Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
Among the often dark outlook for China’s economy, marketing expert Ashley Dudarenok comes with some bright sparks: five emerging consumer groups. She looks at her vlog at Gen Alpha, the metaverse consumers, pet lovers, young and health-conscious consumers, and outdoor enthusiasts.
Unlike in the past, youngsters in China are unsure of what the future brings, and they have become more frugal, says Shanghai-based consumer analyst Ben Cavender, executive director of the China Market Research Group (CMR). to Reuters.
Reuters:
This newfound frugality, reinforced by social media influencers promoting low-cost lifestyles and sharing savings tips, is a threat to the world’s second-largest economy, which narrowly avoided contracting in the second quarter. Consumer spending accounts for more than half of China’s GDP.
“We’ve been mapping consumer behavior here for 16 years, and in all that time I’ve seen young consumers the most concerned,” said Benjamin Cavender, executive director of the China Market Research Group (CMR).
China’s “zero-COVID” policy — including strict lockdowns, travel restrictions and mass testing — has weighed heavily on the country’s economy. The government’s crackdown on big tech companies also had an outsized impact on the young workforce…
Stability has been the key issue for China’s policymakers this year, experts say, as President Xi Jinping prepares for a third term as head of state at next month’s congress of the ruling Communist Party.
“In the past, when there was an economic slowdown, consumers tended to feel that government policy would solve this problem very quickly,” said CMR’s Cavender. “I think the challenge right now is interviewing younger consumers who really don’t know what the future holds.”
China has become a leading force in consumer trends with e-commerce and fintech, first followed by other Asian nations and now the rest of the global market, says marketing expert Ashley Dudarenokat Martechseries. Global brands are taken notice, she writes.
Ashley Dudarenok:
Global brands are starting to look at trends arising from the Asian consumer market, and for good reason. It is expected that consumers in Asia are to account for half of global consumption growth within the next decade. Besides the fact that Asian consumer markets are growing at an exponential rate, the markets are also diversifying and segmenting.
Asia is also leading in terms of e-commerce and fintech. This is especially true as China has contributed to more than half of the world’s e-commerce retail sales. The country’s sales value surpassed the combined total of Europe and the United States. In fact, the largest digital buyer population in the world belongs to China, amounting to more than 780 million people.
Consumers from other countries in APAC are starting to increase in digital consumers as well. According to a report from Bain & Company, Southeast Asia’s digital consumer population is predicted to reach around 380 million by 2026.
So now that we know that Asia is the continent to look out for, what can we learn from the emerging consumer trends there? What else can we learn from Asia’s e-commerce sector?
H&M tries to retain market share in China after a consumer boycott of a range of Western fashion brands – including also Nike and Burberry – on its Xinjiang stance by launching two new brands. The results with the consumers in China have been mixed, says marketing expert Arnold Main Jing Daily.
The Jing Daily:
“There are reports saying some consumers still turned their back to the two brands having found their link to H&M, which shows the brand still hasn’t been fully forgiven by Chinese consumers,” said Arnold Ma, founder of China-focused digital marketing agency Qumin.
“On the other hand, the latter two have challenged the image of H&M as a ‘roughly-made’ fast fashion brand by providing better quality products at a higher price,” he continued. “So, the premiumization, to some extent, helps the two win over some Chinese consumers who pay more attention to quality and design.”…
While H&M, Nike, and Burberry have all pushed ahead in China, they have done so to varying degrees of success. Burberry, which has bounced back faster than the others, has partially benefited from being a luxury brand. As Yam, who has more than a decade of Chinese digital marketing experience, said, “It’s harder to replace — you don’t have another Burberry. For Nike, [consumers] can find the China version, Li-Ning, which is popular in China now. And for H&M, there’s so much fast fashion.”
None of this is surprising, as China accounts for less than 5 percent of H&M’s global revenue, while Burberry’s China revenue accounts for almost half of their global total, Ma noted. Indeed, China is just one — albeit very important — market for these global companies. Recovery, therefore, not only entails reevaluating China tactics but also ensuring a strong global network for when a crisis eventually hits.
China’s luxury market is changing fast as young consumers born between 1990 and 2000 now dominate with 50% of the sales, and that percentage is bound to rise fast. Consumer marketeer Ashley Dudarenok gives four major tips to keep hold of this market in the Jing Daily.
