'618' Netted £110 Billion in Sales. Did you miss out?

'618' Netted £110 Billion in Sales. Did you miss out?

4 minute read

By Adam Sandzer, Hot Pot Strategy Director

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618 is China’s mid-year shopping festival. Although less well known than Singles Day (11.11), 618 is gaining popularity. This annual shopping festival starts on June 1st and ends on June 18th (hence the name 618).

This year, the two Chinese giants – Alibaba, including Taobao and Tmall, and JD.com reported unprecedented sales of £110 billion ($137 billion) during 618. Alibaba led the way with £79.41 billion in gross merchandise value, and JD.com reported £30.62 billion in total transaction volume, up 33.6% vs 2019.

Did your brand miss out on the opportunity?

The short answer is, it depends on your category, as it so often does in China.

Top categories included beauty products, fresh food, medical and health care products, kitchenware, mobile phones, home appliances, food & beverages, baby & maternal products, and home appliances. For brand owners in these categories, this is a must-win moment.

However, luxury and fashion brands were less active during the festival, focused on other events in the China marketing calendar.

Luxury brands are increasingly launching official presences on China marketplaces such as Tmall and JD.com. However, we see a high degree of caution and scepticism amongst luxury brand executives who have concerns around presentation and discounting and the negative impact on equity and value.

Naturally, the platforms themselves, desperate to elevate their own image and increase the average transaction value, have been pulling out all the stops to make it difficult to say no. We know that Tmall have doubled down on Luxury Pavilion with the launch of Luxury Soho, while JD.com have partnered with Farfetch and very clearly articulated their luxury focus. In place of discounts and coupons, the platforms have built a proposition around exclusive product availability, celebrity activations and gifts with purchase.

However, the Covid-19 pandemic has abruptly paused brands selling to Chinese consumers travelling internationally and also limited domestic offline consumption. In this context, coupled with escalating global stock issues, participation in previously taboo events, like 618, has become much more acceptable and even attractive. It will be the same when Double 11 comes around later in the year.

The big question is then, how will luxury brands approach these traditionally promotion-driven events?

While luxury brands resisted these promotions as recently as Double 11 in 2019, this year’s 618 mid-year promotion has seen modest discounting on brand owned stores. It is reported that 178 luxury brands joined the promotion on Tmall Luxury Pavilion, including the likes of Ermenegildo Zegna, Cartier, Chanel, Prada, Alexander McQueen and Balenciaga. Some are offering deals or special prices, although it must be noted that the fabled slash lines are not universal. The discounts available on Farfetch are much more prominent and aggressive.

Given the current retail climate, platforms have been driving these festivals more than brands themselves. For brands, participating and discounting are more pragmatic and tactical plays than long-term strategy.

Indeed, the buzz from official channels outside the marketplaces such as WeChat, Weibo and Little Red Book is barely audible amidst the noise generated by the much more active and digitally savvy fast fashion, beauty and electronics brands.

In summary, 618 has not yet been afforded top tier campaign status by luxury brands. This is particularly clear when compared to recent 520 activations, where we saw brands such as Gucci put significant investment into creative content and celebrity endorsements. Many luxury clients are more focused on the aesthetically appealing Qixi (Chinese Valentine’s Day, August 25th) and have been for some time.

In a world where commerce and content are increasingly blurred and retail sales are increasingly shifting online, is there much difference between leveraging a high-volume marketplace platform to clear excess stock, in comparison with an offline outlet mall?

As 618 results pour in, luxury executives should consider this paradigm shift as they start to think about Double 11 and the broader role of China’s marketplace platforms.

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Looking to understand which events in the China marketing calendar are must-wins for your brand?

Contact Hot Pot China to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


Chinese Beauty Consumers Want Innovation, Education & Personalisation

Your Chinese Beauty Consumer Wants You to Innovate, Educate & Personalise

4 minute read

By Adam Sandzer, Hot Pot Strategy Director

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There has been a growing sense of convergence between Chinese and Western consumer attitudes, preferences and behaviours. Undoubtedly, exposure to international brands and cultures has given rise to significant influence but at Hot Pot we believe it remains vital to focus on nuance and understand how to reach and appeal to your Chinese target audiences. 

Between Q2 2019 and Q1 2020, we looked at the similarities and differences between mid-income cosmetics and skincare buyers across London, Shanghai and Chengdu using targeted survey data (sourced from GWI). Below we share some of our key findings: 

Privacy is fundamental across Shanghai, Chengdu and London but status, altruism and image consciousness continue to have a much stronger influence on Chinese beauty consumers

 

Whilst Londoners value family and equality, beauty consumers in Shanghai and Chengdu are more focused on developing new skills and seizing opportunities in life

 

Search engines are number 1 across all 3 locations but Chinese beauty consumers are significantly more reliant on social media and mobile apps such as WeChat and Little Red Book when making purchase decisions

 

Innovation is the most important consideration for Chinese beauty consumers' perception of brand quality. They are also seeking youthfulness, trendiness, humour and exclusivity much more than their London counterparts.

 

Social responsibility and being eco-friendly are increasingly important considerations across all 3 cities. Chinese beauty consumers particularly seek brands that help them improve knowledge or skills, help them organise or simplify their life and offer customised or personalised products.

