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17 June 2016

# Incorporating Digital in to Your China Marketing Strategy

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With 668 million active Internet users in China in August 20151, smart digital marketing strategy is becoming increasingly essential to mid-market enterprises (MMEs) entering the market. To better understand what channels are most influential and effective for their budgets, MMEs may need to tailor marketing approaches to China-specific platforms and local behavior.

## Uniquely Chinese Platforms

China’s unique digital landscape requires building presence on a completely different set of websites and apps. Rather than Google, Amazon and Facebook, China has Baidu, Alibaba and Tencent (BAT for short, with respective core services in search, e-commerce and social media). In addition, Twitter is replaced by Weibo, Youtube by Youku, and Whatsapp by WeChat.

As with globally-recognized apps and platforms, content can also be shared through multiple platforms of this ecosystem. The interconnectivity of apps gives longer lifespan to marketing content, stretching dollars for MMEs without budgets or resources to create content regularly. For example, a DIY video on home renovations featuring an imported power tool can be posted on Youku.com and tagged in popular design and renovation accounts on Weibo, also linking to e-commerce websites. The video can also be posted on a WeChat news feed or influencer’s social posts, with QR codes enabling users to purchase the tool through WeChat’s payment system.

## Uniquely Chinese Habits

To reach the target consumer, foreign MMEs must stay abreast of changing trends like ever-increasing mobile penetration, which stood at 675 million in August 2015 which stood at 1.24 billion active smartphones as of Q3 20152.

For instance, as mobile messaging app WeChat continues to grow in user base (650 million active monthly users as of November 20153 ) and usage (social media, purchases, paying bills, etc.), it is increasing in consumer influence. The three key factors essential to understanding WeChat’s importance in marketing and sales are: 1) adults spend an average 40 minutes and read an average 7 articles every day on WeChat, 2) celebrities and key opinion leaders (KOLs) on the platform possess very engaged followings and 3) WeChat’s business accounts are where brand stories are told and wares are sold. WeChat is becoming a one-stop-shop for marketing and shopping.

Furthermore, when spending on brand building or advertising, MMEs must find the right channels for their target consumers. For instance, younger Chinese viewers are increasingly watching TV shows online. Some major companies like Yili, the Chinese dairy products maker, have capitalized on this trend by sponsoring online TV broadcasts rather than traditional TV slots:

1R3 presentation, iResearch stats, http://www.iresearchchina.com/

2http://www.chinainternetwatch.com/14949/china-mobile-internet-2015/

3https://www.techinasia.com/wechat-650-million-monthly-active-users/

> This year, Yili sponsored the digital broadcast of a famous Chinese reality TV show, but on an online video platform. It turned out, Yili received more buzz and views than the top TV sponsor

> Yue Tang, consultant at R3, a digital marketing consulting firm in Shanghai.

## Uniquely Chinese Sales

Perhaps the most-reported of all digital trends in China is the booming sales generated in the e-commerce sector. Online shopping transaction values are estimated to reach USD 150 billion during the November and December holiday shopping season in 2015, or a 13 per cent increase over the same period in 20144. On the Singles Day retail extravaganza in 2015, in which vendors on Alibaba, JD and other e-commerce websites offer deep discounts, Alibaba Group alone saw USD14.3 billion in sales over a 24-hour period5. Thus, MMEs looking to enter China without high-capital investments find e-commerce an increasingly attractive option.

Within the e-commerce space, the development of cross-border e-commerce is a boon to foreign MMEs. It is characterized by the direct purchase of foreign goods by Chinese companies like e-commerce giant JD, which manages the warehousing and distribution of the goods.

This channel gives MMEs opportunities to sell through consumer-trusted channels and reach large bases of buyers without heavy investment in stores and distribution. One reason to enter the market is to keep control over product chain and sales, as well as build online education of products. This is necessary because of daigou, a practice in which Chinese shoppers will buy up stock of popular items like beauty and skincare products in stores overseas, and resell the goods in China on C2C channels like Taobao. Though this grants Chinese consumers access to authentic goods without going abroad, daigou necessitates that brands seek ownership over their own marketing, or lose control of it to individual resellers. Cooperation with cross-border channels are ways to take back control.

For MMEs like Focusrite that focus on niche spaces like equipment for musicians, e-commerce in China is a way to reach far-flung consumers who are picking up new hobbies. In fact, a large portion of sales are already being made by retailers on e-commerce platforms in China, says Phil Dudderidge, founder and Executive Chairman of the UK-based company.

But Andrew Kuiler of The Silk Initiative, a brand consultancy based in Shanghai, noted that companies must find the most suitable e-commerce platform. "We found that there is no national e-commerce platform. The right one depends on the product and brand, and the consumer behavior in a particular region," he says. Kuiler points out that Chinese consumers have pre-conceived notions what each platform is best for, like Yihaodian for food purchases, for example. To best execute sales strategy, MMEs must first find the most suitable digital marketing platform.

##

4 http://www.chinainternetwatch.com/15615/chinese-holiday-season-2015/

5 http://www.reuters.com/article/2015/11/12/us-alibaba-singles-day-idUSKCN0SZ34J20151112

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