How can you adapt in order to really make a connection with your Chinese audience? How do you build or refine your marketing strategy for the Chinese market? In this article, we’ll show you how!
As you may have heard before: the Chinese market is special. It’s not just the culture; the whole environment is unique. Building a marketing strategy is a learning process. Understanding the market you are targeting is the first, and therefore the most crucial step in the process.
Understanding the Chinese market is no easy task. However, they are some key facts you must know about the digital environment and the consumers that inhabit it.
As the West is increasingly coming to realize, the Chinese market is now digitalized, and marketers need to be aware of this fact when building a marketing strategy for China.
According to a January 2021 report by Hootsuite, 96.3% of the Chinese population owns a mobile phone. Around 1.61 billion mobile connections cover 111.8% of the population. On the other hand, only 50.2% of Chinese consumers own a computer. Therefore, it can be safely said that the Chinese market is primarily mobile.
About 70.4% of the Chinese population had used the Internet in December 2020, up from 64.5% in March 2020 - an increase in penetration of 5% in only 9 months! The Chinese market is clearly evolving fast, and becoming increasingly connected.
Also in 2020, digitally-enabled payment transactions reached a total of US$ 901.7 million, with digital ride-hailing services accounting for US$ 237.8 million, and online food delivery orders for US$ 410.8 million.
Nor is this trend restricted to urban areas. China has a significant rural population, representing 39% of the total, or 552 million people as recorded in 2019. Since 2014, rural areas have seen increases in internet users of 43%, reaching 285 million people in June 2020.
China counts 930.8 million active users on social media, an increase of 12.9% year-on-year. A typical Chinese user has 7.4 social media accounts on average, and is spending around 2 hours and 4 minutes per day on social media platforms. Social media is therefore an important part of the Chinese consumer journey.
In addition to spending more and more time on various platforms, users are searching for products and answers. In 2020, 34.3% of online search was conducted via social media.
WeChat is the most popular social media platform in China, boasting 1.21 billion active monthly users in November 2021, or 19.9% of the entire Chinese population. Each quarter, WeChat welcomes 7 million new active users.
WeChat – or Weixin in Chinese - is undisputedly the main platform in China. Over time, it has become more than a social media application. In 2011, it released its own payment app, navigation system, and various Mini Programs, and continues to evolve to this day. Tencent, the original developer of WeChat, has recently added Mini Stores and Live Streaming features to its existing line-up of services.
Sina Weibo is a microblogging website released in 2009 that garnered 511 million monthly active users in December 2020 and is currently experiencing annual growth of 14 million active users.
It is vital to understand Chinese consumers when preparing a marketing plan for China, although admittedly this is challenging. China is a growing economy, buoyed by a recent raise in wages and distinguished by a unique set of purchase drivers.
The average salary increase of a Chinese worker in 2020 was 3.6%, among the highest the world. During the last decade, Chinese consumers have seen a continuous increase in purchasing power and are increasing their spending levels accordingly. As recently as 10 years ago, most urban-dwelling Chinese consumers had only just enough money to cover their basic daily needs. The same households nowadays are among society’s well-to-do.
China as a whole is now an upper-middle-class country, which has experienced 400% overall increase in average household income between 2002 and 2012.
Therefore, the Chinese retail market is an attractive target for brands that are prepared to research how their preferences and tastes differ, and in particular the drivers of their purchasing behavior.
What influences Chinese people most when looking for products?
According to a KPMG report published in 2020 about purchasing behavior post Covid-19, Chinese consumers are mostly concerned with “value for money” when deciding to purchase goods or services (63%). In second place on the list of key influencing factors is “ease of purchase” (42%), closely followed by “trust in the brand” (41%) which they have developed over time.
Customer segmentation is the process of organizing customers into categories based by common characteristics. They are many different ways to segment, such as location, age, and income.
We chose to highlight 8 different consumer segments, grouped by habits and interest.
Millennials (i.e. those aged between 18 and 30 years old) account for more than 350 million Chinese consumers. They are therefore a significant force behind the Chinese economy, and they are growing - at a Compound Annual Growth Rate (CAGR) of 11%. In 2021, Millennials are expected to represent 69% of total consumption and, according to Goldman Sachs, their combined spending is expected to grow by US$ 3 trillion in the next decade
In other words, millennials are a very lucrative segment for marketers who can successfully target them.
Digitally savvy and attracted by luxury goods, Chinese Millennials are natural mobile shoppers. They are heavy users of online media, dividing their time between social apps, short video platforms, and mobile games. When making purchase decisions, they are strongly influenced by peer recommendations. They tend to put their trust in word-of-mouth marketing, including opinions expressed by influencers / KOLs via social media and livestreams.
In terms of the type of products that interest them, they are attracted by a healthy lifestyle pursuits and travel experiences, and have a preference for premium goods and services. Furthermore, they are looking for products that are personalized and have a sense of uniqueness to them.
Red, Douyin and Weibo are all platforms that can be used to communicate with Chinese Millennials.
According to Matthieu David-Experton, CEO at Daxue Consulting, while Gen Z is looking for “playfulness”, Millennials are more concerned with “authenticity”.