 

Evidently, there are important differences in preferences and behaviours that brands looking to market to Chinese consumers need to be aware of. The gap between Shanghai and Chengdu consumers is not as wide as that with London but there is nonetheless nuance that necessitates a tailored localised approach for regional campaigns. 

Most of the surveys were taken prior to the outbreak of Covid-19 and lockdown, from which most Chinese consumers have now emerged and returned to ‘normality’. However, from review of the specific Q1 2020 data it appears that the crisis has only served to accelerate existing trends and prevailing attitudes. In particular, there is a stronger belief that “life is the real luxury” and beauty brands that innovate and personalise as well as consciously enable consumers to elevate their status, develop new skills and organise themselves are the most likely to succeed.

 

Key takeaways:

  • It is vital to understand nuance in preferences and behaviour between consumers in your home market and China
  • Compared with UK consumers, Chinese beauty consumers are much more interested in brands that innovate, educate and personalise
  • Covid-19 has served to entrench and accelerate attitudes, preferences and behaviours rather than replace them

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At Hot Pot China we partner with forward-thinking brands on their China activity. We guide our clients in maximising ROI from their short, medium and long-term marketing activity with Chinese consumers, both in China and in domestic markets.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value for your brand, digital and eCommerce initiatives.


Uncovering the Truth about Live Streaming in China

Uncovering the Truth about Live Streaming in China

5 minute read

By Paul Hickey, Hot Pot Strategist

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Live streaming is the ‘in’ thing right now in China. Many have heard the astronomical sales figures that live streamers, like Li Jiaqi, brought in for brands on Single’s Day in 2019.

Tmall is cashing in on the explosion in live streaming popularity by encouraging brands to utilise in-platform live streaming to drive traffic to products. This growth in live streaming has led multiple other platforms, including WeChat, Douyin and Little Red Book, to develop their own live streaming capabilities. 

While many see the opportunity in live streaming as a quick way to garner massive sales, it’s important to understand what opportunities there are for your brand and what role, if any, live streaming could play. While many brands have seen success, there are other brands that have fallen foul of not following some basic principles and in turn, received backlash from Chinese consumers. Additionally, there have been recent rumblings that many brands are seeing inflated sales figures during a live stream, only to then have a huge quantity of returns, potentially negating the benefits of streaming.

If you're considering live streaming for your brand in China, here are a few fundamental principles that you need to follow, to avoid costly mistakes and common pitfalls.

 

Establish Why You’re Live Streaming

Given that live streaming has been given so much press, many are looking at live streaming as a quick way to drive sales. However, it’s important to understand that live streaming serves multiple purposes and different categories perform differently on live streaming platforms.

Typically, FMCG, skincare, makeup, snacks, and wine and spirits have all seen strong sales through live streaming. Luxury, however, has seen live streaming be more effective as a branding and awareness channel.

It’s important that you understand why you’re live streaming. If you are looking to sell, then you should take a look at creating bundles or giving a great deal on individual products that aren’t your hero product. Pushing a hero product at a discounted price as part of a live stream can have a detrimental impact on brand image.

 

Know your Brand 

There’s an old adage - ‘know who you are and deliver it at all times’ - and nowhere is this more crucial than in China. Live streaming may look like a simple endeavour but there are many parts that make up a successful live stream.

One brand that failed to deliver on its own brand proposition was Louis Vuitton. The brand hosted an hour-long live stream session on Little Red Book to launch its summer collection, garnering over 152,000 views. However, there was much discussion around whether the live stream actually matched up to Louis Vuitton’s luxury credentials.

Viewers noted that the set up felt far too simple for a luxury brand and that in turn made the products seem unappealing. Many consumers also took umbrage with the choice of host, commenting that once again, she did not match the luxury proposition of LV. It’s essential that when looking to live stream, a brand understands their own proposition and develops a live stream proposition to match.

 

Invest

The basics are no longer enough. Live streaming is incredibly popular right now and therefore, brands are investing more and more to create a compelling proposition and attract people to watch their live stream instead of competitors.

One area that has seen tremendous growth is the use of sophisticated studio setups. Chelsea FC launched a live stream show on Weibo and Douyin. The Premier League club delivered a two-hour broadcast in a professional China production studio, reviewing Chelsea's 2004-2005 Premier League championship season. The broadcast featured frontline reporters sharing their experience from Stamford Bridge and fans reminiscing about the team winning the championship.

The show garnered 7.5 million total views, the topic "Stamford Bridge Rising'' had 2 million reads and 1 million interactions. 

 

In addition to investing in a professional set design, another major investment is in the person you choose to host the live stream. Brands have a number of options here. If embarking on a regular live stream (weekly, monthly), then it may be worth investing in internal talent and driving awareness through different channels. However, many brands look at working with influencers and celebrities in order to drive traffic from their fanbase to their brand.

Picking the right person is essential and can differ greatly depending on the objective of your live stream. Recently, Yanghao Luo, entrepreneur and one of China’s original internet celebrities, conducted a live stream that attracted 48 million viewers. Throughout the course of this live stream, he sold over £15.5 million of goods. This success was built on Luo’s reputation having founded his own smartphone brand as we;; as trust built through his work as a teacher. Tapping into this kind of meaningful and trustworthy influence can create big wins for a brand.

 

Regularity

As live streaming becomes more sophisticated, platforms are looking at working with brands to establish regularity in live streaming that brings consumers back to the platform on a more frequent basis. For example, Tmall is incentivising brands by giving them prominent positions and encouraging traffic.

