Jenny Chan 陳詠欣
Jun 12, 2017

Q&A: The factors that make China a unique market

We asked four in-market experts for their insights into Chinese consumers.

Q&A: The factors that make China a unique market

We asked four in-market experts for their insights into Chinese consumers.

Participants:

  • Peter Petermann, chief strategy officer, MediaCom China
  • Henry Shen, head of strategy, McCann Health Shanghai
  • Helene Wei Huber, planner, McCann Worldwide Shanghai
  • Bryce Whitwam, CEO, Wunderman China

What distinguishes the Chinese consumer market from others? What are the most interesting trends in China that make its consumer market unique in Asia?

Petermann: The Chinese consumer market is the most dynamic, fastest changing market in Asia. The Chinese consumer is the most digitised consumer in the world and the companies innovating the digital space in China (Baidu, Alibaba, Tencent and others) are more innovative and have more investment power than most other tech companies in the world. As a result, Chinese consumers are much more willing to try and adopt new technologies and new digital services. And because of the sheer size of the market innovations that would remain a mere fad elsewhere quickly evolve into sustainable business models in China. Social commerce, live streaming and e-cash (Alipay, WeChat wallet) are examples where China is significantly ahead of the curve – and these will have a massive impact on how brands will be sold in the future, both online and offline.

Shen/Huber: Chinese consumers are very open-minded. In the past 10 years, they’ve been exposed to more than they have in the past fifty combined. No one else is as excited to learn about other cultures as the Chinese. Eager to try new things, the Chinese are always on the lookout for what’s new, whether it’s a brand, an app, or the next getaway travel destination.

However, the eagerness to learn and experience means trends come and go in China at an unparalleled pace. What’s cool today is old tomorrow. For example, 2016 was the year of livestreaming. Apps like YingKe and HuaJiao created their own livestreaming economy that provided live-streamers steady income. But now, just a year later, livestreaming is losing its novelty appeal in China compared to the US, where livestreaming is just beginning. Similarly, the novelty of WeChat ads has faded in popularity this past year.

That said, foreign brands looking to enter the market should not underestimate the power of WeChat. WeChat encompasses consumers’ lives in a way that’s completely unique to China. It is about working out a relevant way to be a part of the WeChat ecosystem. As a marketer, you have to keep your ear to the ground to know what’s coming next and remember that the Chinese market is not homogenous – with more than official 6 tiers (ways of classifying cities) - consumer behaviour, income levels and local trends vary enormously.

Whitwam: The Chinese mobile revolution has increased the importance of the customer experience.  Chinese consumers now expect brands avail themselves within the digital ecosystem and deliver a seamless journey across retail, social and e-commerce touchpoints. 

The luxury market is now not just judged by in-store personalized service but also by convenience outside of the shop.  Convenience, in fact, defines the customer journey for all brands: how many clicks am I away from purchase? It’s no wonder that technology brands like Tencent and Alibaba rank highly in this year’s WPP BrandZ study because Chinese consumers see them as delivering a superior customer experience. Wunderman created the Su Misura Experience last year for Ermenegildo Zegna that delivered a luxury experience within a WeChat environment. Customers entered a bespoke platform that enabled them to track the production processes of their handmade Italian suits. Brands that can use technology to effectively connect customer touchpoints are going to win. Every customer experience is a marketing experience. That’s why a strong collaboration between sales and marketing teams has never been so important in China.

What are some of the cultural issues brands need to be aware of when marketing in China?

Petermann: Every time you attempt to take an established brand from one culture to another you need to be aware of the cultural nuances, not just in China but anywhere in the world. This begins with a brand's choice in casting and certainly goes beyond executional aspects such as color, music or editing. Additionally, there translating brand names and slogans into Chinese is a huge challenge: very often a simple and direct translation is not possible and when you do translate brand names you have to be aware that Chinese characters may have many hidden meanings and can potentially put consumers off. One infamous example is Coca Cola: when they first introduced the brand in China they used the name "Ke-Kou-Ke-La" which literally translates to "bite the wax tadpole". 

