Following the China Consumer Conference Day and CBBC’s Summer Reception – which took place on 4 July at Mayfair’s No.4 Hamilton Place and attracted over 200 delegates – the second day of activities under CBBC’s flagship consumer event generated a lot of buzz, with the exchange of fresh ideas and insights, as well as the generation of tangible next steps for participating UK brands in the China market, high on the agenda.

The event also included an exclusive afternoon private view of ARgENTUM Apothecary and a reception at their London venue

Meet the China Partner

The day kicked off with Meet the China Partner, which was held online as well as at CBBC’s London office, with select China buyers attending in person for the first time since before the pandemic.

Zhu Dan, Business Operations Director, Douyin International, presents at the Meet the China Partner session at CBBC’s London Office

UK Consumer brands interested in meeting some of China’s most successful retailers and distributors of UK consumer products took part in the session, which gave them the opportunity to meet and build relationships with four pre-warmed buyers, with dedicated follow-up support from CBBC included post-event.

Participating importers and distributors included:

Participating digital marketing and e-commerce agencies included:

Participating e-commerce platforms included:

View the full list of Chinese Partners who took part here.

Chinese Influencer Programme

Following the Meet the China Partner session, the Chinese Influencer Programme took place in the afternoon at CBBC’s London office in Westminster.

Held in partnership with Influencer Hub International, in this interactive session, UK Consumer brands in attendance received valuable live feedback on their brand from dynamic London-based Chinese influencers.

Kiltane takes part in The Meet the Influencer session at CBBC’s London Office

The participating Chinese influencers were:

• UKZone: Leading UK-Chinese influencer covering lifestyle, culture and news (total followers on Xiaohongshu & Weibo: 610,000)
• Ms Xiaoji in London: UK news/lifestyle blogger with a significant UK-based Chinese international student audience (total followers on Xiaohongshu, Douyin, Bilibili & WeChat: 400,000)
• Liujie: Multi-industry female entrepreneur, leading lifestyle influencer and high-end lifestyle expert. She is also a pet lover (total followers on Xiaohongshu & Weibo: 74,000)
• Mary: Fashion and cultural influencer with a focus on street interviews (total followers on Xiaohongshu: 15,000)
• Kayla | 29士多店(每日必更！: Shares insights on her lifestyle in the UK and China, as well as tips and information on food and beauty (total followers on Xiaohongshu: 5,700)
• Taoci: High-end lifestyle influencer in the UK, shares work experience insights in the UK. Her followers are mostly interested in UK culture (total followers Xiaohonghsu: 5,600)
• Vickiyu: Shares experiences of her lifestyle in the UK and China, as well as family and home renovation insights (total followers on Xiaohongshu: 3,300)

Each of the participating influencers brought their own unique perspective to the event, with expertise in areas ranging from fashion and lifestyle to food and drink to beauty. Each of the influencers has an impressive follower count and presence across key Chinese social media and social commerce channels, including Xiaohongshu, Bilibili, Douyin (the Chinese version of TikTok), Weibo, Instagram, and WeChat.

UK Consumer brands took advantage of this chance to engage in a live Q&A session with influencers to discuss any queries they have in relation to consumer perceptions, including but not limited to new product launches, packaging, trends, shopping behaviour and market strategies.

The session provided unique and meaningful insights that will help participating brands to make strategic decisions, innovate and grow in the Chinese market going forward.

Following the conclusion of the Influencers Session, guests had the chance to attend an exclusive afternoon private viewing of skincare brand ARgENTUM Apothecary at the brand’s London venue.

Guests mingle at ARgENTUM Apothecary

Guests sampled the brand’s luxury products and enjoyed the chance to hear from Founder & CEO Joy Isaacs on her vision for the brand, as well as her experiences in the Chinese market.

