A letter from our CEO

6 minute read

By Jonathan Travers-Smith

As we enter the Lunar New Year period, I wanted to share reflections on the last 12 months for Hot Pot China, as well as a short look ahead to the Year of the Ox.

While 2020 was a challenging year on many fronts, the pandemic accelerated a raft of advancements for brands and retailers in China. I was personally struck by how China’s already advanced digital ecosystem was perfectly placed to weather the storm of physical retail closures. 

March saw retail assistants turning into grassroots live-streamers via their personal WeChat accounts, allowing shoppers the ability to have a near in-store experience for entire malls from the comfort of their own smart phones. While the underlying platforms and tech solutions were already in play in China, O2O initiatives took a huge leap forward in terms of adoption. Check out our short video here covering this trend.

In November, Singles Day 11.11 saw Alibaba’s platforms alone racking up $74bn in GMV, almost doubling the 2019 number despite the coronavirus headwinds.  We also saw greater emphasis being placed on commercial festivals outside of 11.11 with more brands understanding opportunities around 6.18, 5.20 and the full gamut of China’s commercial calendar.

Our business 

As a business, our key sectors of retail, beauty and fitness/sports continued to grow significantly and Q4 2020 represented Hot Pot’s best ever quarter for new client wins, which we will be announcing via our channels in the coming weeks – join us on LinkedIn for realtime updates.

In late 2020 we saw more clients than ever looking to launch, relaunch or optimise in China.

There was a true realisation among senior decision makers that home markets can be fragile and China presents a very real and sustainably profitable market, if approached strategically, but with humility and respect. 

A case for insights 

This has led to Hot Pot developing new solutions across our suite of strategy products, including bringing forward the rollout of a dedicated China insights platform. A product that was developed after listening to and understanding our client’s needs, chief among which was the clear need to engage with and understand targeted groups of consumers across diverse locations and demographics in China. 

While maintaining our executional campaign work delivering brand and commercial growth for the likes of La Perla, Olivia Burton and Selfridges, we are hugely encouraged by the increased allocation of client spend to deep insights, as this underpins all work done in market by our team. This is also a core principle of our company vision:

Delivering long term value not just in China, but with a deep understanding of today’s Chinese consumer. 

In play with a set of foundation clients already, we are delighted to be launching our comprehensive insights solution to a wider audience at the end of Q1. 

Our team 

We have also been busy hiring in London and Shanghai, bringing on board deep brand expertise in the form of Jessie Allen, our China Director leading the accelerated build of our Shanghai team. Additionally Fan Tu, a seasoned account manager with online and offline experience in our Shanghai hub, helping us to service our client base on the ground in China. We’re also delighted to welcome Sally-Anne Amakye to the Hot Pot team, leading the charge on Hot Pot’s own marketing and thought leadership initiatives.

As we look to the other side of the Lunar New Year I am personally excited to be working further on our team growth, company culture and developing the unique cohesion and seamlessness between our London and Shanghai operations. 

A look ahead

At Hot Pot we aim to leave every interaction having created value, so this in mind I wanted to end on a short set of trends and predictions from the strategy team for the China marketing landscape in 2021.

1. Private/brand owned traffic will move from “interesting” to “critical”. The rising costs of e-commerce traffic will mean that brands have to be able to activate their own audiences through WeChat groups and other owned communities. 

2. Lower tier city growth and brand expansion will accelerate. The majority of economic growth is now being seen outside of Tier 1 and 2 cities. Top brands have already begun to open physical retail and hold major brand launch events in lower tier markets with high spending power.

3. More Luxury purchases are made in-market. International travel was a huge driver of major luxury purchases for Chinese consumers. With the current uncertainty around international travel, domestic luxury purchases are increasing and this trend looks set to continue. Brands will need to focus on accelerating price parity within China to tap into this and make up for the loss of revenue typically made from travelling Chinese consumers.

4. Alibaba’s ambition on luxury. Tmall, one of China’s largest online marketplace, welcomed two big luxury names in 2020: Porsche and Hermes. No doubt there will be more and more luxury companies who now view Alibaba’s properties as legitimate destinations for selling luxury products and communicating global brand propositions in a nuanced way.

5. The continued rise of Xiaohongshu. Grassroots influence has been the secret behind Xiaohongshu’s huge success and for us is now China’s most important social platform. Countless authentic product reviews generated by real users have direct and immediate influence on purchase decisions. Having a voice on this platform is now a must for brands looking to succeed in China.

Wishing all of the Hot Pot China clients, partners and followers a healthy and prosperous Year of the Ox.

Jonathan Travers-Smith, Founder and CEO

Get in touch for a discussion of how the above trends will impact your brand in the Year of the Ox. 

Additionally, for an early run through of the upcoming Hot Pot China Insights Hub, please drop a note to nihao@hotpotchina.com and a member of the team will be in touch.