Western brands that are trying to get to grips with social media in China know that it is a fast paced and often complex arena and, with nearly 600 million users and a year on year growth of over 165% for mobile shopping, it’s something they have to work hard to keep up with.
Here is our top trend for 2014:
is Tencent’s WeChat set to be the app of choice for both business and pleasure?
According to multimedia journalist Paul Bischoff on TechinAsia: “In China, all online communication converges at WeChat. The four-year-old chat app now functions as text messenger, Facebook, Reddit, Skype, IRC chatroom, Meetup, and Instagram – all rolled into one.”
It used to be that apps like Facebook and Twitter would take care of the personal and those such as LinkedIn would satisfy our business and work needs. With WeChat though, we have an app that is trying to break down the barrier between the two. Business meets social and personal. It works well in China’s social media world and it may well be heading West to challenge some of our established platforms.
In China, social capital is a vital prerequisite to success. Whereas people in the West might have one account for their personal life and one for business, in China it is often rolled up into one. And something like group chat is very important to our Eastern colleagues.
Networking groups are big in China
WeChat groups have a limit to the number of members. You need special permission to run one that has in excess of 100 people and if you run it, you must be able to moderate the content accordingly. For many Chinese businesses, selecting the right group to follow, and networking through it, can bring success and vital information exchanges.
With all its functionality, WeChat is an ideal platform for a varied range of activities from selling online and settling disputes to running a web style seminar. There are predictions that WeChat is going to overtake even Facebook as the world’s premier social marketing tool.
The benefit of Tencent’s platform for Western brands is that it is possible to categorize people according to their location and gender. More than half its users are aged between 25 and 30 and many are white collar workers who reside in first tier cities. And with business merging into personal with many of its users, this provides a unique opportunity for brands hoping to develop a marketing approach tailored for Chinese consumers.
The problem for brands trying to make their way on this multi-faceted platform is that it’s not quite there yet. There are still challenges in marketing your brand on WeChat.
According to Xiaofeng Wang from The Forrester Group: “The information that users share on WeChat is private and can be seen only by personally approved friends; as a result, WeChat is used more as a communication tool for friends to keep in contact. Users are less likely to repost brands’ information massively, as marketers expect them to do on Weibo.”
There are also restrictions on brand accounts for how many messages they can send to their fans. With the government crackdown on luxury items and self-indulgent behaviour, Western brands are still weighing up the options and discovering how best to leverage WeChat as a marketing medium. But the truth is that its growth in popularity across the globe may well make it a primary focus for many years to come.
The slowdown in China’s economic growth might be making some big Western brands think twice about investing in this lucrative market in the future.
At the beginning of 2014, both L’Oreal Garnier and Revlon planned exits from China’s competitive cosmetics market.
China is a large and complex arena in which to do business. Foreign companies have often had difficulty navigating it. Luxury brands appear to be suffering more than most, not only because of the economic slowdown but also the government’s crackdown on what it sees as unhealthy extravagance.
“As growth in China slows brands are starting to evaluate their portfolios in China and to focus on where they see the biggest growth,” comments Torsten Stocker, Hong Kong-based partner with consultancy firm AT Kearney
In truth, L’Oreal is not pulling out totally from the Chinese market. They will, instead, be concentrating on two main brands: L’Oreal Paris and Maybelline New York. China is one of L’Oreal’s biggest markets, they have a 17% share in it, and they see social media marketing as vital to their success there.
Lancôme, another luxury cosmetic brand in China, has a strong presence on many social networks including Kaixin, Renren and Sina Weibo. It uses prominent key opinion leaders to promote its products on their blogs and in videos. And its Rose Beauty Weibo page has over 900,000 followers who regularly visit for advice and chat, post comments and reblog to their friends and family.
Lancôme created a new campaign for this New Year encouraging their fans to create digital talking greetings cards. “A Merry Lancome New Year” was launced on WeChat, Weibo and their own community website with those who collect the most ‘likes’ eligible to win products from the company’s latest line of cosmetics.
One of the ways in which luxury brands have suffered with the government crackdown in recent months is its effect on the Chinese practice of gift giving. The reason luxury items have caught the attention of the government is because they have often been used as bribes in politics and business.
But the affluent Chinese who buy luxury products are also changing their habits and purchasing outside of China’s mainland. And, according to analyst and writer Michael Zakkour: “Chinese luxury consumers are turning increasingly toward spending their ample disposable income on lifestyle purchases in addition to pure social status products.”
There is no doubt that luxury brands are nervous at the moment. Some like L’Oreal and Revlon are altering their approach to the Chinese market. Others are engaging more deeply on social media to offset any decline in popularity. Government crackdowns can disappear almost as quickly as they appeared.
But it’s not all bad news for luxury brands and the people who market them. The past 10 years has seen rapid growth in the economy and many see the current slowdown as a return to a more stable market that will benefit all Western brands trying to sell themselves in China.
“After a decade of rapid growth, the past two years have been a reality call for luxury brands in China. Rather than a downward trajectory, brands should think of the slowing market as a stabilization of rates that weren’t sustainable in the long-term.” The Jing Daily.