'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.


How To Engage China's Silver Spenders

How to Engage China's 249 Million Silver Spenders

7 minute read

By Michael Paradiso, Hot Pot Client Director

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When business leaders think about the opportunity in China, most will likely picture Gen Z or Millennial consumers in Tier 1 cities, such as Beijing and Shanghai. Brands invest heavily to win this affluent, brand-conscious segment.

Another significant, yet often overlooked consumer segment is China’s seniors, or silver spenders. There are more than 249 million seniors in China, representing 17.9% of the population. The proportion of the elderly population is expected to rise to 34.9% by 2050.

Collectively, China’s silver spenders account for US$700B in consumer spending, with more than US$2.4T in savings. China’s seniors represent the world’s largest silver market.

Silver spenders were born before 1960. Now 60 years and older, they have lived through Mao Zedong era of the 1960s and early 1970s, the economic reforms and opening of the economy under Deng Xiaoping in the 1980s, and the steady rise of incomes over the past 30 years.

These economic shifts have also caused cultural changes, particularly for the family. This has led to evolving attitudes for seniors around self-sufficiency, connectivity, purpose and outlook. 

Seniors feel the need to connect with technology because they want to remain relevant and in touch with their families. 12.5% of China’s 829 million online users are 50+ years old, growing at 10.4% year on year. Tmall has more than 7.5M Silver Spenders registered.

That said, only 8% of seniors feel that marketing and advertising addresses them in a relevant way. 

Most of the senior population in China hold the traditional opinion that it is important not to spend frivolously. They are more careful about their purchase decisions. Therefore, marketing to China’s seniors is different from marketing to a younger Chinese consumer.

Here is a look at how seniors’ attitudes and use of technology are redefining industries, and how global brands can more effectively connect with silver spenders.

 

Identify and Deliver Tangible Value

Silver spenders are inherently frugal but that doesn’t mean they won’t part with their money. For seniors, a ‘brand’ is more commonly associated with ‘product quality’ or ‘style’, rather than heritage, craftsmanship, or aspirational qualities. If a product delivers tangible value for them, then they are willing to spend.

When planning trips, seniors seek out tours that are built for their demographic, focusing on schedules that balance activity with rest, with the right transfers to avoid feeling overly tired.

In fashion, clothing and footwear needs to be stylish, so the designs don’t feel old. At the same time, the garment must have the right functional qualities. For example, shoes must be light with a soft, non-slip sole and be easy to put on.

With a retirement age of 60 for men and 55 for women, Chinese pensioners are among the youngest in the world. They are taking up more hobbies to occupy their time, such as modern languages, calligraphy, and photography. They are investing in their hobbies too. Camera stores in Shanghai report that 40% of their customers are 60 years and above.

Brands will win silver spenders when they correctly identify seniors’ needs and develop products and services that deliver value.

 

Messaging Should Not Feel ‘Old’

Seniors do not appreciate being reminded that they are older. Marketers should avoid marginalising silver spenders by only speaking to age-specific product benefits. Instead, focus on empowering the consumer. For example, a clothing line targeted at the senior market should emphasize that it is a “stylish brand with exceptional comfort for the mass market” instead of being “senior-specific with extra elastic.”

Marketing materials should feature middle-aged models, as they project a younger image and create an appropriate impression. Alternatively, some companies have effectively used senior models that don’t adhere to age-specific stereotypes, such as Volkswagen and Reebok.

 

 

In both instances, silver spenders understand that the products are relevant for them, but the messaging is uplifting and positive, rather than focusing on why they need specially designed products because they are older.

 

Target Seniors Through Relevant Channels

An important step in campaign planning is channel selection, to ensure that the carefully crafted message is delivered to the target audience. 

WeChat is the most popular social media app for active Chinese seniors. They spend on average 1 hour 37 minutes on WeChat daily, discussing their daily lives and hobbies with friends. For comparison, this is just 49 minutes less per day than younger Chinese consumers spend on the app.

While WeChat is commonly used among China’s seniors, other popular platforms like Weibo and Xiaohongshu are not. Marketers must tap into different platforms and communities to effectively share their message with the intended target audience.

Square dancing is one activity that is extremely popular among China’s seniors. More than 200m seniors have tried it and 100m participate regularly in square dancing. This wellness and leisure activity has grown into a US$15B market from the sales of shoes, costumes, and boom boxes. 

Marketers are using this community as a way to connect with silver spenders both online and offline. Banks and healthcare companies regularly sponsor square dancing activities to promote their products. Digitally, the go-to app for senior square dancers is Tangdou, which boasts 400,000 monthly users and 4,000 monthly events. On average, users are spending 33 minutes per day on the app, which gives advertisers an ideal channel to reach seniors.

For booking travel and trips, older Chinese are still more likely to work with travel agents and book their holidays in groups. That said, there is rapid growth in purchasing travel online. 50% of Silver Spenders are already using an app to book some form of travel or tours. Online travel platform Tuniu reported that travel had increased 88% from people older than 55 and that the age group already accounts for 18% of total bookings.

 

Create Communities for Seniors

As the family dynamic evolves in China, seniors are increasingly finding themselves with more time and more disposable income. Health and wellness are more relevant and they are spending more money to build connections with like-minded people who share their values and interests.

China has seen a boom in older education schools. Offering a variety of classes, including degree programs, there are more than 70,000 facilities around the country with an intake of 8 million seniors annually. The government has plans to ensure that there is at least one such facility in every city by the end of 2020.

Some companies are providing products and services that better connect generations within the family. HiNounou provides seniors and their families with a one-stop, comprehensive home wellness solution. The ecosystem tracks, analyzes, and reports their health data in real time, providing seniors with personalised wellness regimes and families with peace of mind. Larger insurance companies, such as AXA, PingAn and Angelcare, have also partnered with HiNounou to better engage the senior community.

One larger investment for more affluent seniors is in property, specifically at upscale continuing care retirement communities. These communities are viewed as a more desirable alternative to nursing homes or ageing alone at home. They offer a range of lifestyle services and greater community. Some of these communities are built by insurance companies who convert insurance policy earnings into retirement home leases for older clients.

 

In Conclusion…

China’s 249 million silver spenders are a growing, increasingly affluent, and largely underserved consumer segment. While they are more careful about their purchase decisions, they collectively spend US$700B annually.

To more effectively engage this audience, marketers should:

  • Deliver tangible value by developing products and services that consider seniors’ needs
  • Share messages that empower silver spenders, instead of reminding them that their needs are different as they grow older
  • Build partnerships with the right channels to ensure the messages are delivered in the right place to the audience
  • Create communities with like-minded people who share their values and interests.

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.

Contact Hot Pot China to discuss how our team of China specialists can help realise greater value in 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.