Marketing To China – Why And What Are The Ways To Start
2020 has been an unprecedented year for the world. From countries to cities, the world has been placed in a Great Lockdown. Many countries are in an economic crisis, and there is great uncertainty over the economic landscape, as global growth is projected to fall to negative 3 per cent in 2020.
According to the Chief Economist of Organisation for Economic Cooperation and Development (OECD), Laurence Boone, China is the only G20 country expected to have a positive economic output in 2020. The world’s second-largest economy has a strong comeback after shrinking 6.8 per cent in the first quarter of 2020. Coincidentally, the Foreign Direct Investment (FDI) inflows into China surged by nearly 25 per cent to US$14.25 billion in September 2020, as compared to 2019.
Today, the population of China stands at 1.44 billion with an estimated affluent 400 million middle class people and growing. China presents a huge opportunity with the trend that it is poised to become the biggest economy in the world. The Chinese economy currently makes up 16 per cent of the world’s Gross Domestic Product (GDP) which is around 14 per cent of the world’s exports.
Do you need a physical presence to enter the China market?
A physical presence is not necessarily needed to break into the China market. It is, however, crucial to use the right Chinese digital platforms to reach Chinese consumers from marketing and distribution channels.
A common question that was often asked, “Is search marketing the way to go in China?”. While search marketing is a key strategy outside of China, this may not be the case in China.
The revenue of Baidu, the main search engine in China, has been in decline for years since 2016. A paid search advertisement on Baidu about a fake and illegal cancer treatment that led to the death of a student, prompted trust issues with the Chinese consumers1. Baidu reported a 13% year-on-year decline in the first quarter of 2020.
The fall of a dominant content provider led to the rise of a different model of content provided for the Chinese consumer market. These days, Chinese consumers navigate towards content and purpose-specific mobile applications in China instead.
The rise in industry, purpose-driven, and content-focused mobile applications
From Taobao to Xiaohongshu (小红书 a.k.a Red), to Douyin (抖音, or Tik Tok for global use), and even to Pinduoduo (拼多多), Chinese internet platforms or mobile applications have changed the buying behaviour of Chinese consumers. E-commerce platforms such as Taobao and Pinduoduo were ranked as the top 10 mobile applications.
Mobile applications such as Taobao, Tmall and JD would be used for shopping, Pinduoduo for deals, Xiaohongshu for luxury and travel content, Meituan for food delivery, courier, hotel, and tickets booking, Ctrip for travel-related services, and WeChat for sending messages, social networking, shopping, and gaming.
WeChat, the first super-app, and the application that you cannot live without in China, have mini programs which are a lightweight application that runs within itself. This allows brands to set up their own e-commerce, games, and services platforms. With a closed ecosystem, a customer can complete the whole shopping experience without exiting the app.
Digital landscape in China
The Chinese digital landscape is amazingly complex, and for businesses that wants a market share in the Chinese market (regardless of domestic Chinese consumers, or outbound Chinese tourists post-pandemic), digital penetration is the necessary step to take.
Online content has evolved from text (blogs) to images (Xiaohongshu) to videos (Douyin), with e-commerce livestreaming as the current trend. These content needs to interact with the consumers and appeal to them. This means that brands should target those who hold the key to decision making and have purchasing power.
There are, however, a few key building blocks to success – users, creators, and brands. Brands will have to give incentives to creators so that they are able to come up with great and appealing content for the users. This will then, in turn, lead to a brilliant review that will spread through social sharing and word-of-mouth in the social apps.
In essence, brands will have to jump on the bandwagon of working with creators in the Chinese apps to target Chinese consumers who are shifting towards reviews and social interaction before they make their purchases.