Marketing executives in the West are busy checking the stats for Chinese social media to better inform how they promote their brands on social media.
Getting to grips with the country’s wide and complex social media community and developing a strategy for reaching consumers lies at the heart of many brands hoping to succeed in China.
For many marketers, the stats help to tell a story and define social media usage. According to Marketing to China: “Platforms like WeChat and Sina Weibo have more than 300 million users, while Meilishuo, a popular social shopping website grabs about 30 million users per month. Experts say that within next 5 years, China is expected to reach $271 billion from online shopping.”
But do the stats tell marketing executives anything really useful?
- 47% of Chinese consumers watch videos and television on tablets.
- Much is made of the affluent rich who live in the big cities but marketers who concentrate only on Tier 1 and Tier 2 cities are bypassing the vast majority of China’s citizens. While there are just 4 Tier 1 cities with over 16 million inhabitants, Tier 3 and 4 cities and towns boast over 161 million people.
- 82% of Chinese netizens are buying online more than any other country including Germany and the USA.
- 22% of China’s internet users believe that sharing on social media is an expression of their own personality and 30% believe it is driven by creativity.
- China’s mobile shopping increased by 168% in 2013 and is estimated to almost double that in 2014. If the trend increases, by 2017 it will have increased by over 1,000%.
- The preferred format for advertising in China is the use of coupons (33%) and video (36%), with the best time to reach out to netizens on their mobiles being when they are on the way to work or at weekends.
- While it might not occur to consumers in the West, 61% of china’s netizens would consider actually buying a car online.
- WeChat is the fastest growing app internationally, outstripping everyone else. Its success has made Tencent the first Chinese internet brand to succeed out of the mainland and is set to make big inroads throughout 2014 and beyond. For many industry experts, WeChat is still the one to watch.
- 74% of netizens shop online to get a lower price while 78% also worry about the authenticity of the product they are buying.
Perhaps one of the more influential trends is that China’s ecommerce growth is back on the rise again, estimated to be worth $540 billion by the end of 2014. Industry experts believe that this is in part being driven by the lower Tier cities which lack the stores of their more affluent neighbours. According to China Briefing: “While there are plenty of physical shopping options in China’s larger cities, lower-tier cities cater less to international luxury brands. In light of this demand, the internet has allowed many retailers to offer goods to consumers in lower-tier cities and further afield without the need and cost of setting up a physical outlet.”
It’s a stat that suggest Western brands should be moving out from the Tier 1 and Tier 2 cities to the places where most of the Chinese population are living.
Western brands that are trying to get to grips with social media in China know that it is a fast paced and often complex arena and, with nearly 600 million users and a year on year growth of over 165% for mobile shopping, it’s something they have to work hard to keep up with.
1. China gets the exercise bug
Well into 2014, microblogging platform WeChat are forging into new territory by teaming up with third party vendors to promote smart hardware like fitness bracelets. As with Western users, Chinese netizens are getting the exercise bug, particularly in the more affluent Tier 1 and 2 cities.
According to Want China Times, this month saw “iHealth, Huawei Honor, Lifesense and Codoon put their respective WeChat version of smart bracelets for sale on platforms such as Jingdong Mall (JD.com) after the WeChat team closely worked with these vendors for nearly half a year.”
It may be a sign that WeChat is beginning to collaborate more with third party providers, though they are keeping their cards close to their chest. The integration allows WeChat users to put on their smart bracelets, measure their sporting or exercise performance and then share it with friends on the popularmicroblogging platform.
2 . Search targets “big data” in China
Internet search giant Baidu is thinking about big data as they move into the later parts of 2014. With trillions of web pages in storage and billions of searches conducted every day, Baidu is China’s major search engine, modelled on Google, but perhaps slightly behind in developmental terms. According to Wang Jing, vice president of Engineering: “Baidu hopes to build a big data engine on the massive data the company collected over the years and offer it to traditional businesses.”
3. Online to offline is getting bigger
Online to offline, whereby a mobile or pc is used to order something like a taxi is set to become more popular as offline businesses start to get a slice of the ecommerce pie. Tencent has been leading the way mainly because of its 355 million monthly active users and others may well jump on the band wagon in the future.
4. Chinese companies are becoming more competitive
China’s own companies are beginning to realise the power that can be had from harnessing social media and are starting to become more visible, competing with Western brands who have long been working hard to make China’s various platforms work for them.
According to Econsultancy.com: “The trend in China is towards using social media as a bridge between consumer and company. And as 500m of China’s 618m internet users use a mobile device to access the internet, m-commerce has become even more important.”
5. China gets World Cup fever
And finally, although they didn’t have a team in the tournament, China’s netizens have been keeping a close eye on the World Cup this year with interest peaking with around 11 million users including a hashtag in their posts throughout the group stages.
It used to be that your average netizen in China would hook onto one brand and stay with it… not any more
Lately, though, with the rise of social media platforms like WeChat and Weibo and online shopping through internet giants like Alibaba, greater choice has meant that China’s ever growing online army are more likely to follow several brands.
