Marketing in China for Western Brands. Social-Commerce or Live-Streaming?

24/05/2019

When marketing in China, focusing just on one e-commerce platform is not enough. Western brands aiming to enter the Chinese market now need to cope with social-commerce and live-streaming. But between the two, which is the best solution?

 

As the country with the largest middle-class society, China has now become the center of interest of many Western brands, which are now striving to succeed in this promising new market.

Nevertheless, the Chinese market has revealed to be not only much different from the Western one but it is rather the forerunner of trends that are now able to influence even customers’ behaviors beyond its boundaries. Therefore, Western companies face various challenges in marketing in this dynamic and fast-changing country.

The Middle Kingdom has a unique digital landscape, consumers have distinctive purchasing behaviors and there is intense competition between homegrown and foreign brands. And although foreign companies are learning to manage Chinese major platforms, some of them have run into dramatic failure mostly due to a misinterpretation of the local culture.

The brands that succeed are those that are able to build a strong presence across multiple platforms leveraging local marketing trends. Let’s see which.

First of all, the Chinese consumer base is a “mobile first” society. According to data published by the China Internet Network Information Center, out of a population of 1.4 billion people, 802 million people are actively using the internet, of which 98% are mobile users. This data must be taken into account before planning a marketing strategy in China as many Western brands are not ready for the Chinese cutting-edge landscape yet.

 

marketing in china - smarphone - cifnews

© Unsplash. Chinese people spend an average of seven hours a day on their smartphones, mainly on social media and e-commerce sites.

 

The truth is that Western brands that want to enter the People’s Republic market must forget those marketing strategies that work in Western society. All the tricks to appeal the international consumers are just a little part of a much comprehensive landscape of strategies in the Dragon, or they might not even work at all.

Contrary to the Western side of the world, in the Celestial Empire, BAT companies – Baidu, Alibaba, and Tencent – master more than just one market. While in the West Amazon dominates the e-commerce industry, Google rules the internet and PayPal drives fintech, in China all the three giants control many different sectors. From e-commerce to fintech, from social media to eSports, from the entertainment industry to communication, BAT companies have built a whole environment of platforms, which are all linked and communicating.

Therefore, thinking of an advertising campaign only on Chinese major social networks might not be enough. However, partnering with one of the BAT companies will open a window of opportunities made of live-streaming campaigns, New Retail strategies, and online experiences, which might not focus on direct sales only but which would build strong brand awareness in the country.

 

Among these interconnected online and offline strategies, two trends are actually leading the retail market: social-commerce and live-streaming, which, however, have now evolved into a brand new “live shopping” experience. But which of the two marketing tools is the most effective for Western brands?

 

For what concerns social-commerce, it is a direct result of the recent drastic change in Chinese consumers’ behavior. Indeed, with the rapid penetration of smartphones into Chinese lives, many aspects of the daily activities have changed and the one that changed the most is how they do and conceive purchases. What we knew as e-commerce – an act of purchase by the user who chose to buy through an online platform – is now changed into a social activity closely linked to social networks.

This new way of doing online shopping can no longer be defined as e-commerce. Today we talk about social-commerce or conversational commerce, a “hybrid” that comes from the combination of social networks, messaging applications, and shopping platforms. In particular, in China, it means getting in touch with people who share the same interests rather than just an act of purchase. Online shopping is thus perceived as a way of doing social engagement.

WeChat has already responded to this need by creating a communication-based ecosystem where retailers meet the customer by creating a relationship based on trust that is very different from that built by classic e-commerce companies. However, besides WeChat, there are some other Chinese applications which are less popular in the Western world but which represent the real forerunners of social e-commerce as we now know it such as Pinduoduo and Xiaohongshu.

The growing enthusiasm for social-commerce that combines marketplaces with social media features is going to drastically grow in 2019 as also worldwide users now started to express interest in this kind of e-commerce. It is estimated that 70% of Chinese born after the Millennial generation will directly go on social media to purchase products or services this year.

 

Marketing in china - live shopping - cifnews

© Alizila. Live-streaming of Alibaba’s “See Now, Buy Now” fashion show. China has become the largest market for live-streaming, which is expected to be worth $8 billion in 2019.

 

Nevertheless, the social media landscape in China is moving at a fast pace and new social-commerce platforms, as well as new trends, are constantly emerging. One of them is video content, not only short-videos but also live-streaming.

Video-related apps like Douyin opened the Chinese market to short-video content and since this trend started last year, it drastically changed the way users consume content and transformed the whole marketing industry until it landed to real-time content through live-broadcasting platforms.

Therefore, while brands already mastered the art of short-video marketing, live-streaming is changing the whole game reshaping the entire e-commerce sector. Today, e-commerce penetrates the majority of live-streams whether through fashion show broadcasts or via internet celebrities reviewing the latest cosmetic product, enabling consumers to buy what they see on the screen in real-time.

 

From the entertainment industry, live-streaming quickly turned into a marketing tool and finally into a new form of retailing. It is the “live shopping” era, when watching live videos could also mean going shopping.

 

An example is the Single Day – China’s biggest sales event – during which the e-commerce giant Alibaba live-streamed a fashion show called “See Now, Buy Now”. The show was broadcasted live on 10 platforms including Taobao and Weibo giving to millions of consumers the opportunity to buy products on the spot.

Today, numerous “parallel” marketplaces like Taobao Live allow merchants to link a series of products to the stream and users can interact with the streamer on air. According to statistics, more than 100 million viewers watch a live online video event every month while nearly 32% of users now buy products through live-streaming videos. Therefore, “live shopping” is surely something Western brands should consider while entering the Chinese market.

Victoria’s Secret is one of the Western brands that – successfully and wisely – took advantage of China’s live-streaming culture to reach out to customers. The lingerie company launched a live stream on Youku during its annual runway show in Shanghai. While users were watching the show, they could purchase the featured products in real-time by clicking the links to the brand’s e-commerce sites.

 

marketing in china - Yang Mi and Mark Chao - michael kors - cifnews

© Weibo. Douyin’s popular KOLs, Yang Mi and Mark Chao, at Michael Kors’ event. Chinese KOLs are trusted to be the most influential personalities when it comes to marketing and selling in the PRC.

 

So, what is the best solution for Western brands when marketing in the Dragon? Social-commerce or live-streaming? The answer is both. Especially if a popular Key Opinion Leader (KOL) is involved.

Live-streaming is booming in the Celestial Empire for some time now while Chinese consumption online is growing year after year together with an increasing purchasing power. Therefore, the Chinese thirst for trust and transparency, as well as a growing need for social engagement, could only result in the fusion of social-commerce and live-broadcasting.

Selling in the Dragon today means building brand awareness and creating real relationships with consumers. For Western brands, it means building trust on social media and offering entertainment and transparency through real-time content, which all result in selling through social-commerce and live-streaming platforms.

The concept that “content is king, but context is god” applies perfectly to the Chinese diversified e-commerce landscape. Content marketing is vital in China but creating unique experiences on the right platform is now more important than ever.

Western brands that aim to enter the Chinese market cannot focus on creating the best advertising campaign on just one platform. They must be able to build their own “world” made of real-time experiences, which must be interactive in order to create engagement and in order to build relationships with the customers. But above all, it must be connected to the wide universe of Chinese social media and e-commerce platforms.

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