This regularity was significantly increased during the COVID-19 pandemic with brands broadening their live streaming strategies from a purely sales-driven approach to include branding and engagement.

Lululemon offered dozens of daily live yoga classes and created a list of trainers offering online classes on its WeChat and Douyin accounts. The classes were on every Monday, Wednesday, and Friday night to provide free, regular training sessions which can be booked in advance. Using live streaming to engage consumers and bring them into a brand ecosystem, regardless of platform, is a great way for brands to achieve multiple objectives with one activity.

 

Do What You Can, As Well As You Can

Live streaming is already established and advanced in China, so consumer expectations are also high. They expect live streams to be a seamless experience that is in line with their perception of your brand. That isn’t to say you have to invest in elaborate sets or celebrities but you do need to ensure what you can do is done very well.

One of China’s top live streamers, Austin Li - also known as the Lipstick King - recently ran into trouble during a live stream with virtual singer Luo Tianyi. Luo Tianyi was supposed to perform a song, but the audience only saw Luo Tianyi dancing without any sound due to a technical failure. It was criticized by consumers as being a “gimmick without good preparation.”

 

In Conclusion...

  • Live streaming is a great way to achieve a number of objectives, including sales, branding, awareness and engagement
  • Plan ahead as much as possible and stick to these essential rules when developing a live stream program
  • Running into live streaming expecting to sell millions of RMB in product without preparation or due diligence will likely end in disaster
  • Monitor the full impact of the ROI, including returns for items where the commission has already been paid to an influencer. Like all marketing activities in China, live streaming must be rooted in commercial goals and be integrated into a broader digital marketing approach.

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Get in touch with us to find out how savvy strategic planning, campaign management and in-market support can help you make the most of the enhanced China opportunity.


Hot Pot’s Guide to ShiHuo 识货 - the app for sport enthusiasts

Hot Pot’s Guide to ShiHuo 识货 - China’s app for sport enthusiasts

5 minute read

By the Hot Pot Campaign Team

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China’s health & fitness industry has boomed in the last decade, growing at an average rate of 8.6% YoY since 2014. Popular sport-product app Shihuo caters to this trend, providing a content sharing platform for a community of sport-obsessed and athleisure-wearing consumers.

Hot Pot’s Campaigns Team created a Shihuo platform 101 for brands looking to capture this audience, shining the spotlight on a few brands getting their approach right.

What is ShiHuo? 

Loosely translating to ‘Spot the Best Products,’ ShiHuo established itself as a male-centric, sports product platform. Six years after launch, ShiHuo has 4.8 million Daily Average Users (72% male) and is the third most popular app in the sports category on China’s Apple store. Content is focused primarily on those searching for genuine sportswear products, an often difficult task in a market littered with convincing counterfeits. 

The app offers 3 main attractions for users that sit across the conversion funnel. 

Pre-Purchase - Sports & Product Focused Content 

  • The main use of the app is to discover and discuss niche sportswear content, with a focus on identifying genuine products. 
  • Through owned profiles, brands can disseminate product information, launches, offers and interactive campaigns.
  • KOLs provide the biggest source of content, building communities around their valued opinions, including product reviews, unboxing and competition-led campaigns.

Purchase 

  • While ecommerce isn’t directly available on the platform yet, the app is set up to facilitate conversion on external sites with reduced friction 
  • Links are embedded within both brand and KOL content, driving users to authentic and verified ecommerce sites. 
  • Users are thereby protected against counterfeit purchases, in turn driving relatively high conversion rates 

Post-Purchase - UCG reviews

  • App engagement is also very high, largely driven by product reviews 
  • Users provide another layer of product authenticity through reviews of the products, delivery, unboxing and customer service to advocate or critique recently purchase experiences.

 

How can brands leverage the platform?

Brands have an opportunity to curate a community of vocal brand advocates amongst users who are actively searching to make purchases. Aside from pushing out owned content, there are two main advertising opportunities for brands. 

In-app Media Buy

  • ShiHuo offers a range of different media buy placements that can drive users to their Brand Profile, or direct to their website or ecommerce site.
  • These include ads on the user's launch screen, within the newsfeed and trending content. 

KOL Collaboration 

  • A great opportunity for brands is to collaborate with KOLs and access their evangelized networks.
  • Creating innovative content with KOLs is key to cutting through the noise, leveraging interactive campaigns and giveaways to unlock engagement. 

 

Case Study - Roseonly

What we loved about Roseonly’s ShiHuo collaboration is the innovative approach to connecting with their target audience. As an online high-end flower shop, Roseonly was not necessarily a natural collaborator for digital campaigns on ShiHuo. However they noticed that a large portion of the platform’s consumers were males purchasing for their partners. 

Launching on ShiHuo allowed Roseonly to tap into a male-dominated community. They tied in to May 20 (I Love You Day) celebrations to challenge couples to share the most stylish matching outfits. To enter, couples needed to take a photo of their outfits, share and tag the brand on ShiHuo. Leveraging an existing network of KOCs (key opinion consumers) and their partners, this thread skyrocketed on the app. The result: nearly 1,000 total entries, 120,000 million impressions and a total of 150,000 votes. 