As a foreigner, I have noticed that Chinese advertising seems to be a lot more direct (or even aggressive) than what I am normally accustomed to – almost as if the clutter here seems to be even harder to break through. So you see KOLs very adamantly holding the product into the camera, push-selling it, something which both the KOL and the consumer would not appreciate back home. But we are seeing a change in China's younger audiences: there seems to be a shift towards more sophisticated, more authentic advertising. I am not able to prove this with numbers but I have a feeling that Chinese consumers are getting tired of in-your-face ads. They no longer want to be "yelled at", they want to be "talked with".

Shen/Huber: Most brands in China use influencers (or KOLs) to appeal to Chinese consumers. Influencers can be foreign or local. However, influencers pose two challenges.

First, foreign brands, particularly those who aren’t fully aware of Chinese consumers’ tastes, need to investigate what their core demographic thinks of a certain influencer or KOL before partnering with them. Just because one person has a lot of followers, does not mean they are suitable for your brand or even influential.

Second, brands that select foreign influencers must also be careful what the person says or does outside of the brand. If a foreign celebrity or spokesperson unintentionally posts a photo to social media that touches a sensitive, perhaps political topic, Chinese netizens will quickly bash that person on social media, and the brand value you hoped to gain will be lost. Remember that the impact of transgressions on sensitive topics can be severe and long-lasting. For example, after shouting “Tibet, Tibet” in midst of her song “Declare Independence” almost a decade ago, Björk’s name is still a taboo in China.

Whitwam: The one key insight in China that brands need to be aware of when marketing in China is that Chinese people are frequently in fear of being ripped off from brands, some of whom have been dishonest to them in one form or another in the past via false product claims. 

Trust is a very short commodity here and is probably a reason people switch brands here more than every other market. It’s probably not a surprise that Chinese consumers react more positively to online communications using influencers or key opinion leaders than most other markets. 

Livestreaming product demos are the rage these days, and according to the recent Mary Meeker report for Kleiner Perkins on China internet trends, livestreaming’s estimated revenue per hour is twice of television. Further down the funnel, friends and family in WeChat groups also provide product recommendations that often go under the radar of conventional advertising.

Is there anything advertisers need to avoid in China?

Petermann: Generally speaking, firstly I would say that humor is something that rarely translates, especially in China. Snickers is a good example for this. The brand's quirky "You're not you when you're hungry" works just about everywhere else in the world. Although I imagine that the insight is very true here, too, the humor and irreverence of this ad is simply lost on Chinese consumers. Secondly, Chinese consumers (and the Chinese government) are very sensitive when it comes to political issues. Where satire and political commentary may be acceptable in other markets, China is one that brands need to stay clear of anything controversial. And lastly, we strongly recommend brands not to try to reinvent the wheel when it comes to digital infrastructure. Baidu, Alibaba and Tencent already have many apps and utilities in place and it would be a waste of resources for brands to try to create their own version of these.

Shen/Huber: In the whole of Greater China, advertisers should avoid political issues. Social issues, on the other hand, are a grey area. From the perspective of a global brand, SK-II’s ‘Leftover Women’ campaign was a runaway success. The campaign drove rapid awareness because everyone everywhere was talking about it. However, many local Chinese responded negatively to the ad. That doesn’t mean what SK-II did was wrong, but it’s a fine line.

Whitwam: There are so many things to avoid here.  Since arriving here in 2005 I have often been asked this question and my usual response is to avoid spreading your branding, marketing and distribution resources too thinly and consider focusing on a certain group or region of the country to build your success.  Alibaba has revolutionized distribution in China by allowing access to a larger portion of the country for a fraction of the cost, but that doesn’t mean that there are massive cost savings by relying on e-commerce to fill in the gaps.  China is still very much a “pay to play” market and you’re not going to get noticed through organic search. It’s therefore better to pick a focus and build your empire from there.

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