Overview of the Chinese cosmetics market

China’s cosmetics performance in the global stage 

According to Euromonitor, China’s cosmetics market occupies 12.7% of the global cosmetics market, becoming the second-largest market after the US.

Data source: Euromonitor, Top 10 cosmetics markets globally

Even after several years of market expansion, the market still seems to have a fine potential for growth in the future. According to Euromonitor, the CAGR of the Chinese cosmetics market is the highest in the world.

Data source: Euromonitor, Top 10 cosmetics market ranked by CAGR

Based on data from the National Bureau of Statistics, the yearly growing pace is remaining at about 10% since 2013 and the total retail sales reached 299.2 billion RMB in total. Hence, investing in such a large and consistent growing market can bring high revenue to the company.

Source: National Bureau of Statistics, Total cosmetics retail sales in China

Chinese domestic cosmetics brands are prospering

Cosmetics comprise a wide range of products like skincare, makeup and perfume. In the Chinese cosmetics market, skincare products are the main consumption force, and makeup products increased its market share year by year. Skincare products consistently accounted for over 50% of the Chinese cosmetics market. On top of this, makeup products have been continuously increasing since 2014.

Data source: Euromonitor, Cosmetics market distribution by category

Seven of the ten top cosmetics brands in China sare Chinese domestic cosmetics brands. The attention rate of Perfect Diary is far higher than other brands, meaning that a lot of cosmetics fans in China follow Perfect Diary.

Data source: QuestMobile New Media, Which Chinese domestic makeup brands are the most popular

Among the top 100 most popular cosmetics brands in China, 37% are Chinese domestic makeup brands.

Data source: QuestMobile New Media, Regional Distribution of top popular 100 brands

There are two cosmetics categories where Chinese domestic cosmetics brands have a strong position. These categories are essential skincare related products and eye make-up. Essential skincare products like hand cream, mask and cleanser have high daily consumption. Chinese domestic cosmetics brands could use price advantage to compete, through controlling the supply chain to lower cost. Besides, unique design helps Chinese domestic makeup brands make eyeshadow and eyebrow pencil hot products.

Data source: QuestMobile New Media Database, Origin of brands dominating China’s cosmetics market by product category

The rise of Chinese domestic makeup brands is correlated with sales promotions. According to Askci, 2 of the top 5 sales brands were Chinese domestic cosmetics brands during 618 shopping festival in 2020. Perfect Diary and Florasis ranked first and fourth respectively.

Data source: Askci, Cosmetics brands sold most during 618 shopping festival

Chinese cosmetics consumers portrait

According to data on Tmall and Taobao, consumers under 30 years old place most of cosmetics orders. Most of them are post-90 or even post-00. Students aged 18–22 made up over 25%, but their market share has decreased.

Data source: Tmall & Taobao, Chinese cosmetics consumers distribution by age

However, the share of consumers over 30 years old has an overall increase. This increase might because people aged over 30 gradually build and wake up the awareness of using skincare and makeup. Therefore, the demand for cosmetics among them goes up.

What Chinese domestic cosmetics brands consumers purchase most

According to the skincare top sales, Pechoin harvested 1,733 million RMB in sales, ranking first, followed by Chando and WIS, with 1,653 and 1,515 million RMB respectively.  

Data source: Tmall & Taobao, Top Chinese skincare brands

In the makeup market, top brands are different from top skincare brands, although some makeup brands provide cosmetics products. Perfect Diary maintained its performance and ranked first, with 2,762 million sales.

Data source: Tmall & Taobao, Top Chinese makeup brands

What makes Chinese domestic cosmetics brands different

Compared to foreign cosmetics brands, Chinese brands seem to put their eggs in more baskets. Their marketing efforts are spread through much more variety of activity and spread across many more platforms.

Creating a KOL marketing feedback cycle with short video apps, live-streams and KOLs

The rise of most Chinese domestic cosmetics brands attributes to social seeding through KOL marketing and cooperations. This feeds a feedback cycle where consumers give feedback on open platforms, where brands can then apply to their product development.

Data source: QuestMobile, Online marketing mode

Leverage traffic of multi-channel, post content in different forms

Traffic in multi-channel is other boost for the development of Chinese domestic cosmetics brands. It is common to market on Douyin, Kuaishou, Weibo, Wechat and Red, but each social platform has its own marketing strategy. On Douyin and Kuaishou, where people post short videos, brands cooperated with KOL to post makeup try-on, makeup tutorial and unbox testing. On Weibo, brands normally implement celebrity endorsement. On Wechat official account, brands post deep introduction of products. On Red, brands and KOLs post products-related tutorial.

Data source: QuestMobile, Online marketing in different forms

Launch cross-over products in big e-commerce promotion

Co-branding is more a strategy to get hold of targeted audiences who have complex behaviors. Through cooperating, brands can find a connection between consumers and brands. For example, Chando’s cooperation with Bilibili is a new try for its marketing strategy. As a place attracts most young generation, Bilibili provides a platform for Chando to increase consumers base.

Source: Chando, Chando X Bilibili

Unique marketing strategies for each Chinese domestic cosmetics brand

Perfect Diary, a textbook case for private traffic

Perfect Diary, established in 2016, is one of the young Chinese domestic brands. It targets 20-35 year old women, which is a high spending power group. In March 2017, it opened an online store on Taobao and Tmall. Half a year later, Perfect Diary opened on Red, WeChat store and hosted three Pop-up stores in Shanghai. In 2018, It established a Douyin and JD store. On January 19^th, 2019, it owned the first offline experience store in Guangzhou and expanded to 40 offline stores now.  

Behind Perfect Diary’s bold IP collaborations

IP cooperation is becoming a popular marketing method for domestic Chinese brands. Perfect Dairy cooperated with lots of IPs to launch new products. The most popular IP cooperation is with the Discovery channel.

Source: Tmall, Perfect Diary X Discovery

The history of Perfect Diary’s IP cooperation consists of three stages. In the first stage, Perfect Diary started to explore the market and launched fashion week related products. It reached celebrities, who have high credibility and cultivate the trust in the market. In the second stage which is the explosive phase, Perfect Diary cooperated with cross-over IP and KOLs to promote a single product. In this stage, it cooperated with makeup KOLs and reached to the followers, which increase the influencing power of brand. In the third stage where the brand continuously grew, it cooperated with mass and trendy IP. This cooperation helps to expand customers group, including people make-up beginners. 

