- What are some of the top digital marketing trends that foreign businesses can capture to help them sell to the Chinese market of more than 200 million digital natives?
- Find out how livestreaming, KOLs, WeChat mini programs, Xiaohongshu and Zhihu can help you increase presence in China.
China’s meteoric rise to one of the world’s biggest players in the digital economy has brought paradigm-shifting change and innovation to the ways in which products and services are marketed. According to a study published by McKinsey last year, China is at the forefront in key digital metrics: it topped global rankings for the number of internet users, mobile payments penetration and retail e-commerce gross merchandise value (“GMV”) in 2020.
The explosive proliferation of all things digital in China within a short space of time can be attributed to its behemoth consumer base of nearly one billion internet users, which is bigger than the US and the EU together. Its sheer size has no doubt been central to China’s transformation into the world’s largest e-commerce market with a recorded online transaction value of around USD1.7 trillion in 2020. Another important factor is the presence of an innovation-friendly digital ecosystem whose development has been spurred by technology heavyweights, notably Baidu, Alibaba and Tencent in the early days. Meanwhile, “new kids on the block” have emerged, such as the likes of ByteDance, Meituan and Pinduoduo, whose heft to shape ecosystem dynamics is also to be reckoned with.
However, tapping into this digital bonanza is no walk in the park: it would require a clear and consistent strategy, keeping on top of the ever-changing technological landscape and considerable finesse in navigating the various cultural differences.
An important difference to keep in mind
In their marketing forays into the Chinese market, foreign companies have been quick on the uptake when it comes to adapting content and channels to cater to local preferences. Yet the blind spot is often the presumption that marketing tenets entrenched in the West are universally applicable, so they simply follow their rulebook on advertising strategies and campaigns, believing that it is foolproof in a market like China too.
According to the Harvard Business Review, however, this common fallacy cannot be further from the truth. Chinese consumers typically spend a whopping seven hours a day on their mobile devices, which is roughly double the amount of time that Americans spend. It follows, then, that the approach taken by Chinese companies is heavily informed by the habits and needs of so-called “mobile-first consumers”. The quirks of the Chinese market have meant that marketing efforts are often focused on the creation and sharing of viral content, and the leveraging of “channel-straddling media giants” – with Tencent being the epitome – which unite social media, entertainment, gaming, financial services and retail investments all under one roof.
Foreign companies wishing to gain a foothold in the Chinese marketing landscape must, therefore, have a firm grasp of how they can harness the power of these all-inclusive ecosystems as described above and how they, as sellers, can manoeuvre within this hotly competitive space.
So, what are some of the top digital marketing trends that foreign businesses can capture to help them sell to an increasingly discerning audience of more than 200 million digital natives?
1. Livestreaming and key opinion leaders (“KOLs”)
As Nielsen Media Research observed, “the intensity associated with using KOLs in China is unique relative to almost any other country.” Generally revered, KOLs are well received by their audiences, exude trustworthiness and credibility, and are relied upon for their expert advice. They can be pop stars, celebrities, models and other high-profile people that draw a large and stable viewership. In China’s idol worship and fan culture, using an appropriate KOL to create brand awareness and generate leads can yield faster and more effective results than conventional advertising. While already considered mature in its development, Western KOL culture, as embodied by Instagram, is not on a par with the pervasive influence of Chinese KOL culture, which is in a completely different league altogether.
Driven by the surge in video livestreaming during the pandemic, livestreaming-originated e-commerce made up 10% of online GMV in 2020. Remarkably, Chinese actress Liu Tao with 44 million Weibo followers was able to sell RMB148 million worth of products in her first Taobao livestream in 2020. On Singles’ Day in 2022, 7,667 livestreaming channels on Douyin recorded more than RMB1 million in GMV, and GMV rose by a staggering 405% year on year during the pre-sale period.
While KOLs still wield persuasive clout over prospective consumers’ purchasing decisions, there has recently been a steady shift towards giving more weight to the role of key opinion consumers, who are perceived as gurus in the product testing and reviewing community.
2. WeChat mini programs
Developed by Tencent and launched in 2011, WeChat started out as a social media and messaging app – akin to Facebook and Whatsapp. According to recent statistics, WeChat currently has around 1.3 billion monthly active users with roughly two-thirds of users located in China. Since its inception, it has evolved by leaps and bounds into a comprehensive lifestyle app that bundles many different features together – thanks to the launch of WeChat mini programs in 2017. These are essentially mini apps within the WeChat app itself that provide the all-important nexus between consumer users and businesses. Users can shop, order food, pay utility bills, transfer money, book flights and doctor’s appointments, apply for visas, and even file for divorce. According to official WeChat data at the start of the year, there were 450 million daily active users on WeChat mini programs, and the total transaction volume of catering, tourism and retail products and services rose by 100% year on year.
The differentiating feature of such mini programs is that users can consume a wide range of products and services all inside WeChat’s cross-functional ecosystem in a smooth and uninterrupted way. By the same token, mini programs facilitate brands’ marketing and selling of their offerings in a similarly accessible and seamless fashion. More than three-quarters of mini programs are linked to official accounts, which underlines their importance in helping companies touch base with prospective customers.
