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/