A pop-up store is a short-term, temporary retail space that brands occupy. Regardless of whether the brands previously adopt a physical presence or not, it can be used for sales promotion purposes or for simply building connection with their existing and potential customers. Pop-up stores are usually designed or decorated creatively with the intention to provide a unique, engaging and memorable experience that can generate buzz in the short-term. It is apparent that pop-up stores are an effective marketing method, but what does it take to run a successful pop-up store in China?

Pop-up stores in China: An innovative new retail format to penetrate the market

Pop-up stores are often considered as a form of guerilla marketing that can help a brand to achieve strong short-term growth in sales, engagement or awareness.

Luxury brands open pop-up stores in China to connect with consumers

Brick-and-mortar stores play a very important and essential role for luxury retail brands as it is where brand story and consumer experience meet. While a long-term physical store is able to achieve so, a temporary pop-up store will be able to generate more excitement and a more unique experience for customers.

Chanel successfully launched a pop-up store in Shanghai named ‘Coco Game Centre’ two years ago. The Chanel arcade clearly went viral as people waited for over 2 hours outside only to get a peek inside. The store featured a make-up bar for customers to try on new Chanel beauty products, a series of arcade games for customers to win gifts such as lipsticks, lotions etc., and a few picture-worthy spots for customers to take pictures and upload on social media.

Chanel seeks to establish a closer connection with its customers through a pop-up store interaction. It is a fun and creative approach for the brand to create a unique, immersive and personal experience to the customers. The big Chanel logos upon the wall, and the red, pink and black colors all comes together in the pop-up store to communicate and convey the brand’s story and its core value.

With digitalization incorporated in the store, customers can scan QR codes and pay online at ease. In this way, they are not forced to make purchase, but are invited to experience the brand and make conversion in a more natural setting. Moreover, Chanel can also generate buzz around product launch and receive feedbacks on its new products. Big brands like Chanel usually has clear and defined target customers, in which utilizing a pop-up store will help attract right customers to give right feedback.

Online brands seeking an offline presence through pop-up stores in China

The best way for online brands to bridge the gap between their online and offline presence is a pop-up store. Pop-up stores are not only much more cost-effective, being 80% cheaper than a long-term physical store, but also is a great marketing tool in China to increase visibility and direct publicity.

In 2018, one of China’s biggest E-Commerce platforms, JD.com, tried their own version of pop-up retail in China —— ‘JD Fashion Space’. Its main object is to mix and match fashion, high-tech and Art Space. Consumers are invited to interact with the brand via digital dressing machines, shopping machines, games, and a designated selfie area.

Although consumers are becoming more digitalized than ever before, online brands like JD.com still seeks to create a cohesive brand experience offline to gain customer loyalty by opening pop-up shops in China. Consumers expect more different and engaging high-techs like immersive VR to become entertained in a technology-centric era. JD.com cleverly offered an interactive offline experience to their consumers’ taste, utilizing its digital strength, from VR fitting rooms to digital shopping windows.

As pop-up stores can generate short-term buzz, online brands can constantly remind customers their existence via both online and offline channel. This will be a chance for these brands to gain more potential customers offline and remind existing customers their online presence.

Other brands open pop-up stores in China to increase awareness

Other brands, regardless small or big, open pop-up retails in China to generate popularity in the short term and top-of-mind awareness in the long-term.

Last September’s pop-up buzz was all about a milk tea brand ‘Machi Machi’ because of its feature in famous Chinese singer Jay Chou’s music video “Won’t Cry.” The store in Shanghai, which will only be around for a few months, generated hundreds of people lining outside. The resale price of a cup of bubble tea was 10 times more than its original price.

The store has a photo-worthy wall for people to take photos and upload on social media. Many smaller brands like that will especially decorate its interior to make it more Instagram-worthy and hence more sharable on internet. These brands wish to create as much buzz as possible to bring popularity and boost sales in the short term, and the best platform to spread buzz is of course social media platforms.

Given that Machi Machi is planning to open an official store in Shanghai in the near future, pop-up retails in China are no doubt a fast, efficient and cheap way for small brands to test- new products and examine the decision to enter or expand the market. Just a few days ago, on June 25, an official Machi Machi store was opened in Hefei, Anhui province in China. The brand has positioned itself as a high quality and high face value beverage brand that has become a hot topic on social media platforms such as Xiaohongshu and Weibo. Regardless of what intention these brands hold, achieving awareness through a temporary pop-up store will be the key to further success.

Pop-up stores in China emerging as a major marketing tool for brands

Attribute to the success of many pop-up stores in China, increasing number of brands are seeking to generate more awareness and engagement through implementing this type of marketing tool in China. Although harder to breakthrough clutter in the recent years due to fierce competition, nevertheless pop-up stores are becoming one of the main forms of new retail in China.

According to a survey from storefront, 80% of global retail companies have opened a successful pop-up store and 58% willing to reuse the tactic. Pop-up stores are indeed a great way to fulfil excitement in those highly demanding Chinese consumers. However, if not properly executed or implemented, they will easily fall short and even generate an adverse effect then intended to. Customer expectation can skyrocket due to wrong location, failure to communicate brand value, improper execution or implementation etc. Therefore, it is important to carefully plan every step in order to open a successful pop-up retail in China.

How to set up a successful pop-up store in China

Define the goal

Defining  a clear goal for a pop-up shop in China is always the hardest. Although goals like increasing awareness, popularity, buzz etc., are essential, the decision to focus on sales promotion or just for pure marketing purposes will be the key to success. This decision is especially important to foreign than local companies because they subject to more regulations. Therefore, they need to be well-informed about China’s legal rules regardless which decision made.

Those who aim for direct sales, but do not adopt a corporate existence in China, will require partnerships, agents or distributors in order to engage in actual sales activity. On the other hand, pure marketing pop-up retails in China are much more simple to run, ruled under much less regulation.

The decision to sell the products or to market the products should depend on many aspects of company such as market share in China, presence in China, awareness in China etc.

Know your target customers

Millennials and Generation Z are becoming the most powerful consumers that all brands seek to understand. They are also a group of consumers who prefer experience over anything, which has lead the market evolving into an experiential-centric one. Therefore, opening pop-up shops in China that can engage with Chinese Millennial and Generation Z is a key to success. Brands should tailor the pop-up store to offer these customers different and personalized experiences and create an event that is both surprising and exciting to show them that they are no longer Dad’s Oldsmobile.

Find the right venue

The right pop-up store location is extremely important despite that it is often overlooked. The location can be anywhere: on a vacant street, in malls, in another store or event spaces. Regardless of where pop-up stores are located, the venue should generate enough foot traffic and buzz at the right time.

However, regulations need to be considered before picking any location. Unfortunately, due to strict rules in Shanghai and many other cities, pop-up stores are often only allowed to open in malls rather than on vacant street as no business will be granted to open in front of stores of or on side of the roads. Although street will give pop-up stores more space to occupy, shipping malls can offer a competitive edge for the brands. Shopping malls attract high foot traffic and right demographic, which makes it easy especially for smaller brands to target specific customers as they wish. Shopping malls are embracing pop-up stores as a form of new retail in China to save their lost traffic in the recent years, and more than welcome this win-win situation. Therefore, most malls offer convenience set-up process that will save many effort and time of pop-up stores owners.

Nars opened a pop-up store in Beijing in 2018 utilizing the open entrance area of Taikoohui Shopping Mall. The boutique was fairly eye-catching, easily grabbing people’s attention as they walk pass by.

Establish effective brand communication

Pop-up stores must align with and communicate core brand values. A consistent brand story should be narrated regardless of a press interview, a launch party or just a pure experiential store.

PUMA launched a pop-up experience museum in downtown Shanghai earlier this year, allowing visitors to go on a blockbuster journey of experiencing the blurring borders of reality and illusion. The theme goes with their featured new product, the “Future Rider” shoe, and allows consumers to fully experience what the brand has to offer. Added to the thrilling journey, consumers can enter PUMA’s flagship store at the iAPM mall nearby to win more products online. The purpose of the pop-up is not to drive sales, but to spread brand awareness. PUMA is inviting its customers to become a part of its brand and to be on their journey.

Be present on Social Media

In an ever increasing digitalized world, it is especially essential for brands to be present on social media, and of course will be the same for brand pop-up stores. Pop-up store in China relies heavily on short-term traffic and attention. In order for it to go viral and gain success, brands must encourage consumers to take photos in the store and share location on different social media platforms. Collaborating with KOLs and celebrity endorsers will be a powerful marketing tool to build anticipation and generate buzz before store opening. Stores can further enhance the engagement effort and accelerate social media impact by adopting hashtags that relates to the pop-up store theme.

Apart from traditional forms of Social Media like WeChat and Weibo, companies should also consider the growing importance of Xiaohongshu. Millennial and Gen Z spend their leisure time activity on this platform daily, searching up interesting places to visit.

When searching for pop-up stores in Shanghai on Xiaohongshu, a countless number of posts appear. This means that this platform has indeed became an important platform and marketing tool in China, which brands should utilize to generate buzz and increase traffic among its target customers.

Be creative and be exclusive

The most successful pop-up shops in China create unique and interactive experience for its customers. In order for a pop-up to offer a higher level of interaction and engagement, getting creative and think beyond simply selling products will be the key to differentiate from traditional retail.

YSL Beauté launched a pop-up ‘hotel’ in Shanghai early 2019 to promote its new product. The hotel was located in an Art Museum featuring three floors of themed rooms. YSL creatively incorporated its sales effort in this pop-up store. Customers are encouraged to engage with the brand through make-up station, digital interactive activities, and many photo-worthy spots. They are also invited to redeem YSL Beauté.

products using activity points earned along the way. In the hotel, they can become fully immersed in the situation and receive a unique and exclusive experience.

Pop-up stores are an effective marketing tool in China

Overall, successful pop-up retail in China will allow you to create awareness from potential customers, connect with your existing customers, learn more about their needs and hence better tailor your service accordingly. Plan your steps and utilise this marketing tool in China to make further developments on your brand.

Author: Chenyi Lyu

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This article The guide to a successful pop-up store in China is the first one to appear on Daxue Consulting - Market Research China.

Steal the Spotlight

Their reality show ‘Keeping up with the Kardashians’ has already reached the 18^th season. It has built a powerful platform for the Kardashians to stay relevant in the public and communicate with the audiences.

The story of the Kardashians started from a reality show

Basically, the reality show ‘Keeping up with the Kardashians’ made the Kardashians. Kim Kardashian, the most well-known sister, deserves the credit. Before the reality show, she ran into a PR mess when an intimate video of her and an ex-boyfriend spread across the internet like wildfire. Kim Kardashians saw her Despite the rapid success in the western world, the Kardashian’s fame was slow to catch on in China until recently.