For further enquiries about China Consumer 2023, please email Antoaneta.Becker@cbbc.org or Celine.Tang@cbbc.org

To enquire about membership at CBBC, please email membership@cbbc.org or visit cbbc.org/membership

Click here to learn more about China Consumer 2023

The post China Consumer 2023: UK Consumer Brands Meet Leading China Partners & Influencers appeared first on Focus - China Britain Business Council.

In the run-up to China Consumer 2023, CBBC was thrilled to introduce China Voices. Reflecting the expansive, diverse nature of China and its consumers, our extensive and varied panel of China specialists and UK brands shared their exclusive insights and unique experiences in the China market.

China Voices put our speakers in the spotlight, who shared first-hand advice on how to navigate China’s sophisticated marketplace – from achieving success and satisfying your China consumers’ demands through branding and brand aesthetics, to targeting young consumers, communicating your unique brand identity, and diversifying your retail space through concept stores.

Read on to learn more about our speakers’ views on the China market in 2023 and how brands can make the most of the opportunities on offer:

“Borders are finally open in China, which has caused a tremendous push for companies to green light their China projects. If you have the ability, then travel to China and see how it has changed, what is the energy and the vibe.

One of the most powerful tools to be successful in China is knowledge. You must educate yourself on current information. Being on the ground in China will help you to get up to date with the current trends and will help formulate your China strategy.

Speak to as many people as possible and gather your intel in the form of stats, research and trends. This information and knowledge will shape your business’ future in China and help you to make the right decisions for your company.”

Kristina Koehler-Coluccia, Head of Business Advisory, Woodburn Accountants & Advisors

“China is leading a wave of digitalisation and product innovation. A million new ideas and trends can happen in a short period of time.

Embrace the change. And it’s okay if you can’t predict it because the greatest ideas originate from somewhere unknown. To make it happen, place trust in your business partners in China while remaining steadfast in upholding your brand’s core values.

That’s how Molton Brown has carried out its strategy, and we will continue to do this in the future.”

Ada Yang, Senior Market Manager of China, Molton Brown

“China is a long-term commitment, and it goes without saying, you need to fully research the landscape. Make sure that you differentiate your service and vision as there is a lot of competition in the market.

Consider and respect the nuances of the Chinese culture. Take time to understand the different demographics and the end consumers. This will require an agile approach.

Build strong and trusted relationships within China (on the ground) to facilitate the project and who can advise you on local regulations.”

Simon Mitchell, Co-Founder, Sybarite

“The Covid-19 pandemic disrupted the global political and economic order. It significantly impacted several sectors, including retail, tourism and hospitality.

Today, we need to learn how to thrive in the post-Covid era. Looking ahead, especially in the beauty retail industry, consumers are coming back to the offline market from online.

Consumers are looking for first-hand experiences and are seeking to connect with the external environment. Offline shopping is indispensable, and it is crucial for new global beauty brands to remember this when planning an omni-channel strategy.”

Grace Cheng, Head of Brand Business Development, Harmay

“Leave your ego at the door and localise your brand in China by understanding this very different ecosystem and the nuances of Chinese consumers.

Build the right, meaningful partnerships that will allow you to flourish long-term. Develop your own team through great commission and performance-based incentives.

Engage with influencers, both KOLs & KOCs from day one, and work with them to localise the best offering for the market.”

Benji Lamb, Director of China & South Asia, Vitabiotics

“Stay at the forefront of Chinese consumer insights and trends to ensure your brands and products remain relevant in this rapidly evolving market.”

Atul Chhaparwal, Managing Director, Diageo Greater China

“Before entering the Chinese market, it is crucial to define your go-to-market strategy. Consider whether you want to explore the market independently, work with trading partners or distributors or explore other business models.

Additionally, evaluate whether your product offers a unique selling proposition (USP) that can stand out in the saturated Chinese market. Remember to approach the Chinese market while being as humble as possible. Despite being a recognised brand in your home country, you will start as an unknown brand in China. Set reasonable targets and adopt a step-by-step approach. Understand that success in China requires long-term investment rather than short-term gains.

