Mark Tanner
Mark Tanner
26 June 2013 0 Comments

The rise of Tencent’s WeChat/Weixin in China has been quite remarkable. Just two years after launching, WeChat had already clocked 300 million registered users. To reach that many users, Facebook and Twitter took more than five years; even Sina Weibo’s legendary rise to 300m took two and a half years. And, unlike some other social media platforms, where numbers are bolstered by users who can register as many accounts as they have email addresses, WeChat accounts are tied to mobile devices, so there are a lot less ‘zombies’.

While Chinese Internet companies have a reputation for just copying success stories from the West, WeChat is one of those special few Chinese companies that is actually innovating features – some which are even being copied in the West. More than 50m of WeChat’s 400m users are outside of China, predominantly in Asia, but if Tencent can overcome the perception of personal messages being monitored by the Chinese Government, WeChat could become China’s first truly global social network. WeChat’s numbers and its enormous potential, can take a lot of the credit for Tencent’s value being higher Facebook.

As a marketing channel though, WeChat is still a toddler. There are plenty of ways WeChat can be used, and no shortage of successful case studies, but that is just the tip of the iceberg. Tencent is smart valuing users’ privacy by not letting the service become overrun by advertisers, especially given the highly personal nature of the service. Nevertheless, we are starting to see some new features and commerce functions that will increasingly influence many Chinese consumers’ purchasing behaviour – turning it into a money-making machine for both Tencent and those who are clever at marketing on it.

WeChat’s rise has certainly eaten some of Weibo’s lunch, but it doesn’t mean the dearth of Weibo users. Both have their strengths and weaknesses as a marketing channel. Weibo is still the network of choice for most of China’s key opinion leaders, and where the masses go to be influenced. It is much more common for content to go viral on the service. And there are many new features introduced all the time. Sina Weibo’s alliance with Alibaba and Youku should also give the old dog some new tricks. Successful marketing plans don’t just have one or the other, but incorporate the unique and complimentary strengths of both Weibo and WeChat. Speaking of marketing plans, as always, there’s the usual slew of articles that may just help you with yours. We hope you find them useful…

Chinese consumers Chinese Consumers

Chinese Brands Show Consumers How To Overcome Tech Distraction—With More Tech: Huawei strikes a chord with Chinese consumers with their latest effort to build goodwill and promote their Honey Box, a media hub that streams content concurrently to wireless devices. The ads plays on keeping families together, another example of brands playing to concerns about the way Chinese society is going due to distractions such as technology. It follows Coke’s lead which recently launched its ‘Happiness Creation’ project which aimed to address the “dispiriting sense of isolation and loneliness” found in China’s urban areas.

Beijing Snubs Johnson & Johnson over Double Standard in Recalls: Johnson & Johnson, if history is any gauge, it’s definitely not a good idea to treat Chinese consumers worse than in other markets. China has been excluded from 48 of 51 J&J product recalls since 2005.

Consumers Are Rewriting The Rules Of Retail In China : Observations on how Chinese retail differs from the west: (1) retail sales are not dominated by a few large bricks & mortar retailers; (2) Most of China’s 160 cities with more than a million people, and the hundreds of other Tier 3 & 4 cities are underserved by retail; (3) Chinese consumers are ‘skipping’ big box retail, mainly due to eCommerce – which is estimated to be 6-16% cheaper than bricks & mortar. (4) Smartphone penetration is changing retail considerably.

Mapping China’s Middle Class: McKinsey affirming many similar reports: By 2022, the share of Chinese consumers born between the mid-80s and 2000 will account for 35% of urban consumer demand, double what it is today. They’ll be three times the size of the USA’s baby boomers that everyone used to talk about. Unlike their parents who lived through periods of shortage and building economic security, these consumers have had relative abundance all of their lives. They’re confident, relatively Western, independently minded, and want to show it through their consumption. They prefer expensive goods and are more brand-loyal, but like to try new things. Through better taste, higher status and a preference for niche brands, they seek emotional satisfaction. They’re also heavy Internet users, and seek other’s opinions online to influence their purchasing decisions. Older generation’s purchase decisions are also influenced by them. They do still retain previous generation values such as working hard, saving hard, aversion to borrowing, measuring success by money, power and social status. In 2002, 40% of China’s relatively small urban middle class lived in Beijing, Shanghai, Guangzhou and Shenzhen. By 2022, the still growing group will be just 16%, with Tier 3 cities accounting for 30%. Inland China will rise from 13% to 39%.