Arousing viral discussion

The traffic economy is an economy based on digital platforms. Content creators and consumers realize the effective flow of information and generate economic benefits within the platform. In the digital era, traffic is not only driven by offline presence or advertising, but also in-time blooming information exchange online.

The Kardashian’s fame as officially hit China

Trending topics in the China are fast-changing. But the Kardashian are good at maintaining their presence by creating new dramas and the ‘magic’ of the Kardashians in China also worked. In the latest season of ‘Keeping up with the Kardashians’, the scene of the fight between the sisters went viral on Weibo. The topic climbed to the 2^nd of the Hot Search List in Weibo on March 28, with 200 million views and 27,000 discussions. Back to the last season, the dramatic break up between Khloe Kardashian and Tristan Thompson also raised a hot discussion, generating 130 million views and 12,000 discussions on Weibo.

Source: Weibo, Hot topics in terms of ‘Keeping up with the Kardashians’

How to mimic the Kardashian success in a Chinese way?

In China, vlog is a powerful tool

In fact, it is unrealistic and cost-inefficient for individuals or even brands to create a reality show to approach the public. To reach the Chinese market, Vlogs is a good alternative. Vlog is a video-blog, a casual, conversational video posted on social media, many Chinese KOLs use vlogs to reach their audience. According Bilibili, the most popular video platform for vlog in China, vlog has still seen a growing trend. One successful example of applying vlog to marketing could be the OPPO R17 campaign ‘Discover the beauty of the night’. The brand invited some famous vloggers to create short vlog with OPPO R17 about cities such as Tokyo, New York and Hong Kong and capture the beauty of night. The Weibo topic relating to that has already reached 620 million views.

Source: Biliob Index, the popular index of ‘vlog’

Stay Active in Social Media

Taking a picture and uploading it online may seem easy and mindless, but each of the Kardashian sisters gained a lot of reward that comes from a single post. With a mix of brand deals and sponsored ads, the Kardashians make money by just name dropping products and brands in their social media posts. It is estimated that Kim Kardashian makes about $500,000 per Instagram post, Kourtney and Khloe about $250,000 and the Jenners about $400,000 each, although some sources say Kylie Jenner earns up to $1 million per post.

From the reality show to social media, the Kardashians always find the best way to communicate with their audiences. The population targeted by a brand’s communication on social networks determines the content to publish. Moreover, interactive content and videos are particularly appreciated in the Chinese market. The Kardashians understand what their audience enjoys, and tailor their posts in such a way to maintain that connection. They share their lives as mothers and celebrities.

Additionally, they give their fans sneak previews of the new release of their brands. Through Instagram and Snapchat, followers are effectively given a ‘behind-the-scenes’ look at life in the spotlight. The constantly updated in social media. It feels like ‘Keeping Up with the Kardashians’ but in an unscripted, unedited, and intimate format. The result turns out well. Take Kylie Jenner for example, she is constantly active on her Instagram stories has more than 400 million daily active users. Moreover, they used social media to interact with the audiences. Kim Kardashian regularly engages with her followers and gives them insight into her world, like asking her followers for fashion advice in a tweet.

Presence of the Kardashians in China

Kim was the first one in her family spotted the value of the Chinese market and leveraged the social media trends in China. She joined several trending Chinese platforms and which at the end turned out impactful.  On October 27, Kim Kardashian opened her official account on Xiaohongshu (小红书, also known as Little Red Book or RED). Now she has more than 220,000 followers. On the social commerce platform, Kim balances the sales content with personal content her Chinese audiencescrave. The most engaging content of her Xiaohongshu account is about her family and her regular fashion. In Xiaohongshu, she interacted with her followers in the Chinese way. In her latest post about the launch of KKW fragrance, she said ‘Happy new year’ in Chinese.

Source: Xiaohongshu, the most engaging posts in Kim’s official account

However, Kim Kardashian’s traffic on Xiaohongshu is nothing compared to her Instagram following. So how can she start to gain momentum in China?

Kim collaborated with a Chinese influencer to expand her audience

To amplify the brand effect and present the product advantages in a more efficient way, Kim Kardashian leveraged the impactful e-commerce channel. In the Double 11 event of 2019, Kim joined the livestream collaborating with Viya (薇娅), a livestreaming expert in Taobao/Tmall. Even though the influence of Kim Kardashian is strong globally, her livestreaming index in Tmall didn’t tell the same story. The views of Viya’s livestream reached 10 million while the views of Kim’s livestream are less than 15,000. Nevertheless, the livestream worked in terms of boosting sales. At the end, 6,000 fragrances were sold within 30 seconds. Before the livestream, the total sales of the KKW fragrance were only 52. This livestream also raises a hot discussion in Weibo. To conclude, the collaboration enabled Kim Kardashian to win both sales and attention in the Chinese market.

Source: Taobao, Double 11 livestream of Kim Kardashian and Viya

What could be next – Short Video Platform

In order to be digitally active, accessing the vitality of the social media platform and keeping up with the trends in China is crucial. In the Chinese market, the structure of social media is changing fast. From 2017 to 2018, the usage of short video platforms soared by 6.2%. The trend remains upwards till now: the short video market in China soars on traffic growth especially that the Coronavirus crisis boosting the at-home economy. It is changing the monopolized BAT (Baidu, Alibaba, Tencent) structure in the market. There is no doubt that the short video platforming is leading the new social media trends in China.

Data Source: QuestMobile TRUTH, the proportion of usage duration of App, by platform

Construct favorable public image – the Chinese way

The Kardashians in China are controversial figures since it started with the PR mess of Kim Kardashian. However, Chinese customers respect her as fashion and beauty figures in general and the Kardashians brand gained endorsement among them.

How the Kardashians level up their public image?

In the US, the Kardashians have made philanthropic moves which impress the local audience. On one episode of ‘Keeping up with the Kardashians’, focused on Khloe Kardashian and Kim Kardashian’s mission to raise awareness about the issue of homelessness. The Kardashians influence did work. Kim Kardashian stated that the episode inspired over $1 million worth of donations to the Alexandria House, a shelter for women and single mothers in LA. They also leveraged their presence on other famous platform to do goods. Both Kylie and Kim completed the donation to specific issues on ‘The Ellen DeGeneres Show’. If philanthropy can turn someone’s image around in the US, what works in China?

Source: The Ellen DeGeneres Show, Kylie Jenner and Kim Kardashian donated

The Chinese audience is strict

Because of the unique and fragmented characters of the Chinese web, information and trends in China evolve at far higher speeds than anywhere else in the world either positively or negatively. Consequently, maintaining a favorable public image is crucial for your voice in this market. It applies for both celebrities and brands. In 2020, Chinese celebrities have tremendous pressure to maintain a clean, positive image. The tolerance of Chinese netizens is low. In the Chinese digital world, you might be admired by the public on minute, then suddenly be criticized by everyone the next.

The leading Chinese KOL Zhang Dayi (张大奕) was involved in a scandal. It went viral among the Chinese netzines. The topic #Zhang Dayi is a mistress# (#张大奕小三#) raised 780,000 discussion and gained 450 million views. Some of the netizens posted proposals to block Zhang Dayi. The company Ruhan, highly linked to Zhang Dayi, has been at stake due to the scandal. The stock price plummeted, with a maximum drop of 10% and the market value has evaporated by approximately $22 million (approximately RMB 150 million). The man involved in the mistress scandal is Jiang Fan, president of Taobao, Tmall, Alimama Business Group, was removed from the partners of Alibaba.

Thus, a proper brand position and a favorable brand image would be compulsory in order to enter the Chinese market.

Source: Baidu Index, Chinese Netizen search frequency of Zhang Dayi

Fan conversion

As famous figures or signs, their public image can be further exploited and converted properly into business. The Kardashians have become fashion and cultural icons and have infused their brand into everything they do. Each sister has taken their success and translated it into the means of businesses, lifestyle apps, brand deals and etc.

How the Kardashians achieve their success in business

Some of the Kardashian sisters have already found their own brands ranging from cosmetics to clothing. Their marketing strategies are highly consistent: using its own social media platform to promote products and inviting the big-name celebrity to post on social media. Among all the sisters, Kylie Jenner is most successful one in business: her brand ‘Kylie cosmetics’ is already worth $1.2 billion.

As fashion icon, the Kardashians also jump out of the industry to talk to their audiences. Take Kim Kardashian for example, she launched a video game ‘Kim Kardashian: Hollywood’ which is available on IOS and Android for free. It reached 1 million download and 5 million revenue by April 2020.

Can someone mimic the success of the Kardashians in China

While Kardashians’s following clearly shows some differences between western and Chinese consumers, it also highlights the power of influencer marketing in both cultures. Chinese consumers highly reward those who reach out using their culture and language. Kim Kardashian first used Weibo in English and got little traction, then she hopped on Xiaohongshu and used some Chinese, and got more traction. Then she did a livestream just for Chinese on 11.11 2019, and her fame in China hit a new high.

The global success of the Kardashians is not an accident. In the era of digitalization, colossal attention and traffic keep the money-spinning franchise running. However, attention and traffic would not maintain forever. It is crucial to find the right touchpoint to stay active online. The Kardashians successfully spot the growing social media trends in China and replicated their online impact to the Chinese market. Empirical evidences prove that favorable public image matters in China.

Negative image can destroy a public figure for a long-term period. Company in the Chinese market should be careful of building its image and stay consistent in the future. Famous figures like the Kardashians made a great amount of money by just posting pictures in the social media. The Chinese market also provides great opportunity of leverage the famous figures, which help companies exposed in the public and achieve success quickly. All in all, the Kardashians marketing tactics over the years are worthy of praise and provides useful guidelines even for marketing players in China.

Author: Dongni He

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This article Apply the Kardashians marketing tactics in China is the first one to appear on Daxue Consulting - Market Research China.

The incredible success of bubble tea in China since 1996

The story behind the success of bubble tea in China

Bubble tea is a drink made from tea (usually black tea), milk, syrup, and a special ingredient that captivates the hearts of Chinese people: tapioca pearls. Bubble tea is also known as 珍珠奶茶 (Zhen Zhu Nai Cha) directly translates to pearl milk tea, but is also known as boba tea in parts of the world. Far from healthy, the drink contains a lot of caffeine and sugar, especially due to syrup sweetener. 

What is captivating about this drink is that it is both drank and eaten at the same time. Tapioca pearls, which can be different sizes, offer a unique chewy texture and a sweet taste.

Where does such a successful drink in China’s beverage market come from?

Bubble tea originates from Taiwan, in the city of Taichung. It was reportedly created in the 1980s in a tea shop called Chen Shui Tang where the owner, Liu Han-Chieh, was selling oolong tea. With the innovative idea of changing the way Chinese people consumed tea, and a bit of influence from the Japanese way of drinking cold drinks, mixed tea, milk, and ice in a cocktail shaker. Following the popularity of his cold drinks, he experimented with pouring tapioca pearls into the milk tea. This marks the birth of the world-famous Bubble tea beverage in China.

