As a country that has wholeheartedly embraced online shopping, China’s e-commerce market has become the number-one destination for foreign brands looking for new opportunities as part of their wider growth strategy.
The opportunities for global brands to engage with new demographics across the length and breadth of one of the most connected nations on the planet is often too good to resist – which is why we’ve launched initiatives like XploreChina to help those brands forge these new connections.
We’d like to highlight some of the recent changes in the Chinese ecommerce market and how you, as a foreign brand, can adapt to them to become a success.
An overview of the Chinese ecommerce market
China’s strength when it comes to e-commerce is laid bare in one single statistic; that projected e-commerce sales in China are set to eclipse both the United States and Europe by 2024, growing by 80% compared against the other territories’ 53% and 55% respectively.
And while that may only be projected growth, current data confirms China’s digital purchasing power. China’s digital economy accounted for over a third of the country’s GDP in 2019, with more than 710 million people shopping online – the largest digital buyer population in the world.
China’s digital companies have also worked incredibly hard on making their shopping experiences as personal and as seamless as possible, and have also heavily invested in producing Key Opinion Leader (KOL)-led social media experiences that dramatically improve product sales.
On the ground and that hard work is paying off, helping China’s tech leaders grow at a fast pace and stay at the forefront of the blossoming social commerce scene.
Alibaba’s recent financial results for June Quarter 2020 have also exceeded expectations, driven largely by its e-commerce offerings. Similarly, short-form video platforms in China have been joining in the force to boost the m-commerce prosperity, with Douyin announcing a partnership with one of China’s largest retailers, Suning.com, and Kuaishou struck a lucrative social commerce partnership with JD.com.
With socially-led mobile experiences helping to drive China’s retail e-commerce spend by 27.3% to $1.935 trillion, accounting for 36.6% of total retail sales in 2019, China isn’t only attractive right now for foreign brands but will continue to be for the foreseeable future.
China leads the world in m-commerce
China’s incredible e-commerce growth has, by and large, been driven by mobile.
China is also a truly mobile-first nation, and has been since 2015 when, for the first time in its history, more Chinese consumers made purchases through their phones than on their computers.
Since then, China’s citizens have fully embraced m-commerce, with projections expecting m-commerce to account for approximately three-quarters of the country’s total e-commerce spend this year – again, way ahead of competing international regions.
The pandemic and associated lockdowns across China earlier in the year also saw shoppers old and new invest their time in m-commerce, with many converting to m-commerce full-time as a result.
The rise of KOL culture has also seen younger consumers embrace m-commerce in China and has been a massive social revenue driver. The KOL marketing industry is set to hit $15 billion by 2022. 89% of businesses say KOL marketing provides a strong ROI, while 43% of China’s Gen Z consumers follow KOLs to guide their purchasing decisions.
Find out more about the benefits of KOL marketing and how working with an influencer can improve your brand reach by downloading our ebook.
The case of Li Jiaqi, China’s ‘Lipstick King’, is a great introduction to the power of KOLs and how social commerce works. When Li worked with a renowned Japanese skincare brand to help promote their products, he managed to attract close to 17 million live stream views and get the brand a huge amount of targeted coverage.
The result is Chinese consumers skipping physical and online shopping experiences entirely, instead heading straight to their mobiles whenever they need to order fast food, buy groceries and more.
A great example of this comes from Chinese e-commerce company Meituan. A giant in the sector, it’s a mobile food delivery app that serves approximately 600 million customers in China. During the pandemic in China, Meituan reported an incredible 400% increase in demand for online groceries.
How can foreign brands join China’s m-commerce revolution?
One way for foreign brands to enter China is to partner with a larger entity to give them greater market access.
A lot of foreign brands have similarly partnered with China’s leading m-commerce companies to get in front of new mobile markets in the region. Alibaba’s Tmall is one of the weapons of choice for this strategy, especially for western fashion brands looking to make an impact.
First, a word on why Alibaba is so popular. It’s an m-commerce behemoth, with the company accounting for approximately 62% of China’s e-commerce market.