Perfect Diary implements private traffic to build brand-owned traffic pool

Perfect Diary builds private traffic in two ways and uses two virtual BA (Beauty Advisor) to manage different types of consumers. Xiaowanzi (小完子) is in charge of consumers, who purchase online and joined through a lucky money card. Xiaomeizi (小美子) maintains the consumers who attracted from offline pop-stores or give aways. The source of customers is different, which requires two virtual BA to communicate customers in different tactics.  

Data source: Maoshihu, Process to reach Xiaowanzi

Florasis redefines the oriental cosmetics

Florasis’ sales performance is rising

Florasis was founded in March 2017 and opened its Tmall flagship store in August 2018. Although the sales for 2018 were only 43.19 million RMB, Florasis’ sales reached 1.1 billion RMB in 2019, rising nearly 25-fold. 

Florasis also presents an excellent in its first Double Eleven promotion. According to Mktindex, Florasis gained 220 million RMB sales and ranked fifth among the top 10 Chinese cosmetics brands that gained most sales.

Distinctly Asian makeup

As a chinoiserie cosmetics representative, the idea behind Florasis brand is ‘the Oriental makeup, using flowers to nourish the makeup look’. It includes everything from product ingredients to package design. Product ingredients highlight to use nature grasses and flower, and nourish the skin mildly. Package design and product name also filled with chinoiserie. For example, Florasis’s carved lipstick replicates the ancient Chinese carving technique and carved flowers on the lipstick, creating a precedent for the three-dimensional texture lipstick in China.

Source: Taobao, Florasis’s classical relievo

Pregnant woman friendly

Florasis gives people a safe and harm-free impression. It emphasizes that its products contain zero alcohol, zero-hormones and contains no harmful ingredients. An actor (Jiani Zhang) in Story of Yanxi Palace, which is a popular Chinese drama, recommended Florasis’ CC cushion. Zhang posted her using experience as a pregnant woman on Red, which drew most followers’ attention and discussion.

Source: Red, Jiani Zhang promoted Florasis’ product

Picking right KOL and spokesman

According to Baidu Index, the spokesman’s effect can be observed. On 3^rd March 2019, search word ‘花西子’ peaked because Justin Lee promoted Florasis’ loose powder. Another peak on 18^th May 2019 is because Florasis announce Jingyi Ju as spokesman. Jingyi and Florasis is a perfect match, because Jingyi owns high traffic and was known as the oriental beauty.

Data source: Baidu index, What increase the search of ‘Florasis’

Little Dream Garden, a black horse in the body care market

Targets ingredient-oriented consumers

Little Dream Garden is a Chinese cosmetic, focusing on developing body care products. It targets customers who care about the ingredients. Therefore, it emphasizes the ingredient and efficacy, naming product by main ingredient, such as Shea Butter body scrub and Ceramide body lotion.

Source: Taobao, Shea Butter body scrub

Posts testing video to build trust

Little Dream Garden leverages KOLs and KOCs to post product testing videos on Red, guiding users to join in the discussion. The opinion of KOL and KOC can increase trust rate and prompt consumers to buy the products.

Source: Red, Products testing video

How WIS involves celebrities on Weibo

WIS is a Chinese domestic skincare brand, created in 2011. It aims to provide scientific and effective products. It does not have any offline store so far. The brand targets consumers aged 18 -35 who have the strong social ability. For brand positioning, low-price capture lots of post-90 and post-00’s interest.

Source: Wechat, WIS products

Weibo is WIS’ social marketing asset

The popularity of WIS results from social marketing on Weibo. For example, a member of Happy family, Weijia Lee, recommended its product on Weibo, which attracted more than 240 million readers and brought around ten thousand followers for WIS. At the same time, celebrities, such as Jiu He and Na Xie, reposted the Weibo and reinforce the marketing effect.

Source: Weibo, Weijia Lee promoted WIS

What can brands learn from the success of Chinese domestic cosmetics brands

Although foreign cosmetics brands represented more than half of the cosmetic market in China, the rise of Chinese cosmetics cannot be overlooked. In fact, they can provide a learning opportunity on how to effectively appeal to Chinese consumers.

• Listen to the customers

Under short video App + Live Broadcast + KOL marketing mode, brands not only promote their products but also listen to the feedback from customers. Upgrading products according to the feedback is an important strategy to maintain brands’ sales performance.

• Pick the right brands for collaborations

Most Chinese domestic cosmetics brands implement cooperation with brands in different fields, celebrities and etc. to launch limited products. This campaign can bring the brands more consumers, strengthen brand image and increase brand volume.

• Promote in an appropriate form

Chinese cosmetics brands promote their products in different forms according to the character of a product. A testing video will gain more trust for a product that emphasizes its harmless ingredients. 

Learn more about the Chinese cosmetics and personal care market

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This article The rise of Chinese domestic cosmetics brands: Florasis, Little Dream Garden, WIS, and Perfect Diary is the first one to appear on Daxue Consulting - Market Research China.

The development of vitamins and health supplement market in China

The market size of healthcare products in China is growing

Large market size of healthcare products represents the high potential in China.

According to iimedia, the market size of healthcare products in China, maintained around a 10% YOY growth rate between 2013 and 2019. This  which is similar to the US growth rate in 1970’s. China’s healthcare market size reached ¥222.7 billion in 2019, which makes China the second largest market for healthcare products, just after the U.S.A.

Data source: iimedia, Market Size of Healthcare Products in China

The market segment of healthcare product was occupied most by dietary supplement with more than half of the market in 2019.

Data source: chyxx (中国产业信息院), Market Segment of Healthcare Products in China

The health supplements industry in China developed along with the improvement of Chinese people’s living standards and health awareness

Most Chinese considered a healthy lifestyle to include physical and mental health. A healthy lifestyle should be without physical illness and with positive mental health, good social life etc.

Many Chinese see health supplements as a part of a healthy life. Hence, health supplements, such as vitamins and fish oil, are an important choice for health-conscious Chinese consumers. In a survey conducted by iimedia, 48.6% of the participants choose health supplements as their first choice to improve their health condition.

Price distribution of health supplements ranges from RMB 50 to over RMB 300. Most consumers buy health supplements for under 150 RMB on Taobao and Tmall. Customers’ price preference means high-end products are popular among a small group.