The rest of the story is well known: bubble tea has been a great success, spreading throughout Asia and even gaining popularity throughout North America. Today, bubble tea is an integral part of Taiwanese and Chinese culture.

More and more brands on China’s beverage market

Source: iiMedia – Number of milk tea shops in China

China’s bubble tea market seems almost saturated: at the end of 2018 iiMedia counted 450,000 milk tea shops offering bubble teas in China. The number of milk tea shops in 2018 increased by 74% from 2017. Bubble tea is the best-seller in almost every milk tea shop. There are dozens and dozens of players in the milk tea market in China. Equal Ocean ranked the 19 most powerful brands in this sector earlier this year listed below:

Bubble tea brands in China can be divided into two types: traditional and new style, embodied by the famous Heytea brand. The differences are mainly in price and design. The new ones attract younger consumers who see them as a way to show a cool and international lifestyle.

Among these bubble tea brands in China, some will catch your attention, either by the pertinence of their marketing strategy or by their product innovation or even their financial power.

Top bubble tea brands in China

• Yi Dian Dian is one of the three most powerful bubble tea brands in China, coming directly from Taiwan. It is considered a classic brand, serving traditional bubble tea milk. Yi Dian Dian has more than 600 stores in China and is now conquering Europe and other Asian countries such as Japan. Yi Dian Dian keeps their prices lower than most bubble tea stores.

• Coco or Coco Fresh is also one of the 3 brands mentioned above, with more than 2,000 stores worldwide and 20 years of experience.Coco offers a wide variety of toppings and the adjustment of all recipes, and have entered the coffee market in China.

• Heytea, whose success has made a lot of headlines in Chinese media, the Starbucks of Bubble Tea, is one of these new styles brands and has easily competed with Coco and Yi Dian Dian. Attracting mainly Chinese millennials, they are an example of innovation in a standardized sector and successful brand launch. With their first boutique opened in Shanghai in 2017, they are now also present in Singapore and Hong Kong, and with higher prices, hey are positioned towards the premium end of the bubble tea market in China.

• The Alley is probably the brand that has focused the most on the aesthetic side of beverages. Known for its brown sugar tapioca pearls, and layered matcha and black tea drink, its drinks are also among the most caloric bubble teas in China. The brand has succeeded in its commitment to be present throughout the world, on all continents.

• With its first boutique opened in Shanghai in 2006, Happy Lemon is also an interesting bubble tea brand in China because its identity differs slightly from that of its main competitors with design and values more focused on freshness and fruits.

In search of innovation for tea beverages in China: format is constantly evolving

Although most tea shops offer two main options (milk teas and fruit-flavored teas), harsh competition boosted the number of innovations. Non-fruit flavors such as avocado, ginger, mango green tea, taro or mocha are very often available and toppings such as tropical fruits, lychee, coco cubes, aloe jelly, coffee jelly, coconut jelly, pudding or chia seeds can be chosen as well.

The segment of cheese teas, also known as milk cap, is also new: Heytea is very well known for adding salty, creamy cheese to its beverages. The idea is to add creamy cheese to the tea. This helps to compensate for the bitterness of tea, which is less popular with younger generations of Chinese people. This salty cheese balances the sweet taste of the tea and fruits that are added to the drink. Surprisingly, cheese tea seems to appeal to people who care about their health thanks to the low-fat options available.

Happy Lemon has also developed Oreo Milk Tea which consists of adding oreo pieces to a milk-cap tea. But innovations do not stop at taste, design, and format. Shops try to offer the best customer experience. This is the case of Happy Lemon. They went viral on social media thanks to their robotic arm present in some of their shops, which embodies their desire to embrace the trend of new retail.

A report from Mintel recently showed that Chinese people prefer to buy their tea in physical stores. That is why many bubble tea brands in China try to innovate offline. The owner of the boutique explained that it was a pure marketing initiative, to attract consumers in a very competitive landscape.

Instant milk tea in China: different marketing, different codes

China’s tea market is by far the biggest in the world with a retail value of US$9.6 billion. Where it becomes particularly interesting is that 38% of its value comes from the instant tea category. One of the top segments of the instant beverage market in China is milk tea and bubble tea.

China’s instant teas imitate the flavors of bubble teas that can be bought in shops and sometimes even add real tapioca pearls to drinks. How does it work? In a cup, often made of plastic, you can find a sealed pouch of instant tea, a straw and another small pocket with tapioca pearls. Then add hot water, mix and in two minutes, bubble tea to take away is ready. Consumers’ favorite instant bubble tea brands in China are U-loveit and Xiangpiaopiao.

Packaging plays an important role in this market: on-the-go packaging is perfectly adapted to the fast-paced lifestyle of urban and overbooked Chinese millennials. Although more limited than what can be found in the shops, the choice remains quite wide: Xiangpiaopiao offers milk tea with green tea, chocolate, caramel, strawberry, sweet potato, etc.

The brand U-loveit has even worked with celebrities and KOLs in China to promote its bubble teas, collaborating with the world-renowned actor, singer-songwriter, Jay Chou.

The conclusions that can be drawn from the success of bubble tea in China

Drinking bubble tea is something you need to show on social media, that you share with your followers to show your very cool lifestyle, especially with the increasingly aesthetic drinks

On Chinese social media, the bubble tea trend is definitely huge and several pictures of milk teas are posted every single minute. Indeed, bubble tea is fashionable, fun and the most beautiful drink in China’s beverage market. The tapioca pearls and the colors of the tea mixed with milk make very shareable pictures. On Xiao hong shu or Weibo, there are thousands of photos of all brands. The Alley has particularly succeeded in making drinks beautiful enough for social media.

Social media is a showcase opportunity for Chinese consumers

This success of bubble tea in China shows us once again how much social networks are an integral part of Chinese life and that sharing with friends is the daily activity of millennials.

However, social media are also used by brands to advertise. Thirst marketing is thus leveraged by a large amount of bubble tea brands in China, such as Heytea which success relies heavily on its smart use of social media. The brand used the ‘network effect’ of social media and is mainly famous for the extremely long waiting time to get its products.

It uses a controversial technic: scarcity marketing. Heytea posted several pictures of lines in front of their stores explaining that waiting time could reach 6 hours! This went viral online and encouraged customers to share a picture when they finally got the precious beverage. Heytea’s famously long waiting time actually became a selling point.

China’s tea market, an invincible market

One of the first conclusions that can be drawn from the success of bubble tea in China is that the Chinese are still tea drinkers. It should be recalled that tea was discovered in 2737 BC by the Chinese Emperor Shen Nong. An emperor that became mythical precisely because he taught agriculture, medicine and the art of using plants to the population. Since the Tang dynasty, tea has become the main drink in China’s beverage market. Despite the growing success of coffee and the arrival of new coffee brands, tea remains a staple among Chinese. Moreover, the consumption of milk tea in China has exceeded the consumption of coffee. According to Ibzuo, Chinese people consume five times more milk tea than coffee.

Starbucks trend going to an end?

The success of bubble tea in China also leads us to question Starbucks’ supremacy in China. With existing 3,300 stores in over 90 Chinese cities and around 2,700 new stores expected to open by the end of the 2022, Starbucks’ success in China is undeniable. The American and international way of life promoted by these coffee chains has pleased Chinese people for years. Costa Coffee used the same sales argument, with nearly 350 stores in mainland China.

However, the atmosphere of these coffee shops and the values they convey still appeal to the Chinese.

What a tea entrepreneur says about the threat of coffee consumption

In an expert interview with tea entrepreneur Martin Papp, he shared his experience conducting market research in Starbucks in China.

 “China is still a tea-drinking country. I did some market research in 2014 when I was planning on starting this company. So I went to multiple Starbuck stores in China and surveyed customers in the store on whether they prefer drinking tea of coffee. I found that about 50% of Starbucks’ customers prefer tea over coffee. ”

Papp’s research suggests that people who prefer tea still went to Starbucks because tea shops did not offer the desired atmosphere in 2014. However, now things are changing, and milk tea chains have begun to adopt the same codes. People no longer have to go to Starbucks to find a hip place to socialize over a drink. Whether in the names of the drinks, the aesthetics of the drinks, the decoration of the shops and the values conveyed in the advertisements, everything reflects the enviable codes of Starbucks. Recently, HeyTea and Nayuki have even created tea rooms which are comfortable spaces for their customers to relax. So going to Heytea has become just as cool, even cooler given the long queues in front of the shops in Shanghai.

Healthy or unhealthy: a still difficult choice?

Finally, bubble tea drinks with a lot of sugar, raise the issue of healthy drinks in China’s beverage market. According to the Daxue Consulting report on healthy snacks in China, Chinese people, and especially women, have been paying attention to what they buy, the composition of products and the origins of ingredients.  Baidu Index demonstrates searches on healthy products has been stable throughout the past year, showing a real interest in better products. Although, searches for healthy products takes a dive during the spring festival when Chinese people tend to eat more sweet things and other family dishes.

Source: Baidu Index, Daxue Consulting report – The search frequency of “healthy snacks” in 2018 and 2019

How does bubble tea adapt to this trend?

A mix of milk and tea seems not caloric but because of the added sugar and tapioca pearls, bubble tea is a very caloric drink, heavy in carbohydrates. The typical glass contains more than 200 calories and 33 grams of carbohydrates.

According to Meituan, who delivered more than 210 million orders of milk tea last year, Chinese women are the largest consumers of milk tea and bubble tea, far ahead of men. 95% of women under 26 who use the Meituan app typically order milk tea every week. This means that bubble tea brands in China have had to adapt to new health concerns by offering more healthy alternatives and being more flexible on the amount of sugar. It is anyway a trend that is going to reshape the whole F&B industry in China.

Thus, in a highly competitive market, there is no shortage of innovations. Bubble tea brands in China are working hard to keep their current customers and attract new ones. Despite the growing trend of a healthy lifestyle, bubble teas in China still have a bright future ahead of them. The craze for bubble tea is so huge that we are even starting to find bubble sushis, bubble sandwiches, bubble noodles, and bubble pizzas…

Author: Steffi Noël

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The Rise of the Internet and its Impact on Censorship in China

The rapid rise of China’s mobile internet base altered the fabric of Chinese society. From civil affairs to law, politics, academia and foreign relations. Technological developments forced the Chinese government to change its tactics in controlling the Internet. Previous forms of media such as broadcast and print were strictly regulated as indispensable components of the political stability. Now, the Chinese government has implemented a plethora of strategies to censor prohibited information on the Internet. These strategies include strict regulations, employing people to monitor the web, creating organizations for internet oversight, and developing internet censorship technologies. 

