China's social revolution

In five years social media and e-commerce have exploded as the channels by which hundreds of millions of China's newly connected citizens seek out and buy products.

"It would be very difficult for a company that didn't understand this technology landscape to really be successful in China."
Chris Bonsi, Chief Client Officer, TNS Asia Pacific

The numbers are staggering. China has a population of 1.36 billion of whom 1.24 billion are mobile subscribers (and mobile is the primary way Chinese access the internet). There are around 620 million internet users (and growing) with around 200 million online at any time.

Chinese millennials now spend six to seven hours a day on their devices, which is more time than they spend asleep. Typically, their device is the last thing they see at night and the first thing they see in the morning, says Chris Bonsi, of research and consulting company TNS in Shanghai.

China has become the world's largest and fastest growing e-commerce market - $US429 billion in 2013 vs $US298 billion in the US.

"I think it would be very difficult for a company that didn't understand this technology landscape to really be successful in China," Bonsi told a recent ANZ customer tour.

"We have several multinational clients who have been in China for over 20 years, and because they're late to understand this technology dynamic, their businesses are suffering in China."

The China technology landscape looks very different from the rest of the world.

Facebook, Twitter, Instagram, and anything related to Google, including Google+, Gmail, and YouTube are not available in China (although still available if you're using VPN).

Tactics to build a winning e-commerce strategy in China

While the Chinese social media landscape might look different to those in the West, many of the same rules apply for marketers.

  1. Have a clear strategic objective for your campaign. Avoid the "let's create a viral video" approach to social without really understanding the role of POEM (Paid, Owned, and Earned Media).
  2. Social can be cost-effective, but rarely succeeds with no investment. Most successful social campaigns are part of an integrated campaign and therefore require an appropriate amount of investment.
  3. 365 days of engagement > 360 degree campaigns.
  4. Content marketing is a powerful tool for increasing engagement but make sure your content is culturally relevant in China.
  5. Understand the Chinese consumer as people – understanding their needs, dreams, and aspirations will make it much easier to connect with them through social.

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This has created opportunities for domestic Chinese Internet companies including BaiduAlibaba, and Tencent (known as BAT). Baidu is the equivalent of Google for search; Alibaba is the equivalent of Amazon, and Tencent is like Facebook and Twitter combined.

"What's different about the China technology landscape is that in the West platforms such as Facebook are debundling apps, so they have apps for messaging, apps for sharing photos, and so on," says Bonsi.

"In China Tencent has developed WeChat which started out as a messaging platform but now has close to 500 million Chinese consumers using it daily.

The five social and e-commerce channels to watch for 2015-2016

  • Taobao (Alibaba's C2C marketplace)
  • TMall (Alibaba's B2C marketplace)
  • Jingdong (B2C marketplace)
  • Yihaodian (B2C marketplace acquired by Walmart)
  • WeChat (Leading messaging platform and growing digital ecosystem including social commerce)

"It has become an ecosystem. You can order a taxi, share photos, play games, buy financial products, and recently, they've introduced social commerce and brands such as L'Oreal have set up their own stores within WeChat."

The sheer weight of the market and enormous appetite for all things social has seen e-commerce in China surge ahead in different directions to the West.

Bonsi says one of the big mistakes multinationals make when they come to China is to look at e-commerce only as a sales channel.

Tapping social media in China – how it's done

How do you sell 10,000 six-packs of New Zealand apples in one hour? A clever social media campaign on Tmall's Weibo account that played on the popularity of Apple electronics showed how well a targeted, low-cost social media campaign could work.

On 6 May Weibo broke news of "Apple's mysterious new 2015 shock first launch". Those who clicked on the link weren't taken to a new Apple device, but a site for New Zealand Rose Queen Apples. According to the apple's specs were touted as "near-perfect symmetrical design, shocking the industry with a sweetness score of 1700, available in 180 G with the 'golden ratio' in your hand, speedy adaptation for both left and right-hand operation and Able Care service to solve usability concern".

Even after doubling the initial ¥19 ($NZ4.31) discounted price, six-pack sales reached 22,000 in the next 24 hours. Tmall eventually had to prematurely shut the promotion on May 8th as the operating store ran out of supply, according to New Zealand Trade and Enterprise.

For Chinese consumers, the opinions of other consumers posted on social media and e-commerce channels (the increasing convergence is creating what is known as "social commerce") carry a lot of weight when making their own purchase decisions.

"When you go to any of the e-commerce platforms there's a strong correlation between sales and the user ratings," says Bonsi.

"Right now the user ratings are higher for some Chinese brands than some multinational brands because the multinationals have assumed this is a sales channel and the marketing teams haven't focussed on e-commerce as a brand-building platform."

For new entrants to China, e-commerce provides an opportunity to build brand awareness for a comparatively low cost.

"In the past you'd have to go through a really complex distribution and wholesaler network to get your product on the shelves," says Bonsi. "But now many of our clients are actually looking at e-commerce as a cost-effective go-to-market strategy."

The infograhic on this page is also available as an accessible pdf

Stefan Herrick - Senior Manager External Communications, Corporate Affairs ANZ NZ. 

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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