TaoBao_Mobile2

Is Weitao the Perfect Mix of Social Media and e-Commerce? #TaoBao

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.  

TaoBaoStanding 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_buildingTaobao, 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.

Marketing in China

Do Marketing Departments Need a Deeper Understanding of the Chinese?

The continued explosion of smartphones throughout China will provide marketing teams with major challenges over the next few years. The country is opening up and it’s not just people in Tier 1 and Tier 2 cities, where the affluent few live, that brands will be able to reach out to.

imageThey will have to get to know consumers in smaller cities and towns across the whole of China. And that means discovering a whole new set of marketing demographics.

Tier 1 and 2 cities have long been seen as areas where luxury brands from Rolex to Yves St Laurent have been successful. Even specialist food products are beginning to get a foot hold in these places, fulfilling the need for luxury items that set individual consumers apart from their compatriots.

“Online groceries are developing quickly in Tier 1 and Tier 2 cities,” says Yougang Chen, a McKinsey partner in China. “China’s urban consumers enjoy niche food products, and many kinds of products are not easily available in supermarkets.” (http://www.businessweek.com/articles/2014-02-13/how-to-reach-china-s-avid-online-shoppers)

So who are these new customers hitherto beyond the reach of social media marketers in the West? Around 54% of China’s people live in cities and that figure is growing as more office jobs are created attracting people from the rural areas looking for a better and more prosperous life. China’s cities are divided into tiers from 1-6 depending on population and economic value.

Tier 1 cities such as Beijing and Shanghai represent highly developed markets for Western brands and are home to consumers who are considered affluent. Tier 2 cities such as Nanchang and Zhuhai have been attracting increasing attention from brands because of their growing wealth and greater propensity for consumerism.

Below Tier 1 and 2, the classification, originally introduced by the Chinese government, becomes a little less easy to understand. But the truth of the matter is that smartphones are opening up these areas to greater consumerism and Western brands will have to get to with it.

Brands like Proctor and Gamble have been making contact with the less affluent members of Chinese society for years, even before the advent of social media and internet marketing. And Proctor and Gamble, the maker of household and personal-care products, has three of the top five brands in China: Colgate, Pampers and Crest.

Following some mistakes in the late 80s and early 90s, they realised that a one size fits all strategy wasn’t going to work in China and they had to get to know their consumers better. The way they did this was to send out 1000s of their employees to stay with and observe families around China, using that information to develop the right products for those people and the right marketing approach.

What brands need to understand, if they are going to sell to new markets which are being brought closer by the expansion in smartphone usage, is that they are not a uniform body of people. In other words, they are not the affluent rich.

“The city-tiered approach that Chinese marketers mastered well in traditional and digital marketing won’t work for mobile. Why? Because consumers of all levels of mobile sophistication can be found in all types of cities — and even in rural areas — and engaging them will require a nuanced understanding of a marketer’s particular audience.” Xiaofeng Wang (http://blogs.forrester.com/xiaofeng_wang/14-02-13-how_to_reach_your_unique_mobile_audience_in_china)

Lee Ka Shing

Key Opinion Leaders on Chinese social media

Key Opinion Leaders (KOLs) are important weapons for brands hoping to get their message across on social media, particularly in China. They are the people netizens listen to and the value of their endorsement to your product or service cannot be underestimated.

Chinese Thought LeadersThey use platforms like Sina Weibo and WeChat and they can range from national renowned celebrities, organisations and thinkers, to local experts. Their followers number from a few thousand to millions and they can be travel writers, journalists, chefs, photographers, actors and actresses, pop stars and fashion icons. Their followers trust their opinions on where to go on holiday, what clothes they should wear, what they should eat and what TV they should watch.

Large brands use multiple KOLs to spread branding power, spending significant amounts courting the famous and successful. Smaller brands with more limited budgets can also increase their reach by utilising experts and respected fans who are active on social media and have a good following.

Finding a useful KOL

According to Angie Au-Yeung, National Digital Marketing Manager, China, for Lee Cooper,  there are 3 keys to a successful KOL:

Find a KOL who fits your brand. For instance, if you are selling a fashion product to the young affluent in China’s Tier 1 and 2 cities, you are more likely to choose a young, attractive celebrity KOL rather than a renowned architect or popular politician to market your brand.

What do you want your KOL to do? Do you want them to pass on your brand message in their posts? Do you want them to become an ambassador for your brand? There are various levels a KOL can operate on and getting the right balance is vital for a successful social media campaign.

What are the metrics for your KOL? Fan base size and demographic are important. The rise of smart phone usage in China means that you can reach a wider cross-section of the country than ever before. If you are going to invest time and energy in a KOL then they need to be able to reach out to the people who will be interested in your product.