Thus, the Chinese government maintains full control and ownership over the Internet, media and news. It does this by providing daily directives to media outlets on what content to cover. Moreover, the Chinese government manages its telecoms infrastructure in a way that allows for top down internet censorship to take place. As a result, China’s internet censors have blocked websites and removed certain smartphone apps. In addition, China’s internet censors are responsible for the mass deletion of microblog posts, instant messages and user accounts that touch on banned political, social, and religious topics.

Altogether, there are reportedly over 10,000 websites blocked in China. For example, major news and social media hubs like the New York Times, YouTube, Twitter and Facebook are among those blocked. Furthermore, increased internet censorship in China has recently extended to apolitical spaces such as online music stores, platforms for live streaming, dating, celebrity gossip, and blockchain technology. This has resulted in authorities suspending and tightening scrutiny over internet features that enable real-time communication. 

China’s Vision for the Internet – A New Internet Model

Access to the Internet in China is provided by eight internet service providers (ISPs), which are licensed and controlled by the Ministry of Industry and Information Technology (MIIT). These ISPs are referred to as the backbones of the mainland Chinese internet. Their role is to control access to the worldwide web and be the gateway that connects the global internet to the Chinese internet.

Chinese companies police censorship efforts

However, most internet censorship does not occur at the ISP level. It occurs on individual platforms, in which Chinese companies must police vigilantly. Thus, it is no surprise that Chinese super apps such as WeChat are built to facilitate censorship. Specifically, the multipurpose social media app WeChat increasingly employs artificial intelligence to scan and delete images deemed to include banned content. Throughout 2019, large-scale deletions of posts and accounts occurred on both WeChat and on Sina Weibo’s microblogging platform.

Therefore, it is evident that the government together with big-tech companies learned very quickly how to employ digital technologies such as data analytics and artificial intelligence to advance internet censorship in China.

China’s idea of cyberspace sovereignty

So far the Chinese government has managed to promote the Internet as a means for socioeconomic development while successfully minimizing its political impact. While many people and countries bristle at the idea of such wide-ranging internet censorship, China has sought to legitimize it in recent years by promoting the idea of “cyberspace sovereignty.” China defines this as each country having the right to “choose their own path of cyber regulation and development, and public policies for the Internet.”

These moves embody the Xi administration’s sweeping efforts to strengthen China’s system of cyber governance and internet censorship. These efforts aim to expand the legal framework for control over data, networks and information. In essence, China is pushing ahead with its own model of the Internet.

[Source: Quartz, China’s Internet Backbones and the Shape of China’s “Great Firewall,” These graphics show how China’s backbone ISPs located along the Eastern Coast control and provide access to mainland servers that route IP addresses to local IPs.]

Government’s Role in Creating a Managed Internet Ecosystem

Established in 2011, the State Internet Information Office is the responsible organ for internet censorship in China. China relies on the main telecommunication companies such as China Telecom, China Unicom and China Mobile to enforce blocks. To date, more than 60 internet regulations have been issued by the Chinese government.

The 2017 Cybersecurity Law along with other regulations have increased the pressure on private technology companies to assist the government in creating a sophisticated blueprint for internet censorship in China. The PRC Cybersecurity Law requires companies to monitor the content their customers create or share, censor content that violates laws and regulations, and report such content to the authorities. Thus, new regulations, censorship campaigns, and increasing restrictions on the use of virtual private networks (VPNs) have further heightened internet censorship in China. In 2018, regulators reportedly shut down over 6,000 websites. From January 3 to 21, 2019, the Cyberspace Administration of China (CAC) shut down 733 websites and 9,382 mobile apps, and deleted over seven million pieces of online information.

No single government department handles internet censorship in China

In sum, China’s internet censorship regime is implemented by the provincial branches of state-owned ISPs, business companies, and various other organizations. There is no single government department that handles internet censorship in China. But rather, a complex and confusing web of departments and organizations implements censorship over internet media. Below is a graphic that illustrates the interconnectedness of China’s internet censorship framework. It also includes a description of the relevant government departments and their roles in regulating China’s internet.

[Source: “The Limits of Commercialized Censorship in China” by Blake Miller. Agencies and Individuals Influencing Censorship on Sina Weibo]

Departments involved in internet censorship

• The Publicity Department of the Communist Party of China, formerly known as the Propaganda Department, takes the lead in deciding what is kosher and what is forbidden. It sets the direction for media and state messaging for the whole country. 

• The State Council Information Office (SCIO) has a parallel function to the Publicity Department, but is officially controlled by the government, not the Party.

• The Ministry of Public Security (MPS) controls technical internet censorship. Like the Ministry of State Security (MSS), it also has the power to shut down websites and printing presses.

• The Cyberspace Administration of China (CAC) is the most important regulator of internet content and has become much more powerful under the Xi Jinping administration. 

• The National Radio and Television Administration (NRTA) oversees licenses for news publishing, books and periodicals, radio, film, TV, and video game software. Before March 2018, it was known as the State Administration of Press, Publication, Film, Radio, and Television (SAPPFRT), which in turn was formed in 2013 by merging the State Administration of Radio, Film and Television (SARFT) and the General Administration of Press and Publication (GAPP).

• The Ministry of Industry and Information Technology (MIIT) shares and sometimes fights over the responsibility for regulating internet and video media. MIIT controls networks and the Internet, but more from the technical side.

• The Ministry of Culture and Tourism (MCT) oversees theater, live music, visual arts, “cultural products,” and also has oversight over video game hardware.

How does China Censor the Internet?

China censors the internet in two ways: through micro-censorship and macro-censorship.

#1 Macro-censorship

Macro-censorship uses software and hardware based interventions to prevent whole domains from being accessed. Macro-censorship is often referred to as the “Great Firewall of China.” Macro-censorship is what makes certain foreign websites inaccessible. This level of censorship starts at internet routers and applies to entire internet networks.

[Source: Global internet Freedom Consortium, China’s Great Firewall]

The Great Firewall operates under the “Golden Shield Project.” It has been in operation since 2003 and is controlled by the Ministry of Public Security. It serves as the main infrastructure that blocks access to unfavorable incoming addresses from abroad. The Great Firewall deploys several technologies to block entire websites and specific webpages from being accessed by IP addresses located in China. However, the Great Firewall of China primarily focuses on blocking external content.

Some common technical methods used by the Great Firewall are: IP blocking, DNS filtering, poisoning, and redirection, URL filtering, packet filtering, man-in-the-middle attack, TCP connection reset, deep-packed inspection and VPN blocking. Although China has never publicly revealed the technical details surrounding the Great Firewall, researchers worldwide conclude it does in fact employ these tactics such as blocking IP addresses, DNS attacks, and filtering specific URLs and keywords. However, the latter method has become more and more difficult with the increasing popularity of the encrypted HTTPS protocol. 

[Source: Global Internet Freedom Consortium, Internet Censorship Mechanisms in China]

#2 Micro-censorship

In contrast, micro-censorship targets individual expression within China’s domestic internet. Micro-censorship happens at the post, comment, and article level. It is carried out by social media companies and other internet content producers (ICPs). Micro-censorship is accomplished in several ways such as keyword filtering, manual content review, and algorithmic filtering.

However, there are a wide range of micro-censorship methods used in various ways by different companies. But in general companies utilize both human and machine-power to censor online content.

Thus, it is evident that in addition to the many efforts directly taken by the government, a key feature of China’s internet censorship on social media are the obligations placed upon individual companies. This is because they bear the ultimate responsibility for removing prohibited content from their platforms.

In China, censorship is delegated and regulated through internet content provider (ICP) licenses. ICP licenses are necessary to operate an internet business in China. These licenses can be revoked or suspended if ICPs do not comply with government censorship directives.

What role do websites play in internet censorship in China?

Chinese websites are legally required to sign the “Public Pledge on Self-Discipline for China’s Internet Industry.” This orders companies to remove offensive material and to block certain terms. As such, each platform has developed its own methods to combat “harmful” content targeted by the government. Keyword filtering is the first line of defense for many ICPs. Keywords of either single words, phrases, or co-occurring words and phrases are set up to prevent searches, posts, or comments about off-limits content. This form of review is done in two ways: through manual content review and algorithmic review.

How websites monitor content

As part of their responsibilities to enforce China’s internet censorship laws, companies are expected to have the technology to block and filter posts, and the staff teams on-site to conduct manual content review. Technology firms are not only responsible for monitoring and censoring public social media content. They are also responsible for monitoring closed chat groups and even one-on-one conversations.

Thus, Chinese tech firms often employ thousands of content moderators to remove censored material. These moderators look for code words, slang, and memes that people use in order to get around the censors. In addition, there are also censorship “factories” in China to fulfill these duties for firms. For example, one such company named Beyondsoft uses a service called Rainbow Shield. This service has compiled over 100,000 basic sensitive words and over three million derivative words. Of these words, about one-third are related to political content. Following are words related to pornography, prostitution, gambling and politics.

Most Common Internet Censorship Methods

1) Search Engine

In China, the market share of foreign-owned search engines is low, as domestic players like Baidu and Sohu dominate the market. As they are the natural starting point for Internet users, these search engines are of high interest to censors. One method search engines use to censor the Internet is to filter the search results of prohibited terms.

The search engines playing a role in the censorship of China’s internet also include the likes of international companies such as yahoo.com.cn and Google. Google for instance received widespread criticisms over its Dragonfly project and its rumored development of a Chinese censored search engine. Furthermore, Google has also removed advertisements on Chinese websites that review anti-censorship software.

[Source: Personal Graphic, List of popular search engines in China]

2) Reporting

China has recruited thousands of individuals to search the internet and report problematic content to authorities. In particular, organizations like the ‘China Internet Illegal Information Reporting Center (CIIRC).’ This organization, which is ostensibly a civil society organization encourages the reporting of “illegal and harmful information” to the Ministry of Public Security.

3) Content Manipulation

Internet-opinion companies that monitor, analyze, and Content manipulation refers to Internet-opinion companies that monitor, analyze and manipulate China’s social media interactions online. Additionally, there are specific groups and individuals that are given the task of manipulating the direction of internet discourse. For example, the “Fifty Cent Army”. The Fifty-Cent army is a group of individuals are rumored to be paid per-post. This group of individuals consists of government organized persons and netizens given the task to steer online discussion on sensitive topics.

4) Platform and URL based blocking

Platform and URL blocking restricts access to specific apps and websites like Facebook, Twitter and Youtube.

[Source: Personal Graphic, List of previous and now blocked websites and social media applications in China]

5) Keyword Censorship

The most identifiable aspect of internet censorship in China is the ever-evolving list of banned terms and phrases. Entering these identified prohibited words into a search engine will return no results. Similarly, using these filtered terms in a social media post will result in machine-automated software flagging or deleting the content.

