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| Shaun Rein |
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| Mark Schaub |
There is a clear trend in China away from animal testing. This is due mainly to changing sentiment on the part of Chinese consumers. Local authorities across China are developing cruelty-free programs to entice international brands into China.
However, the system in China tends to allow authorities broad discretions. Accordingly, those awaiting a clear legal prohibition across the whole country may be waiting a long time.
However, brands torn between revenue and conscience may consider whether cross border e-commerce or producing locally are possible solutions. Any brand with great ambitions for China will likely need to pursue domestic production. In addition, domestic production may allow brands to tweak products for Chinese consumer trends. The risk in this regard is that product localization may not receive a warm welcome from Chinese consumers. Many still have great enthusiasm for imported cosmetics. This is especially the case in respect of luxury or organic cosmetics brands.More at the China Law Insight.
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China is one of the world's biggest markets for luxury goods, and Chinese shoppers at home and abroad make up almost a third of purchases globally, according to McKinsey.
As the value of China's currency has declined, "consumers just haven't been buying as much overseas this year," said Ben Cavender, an analyst at China Market Research.The lackluster results come at a turbulent time for Prada. The Italian fashion house's stock price has fallen more than 36% over the last year...
Analysts say that Prada has fallen behind its competitors. They say it hasn't invested enough to create a unique experience for customers and hasn't rolled out new products fast enough to create buzz.
The company is working to put this right, but it has some catching up to do to compete with brands like Gucci, which is owned by French luxury group Kering (KER).
"Both Kering and LVMH have been able to invest very heavily into store renovations, visual merchandising, and digital strategy in China which has made it easier for them to generate mainland China sales," said Cavender. "Prada was behind the curve."...
Prada has made some inroads over the last year. Cavender notes that the company "has been more aggressive with product launches," and it recently relaunched a website for one of its most popular brands, Miu Miu, in Europe.
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| Ashley Dudarenok |
Dudarenok explains that it is important for brands to remember that not every channel is for every brand. Although it’s a good idea to ensure as broad a coverage as possible, marketers will need to zoom in on a few specific channels especially if budgets are tight. For example, in addition to Weibo and WeChat, eCommerce brands can register accounts on Little Red Book and Douyin. Moreover, local brick-and-mortar stores can establish a presence on group-buying platform Dianping. Overseas finance brands can open accounts on Xueqiu and educational institutions can choose Zhihu as well.
“These are just broad examples, however, and you’ll need expert advice to help you understand which channels are worth investing in,” she said.
Dudarenok added that while Chinese people love big brands, gaining their love alone is not enough. It’s important to understand the Chinese market and meet the needs of Chinese consumers.
“Take a close look and adjust your brand positioning and product features before entering the Chinese market. For example, the post-90s and post-00s generations are the driving force behind apparel retail today. For foreign fashion brands targeting the middle-class or mature women, they may need to change to a younger, fresher look for Chinese consumers,” she explains.More at Marketing-interactive.
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| Ben Cavender |
Crossover retail or brands building cooperation with each other for new products is the new buzzword for companies looking to gain an edge in China's rapidly changing retail marketplace.
New crossover products that have made waves recently include a creamy candy shaped lip balm infused with White Rabbit creamy candy, a bottle of pink perfume jointly developed by baijiu maker Luzhou Laojiao, and a paprika lipstick from fast food chain Zhouheiya whose signature product is spicy duck necks. The lipsticks launched by US soft drink brand Coca-Cola and South Korean makeup brand Face Shop have the smell of Coca-Cola.
"There is definitely a broader trend toward brand collaboration happening globally and especially in China," said Ben Cavender, principal of Shanghai-based China Market Research Group (CMR). It allows brands to connect with a broader group of consumers and imbibes a feeling of nostalgia, he said.
Millennials, or those people born after 1980, have been the face of the crossover shopping.
For many like Dong Biyong, a millennial shopper, the crossover products are fond remembrances of her childhood. "I was extremely upset after I failed to get the creamy lip balm on the debut day, but luckily enough could get some later," said Dong.
