When localizing a brand name, companies need to pay attention to many factors, including phonetics, semantics, characters, tones, and local dialects. Daxue consulting has a proven four-step method for choosing a brand name in Chinese, which you can learn about here.

Different approaches to Chinese brand names in the pharmaceutical industry

There are several ways to choose Chinese brand names for foreign pharmaceutical brands. Just as when translating foreign names, companies can translate the name either according to its semantic meaning, or according to its phonetic sound. In some cases, it is possible to combine both methods into one translation.  

This case study includes the analysis of 10 companies in China’s pharmaceutical industry. Namely: GlaxoSmithKline Plc, Sanofi, Merck & Co Inc, F Hoffmann-La Roche Ltd, Johnson & Johnson, Bayer AG, AbbVie Inc, AbbVie Inc, Pfizer Inc and Eli Lilly and Co. It includes the analysis of how they choose a Chinese brand name, as well as the names of their products in the Chinese market.

Phonetic translations

Phonetic translation is the easiest way for translation and the most common localization method. A common slip up is when companies simply transliterate their name without thinking about the meaning and sound of the characters. As a result, the character choices, while having a good sound, may have unfit meanings or tones that do not roll of the tongue easily. However, when giving Chinese brand names in the pharmaceutical industry, companies often use this method, combined with choosing the right characters, as it is a very specific market.

GlaxoSmithKline Plc

Source: GSK, GSK website page in Chinese

Original name of this English company is GlaxoSmithKline Plc. In Chinese the brand has the name “葛兰素史克” (“Gelansushike”) / GSK.

Its antiviral medicine Viread in Chinese has the name: “韦瑞德” (“Weiruide”), which sounds similar to the original name.

Such as in this case, the original foreign name has sounds that do not exist in Mandarin, such as the V sound. However, “V” sounds in brand or product names are often transcribed to “W” in Mandarin.

Sanofi

Source: Sanofi, Sanofi website page in Chinese

The French company Sanofi in Chinese has a name “赛诺菲” (“Sainuofei”).

Its antiepileptic medicine Depakine in Chinese is “德巴金” (“Debajin”). “De” might give an impression of “Germany”. However, the French flag is on the packaging, conveying a message that the product made in France.  

Source: Taobao, Depakine in the Chinese market

Merck & Co Inc

Source: Merck, Merck website page in Chinese

The Chinese name of the American company Merck & Co Inc is “默克” (“Moke”). Their popular product Vigantol does not have a Chinese name. Some overseas flagship stores sell this product and it receives hot discussion on social media. 

Source: Taobao, Vigantol in the Chinese market

F Hoffmann-La Roche Ltd

Source: La Roche, La Roche website page in Chinese

A company La Roche from Switzerland has its Chinese name “罗氏” (“Luo Shi”). Some of their products also have names based on phonetic approach. For example, the product Rocaltrol which contains vitamin D metabolites, in Chinese has a name “罗盖全” (“Youjiale”). It uses same character “Luo” as ”Luo” in the company name. Another La Roche product Madopar in Chinese is named “美多芭” (“Meiduoba”).

Johnson & Johnson

American company Johnson & Johnson does not use phonetic approach for its brand naming in China. However, it applies this approach to some of its products. For example, Band-aid in Chinese sounds like  “邦迪” (“Bangdi”). Another product which original name is Motrin has “美林” （ “Meilin”) as a Chinese name.

Source: Taobao, Band Aid and Motrin in the Chinese market

Bayer AG

Source: Bayer AG, Bayer website page in Chinese

German pharmaceutical company Bayer in Chinese sounds like “拜耳” (“Bai Er”). Besides, some of Bayer China’s products also named based on the phonetic approach. For example, Bayaspirin has its Chinese name “拜阿司匹灵” (“Baiasipiling”). It uses same character “Bai” as ”Bai” in the company name. Its product Canesten also has a Chinese name  “凯妮汀”（ “Kainiting”), which sounds similar to the original.

AbbVie Inc

Source: AbbVie, AbbVie website page in Chinese

American company AbbVie in Chinese has a name   “艾伯维” (“Aibowei”). However, most of its products name represent “phonetic + evocative” approach.

Novartis

Novartis which based in Switzerland does not use phonetic approach to its brand name in China. However, its products Diovan has Chinese name “代文”(“Dai Wen”), which sounds close to original.  Same for Trileptal with the Chinese name: “曲莱” (“Qu Lai”).

Source: Baozhilin, Diovan and Trileptal in the Chinese market

Phonetic approach for prescription drugs

All drugs mentioned previously are  over-the-counter drugs, meaning they are aimed at ordinary consumers and their names are casual-sounding, to be clearer for customers. However, for comparison, we also looked at prescription drugs, where the marketing is not just directed to consumers, but also medical professionals. What is interesting thing is that some companies adapt their names of prescription drugs for the Chinese market in not-professional-sounding, rather casual-sounding way.

AbbVie Inc

AbbVie’s medicine Zemplar, which helps to treat secondary hyperparathyroidism in people with chronic kidney failure, has a Chinese name “胜普乐” (“Shengpule”). “Sheng” means “victory”, “Pu” means “common” and “Le” means “happiness”. As we can see, it has no connection with the effect which this drug has or with ingredients it contains.

Another drug Humira, which used to treat arthritis, Crohn’s disease and psoriasis, in the Chinese market has a name “修美乐” (“Xiumeile”). It sounds close to original and has positive meaning: “Mei” and “Le” mean “happy” and “beautiful”.

Source: Taobao, Humira in the Chinese market

Sevofrane’s name in Chinese is “喜保福宁” (“Xibaofuning”) “Xi”, “Bao”, “Fu”, “Ning” are all positive words standing for happiness, safe and good health. It is a volatile liquid anesthetic, used during serious operations. The name sounds surprisingly casual and light-hearted considering the seriousness of the product.

Eli Lilly and Co

This company produces Olumiant, which helps to reduce pain and stiffness in Chinese sounds like “艾乐明” (“Aileming”).  “Le” means “happy” and “Ming” means “bright”. The name conveys a positive message.

Pfizer Inc

Calcium channel blocker Norvasc in Chinese sounds like “络活喜” (“Luohuoxi”). “Luo” means “Merridian”, “Huo” means “alive” and “Xi” means “happiness”. “Luohuoxi” conveys a positive message and might be reliable in curing heart diseases and unblock blood vessels. It also has casual-sound name, although being a serious drug, which requires prescription.  

Source: Taobao, Norvasc in the Chinese market

Phonetic and evocative names

In case of “phonetic + evocative” method, translation covers not only the name itself, but also the signal that the product or service carries. Adaptation taking into account the meaning and sound is the most difficult and successful option, when the creators manage to preserve the pronunciation. Besides, they put the original meaning into the translation and avoid negative perception of images.

Sanofi

Sanofi also uses this approach. For example, its product Aprovel has a Chinese name “安博维” (“Anbowei”), where “an” means “safe”. 

Source: Taobao, Aprovel in the Chinese market

Merck & Co Inc

Merch also has some product names which combine phonetics and meaning. For instance, Glucophage has a Chinese name: “格华止” (“Gehuazhi”). “Zhi” means “stop”. Since the main function of the medicine is to deal with diabetes, “Zhi” means that the product can stop the disease and keep balance of body.

Another product Euthyrox has its Chinese name “优甲乐” (“Youjiale”). “You” and “Le” means great and happy. “Jia” is the same character with “Jia” in “Jiazhuangxian” (thyroid). It conveys a message that the product can do good to thyroid diseases.

Source: Taobao, Glucophage and Euthyrox in the Chinese market

F Hoffmann-La Roche Ltd

The product of this company Xeloda in Chinese sounds like “希罗达” (“Xiluoda”). It uses same character “Luo” as ”Luo” in the company name. “Xi” represents “hope”.

Source: Taobao, Xeloda in the Chinese market

Johnson & Johnson

Source: Johnson&Johnson, Johnson&Johnson website page in Chinese

Johnson & Johnson uses “phonetic + evocative” approach for its brand name in China. In Chinese it is “强生” (“Qiang Sheng”). “Qiang” means “strong” and “sheng” means “life”. “Qiangsheng” conveys a message of “make life stronger”. 

Same approach is for some products. For example, Acuvue’s Chinese name is “安视优” (“Anshiyou”).

“Anshiyou” stands for  “having stable and better eyesight”.

Bayer AG

Bayer uses this approach for Redoxon product. Chinese name is “力度伸” (“Lidushen”). “Lidu” means “strength and power”. “Shen” means “strengthen”. The name conveys a message that people can gain more power after eating the vitamin tablets.

Source: Taobao, Redoxon in the Chinese market

Novartis

Source: Novartis, Novartis website page in Chinese

The Chinese brand name of Novartis is “诺华” (“Nuo Hua”). “Nuo” means “promise” and “Hua” means “China”. Nuo Hua would like to make a promise to China, keep providing innovative products and contribute to the improvement of health and living quality of Chinese people.

Its product Lucentis’s Chinese name is “诺适得” (“Nuoshide”). “Nuoshide” adopt phonetic and evocative strategy by using the same character “Nuo” as the company name “Nuo Hua”.  “Shi” and “De” represent for “comportable”. 

Pfizer Inc

Pfizer has some products named according to “phonetic + evocative” approach. For instance, Diflucan’s Chinese name is “大扶康” (“Dafukang”). “Da” means “big”, “Fu” means “help” and “Kang” represents “a good health”. Another product Lipitor – “立普妥” (“Liputuo”) in Chinese. “Li” and “Tuo” stands for “a high speed”. “Liputuo” means that the problem can be solved in a short time.

Eli Lilly and Co

Source: Eli Lilly, Eli Lilly in the Chinese market

American brand Eli Lilly and Co is another example of combining semantics and meaning. Its Chinese name is  “礼来” (“Li Lai”).  “Li” means “courtesy and politeness” in Chinese and it is an important virtue in Chinese society.  “Lai” means “come”. “Li Lai” conveys a message that the company is gentle and is willing to do good to the Chinese society. This brand is also very special, because of its visual identity. Typography and name totally stand out from the competition in the Chinese market.  Their name is something that you would expect seeing in the hospitality industry for instance (“courtesy/politeness is coming”). Same for their typography, hand-written, as it relates to tailor-made/crafted/personalized products.

Source: JD, Ceclor in the Chinese market

Its products Ceclor’s Chinese name is “希刻劳”(“Xikelao”). “Xi” means “hope”. Zyprexa’s Chinese name is “再普乐” (“Zaipule”). “Zai” means “again” and “Le” means “happiness”. The name conveys a positive message. 

Phonetic and descriptive names

This approach to the Chinese brand names in the pharmaceutical industry means that the name gives a hint of the effect of the product. At the same time, there is a certain parallel in the phonetics of the word with the original name.

