China the Digital Pioneer; How Luxury Brands Should Capitalise on China’s Blazing Online Trail

China is where any luxury brand needs to be.

McKinsey’s recent report, What can we expect in China in 2018, gives some details and data on the ongoing rise of digital China.

Investment in global infrastructure and start-ups, investment in culture, better regulations and more is all made possible with a pioneering level of leading tech. Cash is already (as good as) obsolete, with facial recognition for payments and next-gen AI being led by China.

What does this mean for luxury brands?

Firstly, as we have explained, Chinese Millennials are the key to driving consumption. The McKinsey report confirms: “consumption growth will be driven by the generation born in the 1990s, a generation that has yet to experience anything close to a recession in their lives, and who have more balanced aspirations between achievement and enjoying life.”

We have picked through McKinsey’s recent report, Double-clicking on the Chinese consumer, to find the most relevant points for luxury brands:

Data analysis:

  • China is superbly positioned for consumer targeting and analysis because of the huge scale of data gathered every day from 731 million internet users, five billion online search queries on Baidu, an average of 66 minutes of WeChat usage, and 175 million Alipay transactions. (Source: McKinsey Digital Report 2017)

Revolutionary uptake:

  • China has become a leading global force in several areas of the digital economy. In e-commerce, for instance, only about a decade ago China accounted for less than 1 percent of the value of worldwide transactions; that share is now more than 40 percent. The value of China’s e-commerce transactions today is estimated to be larger than the value of those of France, Germany, Japan, the United Kingdom, and the United States combined (Source: McKinsey Digital Report 2017)

Big Data:

  • Jahwa, one of the largest Chinese beauty care brands, established a joint big-data lab with Alibaba focused on innovating new products. Using advanced analytics backed by large volumes of consumer and transaction data from Alibaba’s e-commerce business, Jahwa has shortened time to market for new products from 15 to 13 months and has expanded its product portfolio from 389 stock-keeping units in 2015 to around 500 units in 2016. (Source: China Securities)

Targeted WeChat ads:

  • BMW chose to focus on WeChat marketing by delivering tailored advertisements to target consumer segments through WeChat Moments. Its advertisements gained more than 30 million impressions within 3.5 hours of going live, creating considerable buzz on social media. (Source: Sohu News)

Delivery capabilites:

  • Chinese smartphone company Meizu partnered with JD.com to make use of the e-commerce giant’s considerable supply-chain capabilities. It used JD.com’s inventory planning system to deliver the new Meizu Note5 phone to customers in Beijing, Guangzhou, and Shanghai within one hour of purchase on the day the handset was released. (Source: Kejixun News)

Online streaming apps:

  • Hunan Television launched its own online channel, MGTV.com, and started offering online-only original series and variety shows. One of the original shows, Super Mom, generated 50 million views of its first two episodes, ranking first in mainland variety shows at that time (Source: Shanghai Daily)

Cross-border scale:

  • Cross-border e-commerce is starting to gain prominence. The value of total cross-border e-commerce transactions reached about 6.3 trillion RMB ($1 trillion) in 2016, about 20 percent of all foreign trade, according to China’s Ministry of Commerce.

The general digital landscape of China is explained for you here.

With WeChat your digital wand for sales, marketing & communications, operations and more, anything is possible. Read these smart WeChat luxury travel campaigns for more examples.

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