Be mindful of the need for innovation and uniqueness to capture Chinese consumers’ attention. Lastly, be prepared for the challenges of building brand recognition and trust, as it takes time to establish yourself in the Chinese market. Approach the market with a long-term perspective, building relationships and adapting your strategy based on market feedback.”

Shlomi Mahfouda, Co-Founder & CEO, Up2China

“For UK consumer brands entering China, prioritising localisation is crucial. Brands need to adopt a “China for China” mindset by understanding consumer preferences, behaviours and regional diversity, whilst building trust and engagement.

However, don’t overlook offline engagement opportunities. Physical interaction is deeply ingrained in human nature. China is reimagining retail, not just revolutionising e-commerce.

Brands already in China are turning physical stores into immersive spaces and creating interactive brand experiences where brand value extends beyond the product. It’s important to find the right balance between understanding and adapting across all consumer touchpoints to succeed in China.”

Natalie Lowe, CEO & Founding Partner, The Orangeblowfish

“Localise your brand, communication, channels, content and partnerships. This is critical in a market that has strong pride in their culture and sophistication in their choices.”

Rachel Daydou, Partner, China Practice Europe, EY Fabernovel 

“Entering China presents remarkable opportunities for UK brands, if they are able to genuinely connect with consumers across multiple touchpoints with local relevance.

First and foremost, products, branding and communication must be tailored to these consumers, reflecting local tastes, heritage and culture.

In addition, a localised digital approach will not only allow your marketing messages to penetrate, but also allow consumers to gain access to your products as they move seamlessly between the realms of social media and online marketplaces. Chinese consumers have a strong appetite for innovative and trending products, so be prepared to invest steadily in R&D.

Finally, to win in China, you need to continually evaluate your consumers, monitor any behavioural shifts to truly understand their needs and adapt your strategy accordingly.”

Liya Zhang, Vice President Marketing, Pernod Ricard Global Travel Retail

“China offers a lucrative market for brands due to its rich culture, tech-savvy consumers and advanced digital ecosystem. To successfully enter this market, brands must visit China to gain a deep understanding of its culture and engage with Chinese consumers directly.

Transparency in brand identity and a USP are crucial, as is maintaining consistency and frequency in social channels to establish brand equity, which requires time and effort. Collaborations with other brands can be beneficial in expanding a brand’s audience and capturing market share.

Building a loyal community and cultivating brand ambassadors are vital for driving growth and amplifying a brand’s voice. Moreover, it is important to involve internal teams in the China journey by exposing them to the market, culture and ecosystems, allowing them to better adapt and contribute to the brand’s success in the Chinese market.”

Ntola Obazee, Trading Director, Emma Bridgewater

“My advice would be for brands to properly do their research on China.

This research can be done either in-house or through a professional consultancy and should answer the following questions: How big is the potential for this product segment? Who are your competitors in market and how well are they doing? What makes them do well/not well? Who are your target consumers? How should you set up your pricing for China? Do you wish to grow your brand in China long-term and how much investment is required?

I do think that research includes coming to China and seeing the country and market for yourself. The China market is a big one but it is also a very competitive one. Success requires long-term nurturing.”

Ran Guo, Director, Consumer Economy China, China-Britain Business Council

“China is a very big and dynamic market. It has huge potential. However, it is also a very competitive one. To enter the market successfully, brands need a clear strategy. UK brands need to budget appropriate investment into the market and have a realistic timeframe.

More importantly, brands need to work with reliable partners who have on-the-ground practice. Today, Chinese customers are pursuing brands that can add value and so UK brands need to think carefully about what they are offering to consumers.”

Jason Cao, Vice President & Founder, Hainan Holdings (GDF) & DutyFreeExpert

“Get your house in order!

You are about to enter one of the world’s largest consumer markets and that means you’re going to need IP, inventory, logistics and a forward-thinking attitude.”

Joy Isaacs, Founder & CEO, ARgENTUM apothecary

“Be aware that China has a very different culture of shopping. It is important that UK brands understand how Chinese consumers receive product information.

