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Tmall or other, where to start in China

It’s easier now than ever before for brands to market their products on the Chinese market, yet the diverse and granular local digital eco-system can be confusing and even off-putting. So where to start?

Over the last decade, the influx of international brands targeting the Chinese market has accelerated exponentially. Although travel restrictions due to the covid 19 pandemic slowed the entrance of companies looking to set up a local office, those same restrictions were counterbalanced with an easing on sales of imported products through cross-border e-commerce (CBEC), which opened up the gates for thousands of new brands to enter the market each year.

Furthermore, since late 2021, the Chinese government has been cracking down on monopolistic practices of e-commerce giants such as Alibaba (Tmall), Tencent (WeChat) and Jingdong which now offers small platforms and private e-commerce channels, like own .cn domains or WeChat Mini programs a breakthrough opportunity to gain consumers attention.

Yet despite the increased accessibility for international brands to enter the China market, the p

ercentage of brands that manage to operate at a profit continues to drop. Our data suggest that about 65% of all brands operating on Tmall weren’t able to turn a profit in 2021, the diagnosis is clear, brands struggle to differentiate themselves as they invest in outdated strategies that don’t effectively enable them to connect to with consumers.

The main issue that brands are struggling with is relying on partners or local teams that reject the notion of branded e-commerce well after it’s become well established in China. In early years, brand differentiation was not essential as the choice of brands was limited consumers didn’t have the luxury of the choice, but that has changed. As of 2021 there were over 360,000 brand stores on Tmall alone. Differentiation is key.

(Source: Visual China)

First thing that brands need to remember is that developing a sales strategy should follow the same process as in any other market. It’s tempting to lean into a specific platform and invest into a one-channel strategy, after all this is what platforms want you to do and it’s what a lot of agency will sell you. However you need to think about the strategy as you would any other market, take a step back and consider;

  1. How do you want to communicate your brand?

  2. Who is your clientele?

  3. What materials are available for you to communicate?

  4. Where will your consumers will be most receptive to said communications?

A) How do you want to communicate your brand?

Consider brand values; localise those that work for the Chinese market, exclude those that do not and adapt where is necessary.

B) Who is your clientele?

For the vast majority or brands, demographic profiles won’t work, the Chinese populous is too large and too diverse. The way to effectively profile your audience is psycographically; who is your target audience, what are their wants and needs and how to they differentiate between brands?

C) What materials are available for you to communicate?

Judged your materials for whether they communicate your localised values and whether they will resonate with your target audience. Local content is shown to engage 3 times better than global one.

D) Where will your consumers will be most receptive to said communications?

Curate your touch points early on and forget the vanity metrics that large platforms offer.

Each channel needs to be considered specifically for this unique market, and that your consumer touch points are also going to vary from category to category.

For example, if you were a niche outdoor brand focused on elite athletes, a campaign on Xiaohongshu (RED) is unlikely to yield positive results. Xiaohongshu is a platform mainly centred around fashion, cosmetics and urban lifestyle, and their core audience is your female clients. According to Statista, Xiaohongshu has about 158 million monthly active users, with female users accounting for 70 percent.

Which leads on how to invest in communications; the system from the brand perspective is geared towards encouraging amplification to be the primary point of investment, which worked when consumers were starved for content, but as more brands have come to market it has become more important to differentiate the content.

Consequently, although it’s often easier to spend money on paid media or KOL campaigns, brands should first invest in making sure that the content is interesting for the local target audience. Only after you have something that is going to work well for the market should you invest in amplification, again though depending on the type of content different amplification will have a different effect. Some content is better suited to amplification by advertising and others via endorsement.

The main traps to avoid are thinking that you’re going to come in and be able to copy-paste strategies and have an easy time recycling messaging. China is really its own market and requires its own strategy.

(Chinese top KOL Li jiaqi)

Work with a partner or do your research, the important thing to winning in China is to start preparing.

by David Ries 2022

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