Engaging with KOL bloggers

Lee Ka ShingBeyond the obvious high-ranking celebrities and others who are in the public eye, there are opportunities for social media branding with China’s large and ever-growing band of bloggers. These are generally people who have a hobby or passion that attracts enough of a following and respect for their opinion to have promise as a promotional tool for brands.

“Building relationships with bloggers in China can be time consuming and requires a degree of commitment but…it can bring fantastic success to a brand in the way of genuine advocacy and provide the local breakthrough endorsement which is essential for traction in China.” Elisa Harca, Marketing Consultant. (http://www.clickz.com/clickz/column/2322997/bloggers-commentators-and-kols-harnessing-the-power-of-chinese-influencers)

More highly valued by consumers than their Western counterparts, discovering valuable KOLs should be a priority for all brands seeking to make inroads into China’s marketplace and sell their products.

Social Media Revolution China

Social media censorship in China and what it means for Western Brands

For brands operating in China’s vast and complex social media landscape, one thing that can’t be avoided is the government’s almost pathological tendency to censor content.

Social-Media-censorship-in-china

(photo via vpnfor.us)

Generating a marketing campaign that gets China’s 600 million online population talking about your brand can have dire consequences – if you get it wrong. Facebook, YouTube and Twitter have all been banned by the authorities and LinkedIn’s new Beta platform, launched in China last month, has had to agree to government restrictions to gain a licence to operate.

Whilst brands may be able to monitor their own content, they don’t have much control over what people say once their message is out there. Many popular brands use well-known Chinese celebrities to promote their products and these Key Opinion Leaders (KOLs) can also get on the wrong side of government restrictions that can often seem as confusing as they are censorial.

Actress Yao ChenActress Yao Chen, the face of Tourism New Zealand in China, became entangled in a political protest when she quoted Solzhenitsyn to her 33 million Sina Weibo followers in support of freedom of the press. The quote: One word of truth shall outweigh the whole world, didn’t sit well with the government censors.
To some, China’s censorship can seem complicated and often random.

“Last year, TV regulators restricted popular genres such as dating, variety and talent shows as part of a crackdown on “overly entertaining” programming. They also banned commercials during dramas, one of the most popular formats in China. No explanation was given for the rules and ad prices soared as supplies decreased overnight.” Anita Chang Beattie, Ad Age (http://adage.com/article/global-news/censorship-china-media-marketers/239187/)

Social Media Revolution China Of more concern to Western brands may be the ever changing list of government censored words and phrases ranging from the “Dalai Lama” and “evolution” to “instant noodles”. It may sound strange to the outside world, but there is reasoning behind these bans, mostly to do with the desire to reduce dissent.
Banning of words can often happen swiftly and without warning but they can also be reinstated just as quickly and mysteriously. In 2012 it was reported that the word Ferrari was banned following the death of a son of an ex-aide to the former Chinese President Hu Jintao. In February this year a similar thing happened with another Ferarri belonging to yet another member of China’s young elite.

Luxury brands, for so long the success story for Western endeavours in China, haven’t been exempt from government bans either. In 2013 there was a blanket ban on advertising for those who promote “incorrect values and help create a bad social ethos”.

WeiboThe Jing Daily quoted at the time: “As such, radio and television stations have been ordered to pull any advertisements that promote extravagant gift-giving — i.e., “waste” — for items such as high-end watches, rare stamps and gold coins.” 

This followed on from a ban of advertising in outdoor spaces that promoted “hedonistic or high-end lifestyles”. Fortunately for luxury brands, this ban did not extend to digital platforms where most of their affluent fans do their shopping.

While brands can often be caught unawares by Chinese censorship, there is still hope that the rise of social media and the increased use of smartphones is going someway to devalue the government’s attempts to control what its people see and say.

In the meantime, brands need to have one eye on current censorship trends if they want to avoid wasting their marketing budget on campaigns that don’t pass an often inscrutable set of censorship rules.

sina-weibo-english

Developing a social media strategy for Weibo for both Chinese and International

Many businesses forging a new media strategy in China, see the country’s premier micro-blogging site, Weibo, as the Twitter twin of the East. However, there are some fundamental differences between the two and simply moving your Twitter strategy over onto Weibo may be more of a mistake than you think.

sina-weibo-englishIt’s not just about 140 characters. Chinese can contain five times more information than English in that short space. This means Weibo provides an opportunity for a more layered dialogue and greater interaction between fans and companies trying to market their product. The Chinese love to comment and Weibo gives them the tools to do this and more.

A picture paints a thousand words. Businesses can do worse than look to the fashion industry for examples of good practice in social media strategy in China. For  a recent Art of the Trench exhibition in Shanghai, Burberry used pictures of people in the city wearing the iconic trench coat on their Weibo page.

Images and video were also transmitted live from the event. The result?