GlaxoSmithKline Plc

This company uses this approach to the Requip, which helps to treat Parkinson disease. The Chinese name is “力备” (“Li Bei”). “Li Bei” means to have the power, which can reflect the function to release Parkinson symptoms.

Source: Taobao, Requip in the Chinese market

AbbVie Inc

Its product Calcijex has a Chinese name: “溉纯” (“Gai Chun”). “Chun” stands for “pure”. Since the product is a liquid used for injection, it gives people a sense of pureness.

Descriptive

This approach to the Chinese brand names in the pharmaceutical industry adapts the brand name so that Chinese consumers understand what effect the product has. It doesn’t have to sound similar to the original name.

GlaxoSmithKline Plc

The example of this approach is company’s product Avamys. In Chinese it is “鼻眼适”(“Biyanshi”). “Biyanshi” means make both nose and eyes comfortable, which can represent the core function of the product.

Source: Taobao, Avamys in the Chinese market

Key Takeaways of pharmaceutical brand naming in Chinese

• Most of the Chinese brand names in the pharmaceutical industry apply phonetic approach. It could be explained by the fact that it is simpler and does not require spending time finding the characters that convey the essence of the product.
• Some companies in the pharmaceutical industry in China use “phonetic + evocative” approach. It helps Chinese customers to better understand what effect product has. However, it is harder to come up with the brand name which sounds similar in Chinese language and has a clear meaning.
• The descriptive approach helps Chinese customers to better understand the product, but it has little correlation with the original brand name.

Vitamin and health supplements market report by daxue consulting from Daxue Consulting

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This article Chinese brand naming case studies in the pharmaceutical industry is the first one to appear on Daxue Consulting - Market Research China.

Developed by American scholars, Richard Thaler and Cass Sunstein, the concept of nudge marketing has been successfully applied in both public and private sectors in the Anglo-Saxon society. The key elements of the nudge theory include the choice   (reducing the mental effort to make a decision). In a nutshell, both governments and enterprises apply nudge in China to entice people to achieve expected behavior.

In the business context, nudge tactics are all around us

Nudge theory was popularized in 2008, but we have been influenced by nudging, even in a consumption context, our whole lives. Simply observing the online and offline ecosystems exposes the abundance of nudge marketing tactics in China. Anywhere a business creates the environment in which a decision is made will inevitably include nudges.

Individuals retain the power to choose among alternatives, but the structure of their choice favors one particular outcome. Nudging affects behavior while also respecting freedom of choice of the consumer. Whether it is placing sweets or other impulse purchases near the cash register, or listing the more profitable product in front of the less profitable one online, consumer choices are influenced by the environment around them.

Photo Source: Daxue consulting, Mechanism of nudge marketing

However, Nudge theory has low academic awareness in China

Even though “nudge” is a popular concept in the western world, it has been rarely cited for academic purposes in China. The official Chinese translation of nudge is “助推理论 (nudge theory)”. Other synonyms such as “助力发展 (development aid)”, “助推器 (industrial propellers)” and “助推 (nudge)” are used in ways irrelevant to the concept proposed by Thaler. According to CNKI, a key national research and information publishing institution in China, the attention degree of nudge theory has remained very low in the Chinese academic world. Even so, mare the translation of western academic papers and analysis of the nudge application in western society. These facts reveal that nudge theory, and nudge marketing in China has yet to become popular.

Photo Source: CNKI, Subject distribution of nudge theory in Chinese literature

Nonetheless, it is interesting to notice some enterprises, including online car-hailing platforms, have utilized nudge marketing in China. On the other hand, Chinese scholars have been discussing applying nudge theory to policy making in China. If so, in which context it is most suitable?

Nudge in the business sector: Software-as-a-service industry and E-commerce platforms have applied nudge marketing in China

With the increasing household incomes, improving legal measures regarding intellectual property and development of the 4G network, the software-as-a-service industry in China is booming. While lots of market players strive for market share, how can they attract consumers in China and stimulate the purchase behavior, by applying nudge in their businesses?

Case Study of QQ Music: auto-subscription and excessive exposure of promoted products are nudges

QQ Music (similar to Spotify), one of the leading online music service providers in China, has applied nudge in promoting their core product. Green Diamond (绿钻) is the premium membership that enables music consumers to unlock premium music services such as music quality, customized themes and profile pictures, and more access to paid digital music. In addition to the premium membership, regular membership is the second promotive product, and it merely consists of the basic service, limited access to paid digital music.

Application of heuristics: information availability

Information availability is related to the observation that as people see or hear something frequently, they tend to believe its perceived credibility. QQ Music has applied information availability successfully. On the home page of the member center, QQ Music mostly promotes the premium membership by placing multiple stimuli regarding Green Diamond. The images below display pages of the QQ Music member center.

Source: QQ Music screenshot, navigating a Chinese app means immersing ones-self in a series of ‘nudges’

Four activities which are circled in blue are related to obtaining premium membership. For users that are not familiar with the platform, these stimuli are likely to entice them to get premium membership directly as they might perceive that Green Diamond is the only membership they can obtain from this online music platform. However, they might not know QQ Music has also provided regular membership as this platform does not place any stimulus to promote it frequently.

Photo source: QQ Music, member center page

Inertia and auto-subscription

Inertia is related to the tendency of people to stay committed to current situations. It is caused by the fact that people are unlikely to be proactive to change things when there is no stimulus to do so. Likewise, QQ Music has applied inertia as the stimulus. Some subscription agreements take effect after users enable the auto-subscription condition. For example, users can pay 12 RMB/month by subscribing to the successively 1-month plan. Otherwise, they cannot have 6 RMB deductions per month as a benefit. Once users enable this condition, they need to cancel the plan manually if they want to terminate the plan.

Moreover, QQ Music does not send any notification to remind users of the end of the monthly subscription. Affected by inertia, users are too passive cancel the plan when they have not been prompted to do so, and thus their subscriptions would continue automatically. QQ Music tactic regarding auto-subscription leverages the other side of nudge marketing; consumers are less likely to react to a stimulus that is not present. 

Case Study of Tmall: Reviews, discounts and particular display of information are nudges

Likewise, Tmall has driven online purchase behavior with nudge marketing in China.

Photo Source: Tmall, Nudge marketing on Tmall platform

Social proof and reviews

High amount of reviews are effective in driving purchase behavior as they give more context and personal experience to products. Reviews are technique of social proof, which states that when uncertain, individuals will look towards the behaviors of others to help them make decisions.

Anchoring and discounts

Anchoring, a psychological pricing technique, is using existing information as a baseline for new judgements. The higher price “anchors” the individual to make the discounted price seem smaller.

Autonomy in decision-making

Being able to choose from various options, such as to check out, add to the bag, or paying in installments, it gives consumers the freedom of remaining autonomous in their decision.

Pushing the sales of a particular product

Placing the most attractive product next to similar products that aren’t perceived to be as good of a deal makes that option look even better. On Xiaomi’s page, the most attractive option would be the middle with its attractive specs, which justifies its higher price.

Photo Source: Tmall, Nudge marketing on Tmall platform

Credibility and labels

Labelling as implicit nudges boosts credibility of the product to make it easier for consumers to find what they want.

Photo Source: Tmall, Nudge marketing on Tmall platform

Similar nudges are widely used in video platforms, paying-for-knowledge apps, gaming platforms

In terms of other digital content and service providers, auto-subscription is a common nudge tactic in this market. It is noticeable that the applied nudge tactic in China’s business can be found in the western context. With the growth of globalization, more and more business tactics born in the west have been adopted in China readily.

Applications of nudge from China’s government

Nudge in the policy establishment is more insightful. More and more Chinese scholars have delved into this field and discussed its feasibility in the Chinese context.

Nudge in China’s public policies: it is applicable in the pension system while focusing on different attribute   

One of the most prominent applications of nudge is in the pension system. In western countries, in order to tackle the low propensity of saving, a nudge has been applied to  trigger their saving habits for retirement. Auto-enrolment and display of selected information are the main characteristics of nudge in the western context.

By 2020, China had established the pension system for over two decades. Considering the relatively high propensity of saving, it has not been a significant issue in China’s pension system. Instead, the main issue has been the low participation rate. Because of the unequal economic development, the penetration rate of the pension system in rural areas is low. Among these nonparticipants, some of them have limited education and do not know the benefits of investment in pensions. To tackle these issues, some Chinese scholars have suggested that the government should utilize the heuristic, framing and availability, to attract more Chinese people to participate in this system. By amplifying the benefits of pensions, offering limited investment plans and using plain descriptions, people’s willingness to participate are likely to increase.

Nudge applied to prevent the spread of Covid-19

On top of strict government measures to control the spread of COVID-19, China also used some more subtle tactics to encourage citizens to follow the rules. Simply putting a hand sanitiser dispenser or a tissue nearby will increase the chances that people use them, before entering a building, even when people are carry their own tissues and sanitiser.

Source: daxue consulting, 50 measures China used to prevent the spread of COVID-19 report, tissues placed at the doors of ATMs

Standing spots also served as a subtle reminder to keep a two meter from others. Though this measure could have been implemented without labeled standing spots, the spots remove the mental effort for people to have to figure out how far to stand from each other.

Source: daxue consulting, 50 measures China used to prevent the spread of COVID-19 report, people are nudged to stand on standing spots

Nudge theory in China has yet to be widely discussed

Regarding the nudge in China’s business sector, enterprises have applied nudge marketing in China readily. Nudge amplifies the universal trait of human behavior. Since nudge works well in the western society, it can also bring similar benefits in Chinese environment.

In regard to the application of nudge in China’s government sector, scholars are questioning the effectiveness of nudge in changing people’s behavior. Influenced by Confucianism, China has been rooted in a traditionally paternalistic system that features control and power. By 2020, the legislation in China has been to affect people’s behavior directly, rather than enticing them to behave in a certain way.

In the future, mitigating the differences might facilitate nudge’s occurrence in China’s policies

Nudge for good is meant as a plea and not necessarily an expectation. Richard Thaler, Nobel Prize winner

“Although there are cultural differences between Asia and the US or Western Europe, fundamental traits of human behavior are relatively stable around the world that would allow China to use the tools to design policies.” Thaler said. He also mentioned that applying nudge in government policy would help China’s government to obtain better outcomes. In line with some Chinese scholars’ opinions, nudge is a valuable tool that cannot be neglected. However, this isn’t to say we should ignore of socio-cultural and economic differences. Hence it is worth doing more research on nudge marketing in the context of China.  

Authors: Amelia Han & Della Yuzhou Wang

Many COVID-19 prevention measures were nudges, spot them in our report

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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.

History of Marie Dalgar

In December 2006, Marie Dalgar ((玛丽黛佳) created its first grafted mascara, which completely overturned traditional view on mascara. It achieved an amazing sales performance: Marie Dalgar claimed that they sell one mascara every 15 seconds. In May 2008, the Chinese cosmetics brand formally established Shanghai Feiyang Cosmetics Co., Ltd., the marketing center. The brand has followed the rapid development path based in Shanghai and expanding to the whole country. In the same year, it launched its official website, providing consumers with a comprehensive information platform. 

