As more and more of the world wakes up to the importance of China for business, and particularly luxury, it’s important that, sometimes, we go back to basics.
The Luxury Conversation recently joined the UK Department for International Trade Retail Mission, presenting to a group of British brands in Shanghai, before they took off to also visit Beijing, Chengdu and Shenzhen to learn more about market entry and make the connections that are crucial for doing it successfully.
When we look at presenting, explaining or writing about business and marketing communications in China, we need to consider the audience, and exactly where they are in terms of their ‘China learning’. It’s understandable that some have ‘heard of’ WeChat and Weibo, while others have listened to ‘China market trends you simply can’t possibly afford to miss out on’ 50 times at different panel discussions and events.
On The Luxury Conversation we prefer to make a deeper analysis of particular market categories, interview the people involved, and try to look at trends – not for trends’ sake, but from the perspective of culture and society.
When meeting some fellow Brits who are relatively new to China, and new to the consideration of their brand entering such a massive market, it reminded me that it might be good to take a few steps back and start again, to help build a clear foundation for those in the early stages of discovering China and its amazing opportunities.
So here is a brief guide for someone starting to learn about business in China – note that this is from the perspective of a certain segment of brands that could be considered niche or luxury – not all brands. More on this below.
First market exploration
In terms of marketing learning – and the presentation made in order to answer the questions – there is usually some dichotomy in talking about China. Big numbers can dazzle and delight, with ‘oohs’ and ‘aahs’ usually forthcoming when people talk about the billions of USD generated by Single’s Day, the billions of e-commerce orders, deliveries, internet users, and so on and so on. Yet then on further explanation, ‘China is as big as a continent so don’t expect to look at the country size and aim to take a tiny percentage of it and find success’.
Personally, I find the ‘big numbers’ unhelpful. It’s a very large country indeed. Pointing to one paving slab in Shanghai and saying ‘this paving slab has 10 million consumers walk upon it each month’ doesn’t mean it’s an ideal place for your brand communications.
Then the ‘unique digital eco-system of China’ is presented – again, very understandably, as people need to know not only the key apps, but that apps, and not websites, are used in China (more on this below). But the problem there is that this (again understandably) concerns brands who are looking at market entry, as they may only see the ‘costs of starting afresh in a new digital world’ as ‘high’.
Yet, the key point here is that there is a range of exploration that can be done before making the investment into the China market – and it should be thought of as long-term investment rather than simply ‘marketing costs’ for the year’s general marketing budget.
The first answer to the question of ‘how can we explore at reasonable costs and effective methods’ is simply to use the right agency. Sorry but I had to mention it at least once! But, what about the details of exploring?
Researching the aforementioned digital eco-system
Your brand might be getting ‘free’ marketing without you even knowing about it. On user-generated content apps like Xiaohongshu/Little Red Book (more on that later), users review and recommend things, in this case mainly beauty and fashion, as well as some travel and lifestyle. It means that Chinese consumers may have bought your brand when abroad and reviewed it, meaning that you can already see consumer opinion/sentiment on your product before you even start your communications campaign.
Before looking at the costs of WeChat accounts, KOL marketing and so on, the research is vital to let you know about the state of your brand category among target consumers. That might sound a little obvious, but with the question of ‘China market entry’ and finite budgets of a business, it’s important to not panic about the scale of potential communications and instead to really, intimately, understand what demographic/segment/people that you need to be talking to in the first place.
Where should you be researching?
In terms of ‘where’ geographically, Shanghai is still the first place to research affluent, globally-travelled consumers. After you have taken key findings from the target consumer in Shanghai, rather than keep exploring other first tier cities, Chengdu and Nanjing are rising in terms of their luxury consumer population and lifestyle. For a mid-size entering brand, your business can explore campaigns and locations in ‘smaller’ cities at lower costs and still with potential reward. Of course this is keeping the issue succinct and further guidance is needed!
Related to online, here is a brief description of the different apps that can pertain to different categories.
Note: people in China use mobile only. Laptops are only used for work. No one looks at websites. You don’t need a website in Chinese!
