Are you a luxury brand? Are you trying to expand your brand in China? If so, you are spot on. But how should you go about it?  China has been facing an economic slowdown these last few years. Nevertheless, the attraction of the Chinese market didn’t diminish. From tech brands to luxury brands, everyone wants to be part of the Chinese market success stories. While many foreign brands, particularly tech brands, invested heavily on digital marketing in China, luxury brands were slower and lacked a bit behind. However, it is all changing now. Luxury brands understand the value and the multiple opportunities that the Online Chinese market can offer to their expansion.

 

First, let’s have an overview of the online landscape in China …

social media

Did you know that about half of the Chinese population are internet users? Not only are they heavy internet users, they also tend to prefer using their mobile phone to access to the internet (about 80% of them). Also, millennials, which means young Chinese people born in the 80’s and 90’s roughly aged between 15 and 30 years old spend on average 27 hours a week on internet! Interesting enough, they also have to check their phone every 15 minutes. Besides, about 9 out of 10 Chinese netizens own at least one social media account.

 

Online luxury brands sales in China

luxury-shoppers

According to Bain, a multinational consulting agency, Chinese consumers account for over a fifth of total luxury products profits. Chinese tourists are indeed well known for heavily indulging on premium products when travelling abroad to Europe and more specifically France (Champs Elysées paradise …). What about online luxury sales? According to L2, a BI company, It is expanding and growing fast with a 20% increase in 2015 compared to 2014. This is over twice as much as traditional luxury market sales. As I told you earlier, mobile phone are very important for Chinese people. When looking for information, there is twice more people searching on their mobile compared to PC. This is a 44% increase in 2015 year on year.  

 

How can luxury brand leverage the digital tool to expand in the Chinese market ?

Social media

With about 90% of Chinese netizens having a social media account, being present on the main Chinese social media platforms is vital. Before drafting your strategy, you do have to know that several websites and social media platforms such as Facebook or Twitter are not allowed in China. Also, when Chinese netizens are conducting some searches on luxury brands, they are more likely to use Google’s Chinese counterpart, Baidu which owns 78% of search engine market share in China. The most used social media platforms in China are WeChat, WeiBo, Qzone, QQ and Ren Ren. The most widely used is WeChat, an instant messaging application created in 2011 by Tencent the creator of QQ. It has over 690 million users worldwide and China is WeChat’s biggest market (no specific numbers were specified by the company). That said, you see that you should start to consider developing a community management strategy to attract Chinese customers to buy some of your luxury products.

Other luxury brands already started to play the online game. For example, Coach, a bag luxury brand, uses WeChat to offer coupons to their fans while launching media campaigns on both WeChat and Weibo. Weibo is a microblogging platform similar to Twitter with over 222 million active users.

 

KOL and opinion leaders

haibao kol

You should go further than just posting and engaging with your fans. You should attract new fans to follow you on WeChat and Weibo. The best approach to improving your brand awareness and visibility is by using opinion leaders. There are different kind and levels of opinion leaders. The one at the top is the star. The star is a celebrity. He can be an actor, singer or TV show host. Then, you have the KOL (key opinion leader), who maybe a social media / internet star. He usually has a strong fan base and is following my opinion leaders. These opinion leaders are people who have an expertise in a specific field: photographs, journalists, book authors, and any other position involving a sufficient amount of followers. They usually follow key opinion leaders to gain more insights about their industry.

leehom

One of Coach online campaigns actually included a star. WeChat Coach fans had to type “Modern New Yorker” (in Chinese :摩登纽约客) in order to receive the nine pieces of a LeeHom puzzle on WeiBo. After having received the puzzle, the follower had a chance finally to win an officially signed Lee Hom poster.  

wuyifna

You also have Burberry who collaborated with Wu YiFan, a Chinese star model for their last men collection to share some VIP content on Weibo. This obviously attracted a lot of attention from Chinese users. Sell your luxury products online …

According to McKinsey, a management consulting agency, e-commerce sales in China are expected to reach US$610 billion by 2018. Needless to say, the next opportunity for growth in China is not in physical stores anymore but online.

tmall

Luxury brands have long been wary of doing business online. The many fake stores and counterfeit issues on Alibaba didn’t ease the issue. According to L2 agency, 35% luxury brands has an online store on either their website, Tmall or JD. Tmall and JD are the biggest BtoC e-commerce platforms in China. Tmall is part of Alibaba, Jack Ma’s group.

For burberry, online sales are the next opportunities in China and they expect that Chinese e-commerce will account for about 40% of their revenue by 2019. You can see below Burberry Tmall store.

As you can see from this article, luxury brands can’t just rely on Chinese tourists and physicla shops anymore. The more your luxury brand is present online through social media, KOL’s/stars and e-commerce, the more your brand will thrive in the Chinese market …

Further reading:

EP#23: How To Penetrate the Chinese Market with Olivier Verot