Nowadays, almost every aspect of Chinese people’s life is linked to digital devices. Millennials and Gen Z are more than ever driving China’s growth in terms of innovations and digital trends. Surfing on this tendency, luxury brands are trying to integrate AI tools both in their offline and online stores. By providing seamless and personalized experiences to their consumers, luxury brands intend to stand out amongst their competitors and attract a wide audience. However, at the same time, it seems that this tech-savvy population will be more demanding in terms of innovation and fluidity when it comes to AI.
How Digitalization Has Reshaped the Chinese Society?
While the reputation of luxury brands in China was heavily dependent on face-to-face customer services a few years ago, the digitalization of the Chinese market, as well as the rising use of social media, has greatly reshaped the way of selling, promoting, and advertising luxury brands. Chinese customers are not only looking for a unique experience in brick-and-mortar stores, but they also expect to have the same online.
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The rising use of electronic devices
As you probably already know, the younger generation is a digital native. However, if there is one country that is more advanced technologically speaking, it is China. We can say that digital is at the core of Chinese society with the rising use of smartphones and other electronic devices. You have to consider that their daily life is totally digital based with apps like WeChat and Weibo, e-commerce platforms like Tmall and JD.com, online forums like Zhihu, etc.
The daily life of Chinese consumers and the consequences of the Covid-19 pandemic
In recent years, many luxury brands have seized the opportunity of the Chinese market to implement beauty try-on tools on their website, e-commerce platforms, mini-programs running through WeChat, or via other various apps.
With brick-and-mortar stores closed during the Covid-19 pandemic in China, AI tools have bolstered in popularity among the biggest international luxury brands by allowing consumers to instantly try on products such as cosmetics, directly on their app or via their website.
Chinese E-commerce websites
When we think about the Chinese market a dozen of years ago, it’s unbelievable to see how digitalization has reshaped the way of consumption in China. Thanks to entrepreneurs like Jack Ma, the founder of the biggest e-commerce platform Alibaba, digital innovations were made possible. The growth of Alibaba for example contributed to the rising use of e-commerce websites such as Tmall, JD.com and Pinduoduo. Over the years, these platforms were able to adapt their marketing strategies according to Chinese consumers’ taste, as well as situations like the Covid-19 pandemic. For example, many companies were able to launch their online stores using VR (Virtual Reality). What was considered impossible at the beginning of the century is now more accessible than ever.
AI: A powerful innovation for China
Since 2006, China has steadily developed a national industrial policy agenda, crossing an important threshold in 2010 with the implementation of the Strategic Emerging Industries program. And over the years, thanks to its bold initiatives in terms of technology, China is poised to dominate the tough but highly promising Artificial Intelligence market.
What is AI?
Artificial intelligence, often referred to as AI, enables computers and machines to mimic the perception, learning, problem-solving, and decision-making capabilities of the human mind. This technology is not only able to learn from examples and experience, make decisions, and solve problems, but also to realize tasks that were only possible in futuristic movies. What was considered unreachable a few years ago is now at the core of innovations. One of the major uses of the AI technology is our daily life is on apps and websites.
- If you want to know more about AI in China, you can read our full article: The Artificial Intelligence Industry in China
Since Chinese society was digitalized, an unprecedented amount of data has been unleashed. Every time you touch electronic devices such as laptops or mobile phones, a certain type of data will be recorded. Therefore, companies can collect gigantic data quantities from our online behaviors.
Big Data refers to extremely large and diverse data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions. The major asset of big data is the possibility to have access to various insights and processes in terms of products and services, in order to analyze them. A well-detailed big data analytics can reduce the cost, the time and increase your productivity and efficiency.
Chinese consumers’ perception of AI
Unlike the majority of Westerners, Chinese consumers are not that worried about artificial intelligence nor the fact that their personal data and privacy might be kept online. Not only will this be beneficial for you in terms of innovation, but it will contribute to your success in the AI luxury industry.