The brand saw an increase of 15, 548 followers in just a 16 day time period and saw an average of 20 active followers a day.” Courtney Gerring, Digital PR at Fashionbi. (http://www.marketmechina.com/burberrys-powerful-weibo-strategy-and-the-benefits-of-weibo-campaigns/)

weibo-on-nasdaqGet yourself verified. Sina Weibo brought in verified accounts much earlier than Twitter. Unlike Twitter, where it doesn’t appear to have the same impact, without it on Weibo you will have a harder time attracting fans.

Be careful what you post. There is censorship in China, a fact businesses looking to get a foothold in this arena have to deal with. Common sense can get  you so far but you also need to keep an eye on what is in/out of vogue. In China, censorship of content, keywords and images changes with the tide. A site like weibowatch.com regularly provides a useful list of up-to-date banned or sensitive words that businesses should be aware of.

Latch onto influence. In other words, it pays to know your public. Get to know the key opinion leaders and build a relationship with them and you will be able to better reach the Chinese public. Particularly on Weibo, these verified individuals get a lot of reposts and comments on a daily basis.

Keep one eye on public events. In July 2011, a huge rainstorm hit Beijing leaving thousands of office workers stranded in the city. Durex posted on Weibo that it would be a good idea to put their product on their shoes to keep those feet dry – the post was shared between 50 million Weibo users.

Timing is crucial. To build up fans it helps to have an idea when the majority are checking their posts. For instance, a large number of Chinese commuters look at Weibo while travelling to and from work.

Weibo vs Peers chart With over 500 million users and almost two thirds of fans spending an average of 3.9 hours a day using it on their phones, Weibo is one of the most influential social media channels in China and one that businesses looking to be a success in the country need to be serious about. Optimising for Weibo may be more challenging than its Western counterpart but, done effectively, can give foreign businesses access to a large and influential portion of the population.

While the controls are tighter, one must realize that social media is infinitely more open than other media in China, and Sina has built a solid product integrating images, video, structured dialog, and longer tweets. As a result, Sina Weibo has become the media of choice that people flock to find or share information, and to voice or hear opinion.” Former Google China head Kaifu Lee. (http://techcrunch.com/2013/02/18/kaifu-lee-still-upbeat-on-chinas-social-media-despite-sina-and-tencent-weibo-suspension/)

Luxury Market in China

Luxury brands blaze a trail for social media in China

Luxury brands such as Louis Vuitton, Tiffany and jeweller David Yurman have all used Valentine’s Day as a reason to launch social media campaigns in China these last few weeks and their approach should act as a guiding light for other brands looking to establish themselves in China.

The reason for their success?
The increasing growth of China’s affluent rich – those richer than the middle class but not so well-off as the super rich.
“Today, the affluent are 120 million strong and their annual buying power is $590 biliion. By 2020, this group will number 280 million – 35 percent of China’s urban population or 20 percent of its total population.” The Age of the Affluent by The Boston Consulting Group (http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-121760)
Lancome Feb14 Lancome, for Valentine’s this year, launched a competition on micro-blogging site Weibo, asking fans to send in love poems for their partners, with those who shared or tagged entered into a free draw for luxury gifts. Audi and Swiss watch brand Tag Hever ran similar ‘send a message to your partner’ campaigns.
Luxury brands are way ahead of others in their approach to social media and e-commerce in China. They work hard to build relationships and interact with their consumers, aided by the rapid growth of smartphone usage and building on their own international reputations and brand desirability. They are purveyors of the must-have Western products that the affluent, seeking status and recognition, desire above all else.
The Chinese affluent are seen as sophisticated e-consumers who like to travel abroad and who are more open to adopting a new brand. According to Youchi Kuo, co-author of the BCG report, learning to sell your brand to this community will also have a knock on effect at home: “By mastering the affluent market in China, which appreciates luxury but is also conscious of value, companies will be better equipped to reach their local affluent customers.”
But it is the way that luxury brands interact with their fan base which can inform new social media campaigns – understanding the Chinese consumer psyche and how they interact on platforms such as Weibo and WeChat. They use social networking a lot, more than we do in the West. One of the clear distinctions between China’s affluent and those in the West is the age. The Chinese affluent are much younger and tend to trust foreign brands more than those from home.
However within this large group there are factions that see the world in different ways and the challenge for marketing executives is to target the right people and not waste their marketing budget on a one size fits all solution. For example, there are sections of the Chinese affluent who want a status symbol while others look to hide their wealth.
“One of the clearest factors distinguishing China’s wealthy consumers from their foreign counterparts is their youth: some 80 percent are under 45 years of age, compared with 30 percent in the United States and 19 percent in Japan.”

(http://www.mckinsey.com/insights/marketing_sales/understanding_chinas_wealthy)