Data source: Taosj (淘数据), Price Distribution of Health Supplements in Chinaby Sales Volume

China’s demand for vitamins is continuously growing

Vitamin market in China is expanding, as vitamin products are becoming widely used in China. An increase in market size can be expected under COVID-19 impact.

Data source: iimedia, ‘Size of Vitamin Market in China

Vitamin E is the most popular vitamin in China, followed by vitamin C

Vitamin E is the most popular vitamin in China, making up 36% of the market. Followed by vitamin C, which takes 30%. The popularity of vitamin E is is partly due to the fact that Chinese believe it can prevent cancer. Chinese’ vitamins preference is different from other countries, such as USA, where vitamin D is very popular.

Data source: chyxx (中国产业信息院), Market Share of Vitamin Market in China by Vitamin Types

Skin care is the #1 concern among Chinese vitamin consumers

Vitamins which target skin health have large market potential in China. From information by DXY (丁香医生), 40% of the survey participants regard skin problems as a bothering health problem.    

Data source: DXY (丁香医生), Top Health Problems Chinese Concern

Skin problems, as the biggest health problem plaguing Chinese people, have led to an increased demand for vitamins, as some vitamins are beneficial to skin health. Vitamin A, C and E can help skin maintain a youthful state, prevent pigmentation, freckles and wrinkles. Thus, they are popular in vitamin market in China. For example, Gold Partner (黄金搭档) sold over 90,000 monthly vitamin C chewing tablets, which is #1 vitamins product for skin problems on Tmall. Considering the apparent concern for skin health, it is also no surprise that China’s skincare market is booming.

Millennials are the target market

Chinese millennials are the target group in vitamin and health supplement market in China, as post-90s gradually become the main force of vitamin consumption. According to Baidu Index, age of people who searched “vitamin” on Baidu distributed mostly in aged 20-29 years old.

Data source: Baidu Index, Age Distribution of people Searching ’Vitamin’

In one survey about post-90s’ health products consumption, top three health-related health-related products purchased are health supplements and vitamins (38%), nutrients dense fruits (27%) and traditional Chinese medicine (25%).

Source: Analysys (易观), Top Health-related Products Purchased by Chinese post-90s

Consumer Analysis in vitamins and health supplements market in China

Core drivers of purchasing vitamin and health supplements

Function, product quality, brand and price are four main drivers of purchasing, according to an analysis, which aims to research what factors effect most when Chinese consider buying vitamin and health supplement.

Data source: iimedia, Main Drivers of Buying Vitamins and Health Supplements

Most customers’ positive perceptions are related to functions. On Weibo or Zhihu, Chinese consumers mentions the function of relieving fatigue and skin whitening ect., when talking about vitamins health supplement.

Data Source: Sample of Weibo & Zhihu Posts, netizens opinions in the Vitamin and Health Supplement Market in China

Core obstacles of purchasing vitamins and health supplements

There is a large gap between China and developed countries in per capita consumption of health supplements. In 2019, per capita expenditure spent on health supplement was only $18 on vitamins and health supplements, while in America, that was $148, eight times higher than in China. However, the market is now growing fast as COVID-19 stimulated the consumption in China.   

Data source: chyxx (中国产业信息院), Expenditure on Health Supplements by Country

Factors, such as Price, product effect and reputation, will stop potential customers from purchasing vitamins and health supplement. Most complaints of health supplements result from effect. Consumers gave negative comments when the high price does not match the value. In addition, the reputation of health supplement in China is damaged by media. Most Chinese customers are bombarded with negative information of health supplement, which to some extent embedded a negative image of vitamins and health supplements in Chinese.    

Data Source: Sample of Weibo & Zhihu Posts, Obstacles for Entering Vitamin and Health Supplement Market in China

Other obstacles, such as the size of tablets and taste, also potentially stop people from purchasing vitamin and health supplements. Although Centrum (善存)’s multivitamin products have high popularity online, Chinese customers complain the design of bottle and the size of tablets on RED (小红书).   

Source: Sample of Weibo & Xiaohongshu Posts,, Comment about Centrum (善存)

Market Competition in China’s vitamin and health supplement market

Vitamins and health supplements from Australia and U.S.A are the most popular in China.

2018’s customs data by CBNDATA, shows that Australia and U.S.A are top two import countries of the vitamin and health supplement market in China. Australia and U.S.A account for 22.3% and 20.4% of VDS imports to China respectively. Their brands quickly seized China’s health supplements market share by cross-border and social e-commerce.

Source: CBNDATA , Customs data, Top 5 Imported Countries in Vitamin and Health Supplement Market in China

Besides Chinese brands, Australian brands, such as products from Swisse and Cenovis, are the most popular on China’s online market. By-Health (汤臣倍健) ranked #1 in May 2020, followed by Swisse (#2) and Centrum (#7).

 Data Source: Taosj (淘数据), ‘Top health supplements brands on Taobao & Tmall

Most vitamin and health supplement brands leverage online and offline campaign to build brand image and promote

How brands build youthful image through cooperating with celebrities?

Many health supplements brands aim to build a youthful brand image by using young KOLs and actors as spokespersons. For example, By-health rebuilt its brand image by endorsing young celebrities, Xukun Cai (蔡徐坤) to attract young consumers and associate with younger personalities. In order to shape the young image, By-health cooperated with Transformers and released cross-over products on Tmall.

Source: Tmall, Youthful Image of By-health

Cenovis is trying to raise brand awareness and attract more young consumers through endorsing Chengyu Hua (华晨宇) who is a singer with high-traffic in mainland China.

Source: Cenovis’s endorsement with Chengyu Hua

Centrum changed brand’s perceptions into young, funny and approachable by cooperating with Joker Xue (薛之谦, a famous Chinese singer and actor). Centrum worked with Joker Xue to film videos ads on Tencent.

Source: Tencent, Centrum filmed videos ads on Tencent

Offline marketing activities to reach Chinese vitamin and health supplement consumers

Many brands use offline marketing activities, such as sport events and pop-up stores, to interact with consumers in vitamin market in China.

By-Health built a museum which can use AI and hologram technology to educate about nutrition science and provide health examinations. These activities help visitors understand health situation and sell By-Health’s products.

