Cracking China through Digital Activation

CHINA EMERGES

It’s 4am in Shanghai…and after tossing and turning from jet lag for the past hour, I started to think back 15 years to when I first started coming to China. Although the jet lag didn’t seem to take the same toll back then (I was only 30), I recall a similar insomnia…then, however, it stemmed more from my anxiety about the next day’s meetings…. rather than from a confused body clock.

But things are different now. I’m more experienced and confident in my position, and China has evolved significantly. Rather than having to worry about how to get to meetings with so few cars/taxis on the road, how to get through the long boozy, smoke-filled banquet-style lunches or how to stay patient enough to sit through day-long meetings which – in reality – could have been condensed into 90 minutes, one is now likely to be caught in such a big traffic jam that it’s necessary to provide at least 30 minutes of extra travel time.

And although the Chinese still love to host their Western guests for meals in the private rooms of their favourite restaurants, in many instances business can now just as easily be conducted over coffee.  In fact, it has generally become easier to do business as China has not only entered but has taken a leadership position in the global economy.

THE ‘GREAT FIREWALL’

China has actually become an innovator in B2C mobile technologies, digital commerce, social media and content marketing.  This despite there being a ‘great firewall’ which restricts access to certain websites, apps and specific content when using an IP address from within the country. This means that in China you cannot access Facebook, Twitter, YouTube or Google…and no Google means no Gmail.

But the Chinese have WeChat, Weibo, Baidu and other platforms that in many cases are just as good, if not even better. Indeed, China has become the world’s largest social media market.  As the most populous country in the world, it also has the highest level of internet penetration, with over 668 million Chinese people online in 2015, and 89% of them could access the web through smartphones. Astonishingly, Chinese spend an average of 40% of their time online, making it the most active social media market in the world with more than 480 million monthly active social media users.

Beyond social media, China is also the biggest e-commerce market by far…with online sales of $590 billion in 2015, a 33% increase from a year earlier. By comparison, US online retail sales were just over $340 billion for the same period.

Translation: China is an enormous and well connected, digitally savvy market that offers significant opportunity.

In order to leverage this opportunity, and the Chinese audience and customer base, however, companies need to really understand the China market.

DIGITAL MARKETING – THE CHINESE WAY

SOCIAL MEDIA

A social media plan is essential for success in China. This requires more than asking a junior member of the team to post updates on WeChat. Rather, it is essential for brands to invest in a well-constructed, detailed digital activation strategy.

Many companies have infact used China as a testing ground for innovative campaigns that are then rolled out elsewhere. Some luxury brands have found traction by encouraging their customers/followers to contribute user generated content (“UGC”) into their social media pages and feeds, incorporating the brand’s products and initiating discussions. Fendi and others have successfully used Weibo in this manner to engage in the market.

In Part II of this post, to be published before the end of the year, I’ll share details about how Burberry specifically has led the way in digital within the luxury sector in China, making it a clear market leader.

As described by McKinsey & Co in its 2012 article Understanding Social Media in China, “…social media is a larger phenomenon” in China than elsewhere, including in the US. But companies can be comforted knowing that, “Chinese consumers follow the same decision-making journey as their peers in other countries, and the basic rules for engaging with them effectively are reassuringly familiar.”

That said, the Chinese are also more reliant on peer reviews than we are in the West…regularly partaking in discussions amongst their friends and various groups seeking buy-in, recommendations and advice on individual products and brands prior to making a purchase.

There is also a strong “KOL” culture in China. KOL is short for Key Opinion Leaders, or what we more commonly know as Influencers. These can be local celebrities, bloggers or others. Just as in the West, the KOL market has become a business in its own right, and key KOLs can charge astronomically high fees. This, though, is an entirely other article which I’ll write more about in the future. In the meantime, Jing Daily recently published an interview with Chloe Reuter, Founder of Shanghai-based Reuter Communications, on How Luxury Can Leverage China’s KOLs in the WeChat Era.

SEARCH

Just as in developed markets, a comprehensive digital marketing strategy must include a plan for local search/PPC in addition to social media.

With Google officially not in China, your digital marketing team sitting in London, New York or Berlin will not maximise ROI of your PPC budget by simply adding China into your global Adwords account. That said, many foreigners and Chinese alike do access Google through VPNs and, as such, may return some results. In this market, however, Baidu is the most popular search engine, although it has been losing ground to other native platforms such as Qihoo 360 and others. Therefore, investment into PPC on these platforms is core to any search budget.

However, with such a large proportion of Internet users connecting via mobile, any search marketing strategy must be tailored appropriately. Regarding e-commerce, it is important to note that Chinese who shop on their mobile are less likely to do so through search but rather through mobile apps.

Alibaba, which owns the two largest shopping sites, C2C platform taobao.com and B2C site Tmall.com, has mobile apps for both of these stores as well as excellent search functionality on their respective websites. As a result, rather than searching for products on Baidu, many Chinese will simply go straight to these platforms to search for products.

MOBILE

With respect to marketing and user acquisition on mobile apps, the market is somewhat unique here as well. According to TechCrunch, Android dominates with 75% market share. In such a large market, however, the number of iPhone users (at 22%) cannot be taken lightly, although the trend shows a continuing shift in market share away from iOS devices to Android, with the former losing 3.2% from Feb 2015 to Feb 2016.

For those looking to acquire paying users for their mobile apps in China, this I can personally tell you is a hard slog. Compared to an average of 8 paid apps on the phones of British App users, and 7 on those of Americans, Chinese average no more than 2.  There is, however, a big caveat here. Apple users do spend more on apps than Android users, with Chinese consumers spending five times the amount they spent just two years prior in the iOS App Store. China has now, in fact, overtaken the US in terms of total iOS App spending. It therefore would be ideal to publish apps both for Android and iOS in the market.

Perhaps most importantly, marketing your apps in China will require some planning as well. It is essential to understand the local app store environment. While it is relatively straight forward to market your iOS apps in the Apple App Store, ‘No Google’ in China also means no GooglePlay.  Therefore, companies need to choose the right app stores in which to market their Android apps. There are 9 Android app stores that dominant, with Baidu App Store, Tencent App Gem and Xiaomi leading the pack.

IT’S NOT AS COMPLICATED AS IT MAY SEEM…

When I now think back over the course of my experience in China, it is amazing to realize how far the country has come in such a relatively short time. It has emerged as a dynamic market with a consumerism as robust as in any other. There is indeed a sophistication among Chinese shoppers, certainly in Tier 1 cities, that is refreshing and makes it relatively straightforward from a marketing perspective. The key challenge, however, is to understand the Chinese consumer, how they think and how they interact with brands and products. This should then inform a local marketing strategy that leverages the right channels and tools to launch and promote your brand and product in the market.

If you believe that the Chinese market could fit nicely into your global roll-out strategy, or rather that China just represents a strategic opportunity that you’d like to explore, there are numerous resources available online. I’ve included a number of links here that should provide a starting point. Also feel free to get in touch to discuss your business and explore how we might be able to assist with the development and implementation of your China digital activation strategy.

I would also welcome any thoughts or feedback based on your individual experience in China.

Jason Keiles is Co-Founder and Principal of Atonik Digital.

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