As we wave off 2021, and welcome in 2022, many of us take the opportunity to sit down and reflect.
At Hot Pot, we have done just that. By looking back at the major policy and cultural shifts that have tugged China in new directions, so too do we look ahead at what might be waiting in tow.
We hope that our predictions offer food for thought for brands engaging with China, as they draw up plans for the year ahead.
Chan Li, Ivy Guan, Emma Milligan, Adam Sandzer, Pippa Ebel and Ash Zhang
share their predictions for 2022.
“Putting strategy into streaming ”
China has the biggest live-streaming industry in the world. The past year has seen the number of vloggers skyrocket - reaching an eyewatering 400 million. The 1st day of Double 11 Festive 2021, Top 2 live-streamers Viya and Austin Li sold RMB 20 billion products in total. For consumers, purchasing via live-streaming has become commonplace, offering competitive discounts. Now though, Viya is in the headlines for another reason. In December, the live-streaming sensation was fined $210m for tax evasion, leading the entire industry to enforce a self-tax check overseen by the government.
If Viya exits, will this leave room for smaller players? Will other ambitious influencers think twice about their future careers, opting for more low-profile routes to market? Is this move the first of many impending regulatory measures set to restrain the wealth and influence of live-streamers in China?
For many international brands, live-streaming in China became something to experiment with in 2021. Despite this, it is becoming clear that the industry will be more closely regulated in the next year, resulting in more key players being removed. I foresee brands becoming more wary in their live-streaming approach, wanting to define commercial objectives and outcomes from the offset, and carrying out more due diligence on their shortlist of influencers.
“Social media fatigue ”
Some brands in China are opting out of social media entirely. Take a look at Bottega Veneta, who last year wiped all content from platforms including Instagram, Facebook, Twitter and Weibo. In November, beauty brand Lush quit four major social platforms, Facebook, Instagram, TikTok and Snapchat. Such steps form part of a louder revolt against social media and mass advertising.
This touches on a key development: social media feed fatigue. Of respondents surveyed, 75% said they were paying less attention to online ads due to digital device burnout this year. Over 45% of young people admit that their social media posts are not an accurate portrayal of their true identity, while 4/10 of those surveyed claim that they feel constantly judged, youth agency Zak found, interviewing 1,000 individuals aged 16 to 24. Social media is increasingly viewed with suspicion and skepticism. I anticipate that in 2022 users will take bolder steps to reduce their dependence on social media, and maybe even ditch it completely.
“Building of bridges, not walls ”
That China’s super apps have begun allowing interconnectivity may be 2021’s news, but the impact of this will undoubtedly be one of the most important developments next year. First and foremost, brands will be better able to track campaigns and develop a single-customer view via enhanced CRM platforms. This gives space for more sophisticated campaigns that move fluidly between previously impenetrable walled gardens, as well as greater re-targeting and consumer retention.
I think the interconnectivity of social commerce will also shift. Imagine a world where you’re interacting on a WeChat mini program game, and then can click straight through to watch a Tmall livestream and purchase from the full product line. This may not be so far away. A seamless user journey between social and Ecommerce platforms will revolutionise the way brands strategise and create content. They will need to adopt a more holistic approach, keeping their fingers on the pulse of different ecosystems, but efforts will be streamlined reaching additional audiences in a coherent, cohesive manner.
“The reopening of traditional routes into China ”
As China market entry and market share penetration becomes more expensive and complex, global brands are going to have to be more creative in their approach. This is especially the case for those with smaller budgets and/or limited existing traction in China.
As Covid-19 continues to create unpredictability for mobility in China, expect a more cautious and pragmatic approach from brands. Before setting up Ecommerce deals or offline stores, brands are likely to spend more time assessing the opportunity and building a level of awareness and organic demand with Chinese consumers through their global touchpoints and cross-border Ecommerce.
I foresee the distributor model, previously in decline, will look more attractive again for some brands. Brands will weigh up the risk of losing control versus the reduced cost and barriers to entry. Could it be that an evolved hybrid model emerges where a distributor is supported by more favourable wholesale pricing and marketing budget from the global brand? Likewise, will a more regional and channel specific distribution approach come to the fore?
“Shifting demographics on key media platforms ”
Whereas certain platforms in China were previously associated with a particular consumer type or profile, I anticipate a levelling out in 2022. Take for instance, Little Red Book. Whereas before it was largely seen as a platform for wealthy mums, the 77% of female users in 2020 has already fallen to 67% in just 12 months. I expect this evening out to continue in 2022.
Similarly, whereas Douyin used to be seen as the platform for Gen-Zers, its appeal amongst sociable silvers is changing the demographic substantially. The same can be said for Bilibili, which has already moved far from its anime-gaming roots, coming closer to Youtube’s diverse offering, with categories such as lifestyle, music and fitness on the rise.
I foresee that brands will no longer be able to adopt a targeted marketing approach focusing on specific channels, instead engaging the full range of platforms available.
“Niche sports become mainstream ”
Outdoor and winter sports markets are booming in China. With the launch of Beijing’s 2022 Winter Olympics this February, the Chinese population is likely to be more enthusiastic than ever about outdoor and winter sports. With international travel bans likely to be upheld well into 2022, activities such as hiking, camping, climbing, skiing and skating will be increasingly popular. Already popularised in 2021, these ‘niche’ sports might develop into ‘mainstream’ ones by the end of 2022, leaving new opportunities for specialist, international brands.
To date, this market has largely been dominated by foreign brands who occupy 70% of the total market, bringing in huge rewards for the likes of North Face and Patagonia. However, more and more domestic brands and even small designer brands have emerged and their share in the market is predicted to grow substantially. In 2022 I am looking out for the new, smaller players, as well as new international entrants seizing on the opportunity of an untapped group of consumers.
These are just a few of the key trends the Hot Pot team expect to see develop over the upcoming months. Scroll to the bottom of this page to sign up for our monthly newsletter The China Imperative and receive insights direct to your inbox.
Alternatively get in touch to have a member of the Hot Pot insights team schedule an initial free China consultation.