She was referring to the lip balm launched by White Rabbit creamy candy and Maxam, a brand owned by cosmetics maker Shanghai Jahwa...
CMR's Cavender said the crossover trend has not necessarily been just with cosmetics, but also with apparel brands. An example in this regard is the streetwear brand Supreme doing collaborations with Louis Vuitton.
Regardless of the specific crossover product category, analysts suggest there are challenges for brands in seeking an alternative product other than their specialty.
"Quite a few crossover products have been launched. But not all of them can be termed successful," said Jin Qiaoying, research director of the beauty and personal care sector at Mintel China.
"Part of the challenge is in making the product meaningful to consumers," said Cavender. If consumers don't have affection for both brands they are unlikely to buy, so there has to be good brand synergy and retailers need to understand their target customer well, he added.More in the China Daily.
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| Shaun Rein |
The Palace Museum’s brand management was chaotic and would benefit from marketing and brand professionals, said Shaun Rein, the managing director of China Market Research Group.
More in the South China Morning Post.“When you think of The Metropolitan Museum of Art [in New York], you know that the quality will be pretty good and authentic. But when it comes to the Forbidden City, we really don’t know what the position is,” he added.
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| Shaun Rein |
The Italian luxury fashion house apologized and said both accounts had been hacked. "We have nothing but respect for China and the people of China," it wrote.
The apology was too late to save a major extravaganza in Shanghai that Dolce&Gabbana had billed as one of its biggest shows ever outside of Italy.
Major Chinese celebrities threatened to boycott the event, which had been scheduled for Wednesday night, and the company finally called it off. Actress Zhang Ziyi, who starred in "Crouching Tiger, Hidden Dragon," said that the Italian brand had "disgraced itself." An analyst said the bad publicity will have a lasting effect.
"It's the kiss of death for Dolce&Gabbana," said Shaun Rein, founder and managing director of China Market Research Group in Shanghai. "I expect them to have a real tough time over the next six to 12 months."
The three promotional videos that led to the Instagram fiasco showed a Chinese woman using chopsticks to eat pizza and other Italian food. Many in China called them racist and full of outdated stereotypes. The videos were previously deleted from the company's account on Weibo, a Chinese version of Twitter.
Rein said it's a big mistake when westerners come up with creative content but don't understand how the campaigns will be received by Chinese consumers.
He noted a trend of rising nationalism in China. "So if you, as a western brand, do anything that looks like you are mocking or making fun of Chinese culture, that's a big no-no," he said.More at AP.
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| Ashley Dudarenok |
Brands are starting to reap more success from working with self-made bloggers, converting their own fan numbers into influence with brands.
For instance, counting on her over 3 million followers on Weibo and 4.5 million fans on WeChat, Fan Yimin, who is better known by her online avatar Becky Li, helped sell 100 Mini Cooper Countryman cars within five minutes via her WeChat post last year.
She is a role model to a generation of digital natives who have established viable careers as social media "influencers", and found fame and fortune solely by posting blogs and sharing their preferences online.
The power of word of mouth is one important reason for blogger success from the cultural perspective, according to Ashley Galina Dudarenok, founder of social media agency Alarice and a veteran social media expert.
More at the China Daily."Chinese customers have very deep trust in key opinion leaders (or KOLs) and this psychological bond can be partially explained by the pseudo-intimacy created by social media," she said. "Social media make you feel like influencers are friends as you know who they are in real life, thanks to the details of their daily lives shared through Weibo, WeChat and live streaming apps."
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| Tom Doctoroff |
According to the 2018 China Brand Relevance Index™ (BRI) survey conducted by Prophet, a global brand and marketing consultancy, Chinese consumers have become more strategic in their purchase. They increasingly value meaningful and tangible innovations of home-grown Chinese brands and appreciate enriched experience through content.