 

Case Study - Nike

Nike often faces counterfeit challenges in China, so the brand saw ShiHuo as an inevitable match to help their fans guarantee authenticity. We are impressed with the creativity of the campaigns, tapping into the Chinese passion for basketball. Ahead of the FIBA championships, Nike built an interactive H5 that integrated with ShiHuo. Users were asked to vote for the winning teams before matches, with the chance to win a pair of trainers. Continuous discussion of the upcoming matches drove engagement for Nike’s account, with the trainers also taking centre stage.

Over 575,000 users interacted with the account, amassing 1,301 user generated posts and more than 100 million impressions over the entire campaign. Of course the real win for Nike is the half million interactions from consumers that then had access to purchase the trainers, with the campaign directing them through to their authorised ecommerce site. 

While many brands are drawn to the huge user numbers of core platforms in China such as WeChat, Weibo and Tmall, Hot Pot regularly advocated backing these up with a more niche approach. Reaching a smaller - yet still significant - community of highly targeted users through platforms like Shihuo pays dividends in terms of engagement and conversion rates as well as ATV.

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Looking to expand your brand within a male-targeted community or looking to learn more about niche platforms in China and how they could work for your brand? 

Contact Hot Pot China to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


Labour Day Tourism Figures Are Cautiously Optimistic

Labour Day Tourism Figures Are Cautiously Optimistic

3 minute read

By Hot Pot Strategy Team

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Labour Day (May 1st) in China is typically a 3 day holiday, however this year, workers were given a 5 day break from work. The Labour Day holiday has traditionally been a big opportunity for domestic travel with China’s 5A scenic spots becoming famously crowded. 

Many are viewing the holiday as an indication of both the willingness for Chinese consumers to travel and a glimpse into the recovery to expect in domestic markets. Now that China has returned to relative normality, Labour Day proved a willingness to travel, albeit with some limitations.


The Forbidden City, Beijing, 1 May 2020

Compared to Tombsweeping Festival (April 4th), there were almost twice as many tourists travelling for Labour Day, equating to approximately 115 million people, generating an estimated RMB 47.56 billion in tourism revenue. These numbers were chiefly driven by the re-opening of major tourist attractions in Beijing and Shanghai that have been closed since late January. However, in order to maintain social distancing rules, attractions are allowing up to only 30% of their total capacity and visitors must wear face masks. Compared with 2019, visits to many 5A scenic spots also saw a decrease in visitors, with many seeing only 20% of last year's numbers.

The top destinations this year were Nanjing, Shanghai and Beijing, with the capital seeing a total of 4.63 million tourists. While these figures are encouraging after months of lockdown, this is still 55% less than last year, giving some sense of the immense scale of China’s tourism industry.

The Bund, Shanghai, 1 May 2020

One destination that was off the travel list for travellers was Hong Kong. Labour Day 2019, saw 840,000 Mainland Chinese tourists visit Hong Kong. This year, during the Labour Day festival, there were less than 1000 tourists and no official tour groups. However, this is not surprising, as Hong Kong has imposed harsh travel restrictions for in-bound visitors since February, requiring them to self-quarantine for 14 days by law. This renders a short-term trip to Hong Kong all but impossible. 

Much of this year's domestic travel was driven by 18-35 year olds, with 50% of tourists aged 26-35 and 21% aged 18-25. The traveler also left their research process a lot later than usual, with a 90% increase in online travel research taking place during the week of April 22nd.

Whilst the numbers were down for Labour Day 2020 compared with the same period a year ago, there is still a clear willingness and desire to travel. Plus, the scale of China means that whilst total numbers are down, they are still significant and meaningful for the target destinations. 

The next key travel period is around Golden Week in October. Whether or not Chinese tourists choose to travel outside of China will depend on the recovery in different countries, with those that have a high safety record and open borders during the summer months emerging as winners. After a period of zero inbound tourism, as countries re-emerge from lockdown there will be an ever increasing opportunity to capture pent-up travel demand from China’s affluent traveller population. 

In Conclusion...

While the tourism numbers are a fraction of what they were last year, it is nevertheless encouraging that 115 million people travelled and spent money outside of their home, even knowing that there would be extra restrictions in place due to Covid-19.

That said, the year-on-year reduction in tourists and economic spend is a stark reminder that a full recovery is going to be a slow and apprehensive journey. Additionally, as the pandemic has impacted every country, there will undoubtedly be knock-on effects from a global supply chain that affect both retailer supply and consumer demand in China.

Nevertheless, we are cautiously optimistic that these figures signify China's willingness and excitement to return to 'normalcy' - however 'normal' might look in a world after Covid-19.

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Get in touch with us to find out how savvy strategic planning, campaign management and in-market support can help you make the most of the enhanced China opportunity.


4 Trends Shaping China’s Luxury Market Amid Covid-19

4 Trends Shaping China’s Luxury Market Amid Covid-19

8 minute read

By Adam Sandzer, Hot Pot Strategy Director

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While the Chinese consumer is relatively confident and ready to spend, how will weeks of lockdown and global uncertainty affect their mindset and impact their behaviour? 

Rather than new trends emerging, we have observed an acceleration of existing trends that have gained momentum due to the Covid-19 impact. 

Here are 4 key trends that global brands must watch going forward.

 

(1) Life as the ultimate luxury

Lockdown at home has allowed consumers to reconnect with traditional pastimes, revisit hobbies, and explore new interests. It has allowed people to reflect on what is important and what gives them purpose and meaning.