Source, By-Health, By-Health’s Science and Technology Museum

Swisse built a immersive urban oasis pop-stores in malls during 618 promotion, where Chinese customer can see its healthy and natural brand image vividly. In addition, Swisse cooperated with The Color Run (Color run: Five-kilometer paint race), the sport event attract most young generation in China.

Source: Swisse, Australia-themed pop-up shops (Left) & Swisse X The color run (Right)

In order to expand target population, Centrum launched a carnival to interact closely with children and sponsored a child-parent TV program.  

Source: centrum, Centrum carnival & TV Program

Covid-19 stimulation: How Covid-19 stimulated the sales of vitamins and health supplements

Chinese consumers are more interested in vitamin and health supplements as COVID-19 increased their health awareness

The health supplements industry in China developed along with the improvement of Chinese people’s living standards and health awareness. Chinese netizens showed more interest in improving their immunity during the coronavirus outbreak in January 2020. Demand for vitamins and health supplements that can enhance their immunity became strong during COVID-19.

Source: Baidu Index, Search Trend of ‘Strengthen the Immune System’

Chinese people showed strong demand for  vitamins and health supplements that can enhance their immunity. Accordingly, health supplements that could improve immunity got more sales.

More Chinese consumers have showed purchase intention for vitamin and health supplements since the epidemic increased their health awareness.

Data Source: BCG (Boston Consulting Group), ‘What Chinese will Buy Most in The Post-COVID-19’

Brands seize the opportunity to increase sales revenue during the most serious period of COVID-19

The biggest price drop of health supplements was in February, as many brands decreased online price to have more consumers during the most serious period of COVID-19. However, many consumers were focused more on personal protection and disinfection products.

Data source: CHUANCAI securities, SOOCHOW securities, Changes in Price of health supplements in China during COVID-19

Then, the sales revenue of health supplements greatly increased from March along with people’s health awareness further improved.

Data Source: Taosj (淘数据), E-commerce Sales of Vitamins and Health Supplements

For example, the health related products of BY-HEALTH (汤臣倍健) and Swisse had significantly increased their online sales.

Data source: Taosj (淘数据), Sales of By-Health & Swisse during COVID-19

What can we learn about the vitamin and health supplement market in China

• Physical and mental health are both important for Chinese people

Many Chinese people are eager to have both physical and mental health. Therefore, in addition to promoting physical health, how to help consumers relieve mental pressure is also an important sales point for all health-related brands in the Chinese market.

• People under 30 are the key customers for many brands

Many health supplements brands aim to build a youthful brand image to reach out more young consumers in China. They frequently used young KOLs and actors as spokespersons. At the same time, Baidu index analysis shows young Chinese consumers have the most interest in vitamins and health supplements.

• Skin health is a top concern of Chinese vitamin consumers

More and more Chinese people are bothered by skin imperfections. Because of Chinese beauty standards, skin whitening is an important driver for Chinese women to take vitamins. Therefore, some health supplements launched products targeting skin problems and received positive feedback.   

• COVID-19 stimulated consumption in the vitamin market in China

The COVID-19 outbreak brought great attention to physical health, Chinese people showed strong demands on vitamins and health supplements to enhance immunity.

See our full report on China’s vitamin and health supplement market

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This article Skin and immunity concerns drive the Vitamin market in China is the first one to appear on Daxue Consulting - Market Research China.

Jump to questions:

• 1:06: We know that email Newsletters are not effective in China. Which channel can replace newsletters?
• 2:56: You mentioned SMS solutions several times. What kind of software do you use in China to distribute SMS easily and to connect them to your platform?

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Matthieu David interviews Josh Gardner, CEO at Kung Fu Data. The e-commerce sector has never been more relevant and richer in China than the present and Kung Fu Data is a big reason why businesses succeed in this field. Gathering the right data combined with having the right business relationships and taking advantage of present opportunities has made Kung Fu Data a force to be reckoned with in the e-commerce business. Find out why in this new China Paradigm podcast.

• 0:15 Guest introduction and Kung Fu Data’s history
• 6:48 Current company size and workflow – pre and post COVID-19
• 17:13 The quality of the shopping experience – is it changing?
• 19:55 Calculation of conversion rates during a live stream – the new way of shopping
• 25:23 What other changes might occur as a result of the coronavirus outbreak?
• 28:50 Owning the marketing strategy – shopping platforms are integrating with social media platforms in China
• 31:51 Learning about e-commerce – how did Kung Fu Data come to be?
• 39:41 Rigging the Game – building strong professional relationships makes long term sense
• 47:46 How does Kung Fu Data gain it’s clients’ trust?
• 53:39 Valuable Intel – sacrificing a year to learn the market
• 58:57 Kung Fu Data strategies for optimizing e-commerce marketing
• 1:06:49 The smallest details matter – a Kung Fu Data approach to e-commerce today
• 1:13:48 What books about China has inspired Josh Gardner the most in his entrepreneurial journey?
• 1:23:47 What surprising success or failure has Josh Gardner witnessed in terms of business in China?

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We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 110: How to score a 1.5 million RMB sales day through live-streaming twice is the first one to appear on Daxue Consulting - Market Research China.

Chinese KOLs and Western influencers earning potential

Top 5 highest paid influencers in the west

Influencers typically advertise products on Instagram, Twitter, YouTube and other platforms. Businesses pay a large amount of money to them with a lot of followers to promote their products. If the  followers appear to match the company’s target customers, it will pay more.

Here are the five highest paid Western influencers

1. Kylie Jenner: $1 million per sponsored Instagram post.
2. Ariana Grande: a little less than $1 million per sponsored Instagram post.
3. Cristiano Ronaldo: $ 975,000 per sponsored Instagram post.
4. Kim Kardashian-West: $ 910,000 per sponsored Instagram post.
5. Selena Gomez: $ 900,000 per sponsored Instagram post.

Influencer is becoming the fastest growing channel for brand marketing. Based on a Tomson study, western businesses earn $6.50 for each dollar spent on influencer with the top 13% earning more than $20, which is a significant return.

The two Chinese KOLs with the strongest sales power

Compared to the hundreds of thousand dollar instagram posts of western influencers, Chinese KOLs can make over a million RMB in sales revenue a minute during live-streams. On October 21^st 2018, Li Jiaqi averaged around 1.77 milllion RMB (around 250 thousand USD) sales revenue a minute during a six hour twelve minute live-stream. Coming in second, Weiya averaged 1.64 million RMB (around 234 thousand USD) revenue a minute on the same day.