Second note: All such apps in China click-through to e-commerce options and payment is seamless via WeChat Pay or Alipay only. No credit cards, no other payment options, just these 2.
Third note: ignore numbers. All such apps have hundreds of millions of users as China is big.
WeChat – the one that everyone knows and is still the keystone of your digital business in China. What you can start with and work towards with WeChat:
Opening an official account which people can follow. You can publish regular content in posts, whether written, visual, or interactive.
- Seed influencers to talk about your products on their accounts.
- Take WeChat Pay in your venues worldwide, which can then link those customers to follow your account, join your loyalty program and so on,
- This means you need to create a WeChat mini program, which just mean you have more functionality – essentially a website or mini app that people access within their WeChat.
- And this means you can offer social CRM, talk to followers based on their location, and do things like create store guides, tourism guides, have all your store products / menu / whatever in Chinese. You can offer gift cards (that they can share to their contacts on WeChat), have the loyalty program, and basically let them do anything with WeChat, even ordering room service or whatever your specific business needs to offer.
Weibo – the ‘other one’ that most people have heard of. Weibo is very simple. Some might try to make it seem more complicated than it is, but it’s a great testing ground when seeding influencers and discovering who made the most creative posts that received the most engagement in terms of comments, or sales, or prompted most visitors to an event. From there, you can engage further with the right community leaders.
Xiaohongshu/Little Red Book – 90% female users born after 1980, it’s a user-generated content app that’s mainly about fashion, beauty, and also travel and lifestyle. People make reviews via pics or videos and then users can save, share, comment and follow. This is worth researching, yet your initial digital moves are all about WeChat as a foundation.
Douyin/TikTok: a short video app. Only worth trying for brands somewhat established in China.
Toutiao: a news app
Baidu: an unpopular search engine
QQ: a messaging app and video upload site
Youku: a video upload site
What’s important to understand about e-commerce is that you can ‘get away with’ not knowing every single e-commerce platform in China. There are even ‘platforms within platforms’ as selling can happen from one platform tapping-through to another (for example WeChat through to ‘LOOK’ or Fliggy through to Alibaba’s Taobao). Yet, coming in to the market, you just need to know:
Tmall – where people go to search and buy. Tmall Global is cross-border and the first place an international brand needs to offer products. Tmall Luxury Pavilion is for lux brands wanting more personalised digital storefronts recommended to wealthy users.
Farfetch – for fashion. Does not store stock but ships directly from the shop. Its users know what they are looking for.
JD – similar to Tmall with JD Toplife similar to Tmall Luxury Pavilion.
First market actions
While the influencer economy is not new, not unique to China and has boomed into a potential bubble (or banana skin for brands, depending on your metaphorical preferences), it’s still an important tactic within overall strategy. KOL seeding is gifting a variety of KOLs with your products – a variety over follower number, type of content they create (whether more category specific, lifestyle, location, follower demographic), and type of post they share (click-through commerce, product review, visual ad style).
You can then contrast and compare what works well and what works less well – not simply in the sense of what to do next time, but with an eye on long-term collaboration with the KOL that takes a natural liking to your brand and would be a great fit for both ongoing outward marketing, and also integrating into the brand in terms of sharing information on the target consumer’s mindset, trends and preferences.
Still key, but Local Opinion Leaders are a little different. Lululemon serves as an example – years ago, before China’s fitness industry boom, Lululemon gifted the few yoga and pilates instructors in Shanghai with their gear. All of their class members instantly wanted to wear the same thing, and in a snowball effect multiplied by relentless outdoors fitness events, Lululemon became the brand of choice. Yes, they benefited from exceptional timing in the rise of fitness in China, but any brand can look beyond social media figures and consider what ‘real influencers’ there may be that are leaders in their own community.
Even if you are just arriving to the Chinese KOL marketing world, it’s worth knowing that KOLs who are simply ‘famous for being famous’ are slowly going out of fashion. The audience wants to hear real expertise from an influencer that has achieved something relevant – a designer, architect, photographer, artist, dancer, entrepreneur/businessperson, and so on.
What are you doing at home?