For many, there has been a moment of realisation that life itself is the ultimate luxury, with a need to grow both personally and collectively, savouring the big and the small moments. In particular, there has been a heightened appreciation for the value of time, as well as physical and mental health.

All brands are now expected to contribute to society and public good. They are expected to help individuals improve. We expect trends like sustainability and wellness to become increasingly important

We have seen an explosion of self-improvement videos on channels like Douyin and Bilibili, ranging from Photoshop, Excel and video editing, to learning languages and cooking tips. This trend has continued post-lockdown.

Consumers are also taking much better care of what they eat and how they treat their bodies. In line with their purpose and the trend, Nike successfully delivered training videos and content to help people stay fit during the lockdown via WeChat livestreams.

Similarly, luxury hotel, Shangri La, provided online cooking lessons.

We also see early signs of upgraded consumption, with over 70% of consumers booking 4- or 5-star hotels for the upcoming Labour Day (1 May) holiday for better standards and hygiene.

We expect Chinese consumers to value everyday and smaller moments in life even more. Luxury brands should focus on an everyday luxury proposition that connects with consumers beyond special moments or big occasions. 

 

(2) The Great Digital Migration

China was already streets ahead in terms of digitalisation of marketing and ecommerce. The pandemic and lockdown have further accelerated the advancement of and dependence on digital infrastructure. We find that the strongest digital brands will be the ones to emerge successfully from this crisis.

Screen time increased 26% during CNY this year, compared with CNY 2019. China now represents 54.7% of the global eCommerce market -- double US, UK, Japan, South Korea and Germany combined. Chinese consumers now get more information from smartphones than from real-world experiences!

Chinese consumers were able to attend events online, such as Shanghai Fashion Week. Virtual access to all areas has quickly become the norm and consumers almost expect a front row seat to brand activities, wherever they are in the world.

Live-streaming has been widely discussed, but has now exploded in popularity with the “see-now, buy-now” model. Short video consumption on Douyin, Bililibili and Kuaishou has become commonplace and continues to prove very effective for keeping attention and driving engagement. 

Amid all of this, the key trend is blurring of the lines between content and commerce. The integration of interactive experiences with shopping is irreversible and very powerful. 

The average luxury shopper in China is 15-20 years younger than Europeans or Americans. While offline will continue to play a role, online engagement through content and purchase through eCommerce is their luxury experience, and luxury brands are quickly noticing this.

By the end of 2019, over 90% of luxury brands with a presence in China had established WeChat Mini-Programs and continue to use them for online selling, brand services and VIP customer management. 

Over 150 luxury brands are now available on Tmall Luxury Pavillion with Prada finally taking the plunge and gaining 54,000 followers in the first month. 

Louis Vuitton and Lanvin have also recently dabbled with livestreaming on platforms like Little Red Book.

However, consumer feedback consistently suggests that while playing in the right areas, luxury brands are failing to truly hit the mark in terms of presenting a premium and aspirational proposition online and are lagging behind their beauty, fashion and even sporting counterparts.

Local beauty brand Perfect Diary launched their colorful eye shadow collection in collaboration with The Discovery Channel. Chinese beauty brands are capturing the attention of Chinese consumers with increasingly sophisticated and aspirational propositions and a growing sense of patriotism.

In sports, Chelsea Football Club’s live-streaming of archived footage featured a studio setting and KOLs. It is a great example of the standard being set to attract attention and gain influence in China. 

Luxury brands must invest in order to meet and exceed the level of content, KOL collaborations, promotions, and online-to-offline integrations that is expected by today’s modern luxury consumers. Brands must focus on localised assets, innovative content, and tech developments to remain top of mind.

 

(3) 'China Proud'

In 2019, approximately 70% of luxury sales to Chinese consumers happened outside mainland China. Given the current travel restrictions and uncertain timeframes, we expect this to dramatically shift to domestic consumption. The Economist predicts this pattern will continue until at least Q1 2021.

Recent surveys by Trip.com and Oliver Wyman have concluded that an overwhelming majority of respondents will prefer to travel domestically for the foreseeable future. While we do not believe that a reluctance to travel will persist longer term, we see this as an opportunity for brands to up their game on home turf and ultimately tip the balance.

The government is also actively looking to stimulate domestic consumption with reduction in tax rates, distribution of coupons and even a shift to 2.5 day weekends in some provinces.

It is still early to understand the full long-term impact of these measures, but the reported sales increases that luxury brands are showing for March and April validate this trend.

That said, footfall to malls and department stores has remained relatively slow and it could be that much of the shift and growth will come from online, with physical stores acting like virtual showrooms and store staff becoming personal shopping assistants. Estée Lauder and Cle de Peau continue to use in-store staff for live-streaming products.

It is also interesting to note the shift towards ‘Made for China’ products and China-first product launches such as Dior’s Gem Clutch -- a bespoke hybrid between fine jewellery and fashion handbag - launched on WeChat and a VIP live stream event.

This is the time to double down on domestic consumption and invest in growing reach and driving traffic to commercial touch points to capture customer data and build personal, long-term relationships.

 

(4) Brand Values & Immersion

Chinese consumers do not want to just follow brands anymore; they want to truly immerse themselves in brand content and be inspired. As the luxury industry becomes more accessible and inclusive, luxury brands must continue to communicate and interact through values to form lasting and deep connections. Storytelling needs to be precise, specific and insight-driven.