The younger generation coming through are also more likely to go for quality products and spend more than older netizens who have grown up through a range of social changes and some difficult economic times. There is more disposable income and greater social freedom now than ever before and it is driving the changing landscape of social media and online shopping.
Social Media is Spreading but the Market is Shrinking for Western Brands
With changing infrastructure and increasing popularity, social media is moving out of the Tier 1 and 2 cities into the rest of this large and complicated country. In 2014, rural areas made up nearly half of netizens and instant messaging is the most popular online pursuit with 530 million active users across all platforms. http://socialmediatoday.com/we-are-social-singapore/2350106/understanding-social-media-china-2014
It’s not all good news for social media marketers working to promote Western brands. According to China Daily: “Amid a sluggish consumer goods market in China, foreign brands are facing pressure, with six out of 10 losing market share to their domestic rivals last year.”
It seems that the domestic market is forging ahead and capturing the attention of netizens. For instance, western soft drinks brands lost a 6.3% share of the market while domestic carbonated brands such as Wahaha “increased market share by 3.8 percent through product innovation and large scale marketing,” according to China Daily. http://www.chinadaily.com.cn/business/2014-07/02/content_17635342.htm
Lower Tier Cities Spend as Much as Higher Ones
The value of rural markets for Western brands is becoming more and more important and, with their greater connectivity, more accessible. In fact, lower tier cities, though having smaller incomes, spend more of their disposable income on online shopping. Brick and mortar stores are also still important to netizens in all areas with over 70% opting to pop into a shop to check out their possible purchase ‘in the flesh’ before buying online.
China is Investing in Infrastructure
The growth of domestic markets that are beginning to compete with high end Western brands has also led to greater investment in infrastructure. After all, if you are selling a lot of products online then you will need adequate storage space.
According to Reuters: “It is estimated that in the next 15 years China will need to invest $2.5 trillion in land and warehouse construction, equating to 2.4 million square metres of storage space.” http://www.marketmechina.com/four-key-facts-e-commerce-china/
There are, of course difference between the consumers you find in lower tier cities and those you find in the more exclusive neighbourhoods of Shanghai. For instance, lower tier netizens are not used to luxury and tend to focus on value for money and functionality. Higher tier consumers are more likely to buy luxury, ego enhancing products to show off to their friends.
But the landscape is changing and it is doing so quickly, and nowhere is this more obvious than with Chinese domestic brands. According to Forbes: “Chinese firms have great ambitions. For many, building their own company into a global brand that’s accepted by consumers in developed economies is a matter of national pride.” http://www.forbes.com/sites/onmarketing/2014/06/30/chinas-future-in-brand-awareness/
Taobao, the eBay style customer to customer e-commerce strand of Alibaba online shopping, has created its own social app called Weitao designed to give more interaction between buyers and sellers on the platform.
Standing in direct competition with other apps such as WeChat and Weibo, Taobao are hoping that their new entry onto the social media landscape will help drive yet morebusiness for their shopping site. Weitao allows sellers to have customised pages linking directly to their shopping pages and to post comments and articles to their fans.
Taobao’s release of the mobile app also coincided with shutting down any QR code access for rival WeChat, a movewhich has suggested to onlookers that they are actively waging war on Tencent for mobile access. While still in its early stages, Weitao has potential for Western brands looking to reach a wider audience in China on a selling site such asTaobao.
Taobao is one of the most successful online shopping channels in China. According to Bloomberg Business Week: “Taobao has catered to Chinese preferences for doing business—for example, it’s enabled buyers and sellers to negotiate and bargain on prices.”(http://www.businessweek.com/articles/2014-02-18/the-secret-of-taobaos-success)
Taobao, with 50% of the market share, towers above Western ecommerce rivals like Amazon who only have around 11%. While a large number of businesses on the site used to besmall, independent e-commerce operators, major brands have had more and more of an impact in recent years. You can buy almost anything and the BBC recently reported on some of the strange products available from boyfriends for hire to live scorpions in a bag.
One of the problems for brands has been the prevalence of fake products and it’s something the ecommerce giant has only just recently admitted to and decided to take seriously. According to NetNames: “Alibaba Group has certainly become more visible in recent months and is engaging more with brand owners, trade associations, law enforcement agencies and governments alike. This is good news, but there is still a long way to go to address brand owners legitimate concerns.”
The upshot is that hundreds of Taobao shops are being closed down on a daily basis but this is only the tip of the iceberg as far as well-known brands are concerned. Most debate that simply closing down online shops is not the answer and that more has to be done to close down the factories that produce the counterfeit goods.
For brands that as yet have no official presence in China, the chances are high that their products are on sale on Taobao, either as counterfeits or as goods imported by Chinese entrepreneurs living in the West and using loopholes in the system to make a profit.