In January 2010, Marie Dalgar opened its’ international factory in Shanghai Fengxian Industrial Park, covering an area of ​​20 acres, which is the largest mascara production base in Asia. Besides, it won the “China Cosmetics Annual Best Single Product Award” at the 2010 China Cosmetics Industry Conference.

In March 2011, Marie Dalgar won the 2010 “Best Makeup Brand” and “Best Single Product” awards in China’s cosmetics industry. In the same year, the brand joined hands with the well-known fashion women’s website Kimiss, and organized makeup contest with international brands such as Armani, Bobbi Brown, and MAC.

Currently, Marie Dalgar is one of the most promising cosmetics brands in the Chinese market.

Marie Dalgar’s brand concept

As the brand claims, besides the perfect effects, makeup is also an artistic master piece. It enhances confidence and it is a factor for different life expression. Marie Dalgar represents the spirit of modern woman’s personality and the attitude of women in this era.

Focusing on young consumers

From the user portrait, Marie Dalgar’s target group is 18-24 year old college students, and 25-35 young white-collar workers in China who have just started work.  Brand has a strong focus on young consumers and builds products that are easy for them to use on different occasions. The youthful brand naturally attracts young consumers through its product innovation and engaging cross-over marketing in the ‘new retail’ environment. Having its own research and development centers and manufacturing bases allows Marie Dalgar to innovate and meet changing demands quickly.

Data Source: NetVoices, 2018 Top Cosmetic Brands in China Report, Marie Dalgar’s consumers by age

Marie Dalgar’s marketing strategies

The domestic brand embraces the “New Retail” concept, taking a unique approach to increase the consumer experience and build brand awareness. On top of this, it has been a pioneer in collaborations.

Cooperating with third parties for campaigns

Co-branding is a key marketing strategy. These collaborations are through co-branding, such as collaboration with KFC and Heineken, and through collaboration with social media platforms like Douyin.

Co-branding rather than embassadors

Every year, Marie Dalgar holds Crossover Art Project. The brand invites artists to express themselves by using its make-up products. For example, fashion photographer Paco Peregrin chose the theme ‘Facing’ in 2015. The following year, photographer Damien Dufresne opted for ‘Through your eyes’ . For its products packaging, the brand also calls on artists, like the young Chinese artist JINLE, invited to celebrate the year of the pig. Out of a limited edition run of 3,000 units, Marie Dalgar sold 1,000 units within 10 minutes. The campaign reached 62 million consumers online, with a total of 50 million engagements.

Source: Marie Dalgar, Wechat, Year of the pig campaign 

Cooperation with KFC

The young makeup brand decided to take advantage of the expanding retail ecosystem by cooperating with third parties for special campaigns. Marie Dalgar outsourced sales efforts and found other ways to use partners’ e-commerce platforms in China. In 2017 Marie Dalgar cooperated with KFC on campaigns and advertising, pulling in traffic from KFC’s huge consumer base.

Source: Chinessima, Marie Dalgar’s cooperation campaign with KFC

Marie Dalgar and KFC created the “Pink is Cool” theme cross-border lipstick gift box. “Pink” and the shared target audience became the basis of this cross-industry cooperation. Marie Dalgar used this collaborative lipstick to create a cool makeup look, and attracted the attention of makeup consumers through the sharing on the Weitao platform. KFC used stores and offline resources to create a cross-border offline theme store to promote this cooperation. The campaign helped the brand win 1.4 million visits on Tmall’s official store and make over RMB 12 million in sales. Most of visits were from selling limited edition gift sets, which included both KFC coupons and lipsticks.

Cooperation with TikTok

In April 2018, Marie Dalgar and TikTok jointly launched challenge event. Being the first collaboration of its kind in the beauty industry, the video challenge had a maximum number of participants of 75,000. The event and related advertisements reached approximately 288 million people.

Cooperation with CCTV

Marie Dalgar partnered with the CCTV documentary series “National Treasure” for a limited-edition lipstick. It helped to build a well-earned reputation among consumers for championing Chinese heritage. Collaborations don’t even need to be in the realm of high culture as long as it will reach the masses in popular spaces.

Cooperation with Heineken

Marie Dalgar teamed up with brewing giant Heineken and Tmall in 2019 to release a “forgiveness” gift box. The gift box was released on Tmall’s “Fans Day” to coincide with the European Champions’ League soccer final, which Heineken sponsors. The hook: soccer lovers could give their partners a gift box to beg “forgiveness” and apologize for ignoring them while watching the final. “Wearing a green cap” in Chinese means “to cheat on your loved one”–in this case, with soccer. Two boxes were offered in “his” and “hers” editions. One box featured green lipsticks and green tea flavors, while the other contained limited-edition Champions’ League bottles of Heineken.

Marie Dalgar uses AR to attract customers

Marie Dalgar and Ali jointly launched the “unmanned color vending machine” and the beauty unmanned store “TO GO “ combined with the platform’s big data to reach more potential consumers.  Marie Dalgar’s “TO GO” store features an augmented reality (AR) mirror to link offline consumers’ experience with their online purchase. This application of AI in beauty  boosted both offline and online sales.

Source: Chinessima, Marie Dalgar’s “TO GO” store in Shanghai

WeChat and Tmall are key platforms for brand’s retail and marketing

Marie Dalgar established the “Playing Color Academy” on WeChat. They use this mini-program to make more customers to reach offline channels. On top of this, Marie Dalgar uses WeChat database for analysis of user portraits and then send it to product development department.

Marie Dalgar actively uses Tmall and gained popularity among its users. In 2018 its rating there was even higher than such cosmetic giants as Armani, Estee Lauder and YSL. Besides, brand’s live streaming on Double Eleven was equally astonishing, with a total of nearly 100 live broadcasts for 300 hours and 1.3 million views. 

Data Source: NetVoices, 2018 Top Cosmetic Brands in China Report, Make-up brands rating among e-commerce users in China

Marie Dalgar is one of the leading cosmetic brands in China

Marie Dalgar is one of the fast-growing brands in the make-up market in China. Such foreign cosmetics brands in China as YSL, Dior and MAC are on the top of ranking.

Data Source: Kantar, Top-5 fast-growing make-up brands in China

Innovative products push Marie Dalgar’s sales in China

In its early stages, Marie Dalgar attracted attention thanks to its “grafting” mascara, especially adapted to the relatively short and sparse eyelashes of Asian people. “It lengthens eyelashes by 300% and increases their density by 700%”, according to Jumeili.

Marie Dalgar’s Innovative products:

• The world’s first grafted mascara
• The first micro-vibration electric mascara in China
• The first domestically baked eyeshadow and blush
• The first mascara with retractable brush in China
• The first vibrating mascara in China
• The first domestic mascara with adjustable thickness and variable extension brush

Pioneering projects:

• The first domestic mascara with 360° rotating brush
• The first custom-made DIY eye shadow in China

Marie Dalgar was the number one domestic makeup brand during the 2018 Double Eleven festival

On Double 11 shopping festival in 2018, Marie Dalgar’s online flagship store was on the Tmall’s Top Beauty brands list. Its mascara also was in TOP 3 hot single products. The daily turnover of offline shopping mall channel stores increased by 414% year-on-year during 11.11 festival. Marie Dalgar participated in Tmall Double Eleven many times, and won the “New Retail Outstanding Contribution Award” from Tmall. The relationship between Marie Dalgar and Tmall are complementary.

Marie Dalgar expands to the Asian market

All of these steps helped to make Marie Dalgar one of the best-selling local brands and advanced the company onto the global stage. It became the first Chinese brand to sell its products in Sephora stores outside of China.

Expansion to Singapore

At the end of 2018, the brand entered Singapore via Sephora. To Mary Dalgar’s CEO, Chen Haijun (陈海军), Southeast Asia is only a preamble before Europe and the United States. “Worldwide markets will represent 20% of the brand business within 5 years”, he said.

Because of it’s strong innovation power, and collaborations to expand it’s consumer base, Marie Dalgar is one Chinese brand that is worth learning from.

Learn more about China’s cosmetics market in our report

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This article Marie Dalgar: a Chinese cosmetic brand gaining international momentum is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David: Hello everyone, today we are going to go through our new vitamin and health supplements sector in China report, which was published in July 2020.

Here to talk about it with me is Allison.

Allison Malmsten: Hi, I am Allison, the marketing manager at Daxue Consulting.

Matthieu David: Thanks for being here. So today we go through this topic which is the Vitamin and Health supplements sector in China, which has been a topic for years, it has been impacted by cross border eCommerce, it has been – actually I don’t know if I could say dominated but influenced a lot by brands from overseas and we are going to see which countries are more valued by Chinese consumers, but if we compare China to the west, what would be your conclusion, Allison, after reading the report?

Allison Malmsten: So, I think one thing that really sticks out is there’s different motivations to take health care supplements in China. In China the number one concern is skin health and the appearance of the skin, so a lot of the supplements will market themselves towards skincare and you might even see for example a specific supplement that’s in China marketed as a skincare product, but then it helps with skincare and then in the west, it might be marketed as it helps with the immune system or something else.

Matthieu David: Very interesting. So it has been in some ways rebranded for the Chinese consumers and I think in the report we mentioned that there was some – also fake statements – do you feel that the fact that the same vitamins would be branded for skin instead of immune system in other countries, would be considered a fake statement or is it just different properties which are – communicated on – what’s your reaction when you read reports?

Allison Malmsten: Yeah that’s very interesting. Its hard to say whether it’s really fake, I mean we would really have to dig into the research done by the companies that created the products and did their own testing further on health departments and their local governments’ approval, but yeah I do think that – for example, some products in China might be marketed as skin lightening, especially like – on another note, some moisturizers might be marketed as skin lightening, whereas in the west moisturizers are known to keep your skin more tanned because it causes you to not shed skin. So, yeah, I think in order to really know the answer to that, you would have to follow a group of consumers for a while to see how it really – how the vitamins really manifest in the body. To a certain extent there’s obviously going to be an amount of the mental factor or the placebo effect like if you believe a certain vitamin is going to make your skin look healthier or it’s going to improve your immune system, you might look in the mirror and say – wow, my skin is glowing today when in reality you don’t really know if its improved that much.

Matthieu David: And in the topics you wanted to mention too when we compare China to the west, is about the level of consumption and the room for growth which seems to be still steep in China?

Allison Malmsten: Yeah, so currently China’s vitamin market has about a 10% YoY growth rate, now this is about the same growth rate as the US in the 70’s, but in the US in the 70’s a lot of these products were still developing and a lot of them would have very negative side effects, and so obviously this would hinder the market growth. But, right now a lot of these products they have already been perfected over a couple of decades now, and so there’s a lot of room for them to really be successful and grow very quickly. However, that being said, China’s market size is still quite a bit smaller, if I look at the number – sorry I have to look at the number really quick but China’s market size –

Matthieu David: The numbers you came up with when we talked about it is that – it was a per capita standing and China was still standing on 18$ USD where the US is –

Allison Malmsten: Yeah, the annual consumption is only 18$ USD per person, whereas in the US it’s like around $400 or was it 140?