Ashley Dudarenok:
Chinese consumer desire for luxury goods is expected to continue to grow in 2022 at an estimated rate of 13 percent, making them the highest spending global consumers. By 2025, Generation Y and Z will account for more than two-thirds of the market. Gen Z, China’s youngest spending generation, are digital natives that have grown up with material abundance. And they are willing to pay a premium for fresh and niche experiences.
As such, luxury brands will continue to leverage digital opportunities over the coming years to provide consumers with unparalleled shopping experiences, using innovative technology like NFTs and AR-powered digitalization. Yet, offline purchasing remains the most important sales channel, making up over 50 percent of all consumption.
Online channels provide consumers with multidimensional avenues for communicating and resonating with luxury brands. Meanwhile, offline channels give consumers physical product and service experiences that online services cannot replace. But integrated online and offline channels create an unmatched level of user stickiness, helping brands build loyalty among future consumers.
In the past, China’s consumers focused often on foreign luxury brands, but those days are over. Unfortunately, most brands failed to follow that cue from their buyers in China, although the situation is improving, says Shanghai-based branding expert Ben Cavenderin Jing Daily.
Jing Daily:
Back when Hermès announced it was launching a Chinese luxury brand in 2010, many scoffed. How could China produce a contemporary luxury brand? Fast forward to today and that possibility is becoming a reality. But, as COVID-19 continues to keep borders shut, why aren’t more Western companies eyeing local Chinese market leaders for a strategic route in, and where are the big success stories?
Aside from the notoriously slow burn of luxury investments requiring especially long pockets, past examples have often not been sufficiently localized. Qeelin, Shang Xia, or even Shanghai Tang, are brands that could have done quite well according to Shanghai-based Ben Cavender, managing director of China Market Research Group, but were not positioned and supported in a way that truly allowed them to be successful.“The challenge with these examples is you have a domestic brand that’s taken foreign investment but has then been given a foreign lens to look at the market… So the products appeal to a luxury consumer sitting in the West,” he explained.
Naturally, if you are a Chinese brand selling to Chinese consumers there needs to be a reorientation on what your story and products should be, which Cavender thinks is often mismatched. Over the last number of years, this “mismatch” has been better served through partnerships with young Chinese designer brands as a way to test the water: Chenpeng, 8on8, and Feng Chen Wang have all collaborated with Western names.
Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
Are you looking for more branding experts at the China Speakers Bureau? Do check out this list.
Marketing expert Ashley Dudarenok tells at the state-owned CGTN how the Double 11 festival in 2021 became a teenager and started to become the way to introduce new products to China’s consumers and turned international.
Marketing expert Ashley Dudarenok explains the young digital natives of Gen Z in China 2021 in terms of marketing. How do they spend their budgets? In spending they Gen Z’s are the most wealthy generation in China, she tells at her vlog, although in a population of 1.4 billion, it is dangerous to talk too much in generalizations.
Marketing expert Ashley Dudarenok looks at the recent Autumn festival, China’s second-largest holiday. How did it develop and how does it affect tourism, eating, and drinking, from her digital vlog. 80 million people have been traveling domestically this year, she says, and comparable to America’s Thanksgiving festival.
China passed in August 2021 its Personal Information Protection Law (PIPL), comparable to Europe’s GDPR. China lawyer Mark Schaub has at his webinar a look back at the road to PIPL. The PIPL will be in force on November 1, 2021.
China’s crackdown on tech firms is in the longer run benefiting consumers and the industry itself, says business analyst Shaun Rein about the governmental efforts to curtail free-wheeling companies.
China’s government is tightening the strings for tech companies, especially when it comes to data management, says business analyst Ben Cavender at RTHK. “I think you’re going to see companies like this that really do peddle in data come under a lot more scrutiny going forward,” he said.
