China is the world’s second-largest luxury market thanks to a rising middle class and many high-net-worth individuals (HNWIs) with huge disposable incomes. According to a recent Morgan Stanley report, Chinese consumers will make up 60% of total global spending growth on luxury items by 2030. In fact, mainland Chinese buyers will boost demand for luxury items by 20% in 2023 alone.

Much of this growth is being driven by digital platforms, which are not just being used as shopping channels but also for content-based product information. Among these platforms is Alibaba’s Tmall Luxury Pavilion, which hosts 200 premium and luxury names from around the world and uses the latest technology – including AR, VR and live streaming – to engage Chinese luxury consumers.

According to the latest data from Tmall Luxury Pavilion, more than 80 million people with a strong interest in luxury goods browsed, collected or purchased more than 10 times on the Taobao App over the last year.

The importance of Tmall Luxury Pavilion was underscored recently when its general manager, Janet Wang, was inducted into the Business of Fashion 500, an influential list of the people shaping the global fashion industry.

Wang has led Tmall Luxury Pavilion since 2021 and has spearheaded a range of cutting-edge initiatives, including live streaming new season fashion shows from New York, London, Milan and Paris, and launching Tmall Luxury Pavilion’s first immersive offline art exhibition, New and Beyond, in Shanghai. Tickets to the exhibition were distributed for free through gamified interactions on Taobao, and visitors could experience various blended online-offline interactions on-site such as the virtual try-on of clothes, as well as receive digital collections.

As Wang told BoF in 2022, brands in China should view platforms like Tmall Luxury Pavilion – including social commerce platforms like Douyin and Xiaohongshu (RED) – as more than just sales channels. Instead, they should take advantage of the technological tools and consumer interactivity the platforms offer to gather insights and use them to shape their strategies in China.

The post Why brands in China should pay attention to Tmall Luxury Pavilion appeared first on Focus - China Britain Business Council.

China has the largest population of digital buyers in the world – 780 million people in 2021 – and the e-commerce market is projected to reach $3 trillion in 2024. That’s a huge market, but it’s also a market with an entirely different landscape from the Western world. As a result, many brands and businesses find it difficult to navigate the Chinese e-commerce landscape due to budget and resource constraints, and most of all, a lack of local knowledge.

If you are operating an e-commerce website in Europe, it’s likely that you have some cross-border orders from China already, so may be considering creating a ‘.cn’ website as a next step. However, particularly as an SME, it is prudent to be mindful of the commitment required to create a website infrastructure in China (including tackling the firewall issue) and engage with local logistics. Most importantly, however, Chinese customers are much more accustomed to shopping from giant e-commerce platforms or social e-commerce, rather than individual brand websites.

The e-commerce giants

Tmall
Tmall Global is China’s largest cross-border B2C digital marketplace, enabling brands without operations in China to create virtual storefronts and ship products into China. Tmall Global offers one-stop solutions for inventory and logistics management, providing options such as bonded warehouses and consolidated shipping from overseas, with Tmall Partners (certified third-party operators) managing the business locally and providing customer support. Some companies use Tmall Global as a stepping stone before committing to a store on domestic brand-focused platform Tmall for more established brands.

JD
JD runs a substantially different business model to Tmall Global as it takes ownership of merchandise sold and is directly responsible to customers for product quality, authenticity, and any after-sales service. JD has its own logistics system, with a vast network of distribution stations and warehouses to fulfil orders quickly. Traditionally known for consumer electronics, the platform has also built up a luxury fashion portfolio in recent years.

However, working with the above platforms comes with cost implications and reduced control over your brand, something that not every business is ready for. Other challenges include gaining and maintaining visibility on a competitive platform and building brand equity in a sales-driven environment.

Social commerce platforms

For SMEs, social commerce platforms can be an effective way of establishing roots in China whilst providing more brand control and ways of building brand equity.

WeChat Mini-Programs
Hosted within Tencent super app WeChat (which has 1.15 billion monthly active users), WeChat mini-programs boast 400 million active users and facilitate one-to-one communication with consumers. They create a powerful platform with multiple features beyond pure e-commerce. Being within the WeChat ecosystem is a distinct advantage, and as such, it is suitable for brands that prefer more autonomy in terms of CRM, CMS, and content marketing.

Xiaohongshu (aka RED)
Popular with Gen Z and millennials, particularly young women, Xiaohongshu (RED) is an important platform for consumers to discover information about trending topics and brands, particularly in the fashion and beauty fields – effectively a search engine. This is also a platform seeing a strong market value for KOLs/KOCs, which brands can work with for product trials and reviews if they have an official account.

Douyin
Owned by ByteDance, Douyin is one of the fastest-growing social media platforms and is primarily focused on short video sharing (it’s China’s version of TikTok). For brands who are ready to connect with Gen Z and ready to invest in video content, creating a Douyin Store enables a seamless online experience from product discovery via videos to landing on in-app shopping pages.

Other platforms including Weibo and Bilibili also have e-commerce functions. These social platforms are touchpoints to build market awareness and engage with potential customers. As a result, social and marketing strategies should be considered in tandem with e-commerce capabilities if you are looking to build a sustainable brand presence in China.

Case study: Emma Bridgewater

Emma Bridgewater is a handmade and hand-painted homeware brand from the UK. It has an e-commerce store on Tmall Global supported by a social media presence on WeChat, Weibo and RED. It has no physical stores in China.

Challenge: Maintaining engagement with Chinese consumers during Covid-19 lockdowns as a niche brand entering the Chinese market through Tmall.

Approach: Give consumers a way to feel good and have fun at home with Emma Bridgewater products during lockdown through a marketing campaign, driving purchases on Tmall.