Tom Doctoroff, Chief Cultural Officer at Prophet said: "Chinese consumers are becoming increasingly sophisticated, actively seeking products and services that provide substance, innovative experience and belongingness. Over the years, we have seen a growing number of brands – both domestic and international – striving to tap into the local market and this trend will be here to stay. To win the hearts of Chinese consumers, brands should be built upon in-depth consumer insights that help boost their relevance to Chinese consumers."More at the Market Business Insider.
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| Ashley Dudarenok |
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| Ashley Dudarenok |
Do brands need to be on marketplaces in China? Why?
Yes. Tmall and JD are too large to ignore, but there are other, specialty marketplaces that may be a better fit for your brand. Chinese consumers prefer these websites to the official direct to consumer website for most brands.
What are the benefits of working with a marketplace?
You have access to a large consumer base. Being exposed to a large consumer base helps brands to gain more attention than was previously possible.
What are the challenges of being on a marketplace? How do you overcome them?
It is extremely competitive on the big marketplaces so there is no organic traffic. You’ll need to spend about 20-30% of your revenue on advertising. It is extremely competitive on the marketplaces. It’s important to test to make sure that you will have the volumes to justify the cost. Experiment with social media and collaborate with key opinion leaders to see if there is demand for your product. Start with a small marketplace to see how volumes are growing enough to justify a presence on the larger marketplaces.
What are your metrics for gauging success on Chinese marketplaces?
There are two categories for metrics: Success: usage, bounce rate, transaction metrics (products sold, number of customers) and business metrics (gross merchandise value, customer acquisition costs, and customer lifetime value). User satisfaction: The marketplaces are strict about ensuring a good customer experience. You need to be under a 7% refund rate and a 4% dispute rate.
What are the organizational challenges brands face?
It’s mostly European and American brands that have organizational challenges. The brands think that they can sell the same way in China as they do in their home markets. It’s not true. You need to adjust product lines, brand positioning, and customer activation strategies appropriately. It’s also important to provide customer service around the clock. As a result, many brands are underfunded on Chinese marketplaces.More at Euromonitor.
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| Andy Mok |
Apple has now become the first-ever one-trillion-U.S.-dollar publicly listed American company. But with a trade war ratcheting up between China and the United States for over a month now, and the Chinese market being vital to Apple, will the company get away intact?
According to Andy Mok, founder of Red Pagoda Resources in Beijing, any iconic American brands will be concerned about China-U.S. trade tensions, because they are very visible symbols and could easily become collateral damage. But he pointed out that it's the consumer who will finally bear the price.
More at CGTN."Apple’s unique position is that it’s shown their customers are very price insensitive that they can get away with charging 800 dollars, 900 dollars, even 1,000 dollars for their smartphone. So I think Tim Cook is very right in saying that this is an attack on the consumer, because I think they will and would be able to successfully pass that through to the final consumer," Mok said during a discussion on CGTN's World Insight with Tian Wei.
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| Tom Doctoroff |
Social+ apps have also gained traction because Chinese tend to be more expressive and open online compared to in person due to the strong influence of Confucian values that minimise individualism in favour of the collective good, according to Tom Doctoroff, chief cultural insights officer at branding and marketing consultancy Prophet.
“The Chinese often generate social currency through their activities and online persona. The online world is a place where you can project your identity safely, and so there is a greater amount of expressive liberation happening online in China relative to other countries,” he said.
As China continues to prosper and its middle class becomes more affluent, many Chinese want their interests or material possessions to reflect that they are “sophisticated and worldly”, so many are happy to share their personal interests or purchases with others online, he said.
More in the South China Morning Post.“I call it pride commerce, where there is the idea that you are what you buy … and that sharing your interests is a way to make your identity stronger,” Doctoroff said.
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| Tom Doctoroff |
But, once anger abates, normalcy returns. Chinese consumers are even more pragmatic than nationalistic. Superior value always wins the day.
That said, there is no room for complacency.