Tmall is just one of Alibaba’s success stories; the B2C platform/app that provides personally customised stores for consumers, brand narrative opportunities, engaging live streaming promotions and other content-led mobile shopping experiences for users.
Burberry and Michael Kors are just two luxury fashion brands who have partnered with Tmall to reach out to new customers in creative ways.
Little wonder why they chose Tmall, too. Luxury sales on the platform grew 46% in the 12 months to June 2018, with the number of ‘luxury’ shoppers growing 36% in the same period. Luxury brands have seen where the market is and have partnered with a firm who will put them front and centre.
Sticking with Burberry, they partnered with KOL Yvonne Ching during the pandemic, who livestreamed her experience in their Shanghai store on Tmall. Most of the products she featured sold out within an hour, with the stream generating 1.4 million views at the time.
The pros and cons of entering China’s m-commerce market
Burberry’s experiences with Tmall make the process seem incredibly easy. Find a digital ‘supplier’ who has access to your market, partner with them, produce content and reap the rewards.
Only, entering China’s mobile market is significantly more difficult than that.
It can be an incredibly challenging process to enter the Chinese market, with companies of all shapes and sizes having to adhere to incredibly strict rules and regulations that they may not have encountered before in their country of origin.
Compliance is key in China; not just in what you sell but how you sell it. That not only goes for your brand, but the way you advertise digitally and the channels you choose to advertise on.
For instance, traditional western e-commerce strategies such as email marketing are nowhere near as effective in China. You have to explore and research to find the right mobile-first channels your audience uses and adapt accordingly.
Our earlier Li Jiaqi case study is a great example of this, and the highly-visual, strong returns you can see if you plan properly. Local mobile and social consumption habits are likely your best way to reach out to your target market; how is your regional audience using WeChat, Douyin, Red, and other platforms?
Which one is best for you? Also, how do you even begin to navigate the language and cultural barriers to partner with a native company the size of Alibaba?
China is no different to any market, too. Customers have to be entertained, engaged with properly, and the brand has to keep a strong eye on cultural trends to be successful.
And, like any other mobile market, Chinese consumers’ tastes are constantly evolving. Recently, for instance, ‘Haitao’ has become popular – the practice of buying from overseas platforms and shopping beyond the border, even if it’s more expensive and takes longer for a purchase to arrive.
Haitao brought along with it ‘Daigou’; shoppers who would buy luxury products in bulk abroad and sell them on at a higher price in China, getting rich in the process.
Coronavirus has put a halt to a lot of Daigou though thanks to slower international deliveries and travel restrictions. Also, with those luxury brands now operating through platforms like Tmall, shoppers get an increased sense of trust that they’re dealing directly with the brand and getting a quality product.
How Nativex helps brands make it big in China
A trusted company with experience of helping foreign companies enter the Chinese market can be extremely helpful, no matter how much or little experience you may have with your vertical and market of choice.
Because, as the stats suggest, the benefits of making it in China are enormous. Chinese m-commerce strategies typically have low maintenance and UA costs; foreign brands of any type have enormous potential in the market; they can take advantage of China’s amazing commerce-friendly logistics, and more.
Nativex partners with brands across the world to help them discover and identify China’s cultural nuances, how their target market makes purchases, overcome the language barrier and build creative campaigns on the mobile channels where their audience spends its time.
Nativex is a certified ad agency and leading global media buying network, with partnerships with the largest and widest-reaching media companies around the world.
Combined with our intelligent tools, our years of experience establishing brands in the Chinese market, our foresight when it comes to shopping and cultural trends, our extensive knowledge of China’s e-commerce rules and regulations, and our relationships with Chinese tech companies, we can help brands make serious inroads in the Chinese mobile market.
Brands that work now to get a foothold in China and produce creative, engaging mobile shopping solutions that are built specifically for their target market could see potentially huge returns as part of their wider growth strategy.
Let the Nativex team show you how. If you’d like to enter the Chinese mobile market and make a serious impact, we’d love to hear from you. Contact Nativex today to find out more.