Matthieu David: Its 148 – the number you came with, so that’s a very, very common way of looking at where you could still grow in China, what segment could still grow is to look at the per capita consumption and to say that China within the coming 10 -20 years will catch up the level of Korea or the US. So, it would be a ten-fold or maybe 8-fold growth if you look at the numbers. That may not happen but that gives a little bit an idea of the gap which could be caught up. At least certainly the case let’s say for – half the population is certainly believable, maybe not the entire population, so its still a fold of maybe 4-5 times.

Allison Malmsten: Yeah and then for japan and Korea the per capita expenditure on health supplements is 100$ so that’s still five times more than China.

Matthieu David: Yeah so that’s certainly why as well a lot of brands are looking at China because they see there’s an appetite for it, there is a culture of eating supplements or superfood, to become a little bit of – that’s the topic I’d like to discuss, a bit of a superhuman, I feel there is a bit in China, a culture of being super-efficient and superman or superwoman and in order to reach this level, either to exercise or to eat a lot of supplements. So, in terms of culture, it seems to fit and in terms of spending it seems not to have reached the maximum.

Allison Malmsten: Yeah definitely I think Chinese especially millennials and Gen-Z are really looking to become the best that they can be and they’re willing to make purchases to do so. Some factors for a healthy lifestyle perceived amongst Chinese people are for example a balanced diet which in a survey by Mintel, 50% of Chinese believed that its important and they do have a healthy diet, but then 49%believed that it is important, but they don’t believe that their diet is healthy enough. And so, this is just an example of about 50% of people are out there and they think they want to do better, they want to close that gap between their ideal self and their current self.

Matthieu David: And that’s something interesting in the report as well. We didn’t want to dig in too much when we were talking about the report today but when you look at the search on Baidu and what’s trending, one of the trends during and after COVID-19 was to try to understand what is junk food and what is a healthy food, because actually people have a hard time to distinguish what is junk food and what is healthy food. We think about fast food when we think about junk food, but it’s not necessarily healthy when its not fast food. Are very oily dishes healthy? Certainly not. And so, there is a request – quest I would say, by Chinese consumers to understand what healthy and not healthy is during COVID-19 and after COVID-19. So, that brings up a topic about COVID-19, how COVID-19 has impacted the industry overall, the self, the perceptions, and I think it’s also impacted prices.

Allison Malmsten: Yeah definitely. So, Covid-19 did stimulate the sales of the vitamins and health supplements sector in China, for sure one topic is immunity and based on the results from Baidu’s searches, you can see that the search for how to improve immunity has skyrocketed around the time that Wuhan was closed down. And then that results in people trying to optimize their health and so vitamins – they had some big online deals, so during February – March, and April, some top brands like By-Health and Swisse were already up in sales by around 40-60% from the year before, and, of course, a lot of this is because people were in general shopping online more and so because this is measuring online sales, that can explain some of these numbers, but there was a lot of price dropping from February-March-April to try and encourage these consumers to shop online and buy their products.

Matthieu David: Yeah, to that we need to remember that the shops closed, the online sales may have cannibalized the offline sales, so all in all the market may not have grown as much as 40-60% during and after Covid-19.

What kind of vitamins Chinese eat most? You mentioned that some vitamins are marketed towards skin more than in the west, but are there some vitamins that Chinese prefer, or health supplements?

Allison Malmsten: So the most popular vitamin is vitamin E and in the US for comparison, Vitamin E falls in like the 8^th or 9^th spot for Vitamins and Vitamin E is marketed as something for skin, something to help elderly, and then after vitamin E comes Vitamin C – which is a bit more popular in the US at least, because it’s known for immunity – preventing colds – so yeah – and then after that is vitamin A which is of course known to help eye sight.

Matthieu David: We mentioned at the beginning that health supplements and vitamins – again I’m not sure to use the right word by dominated, but are largely influenced by overseas players, foreign players. How the different countries perceived by Chinese people. We know that Australia and New Zealand usually have a good image in terms of nature, in terms of food – is it a case in vitamins and health supplements and what other countries stand out?

Allison Malmsten: So Australia definitely stands out, 22% of the vitamin imports in China are from Australia, they’re know for vitamin C – calcium, collagen, grapeseed and dietary fibre and I think the idea that Australia is kind of green, healthy, natural is definitely true in this case – there is one Australian brand that their offline store is kind of like an Australian theme and its decorated kind of like a forest or a jungle and its all green and leaves and I think that’s definitely consistent with their marketing message of being – hey, we’re Australian so we’re natural and yeah I think that’s very effective in the vitamin industry.

Second is the US – they account for 20% of the imports and they’re known for big brands like GNC and so some of those marketing strategies they use like KOL’s and they’re known because they have a big strong brand name and so some people when they’re looking for trustworthy brand names, they might go for some of these foreign brands.

Matthieu David: So you already touched the point about marketing strategies for herb supplements by mentioning some KOL – you mentioned three strategies or tactics that you wanted to go into – one is to use multiple channels to reach consumers – you already mentioned shops – offline shops, and the second one is the market to the right consumers and in the report, we see that the most – the segment expressing the highest interest into vitamins and health supplements, doesn’t mean the segment which is buying the most actually. But the one which is expressing most interest is about 20-29 years old and then you have the 30-39, but this is really the core segment, which looks always a bit younger than the one you would expect – 20 – 29 and so to market to the right consumers would be your second recommendation, to be very careful on this, and secondly its to leverage social media and gain insight from them. Can you elaborate a bit more about those three directions you suggest to form brands in the health supplements and vitamins to explore?

Allison Malmsten: Yeah so first point – using multiple channels to reach consumers, in China omni channel is very important. New retail which is the combination of online and offline – so like we talked about earlier a lot of these products are sold on platforms like Alibaba’s Taobao and Tmall, but at the same time a lot of the brand awareness comes from seeing the stores and going into the stores. One of the strategies that brands use is pop up stores, which is where they kind of have a little exhibit pop up in the street or in the mall and these little pop up stores, they really encourage people to take pictures and share on social media which for them after the cost of the pop up store, the following social media sharing is all free for them.

GNC has had pop up stores, Blackmores and yeah – so that’s how they reach consumers, they do branding offline and you can of course purchase offline too, that increases their brand awareness and then the stores are very interactive and then they might hop online for that final purchase.

Next point – marketing to the right consumers. So, based on our analysis from Baidu, who is searching about vitamins?

Well, it appears that 20-29-year old’s are the main people searching for these products. In contrast when we did an analysis on searching for healthy food, the target age – the age group of the people searching for healthy food was the 30-year olds. So, it does show that the 20-29-year old’s, they are definitely curios to learn more about these products and maybe compare them online, so a lot of the brands do cater their marketing tactics to reach these groups. One strategy is KOL marketing, another example which I thought was pretty clever was that one brand that had a sleep supplement, it’s called [Chinese 16:37] it’s a Chinese brand, they actually target people who stay up late at night, which is likely to be college students and they have these videos that play late at night, talking about marketing their products and they also have comics released late at night, kind of to target those people. Similar to Zhai people like we talked about last time, its targeting that group of people. So that’s kind of some interesting ways – there’s another By-Health, collaborated with transformers, which was really popular when the 20 -29-year old’s – when they were kids. So, it’s a little bit of a nostalgia marketing right there – so that’s –

Matthieu David: It’s interesting to see them targeting a specific context in which you may think of health supplements or vitamins, I really like those niches where you find your sweet spot and Chinese seems to have found that and By-Health, working with, collaborating with Transformers.

I have been always, since I’m in China – surprised how transformers have been popular in China and competing with Disney. I don’t know if its part of Disney, I don’t think so right –

Allison Malmsten: I don’t know, I was never a fan of it.

Matthieu David: But it seems to be more familiar to Chinese than the very well-known Disney cartoon or movies that we would have been familiar with in Europe or in the US – Transformers have really made a mark in China.

AAllison Malmsten: Right. And what’s also interesting is that whilst Star Wars kind of took over the world and everybody ahs seen all of the Star Wars movies; Star Wars is actually not famous in China at all.

Matthieu David: Interesting too, yeah. Very interesting, we need to challenge what we believe as well known and as taken for granted in China, always reconsider it.

And the last one you were mentioning is leveraging social media to reach consumers and gain insights.

Allison Malmsten: Yeah, so when it comes to reaching consumers, one interesting thing is Chinese people – especially on WeChat, they love to use emojis and those little dancing cartoons, they love to use those and so Blackmores has actually released their own emoji for one and then also something that’s very interesting is – if these brands can do some social media listening to see what Chinese consumers are saying about their brands, there’s a lot of learning.

1 – some three key things that we picked out, that was very interesting to us is some of the three biggest complaints about vitamins was 1] that the pill tasted bad. 2] that the pill was too large and 3] that the effects were not obvious enough.

For the first two points –

Matthieu David: Sorry to interrupt but I like to stop on pill tasted bad – maybe that’s something you wanted to say but the fact that the pill tasted bad, I’m wondering if its not good. Because you don’t expect something healthy to taste good. You don’t expect a medicine to taste good. Actually, if it tastes bad, it may link more to something more scientific and chemical or – chemical in a positive way, made by science – something made on purpose, not to please you but to do good for your body.

Allison Malmsten:  Yeah what I thought was really interesting is that – these vitamins are obviously – like they’re not made to be eaten or really chewed on. So that’s why – what’s interesting in China they say literally eat medicine, but in the West, we say take medicine – I don’t know how it is in French but in English, we don’t think of it as eating, and so I think what was very interesting is they would say that the medicine or that the vitamin it doesn’t taste good and I think – well, from my perspective, from the western perspective, obviously – its not candy. I mean, they can add a little bit of sugar to the recipe to maybe make it taste better, but the purpose is not for taste. Although some vitamin C ones might taste citric, but there are some pills like fish oil pills, for example, they’re not going to taste good. So, I just thought that’s very interesting that they comment that it tastes bad and they complain about that.

I actually went and looked at amazon reviews in the West and I saw that nobody was commenting about the taste, cause you just think that’s irrelevant, but that’s a good point to say – maybe the product was not stored properly, maybe it was not kept in a cool enough condition or maybe it was past the expiration or something. Yeah, and then the second point was –

Matthieu David: It’s interesting how semantics could influence also the comments from consumers because of the expiration to eat medicine, in French we say the same as in the US – to take medicine, instead of taking – which certainly would imply different thinking in French relationship with food and with medicine and to associate food and medicine because you eat medicine – it’s a very interesting point.

And the last thing you wanted to mention is about healthy lifestyle, right?