Making it happen: Launched a product giveaway on Weibo and RED with the message that even though you’re at home you can still feel ‘lucky’. Built affinity with followers by sharing relatable content and positive messaging through creative campaigns.

Results: 122% increase in followers across three social platforms during the campaign. Emma Bridgewater launched on Tmall in 2019 as part of an international strategic growth plan. Sales have reached 10% more than the forecasted figures for the past financial year, and there has been 49% growth compared to 2020. More than 20,000 mugs have been sold in China so far.

Case study: Estée Lauder

Estée Lauder is an international company with a diverse portfolio of makeup, skincare and fragrance brands. In addition to physical outlets in China, Estée Lauder operates e-commerce through Tmall and WeChat Mini-Programs, supported by social media marketing on WeChat, Weibo, RED and Douyin.

Challenge: Attracting the audience’s attention during one of the biggest shopping events (Singles’ Day) and stand out from other promotional activities in the market.

Approach: Use tier-one KOLs to connect with audiences.

Making it happen: Engaged KOL Li Jiaqi (China’s ‘Lipstick King’) for live streaming activities and actor Xiao Zhan for the promotion of ANR Eye Cream. Used strategic paid media to amplify social campaigns.

Results:

• $70 million in transactions
• More than 8.9 million core products sold in one hour
• 15,000 lipsticks sold in five minutes by influencer Li Jiaqi
• 400,000 units of eye cream sold out in 36 minutes

Reading about e-commerce in China can leave you with more questions than answers, and that’s perfectly normal – navigating e-commerce in China is a huge task and the case for each company is unique. The challenges of local operations, Chinese content production and the cultural gap mean that you should be sure to do effective research before you enter the market.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can further help you identify the best e-commerce platform for your brand and target market in China.

The post How to sell in China: E-commerce platform or branded website? appeared first on Focus - China Britain Business Council.

When British electrotherapy device maker TensCare joined Tmall Global in 2018, they were well aware of the potential boost success in China could give to their business. Founded in 1994, TensCare is one of Europe’s largest manufacturers and distributors of transcutaneous electrical nerve stimulation (TENS) machines, a method of drug-free pain relief that uses mild electric currents to reduce pain signals. Another major area for TensCare, and one in which they have extensive expertise, is pelvic floor exercisers for continence management. In recent years, the company has branched out into aesthetic devices, for example, using light therapy to improve the appearance of acne.

Just four years on from their Tmall Global launch, China represents over 30% of TensCare’s business. Managing director Neil Wright spoke to FOCUS about TensCare’s rapid growth and how other SMEs should approach their China e-commerce strategy.

Get on the ground in China

As soon as TensCare made the conscious decision to enter the China market, they hired a native Mandarin speaker on the ground in China so they could start building a relationship with their trade partner and make sure that nothing was “lost in translation,” as Neil summarises. As a result, that strong partnership gave them access to actionable insights and market research that they used to tailor their product offering in China. Since they launched on Tmall Global, they have now opened an office in Shenzhen and employed a regional sales manager too.

Identify your strengths but remain flexible

TensCare is best known in the UK for pain management and postpartum recovery devices. They know their customer and their customer knows them. TensCare has a “… heritage of talking to mums and talking to mums at an important time of their life,” Neil says. Their previous market research found that 100% of mums who used their post-partum products remember the product and where they had bought it. 

In China, although their target customer is the same, their product offering is different. On the basis of Tmall Global’s consumer analytics, which showed that new mums in China were concerned about recovering their appearance after giving birth, they switched the spotlight to aesthetic-focused devices, a product category they had only recently introduced in the UK market. Their best-selling product in China is now the Beauty Max, an electro-muscle stimulation device for the face that reduces the appearance of fine lines and wrinkles. “The beauty side of our business was very much a niche product that has become one of our best-selling products.”

Neil’s number one piece of advice is to remain adaptable. That does not necessarily mean creating new products for the China market, but rather finding ways to adapt existing products and strategies based on local insights

TensCare’s Beauty Max on sale on Tmall Global during the 618 shopping festival in mid-June

Showcase your expertise

Smaller companies can be intimidated by the sheer scope of the Chinese market, but as Neil points out, a lack of awareness of foreign brand names means that “even the big players are small players.” Size is less relevant than brand heritage and expertise, and TensCare’s 25-year history and extensive research into how and why people use their products has been a boon in that regard.

To make sure that Chinese consumers understand the brand’s products and technology, TensCare works closely with influencers in the maternity and health and beauty sectors, as well as Alibaba’s live streaming tools and other social media to create engaging, educational content. Neil points to their relationship with their local partner being helpful in this area as well, especially when it came to translating the tricky technical — and often highly personal — functions of products such as the pelvic floor exerciser.

As many companies will no doubt already be aware, it pays to stay plugged into new trends in the e-commerce market, as well as the shopping festival calendar, such as Single’s Day or 11.11. “That’s when we look to key product launches or major promotional activities,” Neil says. During the Single’s Day shopping festival, the company introduced gift packaging, as shifting to the aesthetic device market allowed them space for giftable elements. However, normalising the conversation around their pelvic floor devices via live streams and KOL-led videos has also meant they have been able to create gift packaging and gift sets around those products. 

Adapt, adapt, adapt

Neil’s number one piece of advice for UK consumer goods makers looking to try e-commerce in China is to remain adaptable. That does not necessarily mean creating new products for the China market, but rather finding ways to adapt existing products and strategies based on local insights. “Give it [the China market] a go, be adaptable, and be ready to scale up.”

The post How to adapt your business for China’s e-commerce market appeared first on Focus - China Britain Business Council.

The post How Tmall’s 11.11 Pitch Fest will help your business this Singles Day appeared first on Focus - China Britain Business Council.