RTHK:
Regulators have ordered the country’s biggest ride-hailing firm, Didi, to be removed from app stores and accused it of violating rules on the use of personal data. It comes a week after Didi raised billions of dollars when its shares were listed on the New York stock exchange for the first time. “I think there’s potentially some subtext here which is basically saying ‘if you’re going to be a big tech company’ and you want to (do an) IPO, you’d better be doing it on the mainland'”, Ben Cavender, the principal at China Market Research Group, told RTHK’s MoneyTalk programme. Cavender said he believed the government wanted “to tighten up its access to data that’s being collected while at the same time sort of trying to codify a little bit better what kind of data practices are actually OK in China”. He added that the government is sending a message that it wanted more control over money flows. He said the days of China initial public offerings (IPOs) being a sure thing were over for investors, and described the development as worrisome. Cavender also said there was increased pressure “about this idea of consumer rights and what data actually is being collected. “So I think you’re going to see companies like this that really do peddle in data come under a lot more scrutiny going forward,” he said.
Data is the new oil, and China is already in a leading position to show how data changes the way business is being done, says marketing guru Ashley Dudarenok at her vlog.
Dolce & Gabbana (D&G) got three years into hot water over racist ads and remarks with China’s consumers, and the row did not subside, says business analyst Shaun Rein. “It’s probably the only brand that I’ve seen the Chinese stay angry at for so long,” he told CNN.
CNN:
The brand has not signed a major mainland Chinese name since the incident. For a 2020 Chinese Valentines Day campaign, it used a combination of White and CGI models, dubbed “virtual idols.” And although hiring Chinese celebrity ambassadors and influencers could represent a way to regain trust in the country, it would be “career suicide,” according to Shaun Rein, founder and managing director of China Market Research Group.
According to Rein, it is the alleged Instagram messages, rather than the ad campaign itself, that continue to affect the label’s reputation in China. “It’s probably the only brand that I’ve seen the Chinese stay angry at for so long,” he told CNN.
The label’s recent moves to sue Diet Prada for defamation have only continued to “keep the story alive,” added Rein, who likened it to the “Streisand effect,” whereby attempts to cover something up only draws more attention to it. The lawsuit, which D&G declined to comment on, has created the impression that Gabbana “was mad that his private correspondence got out,” Rein said, adding that Chinese consumers felt the messages were “the true feelings, potentially, of the founder denigrating the Chinese people” — despite the fact that Gabbana and co-founder Domenico Dolce filmed an apology video shortly after the 2018 incident.
Not that the video won them any goodwill at the time. “(It was) like he was trying to save money and his brand, but it wasn’t coming from the heart,” Rein said. “Because again, if you say something publicly but then allegedly say ‘Chinese are s**t’ in private, then who’s going to believe you?”…
The online furor has had real-world ramifications for D&G. In 2018, the brand had 58 boutiques in China, according to NPR. Three years on, its website lists just 47, with shops recently closing in Beijing, Shanghai and Chengdu, according to industry publication Business of Fashion.
The label remains entirely frozen out of major Chinese e-retailers Tmall and JD.com, both of which pulled the brand from its virtual shelves soon after the 2018 incident. According to Rein, it is unlikely that the platforms will stock the brand anytime soon, as they are “petrified by these nationalistic consumers.”
“If you can’t sell on Tmall, you can’t do business in China,” he said, adding: “If I were Dolce and Gabbana, I would take two or three years off from investing in China.”
Is your company ready to sell into China, asks marketing guru Ashley Dudarenok in her weblog. Social media make it in theory easier to sell into the largest consumers’ market, but you have to be prepared very well, she explains.
E-commerce platforms are doing very well in China, but that does not mean they can easily gain consumer’s trust, says marketing expert Ashley Dudarenokon Marketing-Interactive. A few tips: the platform should be easy to use, and the quality of the products should be impeccable, she adds.
Marketing-Interactive:
Although buyers need to spend time and effort to learn more about the products, unless there is a seamlessness in the buying process and education process, customers might turn to competitor channels. “This could seriously affect consumer purchase confidence, especially for mid- and high-end users located in first- and second-tier cities who pursue high quality products,” Ashley Galina Dudarenok, founder of ChoZan and Alarice.
Currently, large e-commerce marketplaces have created dedicated storefronts for their clients to ensure authenticity of products. However, for smaller marketplaces, the inability to verify the authenticity of products is still common. As such, building trust becomes harder.
“At present, more and more platforms emphasis genuine products and are regulating product certification to guarantee product quality. For example, Pingduoduo creates its own factories to ensure the source and quality of products. Consumers shopping on the Pingduoduo platform can enjoy the genuine products and quality assurance provided by merchants. If consumers purchase counterfeit brand products, they can claim ten times compensation,” Dudarenok added.