Generation Z refers to those born between between 1996 and 2010. Its members value freedom and flexibility. They are social media addicts and ultra-connected, are their habits are shaped by the technology they have grown up with. Gen Z is expected to represent 27% of the population by 2025.
Gen Z tend to spend most frequently on what interests and entertains them. They are influenced by their idols and KOLs, and love to try new products, and in particular niche products. They are major consumers of new skin-care and health solutions.
According to Kevin Yi, researcher at Alarice and Chozan, Gen Z consumers spend a large portion of their free time watching animations. They are therefore big fans of Japanese-style cartoons, and traditional Chinese designs with striking colors.
China’s “Silver-Haired” refers to seniors above the age of 50. These consumers are open to new technologies and have more leisure time to have experiences, build social connections and pursue new opportunities.
Most of them use social applications (64.7%), and as such they represent a fast-growing segment of internet users in China. They are mostly interested in purchasing home appliances, health supplements, travel, insurance and financial products.
Middle-aged men refers to those aged 30 and 50 years-old. Compared with their female counterparts, they have stronger preferences, and tend to be more curious about brands and products.
They are mainly interested in “3C” products (Computer, Communication and Consumer Electronics), home appliances, and auto accessories.
In Q1 of 2020, men between the ages of 36 and 45 were buying more cosmetic products than those in the 26-35 segment (55.6% versus 52.1%).
In China, women are responsible for ¾ of household purchasing decisions. In addition to being well-educated, they also have more personal and financial freedom than in former years. Therefore, these “Power Women” comprise a notable segment among the Chinese consumer base.
Over the last few years, Chinese parents have become less price-sensitive and have tended towards buying trendier products. This group represents 300 million active online users, and has a propensity for purchasing via e-commerce channels. Their main purchases are children’s clothing, food supplements, educational, high-tech, and fitness-related products.
The market for Pet Products is a growing one in China, and is increasing each year by 18.5%. In 2019, the value of the Pet Product market reached 202.4 billion RMB, and is expected to reach 472.3 billion RMB in 2023.
Pet owners are responsive to products that have been “showcased” by other pet owners with their own animals. They are willing to spend money to provide the best for their pets, even to the point of purchasing items that would be considered ‘luxury’.
70% of new Taobao Users are coming from Tier-3 cities and below, with the main consumer group those born after 1995. These consumers are mainly interested in electric appliances, such as entertainment products.
This group is also called the “Xiachen” market (下沉市场).
Single people are buying more high-quality products than those in a relationship (75% versus 65%). They are also in general more willing to spend on recreational & outdoors activities, and eating out. Happy Singles are willing to pay for products in the upper quality range.
Having a good understanding of the Chinese audience and its various groups is a vital step in planning about your strategy for China and building your brand’s story.
Converting a Chinese audience into customers is a funnel process:
According to a Hootsuite report from January 2021, Chinese consumers mostly discover new brands through word-of-mouth recommendations (24%), internet search (23.2%), brand or product websites, television advertisements (21.5%), consumer review websites (21.4%) and recommendations or comments on social media (21.1%).
When researching brands they already know, Chinese consumers typically use search engines (36.1%), social networks (34.3%), product and brand websites (31.5%), consumer reviews (31.4%) and mobile apps (27.4%).
As previously pointed out, the younger generations are technology-oriented and social media lovers. They acquire awareness brands via social media and are influenced by KOLs.
Therefore, one way for brands to reach them is to develop a presence on social media by regularly posting quality content, curated for this specific audience.
Gen Z and Millennials tend to look for personalized content, unique products and original stories. They are also big fans of anime.
Stella Zhan, researcher at Chozan and Alarice, recommends that firms write “stories that resonate with [your audience], related to trending topics and use social media to talk to customers” and “catch their attention with vivid visual content”.
As this generation is highly visual and focused on experiences, inbound marketing is speaking them quite loudly.
Inbound marketing is an approach that attracts customers by creating targeted content and tailored experiences.
The best way to create an inbound marketing strategy for a Chinese audience is to first plan your content in advance and then produce amazing content!
According to Chozan, the most popular content is:
Brands need to create more immersive experiences for users. This is done by using interactive elements, allowing users to be “inside the scene”. Short videos, amazing visuals, interactive content, and also emotional content – all help to draw the viewer in. If the content is timely and / or topical, so much the better.
According to Investopedia, “Social Commerce” is defined as using networking websites, such as Facebook, Instagram, and Twitter, as vehicles to promote and sell products and services.
According to Chozan, Social Commerce is very popular in China; 33% of online shoppers spend at least some of their time on social. 50% of product are seen for the first time on social media, with 48% of consumers becoming interested in the product, and 26% proceeding to purchase it.
Apparel, food and makeup are the top products that benefit from social media promotion.
At Duhno, we help you define the strategy you should adopt for your Chinese audience. We create memorable stories and designs to make your brand’s character famous, and prepare him/her for licensing.
Sources: Numbers without links are taken from the last Chozan report about Digital Marketing Strategies in China.