This article provides an overview of the potential of the China eCommerce market and outlines some of the key elements that prospective cross-border retailers need to be aware of before entering it.
Wherever you choose to launch an online presence, promoting your brand to prospective consumers is a must if you want to maximise your online sales; no matter how impressive your product, sales won’t materialise if consumers are simply unaware of your offering, and low brand awareness is a consistent problem for merchants attempting to enter the Chinese market.
Researching and utilising popular Chinese marketing and advertising channels is a must for an e-retailer expanding into China. Retailers should be vigilant, however – the behavioural patterns, perspectives and preferences of Chinese consumers, and therefore the marketing and advertising methods that will hold the most weight, are likely to be different from home markets, and strategies should be adapted accordingly. Retailers should also consider the variety of different shopping patterns that exist within China itself, as these can vary according to location, age and income, and researching effective pricing policies and ad campaigns is a must. Prospective e-retailers should thus carefully consider which channels to employ to best establish their brand presence, as this is a vital part of broaching this digital market.
Adding to the manifest difficulties already associated with broaching this digital market, Chinese buyers express a preference for brands that are already well-established within the marketplace, so building brand recognition is a vital step for any prospective e-merchant into China. Newcomers should apply their marketing efforts to promoting the uniqueness and particular advantages of their goods as compared to competitors. For long-term success, marketing should be approached with the goal of building up a reputable and lasting brand overtime, as opposed to fast market entry and short-term financial gain, and benefits such as strength and durability, where relevant, should be highlighted. Because Chinese consumers often will not perceive products in the same way as an e-retailer’s home market, merchants should carry out extensive market research and adapt and localise their product range to the Chinese market, tailoring specific marketing messages to resonate with Chinese consumers.
It is often advisable to establish a local Chinese language marketing website within China, as due to the boom in eCommerce and a penchant for international travel, Chinese e-Shoppers are now familiar with and often exhibit a preference for luxury foreign brands. This marketing website can be instrumental in gauging consumer interest in and demand for your offerings, and provides a channel through which a retailer can provide catalogues and information on a particular brand, as well as advertise promotions.
In the event you have chosen to set up on a third-party marketplace such as Alibaba’s Tmall or Taobao, a marketing website can help in directing shoppers to your virtual ‘mall space’ or other retail website.
These dominant online marketplaces themselves offer some marketing channels for retail products. As we have seen, breaking into the Chinese market via these platforms provides brands with an immediate audience and comparatively enviable ease of transaction when compared with other methods. These extensive marketplaces, however, offer much less control and flexibility around promotion and marketing, especially when compared to a direct-to-consumer transactional site. Selling goods directly to the consumer presents an e-retailer with a greater degree of autonomy in terms of marketing, branding and special offers. It also means the online retailer has a better opportunity to build their brand and establish brand loyalty than is typically the case for a retailer trading solely from marketplace platforms, allowing for the creation of exclusive customer experiences.
Social media platforms have established an important place in the lives of Chinese consumers and have proved instrumental as brand-building mechanisms. The instantaneous and easy-to-use nature of Chinese social media has meant that consumers flock to these platforms for immediate ‘buy/don’t buy’ advice from other consumers, to post product reviews and to seek product knowledge/advice from trusted opinion leaders.
It is recommended that prospective e-retailers who want to enter the Chinese market are aware of effective branding methods in this territory before launching. Certain imagery and techniques have been shown to resonate with Chinese consumers, and animals are frequently used as they are seen to convey certain messages and meanings, often representing esteemed values in the Chinese culture.
Where relevant, it may be a good idea for foreign retailers to attribute an animal to their marketing or branding based upon the message they are wishing to convey. The dragon, phoenix, unicorn, tortoise, crane and fish convey attributes such as vitality, strength, longevity, beauty, intelligence and versatility.
Companies should also consider that successful advertising messages can differ dramatically between cultures, with Chinese adverts often placing great emphasis on luxury and lifestyle enhancement. Traditional Chinese celebrations and festivals often attract the focus of advertising in China, as do ideas related to family and the dreams and interests of the younger generation. The high quality and performance of products is often emphasised and products have been known to perform well when they are endorsed or associated with a popular Chinese or international celebrity.