Chinese KOLs are relatively more active on live broadcasts platforms, like Tiktok and Taobao live broadcast. Li Jiaqi（李佳琦） and Weiya（薇娅） are the most representative KOLs in China with strong sales power. Li Jiaqi is the “No.1 Lipstick sales ” who sold 15,000 lipsticks in 5 minutes; Weiya is the “the most powerful promoter” that made a record of over 267 million products in a single (2 hours) live broadcast.

On October 20th, on the eve of the Double 11 pre-sale, Li Jiaqi once surpassed Weiya on the hottest Chinese KOLs ranking list（巅峰榜）. In the end, Weiya ranked the top of the hottest ranking list with 550 million live broadcasts traffic.

Source: Baijiahao, the hottest Chinese KOL ranking list

Li Jiaqi Live Data on 21^st October 2018

Li Jiaqi started the live broadcast at 20:14 on October 20^th and finished at 01:36 on the 21^st. The name of the live broadcast room was “miss the start of 21^st, you will regret the whole year”. From start to finish, the cumulative number of viewers reached 31.78 million. Among them, Li Jiaqi sold a total of 39 types of products, sales volume of 1.527 million, sales revenue reached 660.7 million RMB.

Source: Zhigua Data, Li Jiaqi live data

Weiya Live Data on 21^st October 2018

Wei Ya started the live broadcast at 20:00 on 20^th, 14 minutes earlier than Li Jiaqi, and finished at 02:43 on the 21st. During this period, the cumulative number of viewers reached 38.11 million, a total of 242,000 new fans, a total of 57 types of products were sold, sales volume was 976,000, and sales revenue was 661.2 million RMB.

Source: Zhigua Data, Weiya live data

Their live broadcasts on the day of Double 11 in 2018 proved their incredible sales power. Wei Ya achieved more than 267 million volume sales a day. Li Jiaqi sold 15,000 orders in 5 minutes, which defeated the record created by Jack Ma, the founder of Alibaba.

Chinese KOLs like Li Jiaqi and Weiya can feed dozens of factories in China. As Wei Ya said, no matter how much money she made, she would never stop working. If she stopped her live broadcasts, many factories might be closed. Other than advertising income, they also have commission. Weiya can make 2,370,000 RMB income for one live broadcast, and Li Jiaqi can make 3,150,000 RMB for one live broadcast.

Comparison between top western influencers and Chinese KOLs

In contrast to Chinese KOLs livestreaming, western influencers them promote products by well-produced and creative videos posted on Youtube, Instagram and other social media platforms. The quality of those videos can compare with MTV in Hollywood and even comparable to the quality of film production.

Jeffree Star vs. Li Jiaqi

Jeffree Star is a male, born in 1986. His father died when he was 6 years old. His mother is a professional model and has a profound influence on his aesthetic and preferences in a subtle way. He started to wear makeup when he was 12 years old, tried women’s clothing after attending high school, and finally showed himself as a “female image”. Initially, Jeffree Star was active as a model and singer, and was favored by Lady Gaga’s mentor, Akon. Akon boasted that he would become Gaga No.2. However, it did not come true. Later, Jeffree Star was famous for his creative makeup display on YouTube.

Source: WWD, Jeffree Star cremation palette

Four of the five highest paid western influencers are celebrities. Jeffree Star can make a good comparison with the Chinese KOL, Li Jiaqi, as they both are just influencers not celebrities.

Both Chinese KOL, Li Jiaqi and Western KOL, Jeffree Star focus on makeup. KOLs in China have more restrictions than in western countries. Before Li Jiaqi, most of makeup promotors were female KOLs in China. Li Jiaqi always tries lipsticks directly on his lips to better show the real colors, which was very bold for a male KOL in China. However, this is nothing compared to what Jeffree Star has going on.

Annual Income: Li Jiaqi (140 million US ) vs. Jeffree Star (100 million US dollars)

The profit model between these two make-up enthusiasts is quite different. Li Jiaqi’s team earns 1 billion RMB advertising revenue per year. Jeffree owns his personal brand “Jeffree Star Cosmetics” and make 100 million US dollars per year. He is no longer just a KOL but also a famous brand entrepreneur. Based on the data, Li Jiaqi’s team create more revenue than Jeffree Star’s cosmetics company.

Source: Shangyexinzhi, Jeffree Star Cosmetics

Business Model: Li Jiaqi (marketing team) vs. Jeffree Star (vertical business line)

Vertical business line, vertical e-commerce brand is a profit model that many western KOLs are adopting. They start from becoming influencers, then accumulating fans, doing a lot of traffic, and finally forming an independent vertical brand. This is a very different business environment between the KOLs in United States and KOLs in China. Some Chinese KOLs are trying to adopt the same business model. However, many of them were facing quality problems and failed. Vertical business line can also make profits for KOLs in China but following the example of Li Jiaqi might be more suitable in the Chinese market. Li Jiaqi’s team plays a role of a marketer but not involved into production.

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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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Consumer profile of the Stay-at-home Economy in China

The expression of Zhai people (宅人群) refers to men and women who depend on the internet to meet their daily needs without leaving their homes. They are usually keen on online videos, games and social media. Apart from recreation, Internet also enables them to buy food and clothes, learn remotely, and read. During COVID- 19, most Chinese people adopted the Zhai lifestyle. Thus, the Stay-at-home economy in China has expanded.

“Zhai people” aka “宅男 and 宅女” (Zhai men and zhai women) is originally a Japanese word “Otaku” meaning “geeks”, now it is widely used to describe people who don’t like outdoor activities. They normally spend less than 3 hours outside and around 8 hours on the internet every day.

Among the Zhai people, 55.5% are men and the rest 44.5% are women. 76.8% of Zhai people are younger than 35 years old, but COVID-19 pushed the Zhai lifestyle to older generations too. Regarding geographical distribution, Zhai lifestyle are not unique to tier-1 cities. In fact, 60% of Zhai people under 30 years old live in tier-1.5 and tier-2 cities.

Internet accessibility and Mobile payment are the foundation of the Stay-at-home Economy in China

China’s fast-growing internet enables people to enjoy many services without leaving their homes. According to the most recent report from China Internet Network Information Center, 65% of Chinese population are mobile internet users. According to Mckinsey, total time spent online per user per day amounts to 358 minutes, with social apps (44%), content apps (20%) and other apps (36%).