The best armor is a compelling and well-defined brand purpose, a consistent long-term relationship between consumer and brand that underpins all subsequent engagement with that brand. It articulates a brand’s calling and how it contributes to consumers’ lives.
SK-II overcame its scandal by elevating the brand’s purpose from functional anti-aging to an emotive “power to change your destiny.” It resolved a conflict between women’s desire to both conform to conventional standards of beauty and escape the confines of societal expectations. The brand’s efforts were multidimensional. For example, it created a social movement to arm “left behinds” – unmarried women over the age of 27 – with the confidence to be beautiful at any age.
Brands must also be “customer obsessed”.
In an era of consumer empowerment fueled by technology, experience is king. From a delivery app that reveals courier location to facial recognition that generates tailored menu recommendations, KFC occupies a high ground of “seamless personalisation” within the quick service restaurant category.
Starbucks has overcome media brouhahas about tainted meat and price gouging. But business is booming – there are more than 3,000 stores across the PRC – because the brand offers inspired customer experience, not just coffee.More in Mumbrella Asia.
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| Shaun Rein |
Q. One of the key arguments in your book, The War for China’s Wallet, is that Chinese consumers can be mobilized to reward or punish brands based on a country’s relationship with China. The most striking example recently has been South Korea. How worried should brands be about this trend?
A. Brands need to be very worried. They need to understand the geo-political situation better now than at any time before. Five, ten years ago, you basically had to understand: what did the Chinese consumer want, what types of products or services, what’s the right marketing communications strategy? But now, it’s very clear that China is using its economic wallet and its muscle to reward and punish other countries—and, increasingly, companies—to ensure that they adhere to its political wants.
Q. What practical measures can brands take to protect themselves from this?
A. It’s not easy, frankly. I think there are a couple of things. They can, first and foremost, show from the very beginning that they’re friends of China. In the book, I used the example of Yum! Brands— KFC. They have always shown the everyday Chinese people that they respect the culture, respect the people. And they have done it by creating egg-and-milk food programs for poor schoolchildren throughout the country. That’s really important, because when there was South China Sea tension a year ago, sales in some parts of China for KFC dropped dramatically. But they rebounded after a month or two, because at the end of the day, the consumer realized KFC is a friend of China, and that’s a really important thing.
Secondly, you probably need to join associations. No single company can push back against the Chinese government, so you need to form blocks of 20, 100, 200 companies. Then, if one of them gets attacked, they can unify together and say: ‘Hey, wait a minute. This is not this company’s problem, this might be a government issue, don’t punish us.’
Q. How can brands from countries that generally enjoy a positive image among Chinese consumers take advantage of this without making themselves vulnerable?
A. It’s tough. I think iconic brands that represent a country are dangerous. It’s better to be affiliated, but not too representative. For example, Costa Coffee customers don’t always know it’s British.
Right now, Harrods is doing fabulously well, because for Chinese, when they go [to London], it’s a destination. If you go to the UK, you have to shop at Harrods. The risk though, for Harrods especially, is that if there ever is tension between China and the UK, Harrods will be the first thing to get hit. Costa Coffee won’t be. It’s Toyota, it’s KFC, it’s Starbucks, it’s Apple… It’s good to show you’re from a certain country, but it’s also not good to emphasize it too much.
Q. Is there a chance this approach will become less effective if used too often?
A. That’s a great question. I think Chinese consumers don’t view it as propaganda, but rather as pride in the country. I think it’s a strategy that they can employ over the next 10-20 years, and it’s not going to make a difference. Even when we interview Chinese who were educated abroad and they come back, they still get really worked up.
The bigger risk is: will China go too far and cause too much worry for other governments, to the extent that that they do band together and they push back? Maybe they don’t band together in ASEAN, but maybe they band together in TPP. There are all these new organizations that are popping up. China needs to worry about that, that they don’t oversell their economic power.More at Knowledge CKGSB.