The best analyzed list of forbidden keywords comes from Sina Weibo. The list now contains almost 3500 The best analyzed list of forbidden keywords comes from Sina Weibo. The list now contains almost 3,500 blacklisted words. However, many of the words are not ‘blocked’ forever. Instead, they are blocked temporarily during breaking news events and later made accessible once censors judge that the ‘subversive’ connotations of the words have been forgotten. Amazingly, it takes mere moments to block new terms. This allows Sina Weibo censors to respond in real-time to monitor new social media developments. This capability plays a large role in shaping the public discussion online.

However, keyword lists do not always result in automatic blocking or search restrictions. This is because there are usually different levels of keyword lists. At Sina Weibo there are three levels of keywords based on a combination of political sensitivity and the likelihood that a non-sensitive post will be flagged from the keyword.

How Sina Weibo censors content

At Sina, employees in charge of content moderation make most of the decisions about what is and what is not to be censored on their platform. First, posts are flagged and sent to content moderators through keywords. Then, management directs audits of certain posts, accounts, or user reports.

These content moderators employ a variety of methods to handle and outright delete content. Employees commonly choose to handle content in one of five ways: delete, secret, friend, restrict, and conceal. All of these ways of handling content involve hiding content from a subset of users on Sina Weibo. Though the censorship choices mentioned above are the most commonly used, they are not an exhaustive set of the ways in which Sina handles objectionable content. Below is an illustration of the internet censorship process on Sina Weibo.

[Source: Blake Miller, How Sina Censors Content and the Types of Censorship]

China’s Internet Censorship Industry Has Given Rise to New Markets

Internet censorship itself has become a lucrative business in China. For example, the online version of the Party-run newspaper People’s Daily, people.cn. In particular, they contract with companies such as news aggregator Jinri Toutiao to censor content that contravenes the government. Revenue from People.cn’s censorship services reportedly rose 166 percent in 2018.  Thus, the People’s Daily monetized its expertise in identifying ‘‘politically sensitive’’ content by marketing the services of its in-house censors and by formally training and certifying censors.

Another censorship service, Rainbow Shield, as previously mentioned, employs over 4,000 people in multiple cities to review online content. Hence, there exists a lively market for the internet censorship industry in China. Here, many for-profit organizations resort to selling various data products and services to help China monitor online content. Data in the Chinese enterprise credit system shows that more than 900 companies provide internet surveillance services or own copyrights for internet surveillance software.

China is a leader in developing and exporting internet censorship tools

According to records posted on a Chinese government procurement platform, there have been more than 400 pieces of bidding information and contract briefings that refer to the internet censorship business. Also, there are more than 2,000 companies providing various services to the Chinese government in the market.

As a result of these disclosures, China has become a leader in developing, employing, and exporting internet censorship tools and social media surveillance software. For example, the Chinese firm Semptian has touted its Aegis surveillance system as providing “a full view to the virtual world” with the capacity to “store and analyze unlimited data.” The company claims to be monitoring over 200 million individuals in China, which is a quarter of the country’s total internet users. The company even markets a “national firewall” product, which mimics the Great Firewall in controlling internet traffic in China.

Control-service providers

Hence, two types of control-service providers and agencies own the greatest market share in the industry. Technical companies and media organizations. Technical data companies rely on their data-processing technologies such as web crawling and sentiment analysis to provide their stakeholders with customer-oriented surveillance software.

Second are media organizations. China’s media players are very strong in the censorship industry because of their market oriented nature. Although official media outlets such as People’s Daily and China Youth Daily fall under the government’s purview, they still need to address market competition by exploring new profitable business models.

As a result, organizations such as Xinhua, China Daily, People’s Daily, and China Youth Daily have all started their own online-opinion-surveillance agencies that provide internet censorship services. Among them, ‘The People’s Internet Public Opinion Office’ is the most well-known. It relies on the resources of the People’s Daily and People’s Daily Online. As of 2012, this business earned a revenue of approximately $29 million dollars. This represents the second biggest source of income for the People’s Daily.

Internet censorship in China will likely get more rigorous

In sum, internet censorship in China is very widespread and its impact is felt broadly throughout society, business, and politics. As the cluster of actors operating within China’s large and interconnected digital ecosystem continue to merge business models and innovate, it is more than likely that internet censorship in China will become even more rigorous. As a result, this will have a huge impact on all businesses in China. For foreign MNCs in particular, data privacy, business control, and enterprise reputation will be the leading concerns moving forward.

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Just like the content on these platforms, the figures of the short video market in China are making heads dizzy. The Coronavirus crisis has shed more light on an already booming industry. A large number of mobile users and the addiction for short video content among Chinese Millennials were already the drivers of the consumption of short video content. This viral trend is reshaping the content market, with short video marketing strategies in China becoming increasingly crucial for marketers.

The short video market in China soars on traffic growth and AI development

According to a QuestMobile report released in June 2019, the total users of these short video products has reached 820 million, meaning that 7 out of 10 mobile internet users in China are using these platforms to record, share or enjoy videos. The leading players in Mainland China are Bytedance’s Douyin and Kuaishou. Baidu and Tencent are trying to catch up with their own platforms, respectively Haokan and Weishi.

[Data Source: Questmobile –  short video apps in China, MAU June 2019]

Each short video platform has its distinction

TikTok / Douyin’s ByteDance, the global player

Douyin was created in 2016 by the Chinese tech giant ByteDance. It is by far the most widely known short video app thanks to TikTok, its global franchise. The app is available in 75 languages across the world. User base is mainly young women, displaying music-inspired content videos. No matter the size of an influencer, Douyin’s recommendation algorithm is based on users’ virality engagement with a piece of content. As long as people engage with a video, it will continue to spread further. Influencers can also use the live-streaming function to interact with their fans.

[Source: Douyin, the #1 short video platform in China]

Kwai / Kuaishou targets rural audiences in China

In 2012, Kuaishou went from a GIF-making app “GIF kuaishou,” to a short video platform. In 2019 Q2, the app became the second-highest-grossing video app globally, behind YouTube and ahead of Douyin.

Tencent and Alibaba-backed Kuaishou, known as Kwai on the international market, is the biggest competitor of Douyin, with a higher percentage of male users. Targeting China’s grassroots society, 64% of the platform’s users live in lower-tier cities. These users are heavily engaging with content and are willing to comment and to share. However, compared to Douyin, Kuaishou’s content might be of lower quality, and its ability to monetize content is far weaker. With less revenue coming from large brands advertisers, Kuaishou draws revenues from its live broadcasting function in which viewers have to pay to interact with the broadcaster.

[Source: Kuaishou, the #2 short video platform in China]

Xigua, known for its high-quality content

Xigua was created in 2016 by Bytedance to target a different audience from Douyin’s, with males accounting for a greater proportion of users. The platform attaches great importance to high-quality content, with both algorithms and user sharing helping drive traffic to high-quality videos longer than one minute. Besides, people can quickly find videos which interest them thanks to a more precise classification menu. However, the platform lacks active Chinese Key Opinion Leaders (KOLs) who can set the standard.

[Source: Xigua, a lesser known short video platform in China]

Bilibili, from mangas to makeup

Bilibili was born in 2010 from the willingness of its creator to share videos about anime fandoms, manga, and video games. Since then, the platform has diversified, attracting a lot of traffic thanks to content around lifestyle, entertainment, beauty, or technology. The app also offers a live streaming service that allows fans to interact with their streamers.

Bilibili’s audience is far younger than other short video platforms, with 80% of the viewers falling into the 16-25 age bracket. Moreover, the average time spent daily on Bilibili exceeds 85 minutes, and the engagement is relatively high. As of now, brands in the tech and entertainment industry have attracted high retention and engagement on this online video platform. We can also expect fashion to be a big draw in the future.

[Source: Bilibili, originally a manga platform, now is popular a video platform in China]

AI enables the development of short video platforms in China

The monetization of traffic on these applications is crucial, and Artificial Intelligence could help. AI is already the main engine for improving users’ journey on the short video apps, with the ability to enhance the visual quality, select content recommendations, and generate ideas of new content. A better user experience brings more traffic, which in return enables mass advertisement, user subscription, and many monetization opportunities. 

Chinese traditional tech companies such as Tencent, Baidu, Alibaba all invested, developed, or acquired short video apps, feeding them with technology to enable commercialization of content. AI algorithms have transformed the content industry from ‘people looking for content’ to ‘content reaching out to people.’ Thus, a study conducted by Netflix shows that 80% of hours streamed on Netflix are based on personalized recommendations. Wholly enabled by AI, instead of relying on word-targeted searches or interest-channel browsing, these short video apps in China directly feed under-60-second, user-targeted short videos to users.

By collecting likes, comments, and other data metrics such as response time, machine learning tracks user behavior and tailors content, deciding what video to show next. Thus, in China, the average daily use time on short video apps is 45 minutes. The growing user’s attention generates a large amount of advertising revenue, with the value transferred from the brands to the online video market in China. Therefore, following the traffic growth, the short video market in China is skyrocketing on the back of a better monetization of its content. In 2018, China’s short video market revenues grew by 744% year-on-year, an impressive leap forward which is expected to last.

Driving forces of the short video market in China embody modern Chinese lifestyle

In addition to their ability to optimize the viewer’s experience and monetize content, short video apps represent a new type of format that perfectly suits Chinese consumers of the 21st century. The digital transformation of China changed lifestyles, pushing daily-life activities from offline to online. In 2017, improved connectivity and video maturity enabled live-streaming and short video apps to penetrate the Chinese mobile internet ecosystem.

Post 70s lifestyle

Chinese people are getting more time-poor, meaning that the short video format adapts perfectly to this new fast lifestyle. Short content can be viewed on public transport when leaving work, or at home before going to bed. The peak of usage of these apps lies, therefore, between 6 pm and 11 pm.

Outside of the short format, the success of such platforms could also be explained by the lifestyle of the new generation of mobile users. Gen Z (defined as the “post-95” generation, aged 15 to 24) are more inclined to express their views openly. Even if they want to be perceived as independent and brave, they are by no means immune to the influence and group behavior. Consequently, they love to interact with people they identify with, feeling that they participate to the conversation. For example, this group of consumer fuels choreography challenges on Douyin, supports their favorite artist via the live-streaming function of Kuaishou, or follows the latest fashion style of biggest KOLs on Bilibili.

Users under 50 represent close to 90% of the total users on the short video platforms in China. Nearly 50% of whom are under 35. Another characteristic of Chinese consumers under 50 years old is their proclivity to spend money freely. Even if a big part of Chinese gen Z is still unemployed, 70% of them receive more than 3,000 yuan in pocket money per month, with 20% of them receiving more than 10,000 yuan. Beyond this generation, Chinese people enjoy a modern and quick lifestyle with less time to spend than money.

