Have you ever wondered what is the secret of a good localization strategy in China? For those who do not know, localization is the process in which a brand/company adapts to the local culture, from translation to products, to how it markets a product, etc.
That is why, for example, McDonald’s menus are different from one country to another. In a big country like China, which has an ancestral culture and long history, it can be quite tricky to please the crowds.
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You will have to find a balance between embracing the values of the country while keeping the identity of your brand.
In this article, we will explain to you the secrets behind a good localization strategy.
The luxury market in China in 2020
Luxury brands cannot succeed in China without a good localization strategy.
The luxury market in China is particularly interesting. Not only for the cultural characteristics that influence consumer behavior but also for the purely economic aspect in which they are reflected.
Estimates say that by 2025 there will be a scenario in which:
- The value of the luxury market in China will be worth 160 billion euros;
- Chinese luxury purchases will account for 40% of world purchases;
- Chinese online spending for luxury purchases will amount to 19 billion
These data can be confirmed thanks to the growth of the upper-middle class, which will reach 350 million people. This means that more people will be able to afford the purchase of a luxury product in China.
Step 1: To Localize in China start with a Website in Chinese
To be visible on the Chinese market, your luxury brand needs to build a website that follows Chinese Ux rules. Your website must:
- Have a Chinese domain to rank in a good position;
- Be hosted in China. A website hosted by a Chinese provider has a better chance of being optimized. It is also a fundamental requirement to allow Chinese users to reach a site in a reasonable time since requests to foreign servers are slowed down by censorship;
- Use simplified Chinese because Baidu, Chinese most used search engine, doesn’t recognize the English content;
- Use all the several platforms that Baidu offers for SEM businesses, including Baidu Tuiguang, Baidu Bridge, Baidu Display, PPC, and Baidu Brand Zone. All tools are specialized in sponsoring content on the home page of the search engine or on affiliated sites;
- Be visible from mobile phones;
- Contain localized content that follows Chinese tastes. For example, Chinese people love websites with a huge quantity of information, with an eccentric and colored layout, and with extra functions that capture the attention of Chinese consumers.
The success of a marketing strategy is deeply connected with a brand/ company’s ability to understand its target audience.
Step 2: To localize in China Luxury Brands need to study their target audience
Chinese millennials drive the demand for luxury goods in China
Millennials are the driver of the luxury market in China. The generations born after the 80s / 90s drive the Chinese market. People born after the 1980s, commonly called Generation Y, are about 10.2 million and represented more than half of Chinese consumers in 2019.
They spend an average of 41,000 RMB (US $ 5789.57) per person annually on luxury goods. They are the prime beneficiaries of China’s unbridled growth.
Following is the generation born after the 90s, known as Generation Z. Attracted by luxury streetwear, they spend around 25,000 RMB (US $ 3,530.22) a year on luxury goods, almost as much as their parents, known as Generation X.
Chinese millennials have some characteristics that make them completely different from the rest of the Chinese population. They are well-educated, open-minded, and very spendthrift; they are not afraid of accumulating debts. They are more than 400 million and makeup about 31% of the Chinese population. They are digital natives, without cash: all Chinese millennials have a smartphone, which is used to send messages, share content on social media, shop online and pay any what (from a taxi to a vacation).
Chinese Millennials are more ready to buy niche and new brands
Chinese millennial consumers have different attitudes toward luxury goods. Luxury goods to them are a way of connecting with the latest trends and networking with other people with similar tastes.
This means that they are more willing to try out more niche brands than familiar brands. The main point is not the brand name or the pricing, but rather the opportunity to be “cool”. This trend is a major problem for many of the big luxury brands that relied just on prestige and exclusivity for their products. To attract Chinese millennial consumers it is essential to understand their tastes and to make them feel unique.
Step 3: Convenience is the keyword to remember when selling luxury in China
They are accustomed to buying products on-line. One of the main trends in the luxury sector in China is Live-streaming. The number of users using live streaming in China was 477 million in 2019. This year it has reached 613 million. Live streaming means the real-time recording and transmission of audio and video content to a viewer. The host of the live streaming can be a KOL (Key Opinion Leader), a KOC (Key Opinion Consumer), or even a simple user.
KOLs are the Chinese web celebrities, while KOCs are those consumers who have great proximity to their following on social media and greater engagement with it than KOLs. In China, live-streaming is also used a lot in terms of online sales: the so-called live-commerce. While watching a live stream, Chinese users can inquire about a product and buy it on the spot, without changing the App. This real-time purchase is promoted by the “See now, buy now” concept used by many brands to increase sales.
Step 4: Use Chinese e-commerce platforms to sell your luxury products
Xiaohongshu High-end and Luxury Products
Xiaohongshu is a social commerce that it’s really interesting for the luxury sector. It is a mix of Instagram, Pinterest, and Amazon. It is based on a “content-driven” model, which gives great importance to content. It was born as a shopping guide. It mainly attracts consumers who reward quality and authenticity.
Posts and comments would like to educate the user on a specific product more than merely advertising it. Chinese consumers have a lot of trust in social media concerning product recommendations.
There are six types of posts:
- tutorials (how to use a product),
- comparison (differences between a product and another),
- before/after (pictures of before and after and explanation on how to obtain the result),
- story (the Kol tells a personal story that can educate the user),
- guide (a wish list of the products the Kol wants to buy),
- try-on (pictures and comments on a dress the Kol is trying on in the fitting room of a shop).
Tmall Luxury Pavilion: Luxury Brand Should not Be afraid of Ecommerce in China
Tmall, one of the biggest e-commerce platform in China in 2017 launched the Luxury Pavilion, an app which currently hosts 28 brands. For luxury companies, the presence in the Luxury Pavilion, in fact, is primarily a communication channel with a very different target from that to which they are used to in Europe. Chinese consumers spend an average of 90,000 RMB per year, about 15,000 euros, on Tmall.
Young Chinese people are looking for high-quality products, famous brands but also niche companies. The Luxury Pavilion is a precious tool for luxury brands not only to communicate with the current consumer but above all to understand what the buyers of tomorrow will be like.
Step 5: Little details can make a big difference when localizing in China
In China, even a small mistake can cost you a lot. If you lose your reputation, it will not be easy to reconquer Chinese consumers’ trust.
If you use the wrong concept for an ad/product, at best it’s a fail and your product does not sell well, at worst it ruin your reputation for good. We all have in mind the Dolce & Gabbana Pizza eating clip.
In order to mistakes like the one of Dolce & Gabbana, it is important to collaborate with agencies like Gma that have deep knowledge and experience of the Chinese market.
Consult Gma to discuss the localization strategy for your luxury brand in China!
Gentlemen Marketing Agency is a Digital Marketing Agency that is expert in helping foreign companies to establish or strengthen their position in China. We are a growing team of 75 marketers with a passion for China and digital marketing.
We can help your luxury brands enter the Chinese market, contact us to discuss it further!
Read more about China’s luxury market:
- Post Crisis Luxury Brand Strategies in China
- How to lure Chinese High-Net-Worth-Individuals?
- Is there opportunities left for new coming luxury brands in China?