With over 5 billion registered users and almost 500 million unique visits a day, it’s no wonder that Taobao is the number one ecommerce site in China and with the addition of the newWeitao app it could be set to become the platform of choice particularly for those brands making their first forays into the country.
Brands have long been aware that what sells here in the West doesn’t necessarily sell that well in the East and nowhere is this more noticeable than in China.
Often seen as cut off from the rest of the world, the country represents one of the biggest retail markets for brands and succeeding in it is something akin to the Holy Grail.
According to Start Up China: “A 63% majority of international companies operating in China acknowledged that they needed to alter their product specifically for the Chinese market. In most cases, this does not mean completely creating a new product or service, but rather making small adjustments to better suit Chinese culture and preferences.”
A big difference between the West and countries like China is the way things are paid for, something which eBay were slow to take up.
- Whereas eBay wanted people to pay by credit card, Taobao realised that many Chinese consumers didn’t have them or were worried about paying online. They introduced a way for a buyer to pay for a product in cash when it was delivered to the door.
- EBay required sellers to pay for listing a product whereas Taobao decided to make its money from advertising revenue.
- EBay didn’t particularly like that customer and seller would bargain on the price privately and so didn’t add a chat feature. Taobao accepted that the Chinese way is to haggle over the price and was happy to include a chat function that allowed this to happen.
Localisation is the key
According to Forbes, marketers make the mistake of treating China as one big market: “Treating China as a single market is a flawed concept – it’s 29 different provinces with their own peoples, dialects, customs and brand preferences. Procter & Gamble was one of the few U.S. marketers to realize this early on, investing extensively in proprietary research across multiple cities.”
Not only that, but social marketers have to deal with a whole swathe of localised digital platforms such as Weibo and WeChat. China’s social media landscape is vast and complex and choosing the right platform is integral to brand success particularly considering that there are around 500 million netizens and the number is growing.
Beware of bad translation
Many brands, both big and small have fallen foul of poor or ill advised translations of their products and key messages. When Pepsi first ventured into the market its slogan “Pepsi brings you back to life” translated to the Chinese public as “Pepsi brings your ancestors back from the grave” and KFC entered with “Finger licking good” which got translated as “eat your fingers off”.
In truth, many large brands have failed to do the research needed into the culture and customs of their target audience when moving their product into another country.
According to Mike Fromowitz of Ethnicity Multicultural Marketing and Advertising Inc.: “Many international companies have had problems with expanding their brands worldwide because they have failed to put in the research and effort necessary to understand the culture. This has led to several failed brands, to offended consumers, and to the loss of millions of dollars that comes with having to start all over again.”
Renren has lagged behind many of the more aggressive and commercially successful social media and microblogging platforms in recent times though it still has over 170 million users. It’s often seen as a Facebook clone in the West, in the way it looks with the blue interface and how it behaves with status shares, like pages and the ability to post photos and chat with friends.
Having sold its group buying site Nuomi to the e-commerce giant Baidu recently, many could be forgiven for thinking that Renren was going to fade away as one of the major players in social media in China. The competition with Weibo and WeChat was just too fierce. In fact, Renren has been repositioning itself, is targeting the student and youth market, and released a new mobile app in November 2013.
The demographic for Renren remains from 13 to 30 years old, school children and those at university, and brands that have invested heavily in it as a marketing platform over the years have included Dell, which boasts over a million fans on their page, as well as Budweiser and KFC.
“The strategy on RenRen is pushy and strictly sales-oriented, with a multimedia approach including the promotion of other web platforms and mobile apps.” Digital in the Round (http://www.digitalintheround.com/renren-chinese-social-media/)
According to Joe Chenn, Chairman and CEO of Renren, they need to differentiate themselves from their competitors. They have struggled with generating advertising revenue from the mobile application which has led to an emphasis on gaming to attract users.
For brands that are targeting the younger demographic, particularly 18 to 24 year olds, Renren is still one of the sites they should be concentrating on. There tends to be a lot of gossip on the platform and if brands can plug into that they can create an impact.
Although there are restrictions on brands accessing the site initially, for instance Renren only accepts around 100 new brand pages a day, and it is more difficult to operate in than its Facebook counterpart in the West, it remains a key platform in China’s complex social media landscape.
Revenue for Renren has come through its development of online gaming rather than straight brand advertising and that trend is set to continue over the next few years. About 70% of users now logon via their mobile devices and brands that can leverage the gaming side of Renren to get their message across will probably have more success than those that don’t.
The problem for Renren will be existing outside the bubble of China’s social media landscape. Where Weibo and WeChat are making inroads into the West and challenging for a piece of the global pie, Renren may find it difficult to compete with established platforms like Facebook and that in the end may well signal its demise.
In the meantime, for Western brands trying to reach the affluent youth of China, it still holds the potential for good results.
“Our goal is to reposition Renren as a young generation social hub, the best place to observe and understand the thoughts and behaviours of China’s new generation”. Chief Operating Officer for Renren, James Liu. (https://www.warc.com/LatestNews/News/Renren_targets_students.news?ID=32730)