By: Domenica Di Lieto, Founder and CEO, Emerging Communications
Golden Week in China (1 to 7 October) comes at a time when Western brands need to make major decisions about their futures. The rising wave of favouritism towards indigenous producers known as ‘Quochao’, comes on top of an already difficult situation for most European and US marketers, but there are solutions if there is a will to change strategy.
The growth of Chinese domestic brands is not new, but the scale of it is. The once favoured position of coming from Europe or US does not now exist. It is becoming a disadvantage as consumer sentiment moves to home grown. It means brands from outside have to change their approach to one based on more understanding of the markets they operate in. With help, this is a far from unsurmountable challenge.
Identifying the challenges
Brands owners from outside China have, to a large degree, brought problems upon themselves. Marketing has been a major blind spot in sticking with the central proposition of the brand as the hero communication. It still works in other markets, but unquestionably not in China. Consumers are not interested in a product positioned as being more important than they are. They are interested in what it can do for them, how it will reinforce their values, and support how they perceive themselves.
Nearly all marketers from the US and Europe have to learn to let go of what they know from home. The persistence in pushing flawed strategy is frequently enhanced by the hiring of global advertising agency groups that have offices in China, but rotate senior managers in from their home country. The outcome is the reinforcing of mistaken thinking.
A symptom of the problem is the view that localisation of brands can be found by working with premier social media influencers (Key Opinion Leaders – KOLs), and high profile celebrities. The costs involved are very high, the connections created with buyers are often tenuous and short lived, and the association with well known personalities comes with the risk of the increasing number of high profile personal scandals, and other challenges.
Using KOLs is, however, convenient. You throw money at getting instant followers through a third party individual, and you have a guaranteed route to sales. To some degree it works, but it is clumsy, and the brand connection with buyers is forced. Chinese consumers are marketing savvy, and are very aware KOLs and celebrities sell audience reach. Influencer marketing of this type is equivalent to mass marketing, and Chinese brands that universally outperform Western marketing departments rarely use it.
Chinese brands frequently opt for small follower influencers, in particular Key Opinion Consumers (KOCs), that create resonating communication, and generate high rates of peer to peer recommendation. KOCs enable impressive, and sustained results, but are generally not an option for Western companies that lack inhouse capability to identify and manage KOCs, and the same applies to their global agencies. There are independent agencies that have specialism in KOC activation, and they are something brands should be seriously considering.
Covid made what was a negative situation for European and US brands significantly worse. They struggled to identify a response in China, while local brands reacted dynamically by quickly identifying and adopted new ways to sell. From comparatively little use, live stream sales accounted for £110 billion in sales last year, according to KPMG.
Some consumer sectors, such as skincare and beauty, recorded their highest ever sales during China’s lockdown. Social media engagement rates were enormous as most Western brands looked on uninvolved. Some even lost control of ownership status to individual members of the public that were recognised as official brand representatives on key luxury and lifestyle social platform, Little Red Book.
Chinese marketers were able to accurately understand the mood of the market, what consumers would respond to, and subsequently increase market share. It added more drive to their ascendency.
And now we have quochao. Quochao is a development that has changed ‘Made in China’ to ‘Designed in China’. It is not focused on patriotism, but there is an element of it. It is the recognition that China now designs and produces high quality products. Manufacturers use these attributes of culture and nostalgia. The message is powerful and effective.
Quochao requires a radical response from Western brands. Relevance and loyalty was already fast slipping due to brand as the hero policy, and inertia during Covid. Major action is needed. There is a solution.
The solution to brand problems in China
The primary response should be to gain more effective and objective insight on the situation a brand finds itself in. A clear view of the market from a Chinese context is necessary. This should be obtained by practitioners that directly relate to the look, feel and mood of the market, as well as having brand strategy perspective. This is frequently what brands lack, and a major reason why Chinese companies have such a big advantage.
Appointing expertise with both planning and ground level understanding enables the building of marketing narratives that resonate with target audiences.
In addition, social listening should be employed. It is a quick and cost effective way to understand what the marketplace is saying. Its use is standard practice for Chinese companies in undertaking continuous learning, and it enables them to consistently stay ahead of Western rivals.
Social listening tracks what is being said about a brand, what is being bought when how and why, resistance points, intentions to buy, and views on rivals. This is important information that can be quickly collated to assist in turning brand fortunes around.
There is another important component that brands must factor in. It is agility. The fast eat the slow in China. At no time was this better illustrated than at the height of Covid. Chinese markets are volatile and contrary, highly marketing aware and tribal. New media platforms constantly emerge, and can become popular overnight. Major change can be daily. Brands should not be ready for change as something to mitigate against – they should be enthusiastic about it, ready to lead and embrace it to seize new opportunities.
A major part of modern Far Eastern culture is about constantly seeking improvement. It means being capable of pivoting at short notice, and it can be helpful to appoint Chinese senior managers, or consultants in advisory positions to help with this. But there must be the will to want change.
Success when first launching in China comes from forgetting everything learned from other markets, and starting with a blank sheet. A retrace to this point by companies already in country is not realistic, so there is a need to work with third parties that have genuine experience of producing successful campaigns based on truly understanding how to create consumer engagement.
Big budget marketing is not the answer, but being smart is. It is about the will to change direction, and find the right partner that really understands China.