Chinese Internet Internet, Mobile & Social Media

The Leaked New Features With WeChat 5.0 Look Good: Very cool new features coming to a smartphone near you with WeChat. My personal favourite, the new scanner – scan to see places around you and receive info, pics and Google-places type info about them, scan to translate, and scan a product for information, reviews, etc – making it even easier for the countless Chinese consumers who shop this way. If it takes off, it will give a lot of power to the info that Tencent provides about products and services.

Tencent On The Hunt For Online Revenue With WeChat Service: Online transactions on WeChat are now all-go for selected merchants. Online shopping is now a reality, where customers can pay with a credit card or TenPay, Tencent’s equivalent of Alipay/Paypal. McDonalds is one of the first to use it, offering an afternoon tea discount coupon for ¥3 ($0.49), although Tencent is still treading lightly to ensure users aren’t bombarded with advertising.

Millennials Become The ‘Smartphone Generation’: 92% of the 270 million Chinese aged 18-30 own a smartphone, well above the global average of 67%. 90% of them are optimistic about China’s future.

Coolpad Becomes Top 3G Handset Vendor In China: Coolpad hits a note with their 4″ smartphone selling for under ¥1,000 ($163).  The device has overtaken Lenovo to become China’s top local 3G device.

With An Eye On Mobile Video Viewers, Youku And Sina Weibo Form A Partnership: A partnership between Sina Weibo and leading online video service Youku-Tudou is expected to deepen consumers’ online video viewing and sharing experience, and no doubt provide even more valuable data to China’s Internet titans. 76% of Weibo’s 46.3 million active daily users access it through mobile.

The Characteristics of Weibo Video Viewers: On that topic, video views on Weibo: 39.3% are Youku/Tudou, by far the biggest provider. Entertainment is 26%, fun 22% and news 14% of videos. 57% of the viewing is by females, who like food, travel and music, whereas males like music, movie and travel. Two-thirds of viewers are 18-25.

Jego App From China Mobile Looks To Take On Viber, WeChat, Skype: If your business makes a lot of calls to China, China Mobile’s new VOIP app Jego, which offers unlimited calling to Chinese numbers for $15.99/month could be handy.

Chinese food and beverage Food and Beverage

Chinese Drinkers Looking For Less Expensive Wines: 60% of Chinese consumers aged 18-50 spend less than ¥200 ($32) for a bottle of imported wine. Fears of fake wines are the biggest barrier to purchasing, with 44% put off buying for that reason. There is an increasing trend of Chinese drinking wines for lifestyle, and looking for better value bottles.

Amid China’s Boom, Fake Wines Proliferate: Elite winemakers are trying to hit back at the fakers by smashing bottles after tastings and a few other initiatives, but they’re not yet as proactive as the big international spirit makers who have bottle buyback programs, tamper-proof caps and covert tagging of bottles. Unfortunately, unless you are an expert, which many Chinese drinkers are not, it can be hard to even spot the bad fakes. Bottles of 1982 Château Lafite are believed to be the most faked wine in China, with bottles costing upwards of $10,000. There are now believed to be more cases marketed as the 82 vintage in China, than were actually produced and sold globally.

Chinese tourists Chinese Tourism

Independent Chinese Travellers: 8 Things You Should Know: Great insights into catering for the rising Chinese independent traveller: (1) Tell us how much we are saving when we shop in your store; (2) Do you offer a global warranty and customer service in China for products we buy overseas? (3) Please accept UnionPay; (4) Taking photos of an item in your store does not mean we are all counterfeiters; (5) Restaurant menus with pictures please; (6) Wi-Fi. Wi-Fi. Wi-Fi; (7) We prefer Sprinter vans with family and friends instead of tour buses with strangers; and (8) We like local cuisine and local experiences.

Seeing The World Via Social Media: Like most travellers, Chinese are increasingly using social media and online tools to help with their travelling. Weibo, WeChat, Instagram, Tripcolor and other mobile and web tools, plus their iPads to download travel guides, are all influencing travel decisions, especially at the start and end of the purchasing process. Online travel reviews have the greatest impact on making decisions on a destination, with 70% of travellers searching for them. 57% of respondents in a Mariott survey said they’d decline a 25% discount on hotels if it meant they couldn’t access social media.