Another important driver of the Stay-at-home Economy in China is the wide use of mobile payment. 92% of people in China’s largest cities use WeChat Pay or Alipay as their main means of payment.

COVID-19 mandated Stay-at-home, which pushed Chinese activities further online

Time spent online has steadily increased for several years in China, COVID-19 enhanced this trend. During the epidemic, Chinese reliance on the internet increased and they were exposed to more diverse platforms.

1. Mobile gaming: Multiplayer online battle arena sector is the most popular with the game Honor of Kings reached more than 100 million daily active users.
2. Social media platforms: On Weibo, some topics about COVID-19 reached over 1 million reads per minute.
3. Online Shopping: In February 2020, Taobao app had 720 million users in China, increased by 33 million users compared with December 2019.
4. Online fitness classes: KEEP fitness app registered a 185% increase in followers on the live-streaming platform Douyin.
5. Remote work and study platforms: The Tencent Meeting app was downloaded 430,000 times a day, up from 370 before the outbreak.

Social media and news apps are more embedded into Stay-at-home Economy in China

On average, every Chinese social media user has 9.3 social media accounts. 98% of Chinese netizens visited social media platforms in January 2020. All of the active social media users have access via mobile. They averagely spend more than 2 hours per day on social media and 45% of them used social media platforms for work.

COVID-19 drive the demand for news apps as well as social media

Both the time spent and the number of active users of daily news apps increased since December 2019. Along with the development of COVID-19, users’ demand for news apps peaked in February when China entered the height of the epidemic. Then, it had another growth in April when China’s market started to recover from the epidemic. Qianfan Analysis reported a 12.4% increase in the monthly average time spent on news apps per use, from 17 to 19 hours.

[Data source: Qianfan Analysys ( 易观千帆), Questmobile, monthly active users of China’s top news apps during COVID-19]

Outside of news apps, WeChat, Weibo, and short video apps became the main channels for Chinese to obtain relevant information about COVID-19. Information channels on social media are more likely to gain traffic in the future. 48% said they will continue to spend more time in information acquisition after the outbreak. A popular science KOL PaperClip went viral explaining the COVID-19, attracting over 2 million views on Weibo alone.

The 4 types of entertainment rising in the Stay-at-home Economy in China

The mobile games market still has growing potential

The revenue of mobile games had already been steadily increasing, and COVID-19 lead to an influx of new gamers. Additionally, many long-time players spent more time gaming during the epidemic. According to Quest Mobile, the Chinese New Year (CNY) holiday had a 41% year-on-year increase in terms of average time spent on gaming. In the same comparison period, the revenue of mobile games in China increased 30% from $530 million to $668 million.

Most of the top games have some social or multiplayer aspect. Mini games are also popular since they are less time consuming and suitable for stress release. The 5 top mobile games people played during the epidemic include:

1. Honor of King: the number of daily active users exceeded 50 million during the 2020 Chinese New Year. On the first day of the new year, the number reached the peak of 54 million.
2. Online chess and card games: People in northern China prefer card games and southerners like chess.
3. Werewolf: Werewolf (狼人杀) is a popular board game in China. Its active users increased by 20% every day during the 2020 CNY.
4. Sandbox games: The number of daily active users of sandbox grew by 6 million since the 2019 CNY, to reach 76 million during the 2020 CNY.
5. Mini games: OPPO mini games became the third most popular game series according to active users during the 2020 CNY.

Short videos enjoyed explosive growth and commit to user stickiness after COVID-19

Short videos have been one of the most important forms of entertainment in China during the past a few years. Now, short video apps provide quick news and info about COVID-19. The number of monthly active users of online video platforms had a large increase during COVID-19. According to iResearch, short videos claimed 68.4% of the spare time of Chinese people, only second to TV series (69.8%). Some movies released on online video platforms rather than in cinema and they had a large number of views. Cinema is no longer the only option for releasing films, online video platforms are challenging its leading position.

[Data source: quest mobile, the monthly active users of China’s online video platforms]

The industry concentration of short videos in China is high. The top short video platforms reached many new users over 40 years old because they could quickly get updates about COVID-19. Douyin (13%), Kuaishou (17%) and Xigua (19%) all witnessed double-digit growth from December 2019 to March 2020.

The number of paid users of online video platforms increased significantly during COVID-19. And those platforms are determined to keep the trend going. COVID-19 halted the shooting of many TV series, movies and shows, which decreased high-quality content. People will have higher demand for higher quality and diverse media. Video platforms are working hard to buy more high-quality video content to increase user stickiness.

Music and concert industry responded to COVID-19 in ways that ensured its growth

During the epidemic, music platforms offered songs and whole albums related to fighting against COVID-19, resulting in increased online traffic. It’s possible those new users will be paid users in the near future. According to Tencent music group, Kuwo 酷我音乐, a big online music platform in China achieved 3.5 billion total exposure during the epidemic. 462 musicians and singers also published epidemic-related songs in Q1 2020.

Offline concerts were all canceled or postponed during COVID-19, while online concerts offered extraordinary audio-visual experience to fans and received large traffic. Online concerts effectively help online music platforms reach more new users, it can be expected that online concerts will be one of the main ways for music platforms to gain traffic. For example, Tencent music group held on 11^th April 2020 an online concert “I am A-Lin”, and attracted 20 million views of its Weibo topic. 4 days later, it held another online concert “To see you whenever I want” became the No.1 Weibo hot topic.

COVID-19 promoted online reading in a somewhat permanent way

More than 50% Chinese readers chose to read novels almost every day. The average daily online reading time increased by 20% during the epidemic compared to last year. Most new readers are those who did not have much free time to read before. Now they have formed the habit of reading online and boosted the growth of the market.

86.2% of people say they will continue to read after the epidemic, hence the online reading market will likely grow in the near future.

E-commerce and delivery further developed the Stay-at-home Economy in China

E-commerce is further enhanced by KOL live-streaming

The matured e-commerce system provides more convenient conditions for Chinese consumers. But its growth rate has declined, as the scale of users has gradually reached the ceiling of netizens and the cost of acquiring traffic is getting higher and higher. However, Chinese people’s purchasing decisions are heavily affected by KOLs and live-stream and some top short video platforms (Kuaishou and Douyin) already entered the e-commerce market by live-stream + KOLs. They achieved very high sales. Hence, “live-stream e-commerce” will become the next outlet in China’s e-commerce industry.