During the lockdown, the most agile and adaptive brands focused on strengthening customer relationships. And customers had daily connections through direct communication with sales staff and product promotion via WeChat. This two-way interaction is highly personalised and this level of service must continue.

Nike’s ‘Back to the Beginning’ campaign targets aspirational Chinese sports women, by amplifying true stories of athletes who overcame limitations to become world-class. The campaign garnered 90 million comments on social media channels and saw a 55% increase in female audience engagement.

BMW’s short film entitled “A Letter to 2020” presented a timely and sensitive message of hope to commemorate China’s gradual recovery and return to somewhat normal life. The simple style and emotional script creates an aura of approachability.

We have also seen an uplift in collaborations between brands and local artists. These collaborations have increasing appeal for Chinese consumers seeking to upgrade their consumption habits with cultural references.

 

In Conclusion...

These 4 trends are not new, but they are accelerating as China reacts to Covid-19, meaning that they are increasingly urgent for global brands looking to build and maintain connections with Chinese consumers.

  • The pandemic has refocused priorities and firmly positions life as the ultimate luxury
  • China already led the world in digital migration, and their recovery is happening sooner because they can adapt faster
  • Chinese consumers will look to spend more and travel more within China
  • Brands that provide an immersive experience, connecting community, interactivity, and commerce, will win

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Get in touch with us to find out how savvy strategic planning, campaign management and in-market support can help you make the most of the enhanced China opportunity.


Comparing Consumer Confidence in the US, China & Italy

Comparing Consumer Confidence in the US, China & Italy

4 minute read

By Adam Sandzer, Hot Pot Strategy Director

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Retail spend across the globe has taken a significant hit due to lockdowns, social distancing, and financial uncertainty. Many global brands and retailers are seeking to understand if the pause in retail sales will manifest as deferred revenue, or if the sales are lost forever?

To help explore this question, Hot Pot strategists studied data from GlobalWebIndex, analysing more than 1,000 responses from the United States, China and Italy. 

Here is what they found when looking at consumer confidence, financial impact, and propensity to spend.

 

Consumer confidence is returning faster in China

While the crisis persists in Europe and North America, China is very much recovering, with life starting to return to ‘normal.’ 

A March 2020 study of consumer sentiment in China, Italy, and the US reveals that Chinese consumers are by far the most optimistic and truly believe that their country is well on the way to recovering from the pandemic.

Percentage of respondents that feel optimistic/not optimistic that their country will overcome
COVID-19 (1 = not optimistic at all; 5 = very optimistic) | Source: GWI, March 2020

 

Chinese consumers report a lower financial impact

The same study revealed that Chinese personal and household income has been significantly less affected by Covid-19, with 73% of respondents reported no or small impact and only 26% reported big or dramatic impact. Comparatively, 42% of Italian respondents reported a big or dramatic impact.

Percentage of respondents who say COVID-19 has had the following effect on their
personal/household income | Source: GWI, March 2020

 

The lower financial impact is driving pent up demand

After several months of lockdown, it is expected that consumers will have pent up demand to spend. Two key areas where Chinese consumers have held back are luxury items and vacations/holidays. The survey reveals that 20% of Chinese respondents have delayed purchasing luxury items and 53% have delayed purchasing holidays/vacations, exceeding both Italy and the US.

Spending has therefore been deferred in China, more than eliminated, as it has been in other markets. With confidence returning and a lesser impact on income, we can expect a strong rebound in demand for both luxury and holidays in the coming months.

Percentage of respondents who say they have delayed purchase
as a result of COVID-19 | Source: GWI, March 2020

 

Chinese consumers are ready to spend again

Luxury brands are starting to report positive signs from mainland China. According to Bloomberg, LVMH saw sales up 50% at Louis Vuitton stores in mainland China over the past month.

WWD reported that the Hermès Guangzhou flagship took in $2.7 million on the first Saturday they reopened, in a sign that China’s economy is quickly rebounding.

Additionally, L’Oréal Chief Executive Officer Jean-Paul Agon also said sales in China turned positive in March and are on track for a 5% to 10% gain this month.

In general, we are seeing a spirit of cautious optimism amongst Chinese consumers that stands in contrast to deeper uncertainty in other global markets. Smart brands are increasing their focus on the Chinese consumer and investing in strengthening digital resources to offset potential long-term revenue loss in home markets.

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At Hot Pot China we partner with forward-thinking brands on their China activity. We guide our clients in maximising ROI from their short, medium and long-term marketing activity with Chinese consumers, both in China and in domestic markets.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value for your brand, digital and eCommerce initiatives.


Love in China - Why So Many Valentine’s Days?

Love in China - Why So Many Valentine's Days?

4 minute read

By Paul Hickey, Hot Pot Strategist

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Perhaps now more than ever, any celebration that brings people together, whether virtually or physically, is a welcome relief. Thankfully, China has a plethora of such occasions. March 14th every year sees ‘White Valentine’s Day’, typically celebrated by women giving gifts to men. This year, whilst many brands used the day to promote gifting products, they also used the occasion to spread a message of support and community to their followers across China. As we move forward and a level of normalcy begins to return in China, there are more key dates to share the love.

May 20th - 520 ‘wu er ling’

May 20th, known as 520, originated as a result of Chinese internet slang. 520, pronounced ‘wu er ling’ has phonetic similarities with the phrase ‘wo ai ni’, which means ‘I love you’. As this phrase began to grow in popularity, it became associated with the date May 20th. The occasion is widely celebrated in China and due to its digital nature, is very popular online.