Allison Malmsten: Yeah so, we were curious to look at how do Chinese define a healthy lifestyle – obviously that can be perceived as differently across cultures. What we found was very interesting among Chinese people, nutritious food is definitely the most important factor in their – the first choice they make to improve health condition. After that is trying to make better life choices like sleeping more or maybe even using Chinese traditional medicine and then health supplements comes next – but what I thought was interesting is sports and fitness came last and I don’t know if this is my own personal bias but I think in the US when we think – oh we want to make healthy life choices – we think first we go to the gym and the very last thing is changing our eating habits. We always want to outwork a bad diet, we always want to try and work it off at the gym, but in China, it looks like it’s the opposite. It seems that nutritious food comes first and fitness comes last. Health supplements are in the middle, but like you mentioned – with the language, especially with the word for taking health supplements being to eat – I wouldn’t be surprised if that’s more closely related to the perception of nutritious food.

Matthieu David: Interesting. Also in China, my experience is that there is this tendency to think about a miracle solution like when you get – you don’t feel good or you have a cold, you would drink hot water and then you have this one solution fits all – I feel with vitamins and with health supplements, you have this relationship also like miracle solution to whatever problem you have, except that you may have one specific vitamin health supplement to solve your specific problem instead of one solution fitting all.

Another thing I liked in the report and found very inspiring, interesting and something certainly to look at more deeply in the future, is about how to market vitamins and health supplements and it seems that the packaging is very important. It seems also that when you want to connect with the Gen-Z, you may think also about Buddhist healthcare. You may also think about some ingredients like honey, goji berry, tea with health ingredients, fermented food, wheat proteins, things that resonate with the Gen-Z and lastly health is not only – we talked about eating medicine, but actually there are a lot of other products to make it possible for health supplements and vitamins to cobrand their product, which are devices, which are affiliated appliances that somethings certainly a bit new in the mind of consumers to have like air purifiers, to have water purifiers, to have different tools, devices plugged with electricity, IoT, using the internet for health – one being all the Xiaomi devices to track your health, like your pulse and so on.

So, there are a lot of opportunities to communicate about your health I feel in China – it’s a very, very aware market about health. Do you feel the same?

Allison Malmsten: Yeah, in fact, you mentioned about the Chinese magical solution – I think that’s very interesting because I think eastern medicine is kind of – it’s about bringing the body back into balance and I believe that all health problems are caused from the body being out of balance and so doing something like drinking hot water to somebody who believes in that is – drinking hot water, it will solve digestive issues, it will solve skin issues, it will solve any kind of stomach ache if you ate something bad, of course, if you have the flu or anything, you absolutely are supposed to drink hot water. So I think that there’s a lot of belief that no matter what problem your body is having, its having it because its out of balance and then there is this key thing that can bring your body back into balance whether it means cooling you down or warming you up, based on the yin-yang, whereas western medicine is targeting like – okay so you have a stomach problem and we have to identify what the problem is and based on what the problem is there will be a specific remedy for that or medicine for that and it might not be – we won’t relate it to another problem that you’re having in the body.

So I think even though there’s a lot of Chinese people today who don’t necessarily believe in Chinese medicine, you will still find that when talking about food or when talking about a lot of these different life things that these beliefs will kind of sneak their way into the conversation and into the thought and yeah – if that makes any sense – whether they believe in Chinese medicine or not, they’ve grown up with the culture and they’ve grown up with family members telling them what to eat when you’re feeling a certain way or what ingredients help with what type of illness and I think its hard to separate that for the rest of their life. So I think that using these very traditional ingredients like goji berries or fermented food or even using them and then marketing them in the products, again ginger is a really good one and ginseng – that could be really beneficial for marketing in China, versus like if you use ginger in your marketing in the West, people might be like – okay! What is that supposed to do?

MatthMatthieu David: Very true. Thanks for taking the time Allison to talk about the report, and if you want to know more about the report you can find the report on SlideShare, they are all stored on SlideShare and on our website. Thanks for listening everyone.

Find the full Vitamin and Health Supplements Market Report 

This article Market Tidbits transcript #3: A quick glance at the vitamin and health supplements sector in China is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David: Allison Malmsten and I today we are going to have a market tidbit on the Stay-at-home Economy in China and we wrote a report a few weeks ago, about this stay at a home economy which was of course impacted by what happened in February, March, April with the Covid-19, the coronavirus and we mentioned through the report a new type of segmentation which is not totally new with the Covid-19, but which is new with the expansion of the internet and apps and so on, Zhai generation, Zhai people – what are the Zhai people, what do we say within the report?

Allison Malmsten: Yeah, so Zhai people is basically definition for people who prefer to stay at home than go out and previously this would include maybe more introverted people, as also related to the Japanese word Otaku, which is related to the Otaku economy which is the economy of watching anime at home, playing video games all day, but now the Zhai economy, and especially since Covid-19 has expanded to include a lot of different services that you can do at home – so the original definition was a little bit geekier, but now it really includes everyone, even people who work out, anybody who has to go to school or anybody who has to telecommute into work.

Matthieu David: So, we couldn’t mention not only the Zhai people but the Zhai economy, meaning you could become a Zhaist from time to time and the pandemic made some more people Zhai people right.

Allison Malmsten: Yeah, and so originally the Zhai economy was a little bit more male than female, about 55% male, 45% female and the age group was mostly 18 to 34-year old’s. It’s a very digital group of people and they’re very plugged in. traditionally they would be gamers but yeah, like I mentioned now it really includes just anybody even shopping for groceries as participating in the – if they’re doing it from home, they’re participating in the Zhai economy from home.

Matthieu David: So, we know that people spent more time online during the Covid-19 pandemic and we know that they actually emphasized some use – they already had but they also had new use of the internet. What are the trends which could have explored and impacted the stay at the home economy with Covid-19?

Allison Malmsten: So some of the trends that we can talk about an increase in social media use and then online shopping is a really big one, of course before in China a lot of people shopped online but now it’s even more so and including online fitness and then, of course, remote work and study platforms is also increasing and lastly mobile gaming and other entertainment including attending concerts from your living room.

Matthieu David: Yeah, I’m talking about fitness app – there is one app which was a winner during this lockdown which is the app Keep – K-E-E-P – what kind of app succeeded in this category, fitness, news app, can you mention a few of them?

Allison Malmsten: Yeah, since you mentioned Keep – what Keep did is it’s an at-home workout app and what they did is they hogged onto all of the short video platforms like Douyin, TikTok and they – for one they invited celebrities or professional athletes like a volleyball player Hui Ruoqi for example and then the athletes would also teach classes and so that was a really big factor to attract a lot of people into doing fitness from home and so its inspired a lot of people to engage in fitness when originally China’s population of gym-goers was relatively low.

Matthieu David: Interesting, so you mean that deliveration through some kind of KOL or people with an authority in fitness in order to get new users and new –

Allison Malmsten: Yes, and this started – they mostly did this during the Covid-19 so as you can see, the way the pandemic has impacted Chinese people it can be really surprising.

Matthieu David: You mentioned that not only eCommerce went up but also entertainment apps, would you mind sharing what kind of app went up and for what kind of use? We all know that Douyin was a big winner in 2019 and it should be not surprising that it would be the winner for the Covid-19 lockdown.

Allison Malmsten: Yeah so actually there are three short video apps that we’ve really looked at. Douyin, Kuaishou, and Xigua so they all have slightly different user bases and they all increased quite significantly. So, for example, Douyin in December 2019 had 459 million monthly active users and then come March it is now 518 monthly active users and Kuaishou and Xigua have similar statistics and each of these groups they target slightly different user base so Douyin is more GenZ and millennials tier I to tier II cities, Kuaishou is a little bit the lower-tier cities and Xigua is actually known for its high-level content and it actually has a more male user base, so you can see that these are all tapping into and expanding in those unique user bases, so the short video market is really expanding from Covid-19. Additionally, we can also talk about online reading, around half of the Chinese chose to read novels every day during this time and reportedly a majority of them – 86.2% of them plan to continue reading online after the epidemic. So, we will see how long this lasts but its another area that has really grown during the pandemic.

Matthieu David: Interesting, something we forget but the biggest market for books is China and reading novels on a smartphone or on an iPad would be quite natural actually, an increase during the Covid-19 lockdown, that’s what you are saying and its quite interesting how people are going to continue to read novels.

Allison Malmsten: Right. And according to a survey a lot of people will keep reading, but then again self-reported like everybody likes to think that they will continue to read but we’ll see how that plays out.

Matthieu David: You mentioned eCommerce and a lot of people who were not allowed to go out had to use and to rely on eCommerce and – I was going through the report, I was actually surprised by the low level of users for Hema for instance where I would have expected it to be much higher in terms of active users, but still, of course, it increased massively during the epidemic in China. What about the grocery eCommerce more specifically and do you see that as a game-changer or just a period of time or a few months where people had to use it?

Allison Malmsten: I do think it could potentially be a game-changer because once you’ve used it once it really releases a lot of the friction to using it the first time. Everybody was basically – they have a lot of pressure to use it for that first time but now the app is downloaded on their phone, their payment method is plugged in and so it’s a lot easier to maintain a consumer than to acquire a new one and it looks like the monthly active users for Hema and some of the grocery apps, they stayed pretty stable between January and April and in April China was – it was very open. People could really leave their apartments and go grocery shopping almost like normal again and they still maintained a lot of their userbase.

Matthieu David: And what’s surprising to me is that we’re talking about 2.8 million monthly active users for Hema which is for the size of China very small and it increased massively again during Covid-19 but the base was much smaller than what I expected. Was this your feeling too when you were reading the report?

Allison Malmsten: Yeah for the amount of attention that Hema specifically has gotten I would have expected the monthly active users to be possibly a bit higher but what’s not surprising is the amount of growth, I mean its grown like nearly seven-fold from December 2019 to January 2020 so over a month-long period. So I think that’s what’s the most interesting to me is that it’s grown so much and then it continues to grow through February, March, April and so a lot of the users they appear to be staying on the app, granted they might not be ordering the same amount of volume as they were before, but its still definitely has made a big impact in China.

Matthieu David: Carrefour left China like nine months before the Covid-19 lockdown and they could have benefitted from that. I feel that’s really the wrong timing for this player to go out, I mean they could have benefited from a very unpredicted event like this. You mentioned also online education and it grew naturally because students were not at school and actually, they just went back to school a few weeks ago and I think it was early June or mid-June –

Allison Malmsten: Yeah so online education absolutely exploded and this is mostly to do with schools, they still require an education and so these students they have to download these apps and they have to learn the way of telecommuting and so what’s interesting is that some of these apps have actually grown 50 fold, for example [inaudible 11:41] is an app that it used to have only a 124,000 weekly active users but now that’s 6 million – 6.1 million, so that’s quite a bit and what’s also kind of funny is if you look at – for some of these telecommuting apps if you look at the reviews on the Chinese app store, the reviews are actually quite negative, because if you look at what the reviews are saying, tis a bunch of kids, the reviews say like – my school makes me do this online instead of playing my video games, it’s a very disruptive app, I wish it didn’t exist. So that really shows that a lot of the user base is students who whether they like it or not they use these apps for school.