The AI industry in China
As stated before, China is one of the most advanced countries in the world in terms of Artificial Intelligence. Thus, the AI industry in China is in constant evolution in many fields, from the medical industry to the cosmetic industry.
Using AI technology is almost considered mandatory for luxury brands that want to enter the Chinese market.
AI for Luxury Brands in China
One of the most important issues that luxury brands have to deal with nowadays, is to differentiate their brand from competitors as well as to attract millennials and Gen Z consumers. Conscious that AI can be a game-changer, luxury brands tend to incorporate as much AI as possible to offer a unique user experience in order to attract the younger generation. In fact, AI is a way to generate precise insights in real-time in order to enhance users’ experiences. However, using AI tools doesn’t mean that you will succeed, because even if you implement AI tools on your website or your app, for example, you will also have to take into account that it also has to work on WeChat.
Thanks to technology, AI has greatly contributed to reshape retail stores, allowing users to try on clothes virtually, fill a virtual cart that will then be delivered to their home, or pay via facial recognition without going to a checkout counter. In that way, consumers are able to see themselves “wearing” the desired garments without having to try them on.
How Can Luxury Brands Harness AI Tools?
- Gaining a deeper understanding of your brand’s perception
As you already know, millennials and Gen Z are those who are inclined to use AI tools on a daily basis. Thus, AI will help you collect and analyze all the data available about your brand and consumers’ habits. Then you will be able the links, relationships, interactions and patterns about the perception people have on your products and on your brand.
From such insights, marketers gain precise data of how the brand is perceived, for example, by target groups, regions, gender, age-clusters, buyers, etc. This map allows you to truly understand how customers feel about your brand and then develop precise strategies to strengthen your brand.
- Getting to know your audience
AI tools allow marketers to have a deeper knowledge of their consumers and potential clients, enabling them to deliver the right message, to the right person, at the right time. Thanks to AI, marketers can use the profile’s data to refine marketing campaigns and create highly personalized content.
- Personalizing Consumers’ Shopping Experience:
When looking for luxury goods, shoppers want to have a seamless and personalized shopping experience. That is particularly the case with Millennials and Gen Z consumers who now expect their flawless in-store experience to be replicated online.
AI can help you adapt your product suggestions according to customers’ information (browsing behaviours, transaction history, interactions with brands offline…). More than 74% of the Chinese consumers are more likely to buy a product that has been customized especially for them, so AI can be a way to increase your sales as well as to bring you closer to your consumers.
- Improving Customers’ Service
Did you know that more than 33% of millennials are only willing to wait 1-3 minutes for a brand’s answer? This means that customer service is becoming more important than ever for luxury brands that have to be irreproachable. AI is indeed already part of customer’s service, allowing brands to instantly reply to consumers according to predefinite questions and answers, by using chatbots and image recognition for example. By doing this, customers will be more satisfied with your services and will be more inclined to purchase products in your online store again.
- Optimizing Digital Advertising Campaigns
Even though there are various ways to optimize your digital advertising, such as using social media, AI can help you analyze the market and plan your marketing strategy according to your consumers’ needs. Using AI, you will be able to analyze the data of search engines’ popular keywords, information about your competitors, the trends, etc.
How do luxury brands use AI in China?
Luxury brands can use AR to supplement their shopping experiences by letting customers have a virtual try on, which is especially appreciated in a period of a pandemic. Moreover, it is even more common for Chinese consumers to directly download a mini-program through WeChat and use AI to try on cosmetics, jewelries, glasses, etc.
Also, one of the major uses of AI for luxury brands are chatbots, which are extremely useful when it comes to enhancing interactions with clients. Salesforce is indeed a key part of any marketing strategy, so using chatbots can be cheaper and more efficient than traditional communication. The more your chatbots will answer questions from consumers, the more it learns about their habits enabling them to provide more detailed and precise answers over time.
- Read our China Luxury Market Guide
Contact us & start integrating AI into your Chinese Marketing Strategy
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Over the years we have helped several luxury brands to successfully enter China’s digital platforms.