Part of market entry into China is making your global locations as China-friendly as is possible. There’s no need to make a standing start in your China operations when you could already be in the flow of building brand awareness with Chinese travellers. ‘Letting your Chinese customers pay with WeChat’ is not an abstract method or something that is simply a little ‘preference’ they have over getting out their credit cards.
Assuming that ‘Chinese customers can just use credit cards’ is face-palming simplistic, and even arrogant. Firstly, paying with WeChat is so natural – not only for shopping but for every single one payment in life from car parking to the gas bill to instantly sending money to a friend when splitting lunch. Not having WeChat pay says ‘we are foreign and different and living in the past’. But it’s not only about paying.
WeChat functionality means that when a customer pays on WeChat, they can instantly, seamlessly link in to everything else – brand content (obviously in Chinese), loyalty programs, sharable gifts (sending vouchers etc. to their friends in WeChat), GPS-based content/offers and more.
Being niche and luxury
What is luxury, and what is niche? There might be differing definitions in these two aspects. Firstly, luxury in China/Asia doesn’t have to mean very expensive products/services, it doesn’t have to mean fashion, or champagne, or yachts or fancy bling. Luxury can mean high-quality, it can mean an independent lifestyle, it can be a type of personal luxury. Niche generally means ‘not a big famous brand’, it can mean boutique, artisanal, and essentially, for want of a better word, it means ‘cool’.
This means that while perhaps in the UK your brand sold on the High Street of ‘A Town’ and was neither luxury nor niche, you could still consider the business, communications and positioning as a much more premium prospect. This is partly due to the differing demographics in China, different concepts and realities with disposable spending power and the aspirations that different segments are aiming for. (explaining this further requires a separate essay on cultural/societal differences!)
The point here is firstly that ‘curiosity for niche’ is very high in China – consumers have seen countless big, established brands already, and both got a bit bored of them, plus the younger generation don’t want to wear/use the same brands as their own parents might like or know.
Coming in as a new brand which is clearly not ‘from a big famous label’ gives the opportunity to be a little alternative in terms of marketing voice and content angle. Of course, anything in China has to be done sensitively (yet another essay in itself) but if you are starting with ‘internationalised-mindset’, more affluent consumers in first-tier cities, then you need to bring something a little different, something that stands-out and something that can promote individual self-expression. And with luxury and niche both translating to ‘high-quality and cool’, this means that you can look at other luxury and niche brands as examples of successful cases.
Always emphasise being British. I don’t only say that as a patriotic Brit, but our so-called ‘soft power’ is a great tactic – our country is generally identified as a fun, creative, musical land of civilisation, sophistication (don’t laugh), craftsmanship and cakes.
It doesn’t mean that you need to go on about your 200 year heritage and that your factory is still run out of a barn in the Cotswolds – because honestly no one here cares – yet there are many positive national/cultural traits to speak about and it’s worth remembering to play on these – while collaborating with trusted local leaders.
Undertaking market testing and research might make having staff in China seem like a long way down the road. But if you want to be successful in China over the long term or any term, then you need your own people in China – as soon as possible.
The failing brands who had to shut shop and leave China are those who, despite the seemingly ‘business 101’ concepts, did zero localisation, zero marketing, picked bad locations and so on.
Of course, finding success on these foundations does mean using the right agencies in China, but more than that, you need the person who is making business decisions on China to be in China and to know the country inside-out.
It’s not only about making the right decisions in marketing and communications. Being here opens up the real opportunities. Whether it’s getting the best deal on events, venues, purchasing, ad space – or any business aspect at all – it’s always who you know – or guanxi as we call it here. That’s not to say it’s anything ‘under the table’, but personal relationships and trust are how things are done in most places in the world and especially in China. Opportunities for new business, local collaboration and growth will be completely and entirely missed if you don’t have the right people running China from China. Importantly, this doesn’t mean having one Hong Kong office, but HK for HK, mainland China for the mainland.
Make British brands a success in China
There are so many specifics, individual cases, examples and more to go in to. Register on this website as a member, for free, to read our articles, and or find me on LinkedIn.