Chart Of The Week: China’s Starless Hotel Revolution: The number of unrated (no stars) ‘economy’ hotels has exploded in China, at the expense of low-star hotels. There are more than 10,000, mostly Chinese, unrated hotels. They focus on cleanliness, safety, convenience, value for money, brand and Internet sales, rather than stars to fill rooms. Last year, their occupancy rate was 80%, versus 60% for star-rated. At the other end of the scale, 4 and 5 stars hotels are also booming, showing the two types of travellers in China. China ranks 45th out of 140 countries for the tourism competitiveness stakes, not helped by its undeveloped tourism infrastructure, ranked 101/140, brought down by its less developed cities – nearly half of China’s cities have only one hotel, with 0.6 hotel rooms per 1000 people, compared to 2.5 in the USA.

Politics Checks In For China Hotel Industry: More than 30% of the world’s planned hotels are in China, with two-thirds of these in China’s interior regions.

Travel And Tourism Event Addresses Fast-Changing Chinese Consumer: Chinese tourists spent $102 billion on overseas travel last year, making it the first country to ever spend 9 figures in a year. Each year in the next decade, an average of 25 million Chinese will travel overseas for the first time, that’s 70,000 a day. Chinese travellers are increasingly going independent with more than 80% researching and educating themselves about destinations and brands online.

NUO, The First Luxury Hotel Brand Developed In China For Chinese: NUO, the first luxury hotel chain created in China for Chinese. As some cities are oversupplied, NUO hopes to differentiate with quality, given price is no longer the most important factor for Chinese choosing hotels. Lavish lifestyle and Chinese contemporary art will be incorporated, celebrating Chinese culture, with Chinese-style service with local flavours, a local tea menu and pick up in a Red Flag sedan.

Chinese social responsibility Environment & Social Responsibility

Coca-Cola’s PlantBottle Rollout Signals Brands Taking Sustainability In China Seriously: 80% of Chinese consumers are willing to pay a premium for products and services from companies who take the lead on sustainability and social responsibility, and savvy businesses are paying heed. For example, Coke has introduced its PlantBottle to China, and is aiming to use them for every plastic bottle in the country by 2020. Pepsi has invested $30m in sustainable farming and is committed to LEED construction to reduce water and energy consumption. Wahaha, China’s largest beverage company focuses on social sustainability.

Chinese property Property

Implication Of E-commerce In Shopping Mall Positioning: As eCommerce continues to cannibalise shopping malls, developers need to look to lifestyle-experience offerings that can’t be easily matched online. That includes F&B, cinemas, IMAX, KTV, skating rinks and children’s playgrounds or a carefully selected tenant mix and architectural design. Although eCommerce is changing the face of retail in China, there are a few tangible experiences that it just can’t match.

Chinese auto Auto

Getting To Know China’s Premium-Car Market: Interesting comparison by McKinsey about how Chinese luxury car buyers compare to their German equivalents – German consumers with the ability and willingness to pay, place more emphasis on ‘high tech’ and ‘handling’, whereas the Chinese are more concerned about the ‘power train’ and ‘price’. Both are equally keen on exterior.

Chinese luxury Luxury Goods

Which Luxury Brands Really ‘Get’ Digital Marketing In China?: Estee Lauder tops the list of 100 prestige brands in China for social media, digital marketing and online/offline synergies.  Brands continue to under-invest in digital, with Chinese sites taking an average of 24.1 seconds to load – four times the global average. More than half of brands don’t have ICP licenses, just 23% have optimised mobile sites and only one-third have eCommerce.

Chanel Puts Chinese Spin On Global “Little Black Jacket” Show: Chanel is launching the Chinese leg of their “Little Black Jacket” global tour. The campaign focuses on Tier 1 cities to maintain exclusivity. The Chinese campaign is highly localised with Chinese celebs such as Li Yuchun, hot on the back of her L’Oreal spokesperson duties, to appeal to both young & wealthy and traditional clients. Digital plays a big part with a mini-site, online videos, photos and social media.

That’s The Skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a stack of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.