Business

Social media influencers help Chinese brands beat foreign competitors


For Western companies such as Coca-Cola, Maybelline and Nestlé, century-old brands have long offered a huge advantage over local competitors in China.

But these existing groups are increasingly threatened by Chinese startups whose growth has been aggressively driven by smart social media marketing and improved supply chains.

The shift was underlined during this month’s “618” e-commerce festival, China’s second-largest annual shopping event, where local brand Babycare overtook Procter & Gamble’s Pampers in terms of sales volume, according to data from internet group Alibaba.

This was not a one-off: Jinqi Forest, a Chinese beverage company, has overtaken Coca-Cola and PepsiCo in online sales over the past year”Singles Day‘, a multi-billion dollar extravaganza and the largest holiday shopping in the country.

A year ago, Perfect Diary, a local cosmetics brand, jumped over Maybelline and Estée Lauder to become number one on Singles’ Day, while in 2019, snack brand Three Squirrels overtook Nestlé.

Foreign brands used to have an advantage in the Chinese market by representing a superior Western lifestyle. Albus Yu, investment director at China Growth Capital, a venture capital fund that supports brands such as Maia Active, Lululemon’s Chinese competitor, said Chinese consumers are now more confident in “Chinese style.”

The supremacy of Chinese brands marks a shift in a country where foreign products have historically been viewed as safer and of higher quality. It is also a major challenge for increasingly multinational companies We look to China for growth.

It is also in tune with China’s political priorities. President Xi Jinping urged the country to Focus on domestic demand for growth.

“The next decade is going to be the decade for Chinese brands,” said Elijah Wally, vice president of marketing for Asia Pacific at Launchmetrics, an analytics firm. “Domestic brands will take a large share of China’s growing consumer market.”

In the first three quarters of 2020, domestic sales of Chinese brands of FMCG increased 2 percent, while sales of foreign brands contracted 6 percent year on year, according to a report by Kantar Worldpanel and Bain.

Analysts said much of the recent success of local brands is due to huge investments in marketing, particularly on social media. This was fueled by strong support from venture capital.

“Marketing has made Chinese products great. They don’t have heritage ownership of the brand they are trying to protect, which means they are willing to take risks and move quickly,” said Mark Tanner, managing director of Skinny China, a marketing firm.

Marketing can account for more than 60 percent of Chinese consumer start-up spending, according to Launchmetrics, compared to 15-25 percent for foreign brands in China.

“Outside brands are more lively in their marketing approach, they want to grow slowly, and that is how they operate in other markets. Here it is all accelerated because there is a co-founder of WalkTheChat, Jenny Chen. Lots of investment capital.

Chinese brands have also been smart in terms of developing their own supply chains. Due to their proximity to manufacturing groups in China, they have established relationships with suppliers, which has allowed them to speed up the development of new products and reduce costs. These suppliers are often the same suppliers that premium foreign brands export goods through.

Line chart of number of social media posts per month showing Chinese start-up brands receiving more marketing than Western competitors

“The magic is to order in small batches. You can produce thousands of items and see what can stick,” said Rui Ma, China technology analyst at TechBuzz.

Shanghai Chicmax, a cosmetic brand, has gone from styling to selling a face mask in three days. Skinny China Tanner noted that this process took a foreign shampoo brand three years.

Analysts said that variety and speed are important because young Chinese consumers have eclectic tastes and a greater willingness to follow trends than their Western counterparts. Tanner added that while GlaxoSmithKline had 400 products for European customers in one oral care category, it had 12,000 products for China.

Young Chinese consumers also expect Sophisticated e-commerce experience. When buying the lipstick, they might first see an influencer promoting it on Douyin, the Chinese version of TikTok, and then take to social media platform Xiaohongshu to get feedback from professional beauty bloggers before finally buying it on Alibaba’s Taobao after consulting customer reviews and photos.

Some Chinese influencers Gathered huge fan bases, such as “Lipstick King” Li Jiaqi, who has 45 million followers from Douyin. Li’s endorsement can sell the product within minutes and he has previously criticized foreign brands such as Hermès and Chanel.

While watching Li’s live broadcast, Zhang Qiping, a 28-year-old professional in a foreign company in China, discovered the domestic brands Florasis and Perfect Diary.

“I thought the lipsticks looked great, then I went to Xiaohongshu and found that there were a lot of people recommending them, so I went ahead and bought them,” said Zhang, who had previously bought lipsticks from Dior and Yves Saint Laurent.

Chart of China's emerging investment over the past six years

But “micro-influencers,” who have a much smaller reach of less than 10,000 followers, are also an important group for brand marketing. They are often regular customers that companies have turned into brand advocates, giving them free products or small payments.

“In the influencer industry in China, you can find a price for just about everything: a sponsored campaign that looks like local content or a small post by a small influencer,” said WalkTheChat’s Chen.

Another effective way for brands to reach customers in China is through groups on messaging platforms like Tencent’s WeChat, where they are limited to 500 users. This allows brands to interact with consumers in a more intimate environment, but some Western companies see it as offering an uncertain return on investment.

“Chinese brands are more willing to take risks,” Wally said.

Chinese media documented how Perfect Diary opened thousands of WeChat groups led by “Xiaowanzi” or “Abby”, virtual beauty effect Supported by a great marketing team.

Over the last weekend of 618 promotions, one of Abby’s WeChat groups of 200 was inundated with the brand’s promotions, while shoppers posted photos, asked questions and gave feedback.

When Abe was asked to give an interview via WeChat, he replied that a dedicated staff member would reply and send a picture of cartoon mouse Jerry holding a flower.

When asked how global brands are getting her back, Zhang, a consumer who works for a foreign company, replied, “When it comes to switching brands, I usually look at the reviews of Douyin and Xiaohongshu. It all depends on whether the brands can get On beauty bloggers to promote it.”



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button