its own distinct market and create content individually tailored to it with the Chinese consumer in mind—taking into account their specific digital platforms, love of influencer marketing and Guanxi—then great gains can quickly be made.

 

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