Matthieu David: Funny. Was not designed for it initially?

Allison Malmsten: Yeah well, I think the students are just mad that they have to go to school when they could be sitting at home gaming, participating in other parts of the Stay-at-home Economy in China.

Matthieu David: Yeah, not focusing much on the app and the function but the fact that its taking time out of their games.

Telecommunication, of course, the time spent on telecommunication has increased a lot. What can we conclude on that, what are the key learnings on telecommunication apps and meeting apps for work, for meeting with family, to get news, what kind of learnings can we get?

Allison Malmsten: So, some of these telecommunication apps they have a massive amount of users and a short amount of time. On the first day of resumption of work on February 3rd, 200 million people logged onto DingTalk to work from home. So that’s a lot – whether the telecommuting apps will continue to be used in the future – of course, Covid-19 is a huge factor that has again – its kind of lowered the friction to use it, it’s already downloaded on their computers, but whether people continue to use it really depends on the trust in the workplace. That’s a really crucial factor and then there’s also demand for working across regions. 80% of large and medium sized enterprises in China set up offices in at least two different areas, so telecommuting will definitely continue to be used on a large scale but it will be interesting to see if downloading, if having used this apps before during Covid-19 will make it easier for a large amount of people to start working from home and even start working from home on a daily or like, permanent basis or if it’s just going to be something that they will continue to use only for meetings.

Matthieu David: Interesting, I guess we will have to update this report in 3 or 4 months to see how the Stay-at-home Economy in China has been impacted for the long term, or it was just for the short term that it was impacted during Covid-19. Thanks, Allison, for sharing.

Allison Malmsten: Yeah thank you for having me.

Find the full Stay-at-home Economy Report 

This article Market Tidbits transcript #2: The rise of the Stay-at-home Economy in China is the first one to appear on Daxue Consulting - Market Research China.

Product Innovation: Fruit Tea & Soft European Bread Pairing

Nayuki introduced the “fruit tea and soft European bread pairing” as its signature product to the market. Although product pairing has been widely used in the retail industry, it was quite an audacious move for Nayuki to make. Most of Nayuki’s competitors in the industry, including Starbucks and Hey Tea, choose to stay “focused” and stick to one category only, no matter it is coffee or tea. With unique insights into the psychology of Chinese female consumers, Nayuki’s founder Peng Xin, however, considered “Fruit tea & European bread” a great combination that meet “two kinds of needs in a single scenario” and the sales number of the soft bread take up no less than 50% of Nayuki’s total sales nowadays.

Source: Sina Weibo, Nayuki’s soft European bread and tea pairing

Behind the success of Nayuki’s product innovations are its high-quality raw materials and stable supply chain. In order to ensure the quality and distinct taste of Nayuki’s products, Peng Xin and her team have visited and signed contracts with several renowned tea plantations across China and Taiwan. Nayuki has also built its own factories to manufacture fruit in season, which further enhanced the stability of its supply chain.

Aesthetic-Centered Marketing

Although China’s new style tea market is quite a large cake to share, getting a slice of it is not easy considering relatively low barriers to enter the industry and fierce competitions from both local and foreign companies in China. According to the white paper for 2019 new style tea consumptions co-published by Nayuki and 36kr, about half the consumers of new style teas in China belong to the post-90s generation and female consumers take up 70% of the market. Targeting a young and female-dominated market, Nayuki has been taking an aesthetic-centered marketing approach.

Nayuki has been working on a branding project called “Nayuki Cupseum” since 2019, which has been quite successful so far. The concept of the project is to exhibit artworks made by world-renowned artists using Nayuki teacups. So far, Nayuki has held three series of exhibitions which include “Big hugs to you” collaborating with American artist Christopher David Ryan during May 2020, “Being A Cat” with Pepe Shimada and “Ni Hao New Year” with Cinyee Chiu. Apart from the “Nayuki Cupseum” galleries, Nayuki cooperated with the 50th Anniversary of Anderson Lifetime Achievement Award in September 2019, during which every store would exhibit paintings of “The Ugly Duckling,” “The daughter of the sea,” and “Gorrila.”

Source: Nipic, Nayuki Poster

“Marketing isn’t just about advertising. Product development, space design, developing new techniques are all marketing,” according to Peng Xin, the founder of Nayuki. The emphasis on Nayuki’s aesthetic appeal is reflected on its physical stores as well, from lighting, to color tone, to location, all tailored to the needs of young female consumers, such as taking pictures inside the store to publish on social media. The in-store experience seems to be no less important than the quality of the tea itself for consumers. Nayuki is selling more than a cup of tea, but a whole package of experiences from purchasing online, to picking up at the store, to taking a selfie with its beautifully made teacup, which at its core is a reflection of a lifestyle ideal consumers have been longing to have.

Nayuki’s Cultural Appeal: The Arts of Cultural borrowing

Nayuki might strike consumers as a Japanese brand, but it is in essence a local Chinese company that borrowed a Japanese name. This should not come as a surprise as this kind of cultural borrowing is hardly an uncommon practice, especially in the fashion industry. The rising of Nayuki implies the strong influence of the Japanese cultural exports among Chinese consumers. Although tea-drinking culture originated from China and later exported to Japan, the Japanese tea-drinking culture has evolved a system of its own and become quite different from the modern-day Chinese tea-drinking culture. Therefore, taking on a Japanese brand image has facilitated Nayuki’s success by differentiating itself from other local Chinese beverage brands.

Post-Pandemic Age: What to Expect for Nayuki and China’s New style tea Market?

Although the coronavirus has been contained very well in China, consumption patterns have largely shifted from offline to online, which might continue to be the new normal until the vaccines come out. In the meanwhile, new challenges have been raised for the China’s new style tea market and brought new opportunities for Nayuki as well. In response to consumers’ expectations for a higher security standard, Nayuki has adopted a new operating mode that requires no direct human contact. According to Baidu index search frequency data, the search volume for Nayuki peaked in middle of the pandemic on April 1^st, during which Nayuki brought 3,000 free drinks to cheer up the doctors and nurses at the Leishen Mountain hospital in Wuhan.

Data Source: Baidu Index, Search Index for Nayuki from January to August 2020

The pandemic has also rushed China’s new style tea market into digital transformation. During the period when Covid-19 was at its peak in China, Nayuki offered free delivery for all online orders. As a result, the total number of transactions completed on Nayuki’s WeChat mini program have doubled compared to the previous year. However, such transformation requires both financial and technological support, which might imply a reshuffle of the market. Although major companies such as Hey Tea and Nayuki could probably make through the pandemic with enough funding to adjust to the new normal, small beverage stores might find it very difficult and eventually exit the market.

What we can learn from Nayuki’s success

• Nayuki conducted market research to precisely identify their target consumers, then focused their marketing tactics on them. Nayuki has a clear brand positioning that targets 25 to 29 year old women. Nayuki’s marketing campaigns such as the “Nayuki Cupseum” projects and art exhibits with the Anderson Lifetime Achievement Awards are both tailored to satisfy the cultural and aesthetic needs of a young female audience.
• Nayuki differentiated itself from the myriad of other new-style tea brands on the market with its product pairing and store aesthetic. Additionally, the brand borrowed a Japanese name which is unique and stands out.
• The tea-store used an O2O marketing strategy to establish online presence, which was especially useful during the COVID-19 pandemic. Consumers are raising their standards for safety and convenience, which is particularly important for brands to establish online presence during a pandemic. Relying on third-party platforms like WeChat, Nayuki realized digital transformation and made it through the pandemic.

Author: Isabella Li

Learn more about the tea market in China

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This article The success of Nayuki, the Chinese new-style tea store going global is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David: Hello everyone, today we are going to look into the beauty sector in China, and the report we published a few days ago, maybe two weeks ago about how Covid-19 impacted the beauty sector in China. How it impacted during the epidemic and after the epidemic. I’m here to talk about the report with Allison Malmsten who has worked on the report and we will like to share today with the audience a few conclusions we had on the report, especially Alison you mentioned, an overview of the beauty sector before Covid-19 and some of the trends which came out of this and which were a change in the sector. What kind of changes and differences did you see before Covid-19 and just after Covid-19 in China.

Allison Malmsten: Right, hi – so I am Allison, one of the marketing managers at Daxue Consulting. So, first, China’s beauty market is by no means small, it’s the second-largest in the world at over 300 billion renminbi in annual revenue. Skincare taken 54% of the beauty sector in China and some trends that we saw before Covid-19 were – 1] the high-end segment was growing proportionately faster, so high-end brand segment was growing at 18% year on year while the mass brands were only growing at 5% year on year. 2] Second is that social commerce is blossoming, this is Xiaohongshu and also WeChat has its own platform called 有赞 (youzan) and what we saw is on these platforms, especially for the beauty sector in China the conversion rate is pretty high, and so this is kind of a new way of shopping and the year on year growth for Xiaohongshu was double in 2019. Lastly, there’s a rising preference for a domestic brand. Looking at the top 20 beauty brands in China, in 2012 only 7.6% of them were Chinese while in 2018 14% of the top 20 beauty brands in China were domestic Chinese brands, so this growth is pretty significant.

Matthieu David: Very interesting, it seems that the Covid-19 accelerated some trends which were already happening before such as social commerce, Xiaohongshu being one example, that’s what existed before, and the epidemic was let’s say a time where people had more time to spend online and to do social commerce. Do you have the same analysis at the trend that is not necessarily new, whether they have been accelerated with Covid-19?

Allison Malmsten: Right so out of the three trends I mentioned, yes, the social commerce is definitely even more significant now because obviously during the pandemic people were less willing to go to offline stores and they were doing more live stream shopping and more shopping on Xiaohongshu and KOL marketing is definitely very important during this time. There is one trend that might take a turn and that is the high-end segment was growing very fast before and we might see the slowdown as people will be preferred – they’ll be looking more at ingredients and less at brand names, so this could give a chance to any brands that focus on natural ingredients and focus on skin health and skin repair.

Matthieu David: Very interesting to see indeed, in the report we mentioned that Chinese consumers online were looking at the ingredients and at the quality of the beauty product they were buying, more than before and I think within the report we found out that not all the categories went up and for instance make up went down if my memory is correct and specifically some beauty products and financing on natural ingredients grew faster.