Last year, Estee Lauder teamed up with their ambassador Hua Chenyu to release 3 exclusive lipstick shades engraved with ‘520’. By using their male ambassador to promote these exclusive products, they were able to appeal to his fans and promote the idea of self gifting. The campaign proved successful with pre-sale orders reaching over 10,000 units within 24 hours of the video going live.


August 25th 2020 - Qixi 

Qixi, which this year is on August 25th, is based on the story of a cowherd and weaver girl. The two were lovers but unable to meet and were separated by a heavenly river. Once a year, on the 7th day of the 7th lunar month (Qixi), a bridge would form to unite them. The celebration dates back millennia and today, many Chinese couples celebrate the occasion in a similar fashion to Valentine’s Day, sending gifts and arranging dinners with their significant other. Shopping malls, brands and ecommerce platforms all across China see this date as a significant part of their marketing calendars and it is celebrated more widely than its February 14th counterpart.

Last year, Budweiser’s ‘all love is love’ campaign generated significant buzz. The campaign showcased a diverse cast of couples in video and photo content. As well as this, they released special edition bottles that when paired together, showed a couple kissing. The campaign promoted the idea of diversity and all love being valid and this resonated well with their target consumers, reportedly achieving well over 2 billion impressions across multiple touchpoints.


February 14th - Valentine’s Day

February 14th is celebrated in China, although thanks in part to the fact that the celebration stems from the West. Tier 1 cities typically celebrate the occasion more than lower tiers. The celebrations in China are much the same as they are globally, with couples gifting each other a wide range of items. This year, given the seriousness of the situation in China, many brands used the occasion to focus on sharing a message of love and positivity for all, rather than purely gift giving and romantic love. 

Brands still took advantage of the commercial opportunity, Louis Vuitton released a mini-program featuring gift recommendations, but in its content decided to focus on love as a collective rather than purely romantic, generating over 100,000 WeChat views.

March 14th - White Valentine’s Day

White Valentine’s Day is the least celebrated of all options listed but that’s not to say it should be overlooked. The celebration stems from Japanese and Korean culture and is focused on women giving a gift to their partner to say thank you for their Valentine’s Day gift a month previously. 

Many brands create content that promotes white, black or grey products as well as items that would be ideal for gifting. This year, Tiffany created content that showcased different products for different relationship types including the one with yourself. The content was viewed 80,000 times on WeChat.

 

China clearly loves to love and this year has seen a shift away from pure consumerism to utilising campaigns and content to send support across the nation. As the current situation continues to evolve, it’s important that brands understand how campaigns can resonate in the market in a way that feels authentic to consumer sentiment.

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At Hot Pot China we partner with forward-thinking brands on their China activity. We guide our clients in maximising ROI from their short, medium and long-term marketing activity in China, as well as executing the same in-market.

Contact Hot Pot China here to discuss how our team of China specialists can help realise greater value in your brand, digital and eCommerce initiatives.


Brands Leading with Positivity in China

Brands Leading with Positivity in China

3 minute read

By Jonathan Smith, CEO & Founder

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As brands globally look to understand the “new normal” brought about by the Covid19 virus, we take a bitesize look at how brands in China adapted their messaging during the crisis.

Below are a few brands that have adapted their messaging in China so that it still reflects their core brand identity, while acknowledging the impact Covid-19 is having on consumers. This balance is critical as brands craft messages that are consistent yet still sensitive.

 

李宁 LiNing: China’s leading home-grown sports brand.

“Waiting for you…” A simple but powerful reflection on the target audience’s motivation for sports: striving, hard work and camaraderie will all return.

 

网易严选 Wangi Yanxuan: Netease's eCommerce platform

Netease replaced their intended large-scale OOH advertising with a clear and simple message of solidarity - asking people to stay at home and “wait for spring to arrive”. The move was widely praised online for its anti-consumerist nature at a time of hardship for the nation.

 

McDonald’s China

McDonald’s China quickly adapted imagery to be in line with consumers everyday reality - the wearing of masks. Here they lead with a message focused on the positives of lockdown, namely being together and making memories as a family.

 

LeLeCha乐乐茶: Makers of premium tea with soul

LeLeCha乐乐茶 staff adapted their logo cups to express messages of solidarity and fortitude in the fight against Covid-19

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Get in touch with us to find out how savvy strategic planning, campaign management and in-market support can help you make the most of the enhanced China opportunity.


New World Order: The Urgency of the China Opportunity

New World Order: The Urgency of the China Opportunity

5 minute read

By Jonathan Smith, CEO & Founder

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Much has been made by China commentators in recent weeks of the fact that the Chinese word for “crisis”(危机 weiji )contains within it components of the words for “danger” 危 and “opportunity” 机. As a natural born leader, JFK was a fan of this cultural pearl.

While it is not entirely accurate linguistically speaking (the second character 机 ji is also part of words for “aeroplane” and “organic”), it is a useful metaphor for how China business has dealt with the current Covid-19 crisis.

Perhaps more relevant is the original Greek term krisis, simply meaning “turning point” or “decision” and does not imply positive or negative outcomes. When a situation reaches a turning point, it is up to each individual how they respond and whether the effect is positive or negative. 

