China is moving to an all-digital retail value chain. This has wide-ranging implications for Chinese consumer behaviour. If you want to market your product in China, here are the trends you need to keep up with.
Behind the Great Firewall of China lies a unique ecosystem of e-commerce, social media and retail companies. Innovation is fast-paced. Competition is strong. And change is driven by e-commerce giants like Alibaba and their ‘new retail’ philosophy – achieving ever-closer synergy between online and offline channels.
It’s also a land of great opportunity. Online retail imports in China rose to $16.9 billion in the last quarter of 2018. But you’ll need in-depth knowledge of Chinese consumer behaviour, expectations and purchase habits to make the most of it. Here are the trends to be aware of.
Alibaba’s supermarket chain Hema is a perfect example of the e-commerce giant’s ‘new retail’ concept.
You can pay for online or offline purchases with Alipay – Alibaba’s mobile payments provider. You can choose your food in the supermarket and have it cooked at the in-store restaurant. And delivery takes less than 30 minutes if you live within three kilometres of a store. The stores are so popular house prices around them are rising as customers uproot themselves to live within the delivery radius.
Alibaba hasn’t stopped there, either. Ever thought of a vending machine for cars? Through an app, users can find out which car models are available and select a pick-up time for a test drive. Facial recognition confirms your booking. Then your vehicle is brought down to ground level automatically. If you’re happy, you can buy it for real.
Convenience stores can also benefit from new retail. An Alibaba app gives small businesses access to sophisticated customer behaviour analytics and a single distributor for stock.
Alibaba is just one example of how offline, online, logistics and data are coalescing in China. Chinese consumer behaviour is changing. And customer experience is even more firmly in the spotlight. What does this mean for you?
Chinese consumers want to order online with no extra cost or delay – including from overseas sellers. Payment security is another big issue. China leads the world in mobile payment solutions. Integrating Alipay, WeChat Pay or similar can build your customers’ confidence in your brand.
Mobile-friendly, engaging content and innovative events are the key to Chinese hearts. Top it off with that all-important personal touch.
Millennial shoppers (known as the post-80s or post-90s generations in China) are the driving force in the Chinese consumer market. Especially for luxury brands.
They make up 25% of the general population and two-thirds of China’s passport holders. They’re also highly educated (79% hold a Bachelor’s or Master’s degree), with many having studied abroad. This gives them a more international, technologically focused outlook than their parents. Plus an existing awareness of overseas brands and standards.
Armed with disposable income, they’re ready to spend. This trend should continue too. 90% of millennials expect an income increase in the next five years. But just because they have cash to burn doesn’t mean they’ll part ways with their money easily. In fact, they’re very choosy about what they spend their money on. To win their trust, you’ll have to meet their needs.
1) THE FOREIGN FACTOR
Chinese consumers are warming to domestic products. This is supported by government initiatives such as ‘China Brand Day’, launched in 2017. But younger shoppers still prefer foreign brands, particularly for luxury products. So if your product is made in Britain, say it loud and proud, but don’t skimp on the details. Build a distinctive brand image with a focus on social engagement to carve your stake in the market.
2) BOUTIQUE BRANDS
Younger shoppers identify with brands that fit their personalities. 70% say they buy products to ‘feel different rather than fit in with society’. And they’ll engage with companies who dare to do their own thing.
That’s why there’s a growing focus on brands’ history and values. To connect with shoppers, tell your brand story in a personal, authentic and engaging way. Video, interactive content and even virtual reality can encourage shoppers to invest in your brand vision.
Companies that tap into Chinese millennials’ desire to travel do well. A good example is the mobile shopping app Xiaohongshu (Little Red Book). It allows women to discover, share and buy global fashion and beauty products.
Customer service is also extremely important to shoppers. They want personal, direct communication with companies at any time. This is an opportunity to build real relationships with consumers. Platforms like Aliwangwang, Qzone and WeChat can help. This personal step will work wonders for your image.
Because of their focus on personal engagement, shoppers value word of mouth endorsements. 96% of consumers rely on personal recommendations for information about new brands.
Chinese shoppers are also more receptive to online influencers than anywhere else in the world. 78% will purchase items endorsed by celebrities, while 63% are swayed by micro-influencers such as key opinion leaders (KOL) or wang hong. In the UK, it’s 32% and 38% respectively. Analyzing the social media profiles of your followers can help you identify which celebrities to recruit for maximum impact.
Japanese beauty brand NARS launched its Tmall store in 2018. To promote the event, they hosted live-streams with their professional make-up artists and kicked off a KOL marketing campaign. These influencers shared their personal experiences with the products. Within a month, the NARS store had 480,000 followers and looked set for success.
Prefer a more personal endorsement? Social media app WeChat allows users to share vouchers with their friends. Qzone does the same thing with blog content. If your customers are engaged, you can turn them into effective marketers.
Success in China requires an in-depth understanding of the relationship between retail, e-commerce and social media. A well-balanced strategy between the three is crucial for capturing Chinese hearts and minds.
Want advice on how your brand should respond to Chinese consumer behaviour? Feel free to get in touch. We’d love to help bring your marketing strategy to life.
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