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| Tom Doctoroff |
Technological innovation is not the only starting point for branding, customer experience, and product development. A brand’s relentless relevance must also spring from deep insight into consumer behavior. In an era characterized by exaggerated faith in algorithms, programmatic efficacy and hyper-personalization, marketers should answer a higher calling to embrace psychology and cultural anthropology to penetrate the souls – and lives -- of consumers.
Insights are not observations. They latter record what people say or do. The former reveal inner desire.
The first character of the word insight in Chinese is dong, which means “hole.” It is a fitting parallel; insights into consumer behavior are deep. They need to be unearthed. Insights explain fundamental motivations for behavior and preference, answering the question “Why?” More specifically, this article advocates the most powerful insights are tensions – between and within cultural and/or human truths – and brands must use them maximize relevance.
It’s worth noting global brands often struggle to maintain relevance across far-flung markets because they ignore the importance of underlying urges in determine buying behavior. Some of the greatest failures in China, for example, have been caused by cultural tone deafness. Ebay didn’t appreciate the need for reassurance when making virtual transactions. Kellogg cereal misjudged the importance of a “mom’s warm hug” in the morning when launching cold, crunchy breakfast cereal. Best Buy underestimated price sensitivity when promoting the expertise of in-store sales personnel.
Across the developing world, Unilever’s Dove “Real Beauty” positioning – advocacy of women defining their own standards of attractiveness irrespective of social context -- fell flat because the brand failed to appreciate the role of external admiration in non-individualistic markets such as the US and Europe.Much more at LinkedIn.
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| Tom Doctoroff |
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| Ben Cavender |
The issue has underscored a dilemma for global brands, sports franchises, moviemakers and performers looking to tap China’s big-spending consumers while keeping on the right side of often stringent rules about content and behaviour.
“Brands have to be much more aware of politically or morally sensitive topics here,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding the lure of the market meant most people would nevertheless take risks.
“It’s a very different political environment than their home markets and we’re at a time when China is on a drive to clean up behaviour and push a sort of moral code.”
China has long kept tight control of performers it allows into the country. Justin Bieber, Lady Gaga, Bjork and Bon Jovi are all banned over perceived bad behaviour or for broaching sensitive topics like Tibet or Taiwan.More in Reuters.
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| Ben Cavender |
"People are now trying to express their individuality, so brands should think how to make a product fit their lifestyle with high product quality and attention to detail," said Ben Cavender, principal at China Market Research Group, a data information company.
"This is creating opportunities for niche brands and accessory makers to stand out. Major brands are not going anywhere, but they do have to rationalize product designs and categories more to ensure they are getting the right products to consumers quickly," he added.More in the China Daily.
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| Tom Doctoroff |
All three Chinese companies on the top 10 brands list are technology related, with the music app NetEase Cloud Music coming in at No. 10, the global branding and marketing consultancy Prophet said on Thursday as it unveiled its 2017 brand relevance index for China.
“Chinese consumers today live, work and play in a connected, digital world, so the brands that deliver useful, easily accessible and enjoyable experiences are going to be the most relevant to their lives,” said Tom Doctoroff, a senior partner at Prophet.
The rest of the list is dominated by brands that include Ikea, Apple, Nike, Estee Lauder, BMW and Marriot hotels.
The consultancy surveyed more than 13,500 Chinese consumers in 39 cities on the mainland about which among 235 household brands in 30 industries were most relevant to them this summer...
“Overall, the relationship between digital and individual in the West is significantly more functional,” Doctoroff told the South China Morning Post in Shanghai. “But In China, where ambitions are huge but social regimentation keeps people from [expressing themselves or] realising their ambitions, people project a lot of their emotions onto their digital selves.
“So that’s why I think these tech brands are all so rich and meaningful for people – it is not just an utilitarian, convenient relationship,” he said.
More in the South China Morning Post.“There is no way in America that you are going to have PayPal [the western equivalent of Alipay] to rank No. 1,” Doctoroff said, stressing the more apparent emotional connection between tech brands and Chinese consumers.