By this rationale China has moved heaven and earth (literally in the case of Wuhan’s 10 day hospital construction) to minimise negative outcomes, embrace new modes of living, and ensure positive growth post-recovery.

Just a few short weeks ago, the talk was of delayed investments and uncertainty in China, yet the tides have now turned. The pandemic is starting to take its toll on global markets, while China is now well into recovery mode and many businesses are 3-4 weeks into implementing their recovery plans, formed in the peak of the crisis. 

How can global brands turn this to their own advantage?

 

The Outlook for Western Markets is Uncertain Long-Term

The unpredictable daily fluctuations of global stock markets are causing fear across Western markets.

Consumer sentiment is low, with expectations that spending will reduce dramatically on non-essential categories. Many consumer brands are reckoning with prolonged and severe dips in revenue. This is particularly true for brands where physical locations play a major role in their retail mix.

While China reacted rapidly on a national and local level to stem the spread of the virus, precautionary measures at a government level in Western markets have been much slower to take shape. The knock-on effect will not only mean that the virus is likely to be around longer, but that there will be a deep and prolonged deterioration in consumer sentiment and spending. 

Businesses from London to Milan to New York are yet to calculate the full impact of this uncertainty.

In the space of less than a month, China has become a safer bet for smart global brands to invest time, budget and resources in the face of a potential global recession. Indeed many are doubling down on their spend in the region.

What are the factors driving this redoubled focus on the Chinese consumer?

 

Reasons to Bet on China: (1) China is already in recovery mode

Key indicators of economic activity show that China is well through the worst of the crisis. HBR’s article makes for good reading on the underlying trends. 

Happily, a version of normal business life has also resumed on many fronts. Across a wide range of industries, hundreds of millions of employees returned to offices, factories and service hubs during the last 2 weeks (including Hot Pot China’s team in Shanghai).

 

(2) In China, eCommerce already dominates

Pre-crisis, China was already established as the world’s largest eCommerce market, representing just under 50% of the entire global ecommerce market by GMV. By 2023 this is predicted to be around 63%. Already, there are more than 60 billion m-commerce transactions made every year.

Interestingly, the catalyst for the movement towards eCommerce came during another crisis, the SARS outbreak of 2003. The months surrounding that crisis proved pivotal in Alibaba’s decision to launch Taobao as a C2C and B2C commerce platform. With the need for online ordering and home delivery being thrown into stark relief, Taobao and Alibaba initiated an explosive 15+ year run of building out eCommerce infrastructure.

Today, eCommerce and more prominently m-commerce are widely adopted across China and are supported by a fast, efficient and wide-reaching logistical infrastructure. 

For many consumers in lower-tier cities this infrastructure is a vital and established route to accessing global brands, few of which choose to establish flagship stores outside of the "known worlds" of Shanghai and Beijing.

When mapped against a health crisis that significantly reduces public activity, gatherings and therefore footfall to physical retail locations, China retail already has all it needs in place to mitigate risk.

Indeed aggregate uptake for B2C eCommerce in China actually increased for key brands during March across beauty and F&B sectors, with recovery predicted for apparel and leisure goods in the second half of March. Now that we talk of full recovery for Chinese society, we are reckoning with an absolute increase from an already impressive base performance in B2C eCommerce.

 

(3) In China, rapid adoption of new business models future-proofs revenue

In times of crisis, new ways of working and new business models are born. Often these are accelerations of pre-existing forms that are forced into prominence. 

Whenever this is the case, players that respond quickly have the most to gain. China businesses have time and again proven themselves to be first-movers, capable of turning on a sixpence to react to their macro environment.

One such case has been China’s ability to blur the line between online and offline sales methods. Livestreaming is not new for China, but it has come of age over the last 2 years with Tmall making live video sales a core part of the 11.11 singles day sales, as well as forming a standard tool in the playbook for brands on China eCommerce.

The most prominent extension of this development brought about by the crisis is the trend for brands to convert their physical retail and sales staff into live streamers and digital personal shoppers.

As an example - iAPM mall in Shanghai understood the impact of dramatically reduced footfall on their sales and used their own WeChat account to connect its audience with sales representatives from each of its brand tenants. 

Fans of the mall simply long-press the QR code in the message to pick up directly with sales staff from Versace, Coach, The North Face, Under Armour and others. The consumer gets to “shop” the mall while on lockdown in their own apartment, the mall retains its follower base, and brands benefit from direct connection with paying consumers.

Smart brands are already viewing their physical store space as both a brand experience and sales showroom to be leveraged through online channels. While this model has become a necessity due to restraints on movement, Hot Pot’s prediction is that this will be fully ingrained as the new normal for forward-thinking brands in China.

 

To Conclude

Combined with a background of ever-shifting consumer needs, the architecture of China’s leading digital platforms has allowed China retail to ensure the crisis is indeed a “turning point” for the better. 

As Western markets don’t yet benefit from the same underlying structures, responsive brands are turning up the focus on China to realise revenue goals.

Takeaways:

  • The impact on China’s consumer sector has been far less than is currently predicted for global markets, and key indicators are already showing strong recovery
  • While the outlook for the global economy is uncertain, smart brands are doubling down on China efforts to offset loss of revenue in home markets
  • China already has the digital prowess and back end systems in place to facilitate new business models - brands must adapt and adopt in order to benefit.

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Get in touch with us to find out how savvy strategic planning, campaign management and in-market support can help you make the most of the enhanced China opportunity.