Compared to traditional standalone apps, the development of mini apps is simple and straightforward, taking considerably less time to prototype and iterate. Another key advantage is that, thanks to the different tools available at their fingertips, such as WeChat Moment Ads, WeChat Pay and the QR-code scanning function, companies encounter less of a stumbling block when marketing and promoting their mini programs and, therefore, by extension their products and services, too.
Dubbed “China’s answer to Instagram”, Xiaohongshu – literally translated as “Little Red Book” – has captured the imagination of young female urbanites, who are given the endearing and phonetically similar nickname of “Little Sweet Potatoes”. As of May 2022, there were more than 300 million registered users, of which 95% were aged below 35, 85% were female and 50% were residents of Tier 1 and 2 cities. Initially, Xiaohongshu started out as a visual catalogue of on-trend fashion pieces and beauty products – much like Pinterest – where users could share ideas and inspire others with their curated lists of items. Today, in addition to the “community” aspect consisting of fashion and beauty tips, the platform has added e-commerce to the mix, enabling users to “get the look” of trendsetters by completing purchases with a single click, either on the platform itself or being redirected to the relevant WeChat or Tmall store.
It is also important to bear in mind that 50% of its user base hail from the upper-middle and middle classes. Geared towards a more affluent demographic of users, the platform plays an integral role in connecting Chinese consumers with international luxury brands. Bulgarian novelty luxury brand By Far was able to successfully ride on the coattails of this digital marketing trend. The brand did not have formal presence in China but quickly became a “must-buy” sensation among consumers through word of mouth on Xiaohongshu.
As Valentina Ignatova, Co-founder and Chief Marketing Officer of By Far, aptly put it: “Xiaohongshu has always been a vivid display for people showcasing their findings and sharing their thoughts about the world, which often triggers new relationships between emerging brands and the Chinese consumer.” The pictorial nature of the platform and its easy-to-consume, visually pleasing content can help foreign companies build brand awareness and leave a lasting impression on prospective customers prior to their official entry into the market.
Established in 2011, Zhihu – translated as “do you know?” in literary Chinese – is a question-and-answer platform that has a no-frills main offering: users can ask questions on a broad range of topics which are answered by other users within the community. As of 2021 there were over 85 million monthly active users. Its primary user demographic is well-informed millennials from Tier 1 and 2 cities. At the mention of social media platforms, Zhihu may not be top of mind for many; however, its relative obscurity among international audiences should not detract from its reputation as one of the most trusted information sources and a leading authority in many different fields.
In November 2022, Zhihu announced that it was stepping up its game in leveraging the opportunities offered by China’s booming knowledge-sharing market. Its aim is to support more than 500 content creators who are set to earn over RMB1 million over the next three years.
For companies whose strength lies in content marketing, Zhihu can provide a powerful platform to target potential customers looking for reliable and educational information. The main advantage is two-fold. Firstly, companies – by rising to the role of visible experts in their respective industries – can build up brand credibility and increase brand exposure without being overtly “salesy”. Secondly, by engaging with the community through a straightforward question-and-answer format, companies can glean very insightful information about their customers’ needs and problems. This enables them to better tailor their marketing efforts and ensures that their offerings are on the mark when it comes to solving those identified problems.
Don’t neglect lower-tier cities
While it is true that consumers in lower-tier cities lack the disposable income of their counterparts in top-tier cities, the former actually make up over 70% of China’s population. With consumption in lower-tier cities expected to surge to USD6.9 trillion by 2030, the potential rewards awaiting companies for successfully tapping into these richly diverse markets are extraordinary. In recent years, the consumption engine has shifted gear where lower-tier cities are now in the driving seat in steering consumer demand.
According to a report published by Accenture this year, e-commerce platforms were identified as the key consumption channels in lower-tier cities. Interestingly enough, despite lacking the spending power of their top-tier metropolitan peers, consumers in lower-tier cities are more ready to dig deeper into their pockets when it comes to spending on shopping (including online shopping), food and beverage, personal education, and leisure and entertainment. Another interesting finding from the report is that the smaller the city, the more closely its consumers pay attention to online content related to products and services. In addition, video streaming platforms and live-stream shopping are very popular among lower-tier cities.
The bigger picture
The digital era has no doubt displaced the traditional, centralised way of marketing where media content is accessed at a preset time, location and presented in a single format. The increasingly fragmented nature of the media ecosystem has posed challenges to the ability to capture and sustain the attention of a wide and varied audience. It has also had far-reaching implications for the relationship between businesses and consumers. In the traditional marketing era, businesses owned the customer relationship; today, the opposite is true. There is, therefore, a need for a more consumer-centric approach to marketing that closely aligns with consumers’ lifestyle habits, specifically the way in which online content is consumed. This point is especially relevant for a market like China where digital trends reign supreme. Satisfying the ever-fluctuating and fastidious tastes of digitally savvy Chinese consumers is certainly quite a tall order. But, as the trite saying goes, nothing worth having comes easy.