As the second largest consumer economy in the world, China has been at the forefront of marketing trends shaping the global economy. According to China’s Ministry of Commerce, in 2020, China saw sales of consumer goods reach 6 trillion USD. Home to major online e-commerce platforms such as Alibaba and JD.com, China has also ranked in as the world’s largest online retail economy for the past 8 years.
The country’s mature online retail economy, high mobile penetration, and comprehensive e-commerce infrastructure has made it the perfect environment for the emergence of a variety of innovative marketing trends in the past few years. These trends have not only reshaped marketing playbooks within China, but also impacted consumer markets around the globe. Understanding these new trends will help businesses around the world effectively craft cutting-edge marketing strategies.
What marketing trends should we look out for from China in 2022?
1. From KOL to KOC marketing
KOL (influencer) marketing, also known as influencer marketing, was one of the major trends to emerge in the social media era. However, as China’s online consumers become increasingly internet savvy and media reports started exposing KOL misconduct, the prestige of KOL endorsements have waned. Today, China’s consumers, especially the digital natives of Gen Z, are increasingly turning towards KOCs, or key opinion consumers, for product recommendations.
KOCs are seen as more “real”. With fewer followers and a more approachable internet presence, they are seen as the everyday consumer. By providing product reviews and recommendations from an end user perspective, they hold more sway over consumers looking for quality products as opposed to brands with cultural cachet.
In China, marketers are turning towards a two-pronged approach of combined KOL and KOC marketing, using KOL marketing to increase brand exposure and using KOC marketing to more granularly target specific consumer groups.
Livestreaming marketing became possible in 2016 with the launch of Taobao’s livestreaming function Taobao Live. It has since only exploded in popularity since the COVID-19 pandemic. With the integration of e-commerce functionality on livestream-ready social media platforms like Douyin, Xiahongshu, and Kuaishou as well as the integration of livestream capabilities on e-commerce platforms like Taobao and JD.com, livestream marketing has become a mainstay in today’s Chinese marketing strategy.
Last year, on Taobao’s Single’s day shopping festival, livestreams accounted for 6 billion USD in sales. Livestream marketing’s success is the result of combining the frictionless one-click purchasing of e-commerce, the interactivity of livestream product presentations and Q&As, and the dynamism of live product demonstrations.
This trend has now expanded beyond China, with Amazon and Walmart dipping their toes in the livestream marketing trend last year.
3. Social E-Commerce
The emergence of platforms like Xiaohongshu and the development of e-commerce functionality on various social media platforms in China have ushered in the age of social e-commerce. According to e-Marketer, in 2019, Chinese social e-commerce sales totalled 186.04 billion USD, a figure that has only grown in the last two years.
An important innovation in Pinduoduo’s massively successful marketing model was the social aspect of community promotion of products. Social media platforms like Douyin and Xiahongshu took advantage of their massive userbases to integrate e-commerce functionality in the last few years. WeChat’s comprehensive ecosystem, with mobile payments, instant messaging, mini-programs, and official accounts offered the perfect environment for social e-commerce to thrive.
Today, Western platforms are playing catch-up, with Facebook and Instagram refining their e-commerce functionality only with the massive changes in shopping habits brought on by COVID-19.
How to register a store on Xiaohongshu, one of the most popular social e-commerce platforms in China
In 2018, Pinduoduo went public, raising 1.6 billion USD through a US IPO, becoming one of the largest deals of the year. In just three years since founding, the upstart platform broke into the upper echelons of China’s e-commerce market.
It’s secret success? The group-buy feature.
The group-buy feature allows communities and neighbourhoods to place large orders together to get direct wholesale prices. These deals are accessed through WeChat mini-programs, and community leaders post links to various popular or on-sale products in WeChat groups. The massive discounts and communal nature of this marketing model have helped it become extremely popular in smaller cities across China.
Best platforms for group-buying in China
The group-buying market was worth over 11 billion USD in 2020 and is estimated to exceed 16 billion USD this year. In the three years since Pinduoduo’s IPO, Alibaba and JD.com have created their own group-buying functions to challenge the Pinduoduo’s massive market niche.
5. Private Traffic
As an alternative to the increasingly expensive option of paid traffic, private traffic (私域流量) marketing has taken off in China.
While most private traffic in the West is accomplished with blogs and mailing lists, China’s unique internet ecosystem has seen the rise of private marketing via WeChat. By setting up exclusive WeChat mini-program clubs and WeChat groups, brands can easily cultivate communities of consumers with share lifestyle aspirations. Private traffic allows brands to become less reliant on e-commerce platform search algorithms and give businesses the power to present their brand directly to consumers.
This more intimate environment of closed groups allows for higher rates of CTAs than large scale advertising campaigns. In addition, by building a closer relationship with consumers, private traffic increases customer retention rates.
6. Targeting of Lower Tier Cities (下城Xiachen)
As China’s top-tier cities become increasingly saturated for luxury and lifestyle products, brands are turning towards China’s rapidly burgeoning lower-tier cities. Once considered the market for domestic brands, lower-tier cities are now an integral target in the marketing strategies of more and more foreign companies in China.
Lower-tier cities in China, while not having the same cultural exposure and name recognition as tier one cities, constitute a vast portion of China’s population and have seen increasing spending power. Lower-tier city middle income earners have cheaper living costs and a slower pace of life than their tier one city counterparts and are happy to spend their growing wages on consumer goods.
As such, lower-tier cities are now major drivers of China’s consumer market growth, with 70% of Alibaba’s newly registered users coming from lower-tier cities in 2019. Notably, Pinduoduo’s emphasis on lower-tier cities played a crucial role in its meteoric rise.
7. Artificial Intelligence
From AI powered customer service, AI real-time translation/captioning, AI logistics optimization, AI product recommendation algorithms, to AI powered virtual influencers, advancements in the field of AI have created a vast trove of use-cases for marketing. These new advancements will free up resources for other marketing strategies and help to create more efficient pathways to reaching consumers.
Major Chinese tech and e-commerce platforms have been heavily investing in AI, including Alibaba, Bytedance (Tiktok), Baidu, and more. As a developing technology, AI technology integration into the Chinese marketing sphere is a major trend to watch out for in the coming years.
8. Personalization and Customization
According to a 2018 study by Luxue, customization is the top service requested by Chinese millennials.
While not a new concept per se, the trend of personalization and customization in the apparel market has been steadily growing in China. Product customization was a costly prospect reserved for high-end clientele not so long ago, but with the rapid development of e-commerce there are now more direct avenues of communication with customers.
Today, personalization and customization are widely offered by major fashion brands in China, often taking advantage of WeChat’s mini-program features, as seen in campaigns by Calvin Klein and Longchamp.
HI-COM is a multilingual communication agency dedicated to providing China-specific social media communication and e-commerce marketing services to businesses around the world. Working with more than 100 brands, HI-COM is the go-to partner of companies that want to enter China market! Contact us for your free consultation today!