China: Harnessing the power of social media
As in other countries, social media plays a crucial part in marketing in China. But what sets this country apart in terms of platforms and the Millennials who visit them? Alexis Bonhomme, co-founder and Chief Strategy Officer of CuriosityChina, a digital services and technology company specializing in social media, tech and CRM in China, provides the answers.
Why is China so key for luxury brands and how is the social media there different?
China represents more than one third of the luxury goods market, a share that will soon rise to one half, and 20% of the world’s population. All the Western social media networks – Facebook, Instagram, Twitter and the rest – are blocked, so you have different platforms, different ways of communicating, a very specific language, and also very different types of consumers. Depending on the size of city where they live, Chinese Millennials will have different attitudes to luxury fashion. There is a big difference between consumers in Tier 1 cities like Beijing and Shanghai, which have a market for both major and niche luxury brands, and Tier 2 or 3 cities like Wuhan or Chongqing, where the aspiration will be more for mainstream houses.
How does pricing affect luxury fashion for these consumers?
The price point is an important factor in China. So many taxes are added to imported goods that you actually have two markets: one that is internal to China itself, and one for traveling Chinese who visit Paris or London, for example, where fashion costs a lot less – especially since the Brexit vote in the UK. There is a one-word description in the U.S. that also applies to a lot of Chinese Millennials, who can afford certain luxury items (as they are delaying the decision to buy a flat or get married early) but are hesitant about major outlays; they are HENRYs: High Earners, Not Rich Yet. A rising Millennial class, they are a priority target for the luxury industry as the consumers of today – and also tomorrow.
What are the expectations of a luxury brand and its social media?
Chinese society is very competitive and status, which luxury fashion offers, is important. In terms of social media, the communication needs to be creative and enable consumers to learn about the brand. Authenticity is another important expectation among Chinese Millennials. Gucci does this well, because its content is very sharp, straightforward, very visual and sometimes funny. And the brand is certainly seen in China as being authentic.
Which social media should a luxury brand be using in China?
There are three key platforms, with the No.1 being WeChat, which has nearly 980 million monthly users and is for one-to-one communication. For businesses, it’s a way of sending the right message to the right people, driving them to a point of sale or simply collecting additional data, such as social behavior, phone number or email. WeChat is seen as an amazing Customer Relationship Management platform and is becoming a great E-commerce channel as well. Weibo is one-to-many communication and lets people see what their friends – and the friends of their friends – are doing. As people are less active on Weibo than WeChat, Weibo is used mostly for exposure, storytelling and brand positioning. The third is Youku or Tencent Video, which are the Chinese equivalents of YouTube.
However, social media/e-commerce live streaming is becoming very big in China, with leading bloggers filming themselves as they use a product, such as a lipstick, while a button appears to let viewers buy that product. There is also Toutiao, a news aggregator with 150 million daily active users that has been getting more traction recently from marketers. There are also several large E-commerce platforms such as JD.com, VIP.com and Tmall, with massive volumes of traffic, though these platforms are not free. Luxury brands are now using them – not only for selling, but also for raising brand awareness and ‘testing the water’ of E-commerce in China. The key point to understand here is that the Chinese market moves very fast – and brands need to react quickly. Speed and the ability to respond are vital.
Social media is used far more extensively in China than other countries. Why is that?
For a start, social media is far more mobile-first in China. People are glued to their phones and will be viewing content for six or seven hours a day. Why? First of all, there is a practical reason. Mobile communication and mobile commerce offer huge advantages in terms of convenience: sending a voice message instead of calling, paying for a movie theatre ticket via WeChat payment or ordering a taxi with one click using Didi, which recently acquired Uber China. Another reason, more sociological, is the massive pressure on the young generation in terms of social status, family expectations, competition at work and the astronomical cost of living and education. Social media offers an escape from all that. Social networks let young people give a different version of themselves, they are a chance to present a different way of life.
How important are Key Opinion Leaders for luxury brands in China?
There is an A-list of key opinion leaders, like fashion blogger Ye Si – better known as Gogoboi – who work with a lot of brands and who you would include in a marketing budget. But A-listers are expensive to work with, and there are many useful B- and C-list bloggers with large followings, particularly at a local level. If you’re opening a store in Shanghai, is it worth doing a campaign with influencers across the whole of China? A few years ago, the answer would have been ‘yes’, but today it’s probably ‘no’ as brands switch to targeted marketing. China is a vast country: Will people really travel hundreds of miles to a shop? Probably not. So brands are now working on identifying not only the good KOL/bloggers to work with, but also their own influencers – people who are already following their brand and share its content among their networks, for free.
From a marketing viewpoint, how do you see social media in China evolving?
Brands have two markets on social media: external, which is everyone they don’t know but want to draw into their brand community, and internal, which is everyone who follows them and may also be a customer. The trend now is to pay more attention to their internal market. Many brands are not solely looking for new followers, but to know more about the followers they already have by collecting data from different touchpoints – online and offline. They want to identify those 20% of their followers who are the most active and influential. Targeted marketing is more cost-effective because it has a higher conversion rate and while brands must pay to reach the external market, they don’t for the internal one. In other words, social media in China is now becoming more about digital technology – where tech and data influence the way marketers are building their communication strategy – than about digital advertising – where marketers are digitalizing the communication they had on traditional media without a proper audience segmentation.
How is Gucci and its social media presence perceived by Millennials in China?
Gucci has done very well in China since the arrival of creative director Alessandro Michele, who knows all the codes of the House and who works on its dynamic heritage. The authenticity, transparency and focus on collaboration which he brought to the brand made Gucci ‘cool’ in China. It also gave the whole fashion industry a refresh, after a period when it had been very conservative, with a trend for minimalist design. The Gucci brand is colorful, down-to-earth, while the copywriting is sharp and often humorous. Now, at first, that approach was very different, it was marvelously executed and the market got hooked. It was also a very clear approach, with a focus on Millennials and an assumed risk that it may not respond to the wishes of traditional Gucci customers wishes, especially in the West. But it has since been copied by so many others that it is now mainstream in China. Looking ahead, I think the challenge for Gucci is to remain distinctive.