Covid-19 drives traffic on short video apps in China

During the Coronavirus, the shift towards online services quickly accelerated. No matter the age group of the consumer, it needed to rely on online services to keep its habits. With people streaming from all over China, Chinese people have flocked to these platforms to collect real-time information on the epidemic situation. During this period, short video apps represented more than 30% of the time of news acquisition among Chinese netizens, and 17.3% of the total use of the mobile internet. Compared with the 2019 Spring Festival, short video consumption time exceeds that of mobile games.

[Data Source: QuestMobile, How Chinese netizens spent their time online during Spring Festival of 2020]

Moreover, the economic impact of the Coronavirus in China pushed offline industries to go online. Examples of such industries making smart use of the live-streaming functions are the night clubs and the gyms. Thus, a five-hour live-streaming set at OneThird, a nightclub of Beijing, brought back $285,000 in tips donated by the viewers on Douyin. Banking on the trend, Douyin’s rival Kuaishou made deals with clubs across China to stream their shows.

[Source: Douyin – Keep’s Short video marketing strategy in China during the Coronavirus]

Could short videos be the future of marketing in China?

With an incredible engagement from its users, short videos are a boon to promote, market, and sell products. Marketers can use it as a tool for communication, sharing reviews from Chinese key opinion leaders, and for targeting narrow audiences. Another option is to invite followers to share and like a post to win a prize in return. In addition, live-streaming allows for audience interactions and feedbacks, which could provide useful data for marketers.

Proof that marketers would invest the stage, the advertising revenue from the short video market in China is expected to reach close to 100 billion RMB (14.1 billion USD) by 2021.

[Data Source: Statista, 2018, China’s short video advertising market revenue]

Short video KOL marketing

However, as the possibility are numerous, short video marketing strategy in China can quickly become complex. One of the most effective uses of Chinese short video apps is to promote a brand is through influence marketing in China or KOL marketing. Chinese KOLs exhibit the ability to widen a brand’s audience, drawing customers from online channels to physical stores to make purchases. Resulting from their ability to attract traffic, Chinese KOLs can attract brands and advertising, helping short video platforms in China to achieve a better monetization. Consequently, the short video market in China is competing to close exclusivity deals with the biggest Chinese KOLs.

[Source: Douyin – influencer marketing in China to promote the short video app]

The 15 to 60-second format is challenging for creators and brands, which are not able to enter in-depth in the storytelling that makes video content valuable. As of February 2020, short video platforms like Douyin are adopting longer video formats to attract higher quality content. If brevity is making it hard for marketers to inform and persuade, the conversational content of these platforms could represent the future of marketing in China. Live-streaming functions and chasing engagement from the audience to enriches the experience are seen indeed as the next marketing trends in China.

Short video marketing strategy in China: How Daxue can help you

As a competitive market research agency in China, Daxue Consulting can help you creating your short video marketing strategy in China. Our team is dedicated to giving you the best understanding of Chinese consumers and to assist you in each step of your social media strategy process.

Understand the target audience

First, Daxue Consulting can perform customized social media listening plans to analyze comments on Chinese short video platform Douyin, as well as shopping platforms in China – which are directly accessible via the short video app, like Taobao, Tmall, JD.com. This social listening phase will help you identify the best channels according to your targeted audience.

Choose the right KOL for your audience

This first set of raw data is useful to identify Chinese live-streaming KOLs that would fit for your brand, product, or service. Some KOLs could be exclusive to only one or two platforms in the Chinese market. This makes it essential to know the right social-media channel and define a short video marketing strategy in China to reach the desired target audience (e.g., Douyin vs. Kuaishou vs. Bilibili).

According to our case study, Austin, a former makeup artist for L’Oréal, would be the perfect candidate to market a cosmetic brand among young consumers in low-tier cities market in China.

If you want to know more about influence marketing in China to kickstart your short video marketing strategy in China, make sure to check out Daxue Consulting’s KOL market report!

Chinese leading players to go global

While the short video craze is reaching new heights in mainland China, Chinese actors are gaining traction from foreign markets. Embodying the fast pace of the modern Chinese lifestyle, but also the western one, ByteDance’s Tiktok (known in China as Douyin) is booming. In 2019, TikTok managed to achieve more downloads than Netflix, Facebook, or Gmail on the Appstore.  Kwai, which is owned by Kuaishou, repeatedly tops the Brazilian app store’s most downloaded chart.

Chinese players are looking for fresh opportunities abroad, while the short video market in China became increasingly saturated. By appealing to certain demographics and cultures, plenty of short videos platforms thrive in China’s domestic market. Replicating these same strategies on a global scale for Chinese companies could be riskier. Indeed, if there is still room outside of China for TikTok or Kuaishou, it is not guaranteed for the others.

In China, the huge engagement of the users attracts influencers and advertisers who helps achieving the monetization of the content. For Chinese short video startups going global, achieving monetization is a real challenge, knowing that the engagement rate of foreign users is far weaker.

Author: Maxime Bennehard

Check out our report on the KOL market in China

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Astrology is defined as “The study of the movements and relative positions of celestial bodies interpreted as having an influence on human affairs and the natural world.” It originated from the western society. Nevertheless, astrology is popular in China and has affected Chinese people’s daily lives and consumption. Astrology has even made its way into China marketing campaigns targeting young consumers.

The popularity of Astrology in China: western Astrology is more popular with Chinese people

Internet activity reveal the popularity of western Astrology in China. According to Baidu Index, during the period of 2012- 2020  Astrology was searched 16 times more on Baidu than Chinese zodiac. According to Zhihu, 474 topics that are related to Astrology are discussed by Zhihu users in China.

[Photo source: Baidu Index, ‘Search index of Astrology VS Chinese Zodiac’]

The history of Astrology in China

Even though Astrology has been widely discussed by Chinese people in the last decade, it has existed in Chinese society for more than 1000 years. In Sui Dynasty (581-618), Indian monks firstly introduced Astrology to Chinese society. During Qing Dynasty (1636-1912), Kang Youwei, the famous Chinese philosopher and politician standardized the translation of Astrology in China, which has been used in the following years until now.  In the 1990s, Western astrology began to seep into Chinese people’s daily lives. The internet has fostered and spread the popularity of Astrology in China.

Some Chinese consider astrology in who to date and who to hire

During social occasions, Chinese people discuss the latest gossip and tidbits about their astrological profiles. According to The New York Times, social media accounts with millions of followers share weekly horoscope forecasts. On dating APPS, users show their zodiac signs alongside their age, salary, car and home ownership status. More and more Chinese consider astrology  during all kinds of major life decisions including relationship advice, making friends, having babies, and even hiring employees.

Profile of Chinese Astrology fans: dominated by females and youth

Chinese people with different backgrounds hold diverse attitudes and perceptions towards Astrology.

According to a survey conducted by woshipm, 82% of the responders believe in Astrology and females tend to believe it more. Additionally, people aged below 25 are more likely to be Chinese Astrology fans. 47% of the responders read articles related to Astrology occasionally while merely 9% of them read them every day.

[Data source: Research Center of Cheetah Mobile, ‘Chinese people’s attitudes towards Astrology (2019)’]

[Data source: Research Center of Cheetah Mobile, ‘Frequency of browsing content of Astrology (2019)’]

Regarding to content, Chinese Astrology fans are likely to know about personality analysis, lucky numbers/dates/items and relationship insightsadvice.

[Data source: Research Center of Cheetah Mobile, ‘Popularity of Astrology in China’]

In terms of the channels, Chinese Astrology fans access the information regarding Astrology, websites, Astrology apps and influencers’ social media accounts are the common platforms.

[Data source: Research Center of Cheetah Mobile, ‘How Chinese access Astrology related content’]

Rationales for the popularity of Astrology in China: obtaining psychological comfort matters 

Gaining psychological comfort, self-recognition and entertainment, and socializing with others explain Chinese Astrology fans’ obsession with it. Many responders indicate that they turn to astrology for clarity during tough times, which can provide psychological comfort. Chinese Astrology fans feel their lives are out of their control, and reading articles related to Astrology would ease their mind as they can understand the forces behind their destiny. For those who responded gaining self-recognition, they believe that people from different zodiac signs has specific talents. By discovering and  amplifying the talent, these people can maximize their success.

Some answers from Zhihu users have verified these reasons and they are in favor of Astrology. Psychological comfort or related terms is a common  reasons put forth by Chinese astrology fans. Many of them feel that the description of their zodiac signs are accurate as these match their personalities. Some of them mentioned that their belief in Astrology is related to their relationships.

[Photo source: Zhihu, Chinese netizens explaining why Astrology is popular in China]

From the academic perspective, an author from The Outlook Magazine argues that Astrology has been prevalent since ancient China as it was a mean of forecasting national incidents, wars and harvest. Thus this has been a tradition in China, anticipating one’s fate based on Astrology. Nowadays Chinese people prefer the western Astrology instead of Chinese horoscope is due to the fact that the west Astrology is more complex and supported by art works and literature, while Chinese horoscope is relatively abstract and hard to understand.

Astrology market in China: fostered by social media behavior

Social media has been an incubator that has fostered the Astrology market in China as astrology features low barrier to entry, entertainment-orientation and socialization. According to WeChat official accounts, 313 results are tagged as “Astrology” and Uncle Tongdao is the most popular with the search index of 974.1. On Weibo, Jin Li Da Wang (Koi) and Tao Bai Bai have 20.78 million followers and 7.95 million followers respectively. 

Some companies have developed Astrology apps in Astrology market in China. In comparison with Astrology promoted on social media accounts, Astrology apps provide diversified services such as paid Q&A, paid anticipation and Astrology lessons. Moreover, their services are not limited to Astrology but also dice, luck tests and personality tests.

[Photo source: woshipm, ‘Astrology apps in China’]

Case study: the success of Uncle Tongdao

[Photo source: meihua.info, ‘Uncle Tongdao’]

Uncle Tongdao is a successful Astrology brand in China. In 2014, Uncle Tongdao went viral on the Internet as its cartoons and images fitted Chinese netizens’ appetite. By combining Astrology related culture and the 2-dimention culture, Uncle Tongdao is able to win the heart of Chinese Astrology fans. By the end of 2018, Uncle Tongdao had more than 60 million followers on social media and become the representative in Astrology in China. 

The business model of Uncle Tongdao is innovated in China as it combines IP operation, IP authorization, IP E-commerce, IP community and IP crossover marketing. As a result, the company generates its business eco-system and keeps producing business value for its partners. Uncle Tongdao has become one of the most valuable Intellectual Property entities in China.

