These Trends will Shape China’s E-commerce and Marketing Strategies in 2019

22/04/2019

China’s digital evolution is driving the country’s economic growth. What trends are going to lead the Dragon’s e-commerce and marketing strategies throughout 2019?

 

In 2018, China accounted for more than 800 million Chinese internet users, 100 million more compared to 2016. But statistics have revealed that in 2019, the country’s netizen will reach 900 million people, which means that almost every Chinese will use the internet.

Considering that 98% of netizen are accessing the internet through their smartphones, the PRC will continue to be the first “mobile first nation” this year as well. Moreover, each user downloads an average of 44.2 mobile apps compared to the global average of 26 applications per smartphone users. Therefore, a mobile-driven society is what is going to lead both e-commerce and marketing trends of 2019.

But other important trends are going to shape the e-commerce sector and the related marketing strategies this year.

First and foremost, the increasing focus on lower-tier cities. Indeed, while first-tier cities still rank first for what concerns GDP in China, second-tier cities are quickly moving up the ladder.

 

china's e-commerce and marketing trends 2019 - xian - cifnews

© Photohunter. Shaanxi, Xian. While consumption slows down in first-tier cities like Beijing, second tiers like Xi’an will drive China’s consumption in the future.

 

In the not-so-distant future, more than half of the rich Chinese will live in Tier 2 cities, which are now considered “first-class opportunities” by both Chinese and foreign investors. Thanks to a huge amount of investments and a constant influx of new talents, these areas are quickly developing new industries attracting both worldwide enterprises and Chinese people.

Being home to 73% of China’s population, these lower-tier cities, which include prefecture and county-level urban enclaves, already produce 59% of the country’s GDP.

“While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier and more eager to spend, and could contribute two-thirds of incremental growth in national private consumption toward 2030,” says Robin Xing, Morgan Stanley’s Chief China Economist.

 

Third and fourth-tier cities will account for almost two-thirds of China’s annual consumption market, which is expected to reach $9.7 trillion by 2030.

 

Even first-tier graduate students now choose to live in cities like Chengdu or Wuhan rather than Beijing or Shanghai.

According to last year annual College Graduates’ Employment Report, in 2017, only 22.3% of university graduates chose to work in Tier 1 cities, 1.3% less than the previous year and almost 6% less from 2013. Instead, in the same year, 21.7% of Chinese graduates preferred to leave major cities in order to pursue better careers in smaller cities, 8% more than in 2015.

Here, companies like Colin Huang’s Pinduoduo leverage the absence of direct competition with e-commerce giants but their success lies in the fact that the e-commerce industry in lower-tier areas has more room to grow compared to the saturated markets of Tier 1 and Tier 2 cities.

Therefore, here companies would have to target and unlock the most neglected market, that of low-income households with comparatively lower education levels, which, however, holds the greatest potential in China and which made Pinduoduo stand out among all the other online shopping apps.

 

china's e-commerce and marketing trends 2019 - he-conomy - cifnews

© Unsplash. Taobao released a report summarizing male consumers’ purchases on the retail platform that revealed men’s growing interest in fashion and beauty.

 

For what concerns the target audience, in fact, the 2019 trend is to stop focusing on historically predominant markets. This year will be the year of the he-conomy overtaking the she-conomy, and the Generation Z and the aging population being the real protagonists of marketing strategies rather than Millennials.

Over the last few years, China experienced a complete change towards new male consumers. Indeed, the increase in male consumption is the inevitable result of long-term changes in the social structure and habits of life such as the rise of a male population with strong economic power, the increasing number of single men in China, and the awakening of male consumption’s awareness.

By 2020, the size of this class is expected to account for 51% of China’s total male population and advertisement campaigns like that of the baby products marketplace Mia.com are showing the Chinese companies’ growing interest in breaking gender stereotypes.

 

Generation Z is expected to represent approximately 40% of China’s consumers by 2020 and they are believed to surpass Millennials as the largest generation with the potential for more impact on both society and economy.

 

Moreover, a study by research firm OC&C Strategy Consultants revealed China’s Generation Z – those born between 1995 and 2002 – accounts for 15% of their household’s spending compared with 4% in the US, spending much more money than their Millennial cousins.

However, while the youngest netizens spend the most, the elderly population is about to exceed 255 million people by 2020 and although only 10% of internet users were over the age of 50 in 2018, this number is expected to increase quickly. Indeed, WeChat has revealed that its users between the ages of 55-70 grew from around 8 million to over 50 million during 2017.

Therefore, major e-commerce companies started to organize in order to attract this so-called “silver-economy”. And while Alibaba has begun hiring older consultants to improve its digital services for elderly people, other tech companies are launching startups entirely addressed to this generation.

An example is the successful app Tangdou, which focuses on connecting middle-aged women who like to dance in public squares with other like-minded people.

 

China's e-commerce and marketing trends 2019 - generation-z - cifnews

© Unsplash. Although different generations demonstrate similarities worldwide, China’s Generation Z has unique features in terms of spending attitudes and behaviors.

 

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.

Therefore, while China will experience an even wider demand for imported quality goods, cross-border e-commerce is going to benefit more an more of Chinese improvement in artificial intelligence in 2019.

The trend is thus not only to enhance the New Retail concept by intertwining the online world with offline experiences but virtual and augmented reality, as well as facial recognition, are going to play a fundamental role in e-commerce marketing strategies. In addition, big data are going to offer consumers increasingly personalized services.

 

“On the Chinese mainland, you have big players like Alibaba and Tencent whose services are so intertwined in your daily life, where you depend on their ecosystem for services like ordering food, making payments and for e-commerce and entertainment. So it seems almost natural to blend all of this together,” said Tiffany Wan, general manager of VS Media.

 

Nevertheless, the true leading marketing trend of 2019 in China is represented by video content, not only short-videos but also live-broadcasting.

Video-related apps like Douyin opened the Chinese market to short-video content, which represents a bite-size entertainment. Since this trend started last year, it drastically changed the way users consume content and therefore transformed the whole marketing industry.

With the rising popularity of short-video apps, the live-broadcasting format also started to gain a renewed interest among users. Although completely different from Douyin style, live-streaming apps like Yizhibo are playing a significant role in the actual information-sharing ecosystem.

However, while brands already mastered the art of short-video marketing, live-streaming is changing the whole game reshaping the entire e-commerce sector. Therefore, in 2019, we are going to see even more Chinese e-commerce companies integrating live-broadcasts to their marketplaces enhancing the recent “live shopping” trend.

 

china's e-commerce and marketing trends 2019 - video - cifnews

© Unsplash. Weibo’s video function represents an asset as the video social networking is considered to be the next leading model of social media products.

 

According to statistics, today, 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. Behavior that goes hand in hand with the growing demand for better quality and transparency.

Therefore, since Key Opinion Leaders have a powerful influence on consumers due to their creation of relevant and quality content, this year they will represent the most powerful tool for marketing in China. Emotional content, instead, will keep leading the advertising field with a little tendency going toward unexpected twists at the end of the video.

It goes without saying that the result of all these trends is a larger budget addressed to digital advertising and to the improvement of the e-commerce sector. According to Admaster, 79% of companies advertisers said they intend to increase their digital marketing budgets in 2019, especially for what concerns the mobile industry.

The Dragon’s society and quality of life are experiencing massive changes thanks to hi-tech and digital improvements over the last few years. But Chinese companies do not seem satisfied yet, there are still some customers’ needs they want to meet. And since China’s society keeps transforming quickly, some new 2019 e-commerce and marketing trends might show up too.

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