Allison Malmsten: Yeah so, cosmetics were hit the hardest. A McKinsey survey showed that 44% of respondents purchased less make up, while 31% purchased less skincare but then also 25% of people purchased more skin care so it’s kind of balanced out but yeah and then within makeup, obviously lipstick pretty much because everybody is wearing a mask, so there’s a beauty style now called the ko [inaudible 05:00] its makeup for wearing masks, so the focus is really on the eyes and also the skin and so the skin care sector, it did take a bit of a hit but it’s also doing pretty okay and a lot of the focus when people are at home – our social listening showed that a lot of people are talking about its time to be at home and they’re wearing less makeup so they see that their skin is getting healthier so they’re very excited about those results and it inspires them to purchase more skincare products, while at the same time wearing a mask for a long time can be very damaging to the skin, so a lot of people are searching for products that have skincare repair functions and also skin sensitivity is a big keyword now. A lot of people are finding that they have sensitive skin and they’re looking for skincare products that can help repair their skin damage from wearing a mask including anything like natural ingredients are really popular right now.

Matthieu David: And some of the comments we found online through social listening were saying that people were switching from makeup to skincare instead of putting makeup to take more care about their skin with specific products, I would say more natural products. I’d like to go back on the Chinese brands – you mentioned that Chinese brands took off during the Covid-19 lockdown and after the Covid-19. Do you see here long-term trend or it’s just short term and was during the epidemic, or do you see a substantial change which is going to stay?

Allison Malmsten: I think that this is going to – the preference for domestic brands, I think this is going to be a long-term trend. I think this is a trend that was accelerated from Covid-19 and the reasons are 1] because patriotism is a very high right now in general, 2] because also domestic brands really understand Chinese consumers and they understand how to reach them. They’re usually very proactive about social commerce and also, they are familiar with like some Chinese herbal ingredients that are very in right now and so they include those in their ingredient list and yeah, I think that a lot of Chinese brands are gaining momentum right now.

Matthieu David: And we looked into a very specific brand called Perfect Diary in the past and it’s a very, very Chinese company which is doing very well. In a topic, we’d actually like to talk about which is product traffic and Perfect Diary has been an example of being very good at product traffic. Product traffic being something very specific to china where e-commerce started with marketplaces like Taobao and then Tmall and then JingDong and many other marketplaces where having your own website and selling through your own website was not mainstream and now its becoming more the case – not selling through your own website, but your website, your WeChat groups, your WeChat channels and your live streaming. So, using a marketing platform to convert on your own asset, your own digital asset, and not through a marketplace. What did you see in terms of digital changes during the pandemic and after?

Allison Malmsten: So, I saw some digital changes, one like you mentioned private traffic and then two is also live streaming. Live stream obviously ballooned under lockdown, while everybody was at home they spent more time on their phone and inevitably they spent a lot of time shopping on their phone or looking at products and so some statistic for that was that as of February 18th, the monthly number of live streaming events on Taobao ballooned by a 110% year on year. Also, Douyin, also experienced around 70 to 100% growth during the lockdown period, so a lot of brands are using live streaming now. And then also one case, in particular, is [inaudible 09:10] which is an Australian beauty brand, during the coronavirus they directed its offline stores to all sell on WeChat, so that is over a 1000 stores that would normally have offline sales, offline staff, they all went online during that period and they actually had sales of 6.3 million renminbi during a live stream event that happened during the coronavirus lockdown in china.

Matthieu David: I believe that the next step is to see those trends now continuing or if it was just a short-term trend during and after the pandemic.

Allison Malmsten: Right, yes that will be very interesting to see because once stores open up, I’m sure people are very eager to go out shopping again but at the same time they might be a little bit more cautious to hit the stores.

Matthieu David: Thank you, everyone, for listening and we will continue with new reports, we will go through together online.

Find the full beauty sector in China Report 

This article Market Tidbits transcript #1: Major changes in the beauty sector in China after COVID-19 is the first one to appear on Daxue Consulting - Market Research China.

These are some of the successful case studies of brands that creatively appealed to Chinese millennials through nostalgia marketing.

Nostalgia marketing and co-branding in China

Whether it is a cartoon, a candy, or even characters from an textbook, items from childhood and teenage years tend to leave a strong impression on the emotions. A common practice of nostalgia marketing is to partner with a brand that is was dear to the target market during these formative ages.

Wang Wang x Nayuki (旺旺 hot kid x 奈雪の茶 Nai Xue’s Tea): Nostalgia marketing and co-branding in China

Wang Wang, a food maker known for rice crackers and flavored drinks from Taiwan, collaborate with Nayuki (also called Nai Xue’s Tea, a tea drink brand from Guangdong which is rated as one of the top 10 tea drink brands in China) in 2019. The Chinese snack brand aimed to let the target customers recall their happy childhood memories. Therefore, Wang Wang launched its collaborated products on Children’s day in 2019.

Source: naixuecha.com – Children’s day, come to Nayuki and become the luckiest kid

The resulting products from collaboration combined the characteristics both from Wang Wang and Nayuki, including milk flavored drinks, three different flavor of milk custard. Moreover, customer could redeem Wang Wang logo tea cups with consumption points. This brand collaboration went viral online and was very successful given its limited edition nature, which is why we included it in the 10 most epic marketing campaigns in 2019.

Nostalgia marketing strategies in China has proven to be successful. Moreover, nostalgia marketing often resonates with millennials, who are in the sweet spot for having a relatively materialistically rich childhood while having increasing spending power in adulthood. Hence, brands can leverage optimistic feelings and encourage consumers to make a purchase.

Wahaha x Zhongxuega (哇哈哈 x Chicecream 钟薛高): You are young today

The Wahaha Group Co., Ltd. is the largest beverage producer in China. AD calcium milk (AD钙奶) is one of their products carrying many memories of the post-80s and 90s generation. ‘Zhong Xuegao (Chicecream 钟薛高)’ was the three surnames from Hundred Family Surnames, which is an authentic Chinese ice-cream brand. The brand uses an unique Chinese tile design, supplemented by the top ‘back (回)’ pattern in Chinese, meaning ‘back’ to the original taste.

In March 2020, Wahaha and Zhongxuegao jointly launched AD calcium milk flavor ice cream ‘pre-adulthood ice cream’. The main target customer of the new ice cream are adults who have grown up but “don’t want to grow up”, mainly millennials and Gen Z.

Source: Socialone.com- AD calcium milk: Wahaha x Zhong Xuegao launched “Pre-adulthood ice cream” together.

Wahaha and Zhongxuegao made the flavor of ‘Pre-adulthood ice cream’ in layers, the first taste is rich, delicate with milk flavor. After that, Brazilian orange juice and French lemon puree bring fresh fruit flavor and restore the flavor of AD milk drink.

As Generation Z has become an emerging consumer force, domestic brand Wahaha has been trying to communicate with young people. AD calcium milk, as one of the largest IP of Wahaha, has a highly recognizable taste. As a famous product in the 1990s, AD calcium milk still reaches many generations.

Wahaha uses the marketing theme of ‘don’t want to grow up’ to label young people as ‘babies’ and arouse the resonance of more young people.

The cases of nostalgic marketing in China of these two F&B brands have attracted many consumers. The co-branding nostalgia marketing campaigns in China between brands from different industries also worked.

Nostalgia marketing and co-branding in China between brands from different industries

White Rabbit x Scent Library (大白兔x气味图书馆): Be a little bit childish

White Rabbit is a brand of milk-flavored candies. Originally from Shanghai, the brand has a history of more than 70 years. It cooperated with Scent Library, a domestic fragrance brand which is regarded as ‘National fragrance cleaning and care brand’ in 2019. They launched a variety of skincare and beauty products including perfume, fragrance, lotion and shower gel. All the products from the collaboration incorporate the White Rabbit’s signature milk candy flavor.

Like Wang Wang and Nai Xue’s milk tea, the co-branded products were strategically launched during Children’s Day, which triggered the feeling of nostalgia among millennial consumers. More than 14,000 collaborated products were sold out in the first 10 seconds after the collaboration was launched on Tmall on May 23rd, 2019. In addition, in the two months after rabbit launched its online store, the campaign generated 15 times increase in visit and 1.6 times increase in sales revenue.

Source: creative.adquan.com – White Rabbit x Scent Library: Be a little childish!

Scent Library is not White Rabbit’s only partner in Chinese nostalgia marketing. The candy brand also launched a limited-edition lip balm with Maxam (美加净) and milk-candy gift box with Agnes.b which did the test for its future brand co-operations. Through the nostalgia marketing campaigns in China, White Rabbit has capitalized on taste, smell, and appearance that has already left an impression on Chinese millennials during childhood. Now that their target market is all grown up, White Rabbit successfully morphed its brand image from an old brand to a classic, fashionable brand.

Wangyi Yanxuan x Hulu brothers (Yeation 网易严选 x Calabash brothers 葫芦兄弟)

Wangyi Yanxuan (Yeation 网易严选) was officially launched in April 2016. Yeation is a NetEase (网易, a Chinese Internet technology company),  e-commerce platform focused on furniture,   and embraces the brand concept  “good life, but not so expensive”. The Chinese name of the brand ‘Wangyi Yanxuan’ also refers to the meaning ‘NetEase helps you select strictly the products in high quality’.

Calabash Brothers (Hulu Brothers) is a Chinese cartoon series produced by Shanghai Animation Film Studio, which was very popular when it was broadcast in 1986-1987.

The cartoon is about a story of seven colored calabash brothers who protect the villagers and their grandpa from a Scorpion spirit and a Snake spirit.

Source: Official Weibo account of Wangyi Yanxuan, co-branding campaign with the Hulu Brothers

NetEase selected seven different functional beauty products according to each super power of the seven brothers.

The brother with great strength corresponds to the hand cream, so no friction will be generated (smooth skin) if the customers use the hand cream. Eye shadow corresponds to the brother with clairvoyant skills, while the brother with water skills corresponds to face mask for moisturizing. The brother with Invisibility skills corresponds to the makeup cushion product for hiding skin imperfections.

NetEase chose to create Calabash Brothers collection in the beauty category. The nostalgia marketing of NetEase instantly caught attention from customers through waking up their childhood memories, generating emotional resonance. Through this co-branding, NetEase not only attracted customer to create topics and contribute to the traffic for the brand, but also attracted fans of Calabash brothers cartoon, which boosted sales conversion.

Foreign brands apply nostalgia marketing campaigns in China

Mcdonald’s x Li Lei and Han Meimei： the classic characters from English textbook in China

Li Lei and Han Meimei were the two main characters in the English textbooks of junior high school published by People’s Education Publishing House from 1990 to 2000. These two characters accompanied a total of 100 million people in their English learning journey. As a result, the classic lines (as follows) have become Chinese millennials’ first impression of English.

Source: Slideserve.com – The characters that taught millions of Chinese how to greet in English

McDonald’s used this memory for reference and leveraged Li Lei and Han Meimei these two characters in the mini comic where they taught students how to order food in English. In the advertisement, Li Lei and Han Meimei went abroad with their classmates. Li Lei struggled to order food at McDonald’s because of his poor English while Han Meimei as a top student, teaches Li Lei how to order food.

The two familiar characters combine Chinese and McDonald’s elements, refining the original memories by blending the old with the new.