Astrology co-branding in China

Apart from the online sector, Uncle Tongdao also expands its business area to offline sector by establishing subsidiaries that carry on publishing, souvenir and dramas, etc. On May 20th, Along with many other co-branding ventures, Uncle Tongdao alongside with I-ORANGE, an advertising company set up pop-up wedding dress stores. It was an event for single people and encouraged them to face their relationship status regardless of people’s judgments. It turned out to be a successful campaign as the societal pressures of singles is quite a headache for Chinese young adults.  

[Photo source: meihua.info, ‘Pop-up wedding dress store, an Astrology marketing campaign in China’]

Astrology in the hospitality industry

Uncle Tongdao also collaborated with Atour and established a hotel that features Astrology culture in Chengdu. The business vision is providing a comfort zone for young people to alleviate stress.

[Photo source: meihua.info, ‘Uncle Tongdao x Atour Hotel, an Astrology marketing campaign in China’]

Ride your start sign to work

In 2017, Uncle Tongdao collaborated with ofo, a bike-sharing company in China and launched some Astrology-themed shared bikes in China. Uncle Tongdao claimed that,  riding the personal zodiac signbrings luck to commuters in China. 

[Photo source: meihua.info, ‘Uncle Tongdao x ofo bikes’]

Future trend of the Astrology market in China: focusing on platforms, core values and big data

In the foreseeable future, the development of Astrology market in China ought to innovate its channels and content of products. Finding the right platform

Chinese Astrology fans cannot bother downloading apps to access Astrology information. Instead, WeChat official accounts or mini programs are the more convenient platforms.

Focusing on mainstream culture

Secondly, brands should focus on mainstream culture and subculture that are popular with youth in China so that they can alter their products and tailor to different needs. Astrology is a trend to watch for marketing to millennial and gen Z consumers.

Providing comfort

Furthermore, Astrology companies in China should always maintain the core value of satisfying users’ needs by including psychological comfort, positive energy and stress relief in their messages. Considering the fact that Chinese Astrology fans turn to the art for clarity during tough times.

Getting technical

Last but not least, AI and big data will be applicable in Astrology market in China since they are able to make Astrology more convincing. Since 2018, some Astrology APPs have been developing and testing the feasibility of this application and the result is yet to be known.

Popular Astrology topic: How Chinese people from different zodiac signs behave in the relationship?

Speaking of relationships, Chinese youth, especially girls, like to relate personalities to zodiac signs. Undoubtedly, Astrology serves as a reference when they make decisions on their relationships. The table listed below is the summary of characteristics of different zodiac signs. Whether it is reliable or not, it varies case by case!

Author: Amelia Han

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E-commerce, brand image, strong consumer demand: the sex toys market in China is promising

The adult toys market in China is booming. As the world’s largest exporter, producing more than 70% of these items, China is one of the countries where the market is exploding. After an export-oriented industry up to 86%, the trend is now to satisfy domestic demand. Consumption trends for adult toys in China remain low in contrast to its Asian neighbors such as Japan (38% against 75%). Nevertheless, the market is promising and represented 350 billion RMB in 2018.

The Middle Kingdom attracts foreign investors through its production potential, which explains an increase in the number of startups between 2015 and 2017 (+87,15%). The number of consumers is increasing especially within young adults under 35 years old, which make up 63% of sales. At the same time, women’s consumption has doubled in two years and represented 15.92 million RMB toys sales in China. Sales are higher in large, first-tier cities. However, there is strong demand from second-tier cities, which account for nearly 31% of sales. 

[Source: Daxue Consulting, adult toys market size in China]

Preferences of Chinese adults toys consumers

Previously considered as a medical tool, the adult toy has become an object associated with pleasure. Traditionally a masculine purchase, sex toys in China has succeeded in attracting a female clientele in China. If consumers of adult toys express a real interest for these objects, the buyers are even prudish and they want it to be confidential. The typical profile is as follows: male, 26-35 years old, with a good financial situation and a high level of education. He has sexual relations with his partners and is married or single without children. He lives and works in a first-tier city.

Even though men are the primary consumers, the gap between genders is narrowing. Consumer habits between men and women are different. Woman tends to prefer lingerie and objects allowing clitoral stimulations (i.e. 90% of individual sales) whereas men prefer masturbators objects (i.e. 90% of sales). Among the selection criteria, consumers prefer cheap products. However, most of them are paying attention to quality of the accessories. It also applies for innovation, packaging and experience user. Peak consumption occurs twice a year during Valentine’s Day and e-commerce festivals. Consumers used to ordering one to two months in advance, which explains the drop in sales during this period of activity when demand is supposed to be strong. More than 2/3 adult toys buyers have already used sex toys. Therefore, the more experienced consumers are, the more they are a prime target for industrialists.

[Data Source: Research.Moojing. Image source: Daxue Consulting, sales distribution of sex toys in China by gender]

[Data source : Tryfun. Image source: Daxue Consulting, sales distribution of sex toys in China by age]

E-commerce: a success business model

Faced with a booming Chinese e-commerce market, there are tremendous opportunities for brands. The adult toys market in China includes different types of intermediaries such as manufacturers, brands and wholesalers and retailers as well. 58.7% of sales are carried out offline against 41.3% online. At present, offline toy sales are still the most significant channel of China’s adult toys retail. Nevertheless, the consumption trend could be reversed with the current direction of e-commerce growth. According to forecast, e-commerce will surpass offline stores. This one is very popular because it can effectively protect users’ privacy by not marking products’ names without disclosing information about the consumer during the delivery of the product. Distribution channels of adult toys are not limited to offline stores anymore. E-commerce is the most diversified distribution channel; it includes official websites, mobile apps, and social media. Meanwhile, multiform marketing modes promote sales volume growth.

[Source: Daxue Consulting, distribution channels for the adult toys market in China]

Products on the adult toy market in China

Following the removal of political and cultural barriers, many companies have set up to conquer the adult toys market in China. There are several families of products such as: basics items (condoms, lubricants, massage gels), lingerie, women’s and men’s product (masturbatory objects, sexual accessories). Other adult toys could be developed in China as consumers are eager for innovation. There are a small number of competitors on the market, which leads to higher prices.

[Source: Daxue Consulting, adult toys product family]

[Data source: Taosj.com, sales of male vs female products in China]

How brands adapt to Chinese consumers

Among leading brands in China, ones find Durex, Tryfun and Touch that have different positioning and segmentation. As the most popular condom brand in China, Durex specializes in the production and sale of condoms worldwide. It has about 40% of the Chinese condom market. The English brand relies on its reputation and its marketing and advertising actions to gain notoriety. The latter seeks to interact with the public with the implementation of small games, videos and a creation of its online platform called Weibo, which brings together more than 3 million Internet users. Driven by its success, the brand’s latest video has been viewed by more than 5 million people. The brand plays on humor, the authenticity of its products and the notion of pleasure among young adults. Although the condom is the brand’s flagship product, the other adults toys are less exposed.

[Source: China Social Media, Durex’s marketing campaign in China]

Conversely, the Chinese brand Tryfun bank on the plurality of its distribution channels via e-commerce platforms and the design of its products which reinforce its positioning innovative. TryFun has rethought its marketing content in order to break down stereotypes, which has significantly improved its brand image. The trademark relies on a sober and less provocative representation than some trademarks. In 2018, Tryfun has won the Design Intelligence Award in China for its latest innovation called “Xingshi”, a woman’s vibrator recognized for its attractive design.

[Source: Daxue Consulting, Tryfun’s marketing campaign in China]

Another running brand, Touch’s is an interactive mobile application that allows users to purchase their products directly. Its brand strategy is based on e-commerce platforms, its online community and customer satisfaction. In 2017, App lets users rent ‘warmed up’ second-hand sex dolls the brand also created a line of plastic dolls. However, its strategy was not appreciated by everyone as many considered it vulgar.

[Source: New-York Post, Touch line of rentable sex dolls on display at a promotional event in Beijing]

The adult toys market copes with macro and micro economic threats

What adult toys offer is confusing in the consumer’s mind. Indeed, they raise an issue of a low differentiation because most products are copied and they are indistinguishable from the competition. On the other hand, the policies flead by the Chinese government is weighing on businesses such as rules in terms of advertising law, intellectual property, counterfeiting, and taxation. Hence, the costs of advertising are very high and companies can’t invest. Some companies adopt unsuitable methods of marketing promotion, it showed the impression of the low-end brand image to customers. The phenomenon of low quality products is widespread and the rules that regulate the industry are too vague, which is another significant reason caused low user. However, China has production capacities that can enable it to become the market leader. However, the market is little exploited and sees development opportunities slipping through its fingers.

See our full adult toy market in China report

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The Scale of the LGBT Market in China

China is considered more conservative than most western countries when a relationship is concerned. Hence, LGBTQ members are more accepted western countries, and more overtly included in commercial campaigns. For instance, the UK’s top menswear shop, Moss Bros. captured headlines in 2014 when they launched the campaign named ‘Mister and Mister’, a launching time that coincides with the UK’s same-sex marriage law.

In contrast, LGBT community in China remains underground. According to the United Nations Development Program (UNDP) survey conducted in 2015, only 5% of them disclosed their sexual orientation, gender identity, or gender expression outside of their families; and less than 15% dare to tell their families. Indeed, the LGBTs in China have a large number of locations dedicated to their communities. However, although being a significant part of China’s pink economy, people only get access to these places (such as unadvertised gay bars, restaurants, and bars) through word of mouth.

[Source: UNDP Survey, ‘Where do LGBT come out in China’]

Commercial featuring LGBTQ couple

On the other hand, China has shown signs of opening up. In Jan. 2020, Tmall, the e-commerce platform owned by Chinese tech giant Alibaba, has released a Chinese New Year-themed commercial featuring a gay Chinese couple. The commercial advertises Tmall’s special promotions for the upcoming Chinese New Year, an occasion where young people bring their partners home to meet their family members. Instead of taking a conventional approach of describing a heterosexual couple, that 23-second ad puts two young men in a homosexual relationship at the center.

[Source: Youtube, A Screenshot of Alibaba’s Chinese New Year commercial]

Pink advertising in China

LGBT in advertising is surprisingly not uncommon in China. However, is predominantly led by domestic companies and slips under the radar of international media. The Chinese government does not have an official report of the LGBT population in mainland China. But based on the number of users in LGBT platforms such as blued (40 million users in 2019) and gay voice (1.9 million followers in 2020), it has been estimated that 3-5 % of the population is openly LGBT. In other words, the LGBT market in China is reaching about 60 to 70 million people. This estimate would make China the biggest LGBT market in the world in terms of numbers, if not in value – Indeed, it estimated in 2014 that the value of LGBT market in China is at least at USD $470 billion, and probably more. No wonder some brands and companies see the LGBT Market in China as one of the biggest potential ones.