When considering their brand, companies should also take care to avoid images and concepts that may have negative connotations to Chinese consumers. In Chinese culture, the number 4 is poorly esteemed and the number 8 is regarded as lucky, as when spoken aloud they sound like ‘death’ and ‘wealth’ respectively. Businesses in China thus often avoid using the number 4 and actively seek to include the number 8 in their branding, promotional activities, pricing offers and phone numbers.
Developing an effective advertising and communications plan can be difficult given China’s vast consumer disparity. A company should make efforts to segment its consumer market so it can effectively target potential buyers. Establishing partnerships with Chinese distributors and agents can be a good idea, as many specialise in putting on informative marketing shows and events for a particular group of consumers. This is regarded as a very effective way of generating return on investment from marketing.
With the development of eCommerce and widespread technological advantages across the nation, companies targeting Chinese consumers are increasingly making use of online channels, social media and mobile apps to reach prospective customers. Offline channels, such as public relations and word of mouth are also proving themselves to be increasingly effective tools in establishing a merchant’s brand.
Any company entering China with limited resources is unlikely to have the budget required to display advertising campaigns through broadcast media and should instead embrace alternative methods, such as online channels. Regardless of budget, any foreign e-retailer seeking to launch into the Chinese digital market will have to decide upon the right mix of channels for their marketing messages.
When examining which method to select when marketing your online products, it often makes sense to examine the strategies currently acknowledged to be successful in China amongst both Chinese and international retailers.
Hylink Digital Marketing Research (HDMR)’s China Digital Marketing Report, published in 2014, surveyed staff in 30 different marketing organisations in China and gave insights into China’s digital marketing environment, ultimately concluding that Chinese advertisers on the whole have positive perceptions of digital marketing in the territory, with over half of those surveyed indicating that they are willing to try new techniques and methods.
The remaining sample instead indicated that they would discreetly choose established, more mature channels and methods. The overall attitude towards advertising in China is ultimately quite adventurous, however: no advertisers indicated that they would only maintain basic advertising or chose the ‘other’ option, demonstrating the importance of proactivity in the Chinese marketing climate.
When questioned about their budget changes, 73% of advertisers said they would increase their digital marketing budget in the coming year, whereas 17% reported that their budget would remain the same. None of the organisations surveyed reported that they would cut their budget.
Figure 1: Digital Marketing Tools Awareness in China
The chart below displays the usage of different marketing mechanisms.
Figure 2: Digital Marketing Tools Methods in China
Social marketing was clearly a popular marketing method amongst the organisations surveyed, with only 11% reporting that they seldom or never use this platform. Viral marketing, on the other hand, was significantly less popular, with 40% of respondents seldom using this method. Search engine marketing and content marketing were regarded as popular approaches and respondents labelled them as basic marketing methods.
With regard to marketers’ particular choices when it came to integrated digital marketing, the below graphic displays the most popular subcategories in 2014.
In terms of integrated digital marketing techniques, social, search and vertical marketing were reported as the most popular methods. Integrated digital marketing was a very popular marketing choice overall, with only 3% of respondents reporting that they never used it.
Overall, it is clear that online marketing tools such as social media platforms (e.g. WeChat), search engine optimisation and mobile advertising are developing and successful marketing techniques within China, benefiting from overall success and popular use. Marketing to specifically appeal to certain niche markets also seems to be achieving significant success.
Ultimately, China’s online advertising market is growing rapidly, achieving RMB 55.86 billion (USD 8.59 billion) in the third quarter of 2015, a quarter-on-quarter increase of 12% and a year-on-year growth rate of 40%. Spending on search engine optimisation represented the most significant share of China’s online advertising spend in the third quarter of 2015, representing 34.8%. This was followed by eCommerce ads (25.4%) and online display ads (15.8%). Baidu, Taobao and Tencent are the top 3 websites in terms of advertising revenue.
Figure 3: Chinese Advertisers’ Choices in Integrated Digital Marketing
Key to all digital marketing is developing an understanding of the local market. Whilst much of this will come with time, early areas to focus on include; understanding that China is a diverse market requiring a high degree of localisation; with massive mobile uptake, utilising rich media is expected and should be accessible on multiple devices and search; integrating search campaigns to include your presence - either a direct website or your marketplace presence.
This article provides a marketing overview of the China eCommerce market – we have produced a full country guide covering in-depth information on multiple aspects of trading into this territory including logistics, payments, legal framework and marketing.
By downloading this Country Guide, you agree to your email address being passed to this Country Guide sponsor.