Source: Shangyexinzhi.com – China’s favorite English class characters order food in a McDonald’s ad

In the collaboration with ‘Li Lei and Han Meimei’, McDonald’s chose the topic of ‘Ordering food in English’, which is very consistent with its own brand tone and also a practical and interesting topic. Indeed, as one of the largest fast-food chains in the world, McDonald’s has about 30,000 subbranches around the world and the context of ordering in English in the ads fits the reality of many Chinese consumers traveling overseas.

KFC: Back to the price in 1987

In 1987, KFC opened its first store in China. On the brand’s 30th anniversary in China in 2017, KFC launched “back to the price in 1987” campaign, which triggered a wave of collective nostalgia. During a one-week campaign, the mashed potatoes cost only 0.8 yuan and the Original Recipe chickens cost only 2.5 yuan.

Source: Sohu.com – KFC launched ‘back to the price’ in 1987 campaign

Meanwhile, KFC started the topic of ‘I have the fried chicken, do you have a story to share?’ This marketing campaign became the trendy topic and got the traffic and sales for KFC at the same time.

From consumers’ point of view, the price was obviously favorable. Hence, customers invited their friends into the store and inadvertently ordered a lot of food as a salute to their happy childhood. Consequently, the campaign aroused customers to chat about their past youth on the social platform of KFC.

过去进行食 (The Continuous Past) Restaurant- The Museum of Memory in the ’90s

Source: Dazhong Dianping – The atmosphere of the nostalgia-inspired restaurant

The Continuous Past restaurant is a nostalgia restaurant located in Shanghai, China. The restaurant’s layout recreates the classrooms and the boys’ and girls’ dormitories of the 1990s. Complete with musician posters, a blackboard, magazines and books from the 90’s,  ustomers raved about the detailed design of the restaurant. Even the tableware and are the same as in old days, with a classic tin ‘lunch box’, and a  menu in the form of an exam paper. Many customers have commented that the restaurant took them back to their school days.

The restaurant serves customers’ daily cuisine and drinks and food that were popular in the 90’s. Additionally, the background music of the restaurant is also vintage, resonating with customers’ memory of school and youth time. For a cherry on top, the restaurant even has a school bell that rings every hour.

Tips for nostalgia marketing in China

1. Appeal to the senses

Research shows that senses are closely related to memory, and one familiar scent, sound, or image can cause a myriad of memories and feelings to arise. Therefore, in nostalgia marketing, think of how to appeal to these senses. The restaurant The Continuous Past, uses a school bell sound to cause customers to remember their school days. White Rabbit converts their traditional taste to a similar scent in their new co-branded products. There is even more opportunity to uncover in terms of music and scents that appeal to Chinese consumers.

2. Discover what was popular among the target during their children and teenage years

Between the ages of 12 and 22, dopamine is activated a higher levels. This causes people to have a greater connection to the music, media, and products they were exposed to during that time. For millennials this would be the 80’s and 90’s, a time when China had significantly less cultural influence from the west. If the target market is the silver generation, this would be even truer. Hence, it takes consumer research such as in-depth interviews or focus groups to uncover what your target market truly feels nostalgic for.

3. Co-brand with brands from the past

Fresh, new brands don’t have to miss out on nostalgia marketing. While at the same time, many old, cherished brands can create new opportunity through a second-wind. Co-branding is mutually beneficial in helping both brands expand their consumer base. White Rabbit, has renewed itself through co-branding with a variety of different young and hip brands, effectively turning it into a classic brand.

Author: Qing Zheng

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This article Nostalgia marketing in China：Case studies of brands sparking cherished memories is the first one to appear on Daxue Consulting - Market Research China.

Westin has over 230 hotels and resorts in 36 countries and districts in the world. It focuses on the market of high-end consumers. All Westin hotels are recognized by local authorities as five-star hotels. Westin prefers to place its hotels (resorts not included) in city centers, providing its customers with the most convenient location if they want to go sightseeing or shopping. Westin’s 160 hotels and resorts are all known for their modern design, exceptional customer service and relaxing atmosphere.

Westin Hotels & resorts provides customers with relaxing accommodations for them to come back to after spending a day enjoying the surrounding locations. Each Westin Hotel is located in areas that offer unique experiences for its customers. Westin has a history of focusing on wellness, and it continues its commitment to its travelers’ well-being and healthy lifestyle.

What is unique about Westin in China

Westin now operates 25 hotels in China Mainland: four in Guangdong, four in Hainan, three in Zhejiang, two in Beijing, two in Fujian, two in Shandong and one in each of Anhui, Jiangsu, Jilin, Hubei, Shanxi, Tianjin, Wuhan, Shanghai. The above hotels are located in Tier 1 or Tier 2 cities. Currently, China is home to the second largest number of Westin hotels worldwide, second only to the United States. In China’s luxury hotel market, Westin ranked eighth in terms of the number of hotels among all international 5-star hotel brands in 2008, while Sheraton had the most number of hotels (70).

Increasing demand in China’s luxury hotel market brings opportunity for Westin China

Since entering China in 1991, Westin has targeted wealthy Chinese customers. In the last 20 years, China’s promising GDP growth and increasingly affluent consumers have led to high demand for luxury goods and services. The growth of high-yielding consumers contributes to the blooming of the domestic high-end travel and China’s luxury hotel market.

According to GlobalData, China was the largest luxury hotel market worldwide in 2018, with year-over-year (YOY) growth of 18.3%. In 2019, China’s luxury hotel market still had a YOY growth rate of 10.2%. It is predicted that China will continue this momentum in the next few years with a growing number of high-net-worth citizens.   

How Westin adds Chinese elements

Westin also pays close attention to the local culture of the city and the country where its hotels lie and holds cultural events to accommodate these differences.

In Wuhan, Westin held a luxury traditional family reunion dinner to celebrate the Spring Festival. The event offered Westin customers dishes from different geographical regions of China. Various types of tea were also available.

In Hefei, the Westin held a “Mooncake Show” in late August. The show was held in preparation for the Mid-Autumn festival where mooncakes are traditionally eaten. The Westin offered each of its customers four different mooncakes at the show to give them a little taste of China.

In Beijing, the Westin offered its customers a variety of crab dishes. Chinese people love to eat crab in Autumn, but crab is not farmed in Northern China. The Westin gives Northern consumers a chance to enjoy a delicacy that they normally cannot enjoy.

Westin in China：leveraging the power of new marketing. Co-branding marketing

Source: Westin China’s Weibo, Co-branding marketing of Westin China × KEEP

Partnering with “KEEP”, an easy-to-use  Chinese fitness app, Westin is able to improve customer experiences and strengthen its brand image. Westin and KEEP cooperate to satisfy business travelers’ sports needs by providing a full range of fitness activities. 

The collaboration covers in-room courses, running-related and fitness center courses. First, for in-room courses, KEEP and Westin jointly open exclusive TV channels provided in Westin Hotel. Based on the space environment of hotel rooms, KEEP customizes a set of sports courses suitable for hotel guests to exercise in the room. Second, Westin China adjusted its “RunWestin” program, generating its characteristic health running map route in the KEEP App. Hotel guests and city runners can easily use the Westin health running map in the App, and the App can record and collect related personal performance data. Third, for fitness center courses, KEEP also provides Westin with a complete solution, including training, yoga and other courses. These are to better serve the personalized fitness needs of travelers. Hotel guests can easily scan the QR code in the hotel gym to get recommended courses and enjoy working out. 

Why the Westin x KEEP co-branded marketing works

Why is this innovative collaboration so successful? Two similarities between two partner brands can explain this.

First, both brands advocate healthy lifestyles and emphasize keeping fit. Westin hotel has focused on fitness since it was created and is committed to bringing customers health and wellness in addition to a comfortable accommodation experience. Westin promises to enable guests to maintain their workout routine during they stay in the hotels. Such a promise aligns with KEEP’s brand image that has always been centered on creating a “free sports ground”. Based on the same idea, two brands can join forces to help travelers stay fit and have a healthy lifestyle.

Second, two brands share a similar customer base. Westin and KEEP team up to explore the material and emotional needs of high-end traveler groups. Through this cooperation, both parties leverage rich experience in different fields to jointly develop deeper customer insights, and achieve a full range of sports needs for the target customers.

Innovative marketing method achieves better results

Different from simple co-branding marketing, in which two brands only jointly hold activities or produce products, the cooperation between Westin and KEEP has more significant meaning and better results. It embodies a common vision of two parties, and tightly integrates brand values, market experience and customer insights.

Partnering with KEEP, Westin creates some brand new elements to its traditional hotel identity. Hotel’s high-tech hardware facilities and services activated by the Internet help Westin shape a more active and rich brand image. Westin will attract more loyal guests by offering them one-stop solutions for sports needs in traveling. 

New marketing strategy: social media marketing

Nowadays, social media has built an instant and tight connection between brands and customers, especially for the hospitality business. More and more Chinese are used to checking peer reviews and comments on popular Chinese social media like Weibo, Xiaohongshu and Tiktok before purchasing products or services. In these cases, social media plays a vital role in deciding travelers’ purchasing choices. Several Westin hotels, which are instagrammable luxury stays, earn their reputation on Chinese social media.

Source: Weibo, Red –KOLs’ posts about Westin China

On Chinese social media platforms, it is easy to find some KOLs (Online Key Opinion Leaders) posts about people’s stay experiences at Westin hotels. Their posts usually show the luxurious decoration, comfortable environment, considerate service and stunning views of the hotels. With more and more KOLs sharing wonderful stay experiences, Westin raises its awareness among Chinese consumers. Currently, Westin hotels in some cities, like the Westin Chongqing Liberation Square, have become “internet-famous” hotels, attracting tons of travelers to stay or just take pictures.

Source: Weibo, Red –Consumers’ posts about Westin China

Many people, especially millennials, are keen to share their high-quality lifestyle experiences on social media. It is trendy for them to post fantastic photos of the hotel and share their feelings when staying in the hotel. These posts can have millions of views, and thus cause a “network effect,” which helps advertisement for the Westin.

Recovering from coronavirus: upscale hotels should take “smart” strategies

The tourism industry and the hotel market have suffered huge losses from the coronavirus outbreak. In order to reduce loss and raise occupancy rates, many hotels made dramatic price-drops during the period of the COVID-19 pandemic. Until now, a lot of hotels have still dropped the price to entice consumers. However, it is not a wise strategy, since starting a race by dropping the prices will hurt profits across the entire industry. All hotels will lose out and it would be hard for the hotel market to recover from the crisis. In addition, price promotion strategies may have a negative impact on brand images of upscale hotels like Westin.

To recover from the COVID-19 pandemic in a relatively short time, hotels could take action more smartly. For example, they should offer more “value-adds” services to attract travelers, like Westin’s co-branding marketing. Also, leveraging popular Chinese social media to have users advertise for brands seems like a wise marketing strategy.

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This article Westin in China embraces new trends in marketing for upscale hotels is the first one to appear on Daxue Consulting - Market Research China.