During the epidemic, live-stream and KOLs played even more important roles in online marketing. The top short video platforms made full use of their huge traffic to work with top KOLs in live-stream marketing, they have achieved extraordinary results. Live-stream marketing is becoming the most efficient online marketing tool in China. For example, Kuaishou live-stream achieved over 620 million RMB turnover on 18^th of April alone.

Grocery delivery stands out with the help of contactless delivery service

Although January is a traditional low season for e-commerce platforms, the COVID-19 impact on Chinese consumption is evident in the grocery e-commerce market. In the long run, the main problems for fresh food e-commerce are high transportation and storage costs. Fresh food is not easy to preserve and it’s price is usually high. Therefore, it’s essential for fresh food e-commerce companies to optimize storage to lower costs.

Diverse and safe express delivery methods can increase consumers’ desire to shop online and hedge part of the consumption crisis brought by the epidemic. JD.COM has used an unmanned delivery robot for contactless delivery in Wuhan, which promoted the application of AI tech in daily life. Similarly, China’s largest delivery service provider CaiNiao (菜鸟available everywhere in China) started to use the “contactless pickup” service to reduce personnel contact since 28th January. Thus, consumers’ demand for contactless delivery cabinets is expected to continue even after COVID-19.

Online food delivery is essential in the Stay-at-home Economy in China

In the first two months of 2020, the catering industry’s revenue decreased by 43.1% year-on-year. More than 90% of the Chinese restaurants had to close. Luckily, contactless delivery, which was already quite developed in China over the years reduced infection. Two online food ordering platforms Meituan and Ele.me adapted their delivery services to reduce infection risks. This includes taking the temperature of all the people involved in the delivery process.

Seeing the success of contactless delivery, the catering industry all turned to O2O food delivery. According to the survey of iiMedia, 78% of the restaurants mainly sold online to ensure the continuity of their operations during COVID-19. Among them, 70% said they will remain online.

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Find here Daxue Talks episode 66. Our guest Miro Li discusses what omnichannel marketing strategies brands could use in the renewed Chinese markets, such as private traffic, as well as how KOLs and brands are evolving to adapt to consumers’ needs during and after the COVID-19 outbreak.

Full transcript below:

How have KOL’s changed the way they interact with the audience during and after the outbreak?

I think KOL’s do more live streaming to talk to the audience directly. KOL’s like to show more sympathy in the content related to the COVID-19, and sometimes they will remind their followers to be cautious, to stay safe, to stay healthy. Show more sympathy let’s them to have a closer relationship with their followers.

They also share more products that are related to the current situation, for example products that you will need to use at home, like instant food or some DIY food or home electronics. So, they will share some products that are related to the current situation instead of products that you don’t need under this circumstance. At the end, they are trying to have a closer relationship with their followers.

Talking about your business, what were the main requests from clients during and after the outbreak?

Main requests are about how to digitalize. For example, we have some clients that are pure offline and are the retailers. During this time, how should they digitalize in a short time? They need to setup online shops and transform their sales persons to be the online sales who does the live streaming, and to set up the WeChat groups to manage the private traffic. I think this is the most request from the clients during this time.

Also when we are doing the marketing, the brands would ask you, how to combine the hot topics with the content? Definitely, we need to adjust the content direction during this time. So, how to show our sympathy as a brand, how to show our social responsibility, and what we need to do for content management? Also, how to plan an omni-channel strategy in the future in the long term and how to connect the online and offline are also what clients would always request during this outbreak.

What are your tips for brands on how to plan an omnichannel strategy working in the renewed Chinese market?

I think first you need to connect your online and your offline, so you have online shops, you have offline shops. For example, if you have a membership system, you need to combine your online and offline membership system into one system so that when customers shop online, they can get points and then when they go to the offline shops, they can also use these points to redeem any rewards. So, you have to connect it together and you have to have an integrated strategy. For example, you can use your online data, like online shops on TMall, to do a better offline promotion and then when customers come to offline shops, you can [redirect] these offline customers to online and let them become your private traffic. So for example you can add them to you WeChat group and can ask them to become a customer of your mini program so that they will become your private traffic. I think this will become the future of retail.

Also, you have to understand the different platforms for e-commerce and marketing in order to choose the right platform, the right channel. According to your brand positioning and also after the analysis of your competitors, learn each platforms’ algorithm and policy to follow the latest trends of each platform so that you can choose the best, the most suitable channel for your brand.

Before, many brands online have only had shops on Tmall, for example, but now they realize it’s not enough since TMall is popular traffic, and some brands want to start to manage their own private traffic. So, they start to set up WeChat shops and manage their WeChat group as well as doing a WeChat live streaming. So this is what I think: they are evolving, they are realizing that an omni-channel strategy is becoming more and more important. Many brands also start to realize that when you do this, you can’t really see results in the short term, because building word-of-mouth takes time, but it will definitely benefit you in long term. This is why brands need to be patient when doing this, and this is definitely the future of retail.

Any questions? We will find an expert to answer them. Drop your questions in the comments or send us an email – dx@daxueconsulting.com.

This article Daxue Talks transcript #66: Renewed Chinese markets — alternative strategies needed? is the first one to appear on Daxue Consulting - Market Research China.

Can you provide interesting cases on how brands on Xiaohongshu adapted to new conditions during the crisis?

I think I’ve seen some interesting cases. For example, one is from HeyTea. We know HeyTea is one of the most popular milk tea brands in China, and during this time, because people can’t go out to their store to buy the milk tea, through their official account, they started to teach their followers to DIY their own milk tea at home. So, they started to provide recipes to the followers and this I think is a very interesting way to connect with your followers and to engage with them. Red is targeting female customers and female users on Red, and they love the milk tea and even when they stay at home they want to drink the milk tea, therefore they are more willing to learn how to DIY this milk tea. The recipe shared by the official account of HeyTea makes them feel like this is the official recipe from the brand, although we know that this is definitely not the official recipe, but this will make the followers feel a closer relationship with the brand. They are also more willing to engage with the content, such as comment, like or collect the post. So, this is also very interesting.