What is unique about the LGBT Market in China

LGBT people in China are groups that have been mostly absent from mainstream advertising. Often LGBT consumers in China have more disposable income but less family responsibility, making them premium consumers. However, it is hard to identify and target LGBT consumers in China because of various reasons, cultural stigma included. Homosexuality was illegal in China until 1997 and stopped classifying it as a mental disorder in 2001.

It is still a tough place to be LGBT since these young people face intense pressure from their families to produce a son. This is reflected by the philosopher Mencius, ‘不孝有三，无后为大’ which means ‘there are three ways to be unfilial, and having no sons is the worst’. Traditional beliefs of how a family should be create a heavy pressure for LGBTQ people to appease their parents.

Fake marriages to appease family

Consequently, LGBT people in China do not always come out of the closet. Many gay men and lesbian women succumb to social pressure and have marriages with either other LGBT people (sham marriage) or straight allies (Tongqi). Also, more and more LGBTs in China like to travel to countries that have a high acceptance of LGBT culture, allowing them to escape from social bondage for a while. Foreign countries (e.g., the Netherlands, the Thailand) and domestic cities (e.g., Chengdu, Chongqing) are becoming popular travel destinations for LGBT consumers in China.

To engage with the key market segments, companies and brands can craft appropriate interactive means via several websites (e.g., OUT CHINA, danlan) and organizations (e.g., rainbow foundation). There is also support the LGBT community in China through film festivals and pride parades. Recently there has been more investment in in AIDS prevention.

Website of OUT CHINA

The future of the LGBT Market in China

Nowadays, increasing adverts in China include some LGBT models or references. Some of these commercials are from leading companies like Meizu (ad), DiDi (ad), and Dangdang (ad). The recent proliferation of accepting LGBT identity in China is mostly due to the global campaigns for LGBT rights, the legalization of same-sex marriage in more and more countries, and the recognition in the Chinese mainstream media despite the censorship of the country.

Meanwhile, LGBT people in China are impacted by the LGBT campaigns from western countries—an influence that comes from the Internet, the TV episodes/movies, and traveling. As a result, LGBT people in China start to raise their voices and fight for their rights. Both Chinese and foreign brands begin to realize that the LGBT market in China has high potential for future development.

Media and advertisement can positively influence society

Although brands may it as a trendy marketing opportunity without thinking of the impact on society, the portrayal of homosexual relationships in advertising campaigns is a big step in the right direction. They are unconsciously supporting and helping LGBT community in China. The acceptance of LGBT is still not yet considered a social norm in China, and LGBT people in China are often stigmatized. Media and advertisement are changing the views spontaneously. It is predicted that more and more Chinese people will speak for LGBT culture and social legitimacy.

In conclusion, the LGBT market in China is still at the prototype stage. The lack of acceptance of LGBT culture in society results in the difficulty of distinguishing LGBT consumers in China. However, it is an emerging market with many opportunities. Both companies and consumers realize the importance of the LGBT culture and market.

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Nike’s lunar new year commercial: a game of cat and mouse

Nike’s lunar new year commercial is a story spanning decades about the battle between a polite niece and her determined auntie. Every year during the Chinese spring festival, the tenacious auntie insists on giving her niece a red envelope stuffed with money, and, every year, the little girl politely refuses to accept the gift. Due to the stubbornness of both sides, they have turned red-envelope-giving-and-refusing into a competitive sport.

At the beginning of the ad, the audience thinks that the refusal of the little girl is a “play hard to get” strategy to appear polite and well-behaved. However, as time passes, the little girl becomes a schoolgirl, then a college student. She races away from her extremely generous aunt, who chases after her niece across the first through the city, and then the countryside. As a result, the aunt’s insistence always wins. Come to the technology age, she even outsmarts her niece by sending her countless virtual red envelopes via smartphone.

Jump to many years later

The little girl already has her own family with her own little girl. Yet, the battle does not stop there. Now she is old enough and entitled to give her beloved auntie red envelope on Chinese New Year. At the end of the commercial, the auntie appears at the door and the Chinese audience thinks that, finally, the niece will have her “revenge” after so many years and give her aunt the red packet. However, the camera turns back to a pair of Nike running shoes on the auntie’s feet and the “come after me if you dare” look on her face. A new chasing competition begins, however this time, the other way around. The aunt may be getting older, but she does not plan to give up. Like the slogan at the end of the ad – 新年不承认（Hold Nothing Back This New Year）.

Why has Nike’s lunar new year commercial generated buzz on Chinese social media?

In China, a red envelope or a red packet (known as Hóngbāo in Chinese, 红包) is a monetary gift which is given during holidays or special occasions such as weddings, graduation or the birth of a baby. Everyone in China is familiar with red envelopes, and most Chinese millennials have been taught to refuse gifts, including red envelopes. Refusing gifts is considered a good manner, to not appear greedy or taking the present for granted. 

Nike has taken a very smart approach on the Chinese hong-bao tradition and presented it humorously and playfully. According to Nike, even though the festivities of Chinese New Year, they try to remind the audience to celebrate and have fun; to stay active during a season of plentiful eating. Chinese consumers start to appreciate the efforts put into a campaign and how much a brand understands their culture. The chance is much higher for international brands to gain more favorable feedbacks among Chinese consumers, when they feel understood and respected. Nike’s lunar new year commercial has succeeded to do so.

A culturally conscious campaign is a quality campaign.

Chinese millennials are more and more aware of quality. Quality means not only the quality of the product, but also which of a marketing campaign. Simple strategies such as celebrity endorsement may not have the same impact on consumers as they did in the past. As we can see from the top comments on Weibo regarding Nike’s lunar new year commercial, Chinese millennials on social media can differentiate a brand with the ad itself. They even try to reflect on their purchasing decisions based on their own observation of commercial strategies adopted by brands.

Translations of the top comments on Weibo under Nike’s lunar new year commercial:

Everything else aside, Nike is quite good at advertising.

This is not “Nike” at all, oh no, this is absolutely “Nike”.

The ad is quite good. Yesterday I was still fascinated by how impressive Adidas’s new year ad with lots of stars was. After watching this, I think Nike’s lunar new year commercial is even better. In my opinion, brands like Nike, Apple, McDonald and Coca-Cola use less celebrities. Instead, brands such as Adidas, Samsung, KFC and Pepsi adopt more celebrity endorsement. Coincidentally, I prefer using products from the first category. Maybe the style of commercial does affect my purchasing decisions without me noticing.

OMG… How could Nike’s commercial be this awesome !!!!

Tips from local experts are crucial for a successful campaign for foreign brands in China 

For international brands who are not familiar with Chinese culture, it is extremely important to get acquainted with the local sentiment and be careful about the cultural expression. Compare with Nike’s humorous and energic take of Chinese tradition, Dolce & Gabbana public relations crisis in China at the end of 2018 was rather a regret. The brand was accused to be insensitive, stereotypical and disrespectful. “Western brands seeking to enter and expand in China should be aware of Chinese cultural sensibilities,” said Angelica Cheung – Editor in Chief of Vogue China – reported by WWD. “Instead of dictating everything from head office, they would gain a lot from listening to the opinions and insights of their Chinese teams.”

Author: Chencen Zhu

Watch the Nike Chinese new year’s ad:

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Full transcript below:

Oliver Verot: I’m Oliver Verot, the founder of Gentleman Marketing Agency (GMA). We are a digital marketing agency focused on performance and based in Shanghai.

Interviewer: Would you mind telling us more about CPS (cost per sales) on Douyin?

Oliver Verot: Today, Douyin is offering brands CPS campaign. CPS campaign is very interesting for brands because they can buy some traffic and can be paid by sales, so it could be between 6% to 10% of sales. Every time they make a sale, 6% to 10% will be directly given to Douyin. It means that in the past you had the cost per click, so you buy traffic, but you never know if your product video to sell, but with CPS, you buy it and you are sure that it works. If it doesn’t work, it means the campaign isn’t running. Today, not all the brands can do this, the requirement is very strict so I think only 80 brands per category, for example, cosmetic is 1 category, food is 1 category, so they are very selective. They want the brand are still used and quite known and they want the brand that has a Chinese business license and then they can run the company for them and basically pay them by cost per sales.

Interviewer: Is the level of commission standard or is it determined during the negotiations?

Oliver Verot: It’s a negotiation, it depends on the cost of the product and the category, so basically the more the brand is famous the more their power negotiation the more the commission can be lower, because for example, basically if you direct a lot of traffic to L’Oreal, L’Oreal is already famous so the conversion won’t be high, so L’Oreal will have the power to negotiate to make it lower but if it’s a new brand, basically they have almost no power of negotiation so the commission will be higher.

Interviewer: Do you have negotiations directly with KOLs or with Douyin?

Oliver Verot: Jointly with Douyin because Douyin has developed a loop band so it’s basically like a Facebook business manager and it’s an external platform for that either, so this is the place you upload the product you’re running your campaign, so by category and things they can give you the estimation of the cost per sales at the percentage. It’s actually very depends because after running a certain range of campaign you can then come back and renegotiate with Douyin to have something cheaper because your product convert very well and it’s a top sales, so they can give you better conditions of if not they will just delete your product and your category because they estimate that your product is not suitable for people.

Interviewer: Do you have anything else to share that may be new on Douyin or interesting to learn?

Oliver Verot: For me, what’s very interesting in Douyin is basically one of the smartest platform that I never see. So it’s roofing is beyond high and they really have the capacity to know your audience based not only about what you like and what you don’t like by the time you spend on the video and also according to the time and hour. So it’s really learning platforms and what’s good with this kind of platform is that they can identify to which people  point of interest, so the point of interest is for example, these guys and those guys, he likes sports, he likes food but they only like it on the weekend. They put a lot of stuff like this, so they correct kind of local audience and after when you advertise your products, you only advertise a product to the right people at the right time. I will give you a concrete example, I’m a Douyin user, so I can use Douyin when I was in the taxi and they will show me football things, something that I like. But when I’m at weekend with my kids, they will mainly show me video for kids like something funny, some cartoons, etc., and in the middle of that, they are able to target me toys for my kids, so I have to admit I’m extremely impressed as a marketer, so they are able to know what time I am, what kind of videos I like when I’m with my kinds and watching Douyin and show me this kind of game and if the game is very good like this in one cake that I can just buy it on Taobao and it costs like 30RMB, 50RMB, 70RMB, I’ll just pay because I think it’s cool and I’ll make and enjoy it. It’s an extremely powerful and advanced platform for me and I believe that it would be extremely powerful in the future.

Daxue Talks is a show powered by daxue consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

This article Daxue Talks transcript #28: What to know when running a marketing campaign on Douyin is the first one to appear on Daxue Consulting - Market Research China.