Another example is the brand called Super Monkey, a chain fitness gym in China and because people can’t go to the gym to do exercise, Super Monkey started to launch the online exercise course or even live streaming course to teach people to do exercise at home. They even asked their followers to do homework, like every time you need to check our brand account and you need to do at least 20 minutes exercise. So, this is also a very good way to engage with your customers.

And we also see some beauty brands have changed their marketing direction during this time. Because we have to wear masks every day, some customers may ask – how do I do makeup if I need to wear masks every day? So, we see, beauty brands like MakeUp Forever actually add these key words, add these trends in their content, and they started to teach people how to do makeup when still needing to wear a mask.

For example, they focus more on eye products, like eye shadow, mascara, eyeliner; they teach you how to do this nice makeup even though you still need to wear a mask. So, I think this is also a very interesting case on Red.

How have brands’ behaviors on Xiaohongshu changed during the coronavirus?

More and more brands are trying to host live streaming and host them more often because before coronavirus many retailers are pure offline, and now they have to go online and they have to launch their online shops. Therefore, they started to host live streaming, to engage with their customers online, and to do more online marketing. And we even see some brands even invite their CEO’s to join their live streaming to talk to the customers directly. Also, we see brands are more willing to engage with their followers. They will host more interactive activities, for example, sending out free gifts or give special discounts during live streaming or have lucky draw games to engage with the followers. For the customers, they have to stay at home so they spend more time online, and they are also more willing to engage and interact with the brands. In turn, brands also want to keep a close relationship with their followers.

We also see some brands even changed their marketing direction. For example, they would add some popular key words in their content and also some brands even change their best sellers. For instance, when you stay at home, you don’t need to wear the makeup, so maybe cosmetics may not sell really well for a beauty brand, so they would start to push more skin care products as their bestselling products instead of the cosmetics products.

Also, we see many companies want to show more social responsibility and they would post content related to covid-19. For example, Starbucks launched contactless delivery, so if you order a cup of coffee from them, you don’t really need to contact any employees. They would provide this kind of contactless service for you to get the coffee in store. This is how companies are showing social responsibility and their support to the doctors and hospitals during this crisis.

We know that Xiaohongshu is testing personal Shu shops for certified influencers, can you tell us a bit more about them?

Shu shop is a new function of Red and it’s still testing. Shu Shop in Chinese we call it 薯店, and it allows the certified influencers or KOL’s to have their own personal shops which can be linked to their KOL accounts, because currently on Red only companies can open a shop, unlike Taobao where you can actually use your own personal ID to open your personal shop. So, this is what Red is testing to allow influencers to open their own personal shop, and KOL’s can also add the product links during the live streaming or links to their post, so the audience can purchase directly and go to their shop.

Currently only several KOL’s have this new function because it’s still testing, and we actually see that many KOL’s actually own their own personal shop on Taobao, mostly selling apparels and accessories and they are also trying to develop their own brands. I think this is what Red is testing — to see if they can push some niche brands, KOL brands, and influencers brands on Red, which is why they started to allow some influencers to have their own personal shop.

I think this is a good testing because many KOL’s are trying to develop their own indie brand, since Red is also trying to enhance the social commerce function. I think this is a good try to see if the influencers can bring more self, can bring more traffic to their own shop, and this also I think provides more possibilities for brands if the KOL’s are allowed to have their own personal shop. In the future, maybe we can also have some of the brands’ products in the KOL shops so that KOL’s can live stream it and also ask people to purchase it from the KOL shops. After all, this is a new function, so let’s see how it goes in the future?

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Full transcript below:

Have you witnessed any B2B O2O strategies that connect both offline and online?

Yes, for that there is WeChat. Basically, with a QR code, you can link people that you meet offline to your WeChat account or your CRM. Let me explain to you how it works. So, you’re going to a far, and instead of distributing brochures with all the information, you can give them your QR code that is linked to an online brochure on WeChat. The second thing you can do is that when you distribute your name card with the QR code on it. People will directly receive a link to your WeChat account, and they will receive an introduction to your company. So, it connects the offline world to the online world. There is another way to use it as advertising in some special events. If people want to know more, they can simply scan the QR code. Also, if you participate in a conference and you are the speaker. There might be a lot of people that would want to ask you for information. What you can do is to display your QR code and people can simply scan it and learn about your company, your experience in the industry or your case studies. So, it is efficient. 

The question that most companies need to ask themselves about O2O strategies, is, why should we do that? The real reason is to connect the online world to the offline world and to keep contact with these people that ask for information. You can then try to meet them, promote your services or products, or put these contacts in a special CRAM so, basically keep track. It is a way to keep connected with the people you have met. They will receive more information and have the opportunity to have a second thought. For B2B transactions, you need several meetings and touchpoints. So, in the end, it is not really offline to online but more to multiply the touchpoint with your target.

Is KOL marketing big in B2B businesses?

It can be, but it is not popular. Most of the time there is not really KOL because B2B happens in niche sectors most of the time. If the market is big, there can be some KOLs. For instance, there are some in e-commerce because the market is large. In general, you use KOL so that they speak about your company and then you can gain some traffic. For B2B, this strategy does not work. What works it to have the credibility through a KOL. If you are doing e-commerce and a specialist talk about your company, then you will receive a credential and you will be able to use it later for potential leads. Imagine that Jack Ma says that your company is doing a good job. This would maybe bring a bit more customers on your website but that would not be significant. But, if you reuse what it says about your company to create marketing content, then it will have a great impact. So, KOLs can be useful to gain credibility.

What kind of formats need to be developed by B2B companies to enter the Chinese market by format we would like to investigate. Is it a video, a text, an image, KOLs, a sponsorship or something else?

The videos are taking more and more space in the B2B industry because they are more engaging. Pictures are also good. In marketing with say that a picture is equal to 1000 words and a video is equal to 1000 images. So, we recommend using pictures to show your product, to show what you are doing. Visuals are often better and after this, you can use texts. If you want to use banners, I would not recommend using it too much. Chinese people do not trust ads except if they already know the company. So, banners or ads can be used in the retargeting strategy. So, people go to your website, look up for information, you then put a cookie and you can track the leads for 15 days to 6 months. During all this time, people will see banners of your company so it will remind them who you are and what you provide.

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This article Daxue Talks transcript #43: What are the trends for B2B marketing in China? is the first one to appear on Daxue Consulting - Market Research China.