From language to payment method to user experience, UK brands need to do more than just sharing information about their online stores.”

Celine Tang, Retail & E-commerce Sector Lead, China-Britain Business Council

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post 15 China experts on how to make the most of the China opportunity appeared first on Focus - China Britain Business Council.

At the Conference, attendees heard from speakers representing leading global companies, who discussed the current trends and future opportunities within the Chinese consumer landscape for British consumer brands.

CBBC’s Chief Executive, Andrew Seaton, introduced the event, saying that it would look at opportunities and challenges in the China market.

“It has been a difficult few years with geopolitical challenges, the conflict in Ukraine and Covid restrictions, but we are now much, much closer to business as usual,” he said. “There is more travel, more flights and a return of the trade fairs and exhibitions that help business.”

Seaton said that there is now greater clarity on the UK’s strategy towards China, quoting James Cleverly, Secretary of State for Foreign, Commonwealth and Development Affairs, who recently said that alongside protecting national security, we need to protect business.

“We want British companies to do business in China just like American, ASEAN and European companies do,” Seaton quoted Cleverly as saying. He went on to say that he hopes to see more UK ministers supporting business in China as now is a good moment to refocus on China.

CBBC’s chief executive Andrew Seaton offered opening remarks at the event

With UK-China trade accounting for £37 billion, China is the UK’s third-largest trading partner. Economic growth is the priority for the UK, and exports are a key driver of growth, with pharmaceuticals, healthcare, vehicles, and fashion among the key export sectors. As other export markets experience difficulty – the Eurozone is hovering around recession, and the US economy is predicting just 1.5% growth – China is essential not only to the economy but also to the 115,000-130,000 UK jobs that trade with China supports.

However, Seaton noted that China is facing challenges with youth unemployment, overcapacity in the property sector, and slowdowns in some areas of manufacturing.

“Are we looking at a post-Covid boom?” he asked. “No, but we are seeing post-Covid recovery,” he said. A predicted 5% growth in the Chinese economy this year would account for a third of all global growth, which would have a huge impact on every other nation. He reminded the audience that Guangdong Province has an economy bigger than Canada, and Jiangsu Province’s economy is bigger than Korea’s. China’s middle class is expected to double to 900 million and its high-income earners to reach 100 million, and by 2035 China is expected to be the world’s biggest economy, creating a huge demand for British goods and services.

The first panel saw speakers from Burberry, Harrods, Fontraine Group and Diageo discuss the experiences of UK brands in China

UK brand experiences in the Chinese market

Antoaneta Becker, CBBC’s Director of Consumer Economy, UK, hosted the first panel of the day, which saw speakers sharing experiences of what Chinese consumers wanted and expected from British brands. “After being away from China for three and a half years, the changes I observed [during a recent visit] were more far-reaching than I expected, and the implications will affect all of us,” she said.

Becker highlighted three main changes:

• Participation: Chinese consumers demand to participate in and co-curate consumer experiences. They are demanding new ways of personal self-expression that set them apart from the crowd.
• Localisation: China Chic is sweeping through China, and “in China, for China” is now a prerequisite for brands to succeed in the Chinese market. An appreciation of Chinese heritage and culture is essential to allow Chinese consumers to relate to the brand.
• Sophistication: Consumers have had time to understand and learn about brands and are now much more sophisticated, with many subcommunities becoming very specific and sophisticated about their requirements from brands.

Atul Chhaparwal, Managing Director of Diageo for Greater China, explained that although the vast majority of drinkers in China prefer the local spirit baijiu, Diageo has seen double-digit growth for Scotch in the last 12 months, making China one of its largest markets. This growth, he explained, was because Diageo has a large portfolio of brands, which allows them to cater to different groups and price brackets. The company also has a strong localisation policy and continually innovates products to appeal to Chinese consumers whilst respecting local culture – such as producing a Forbidden City Limited edition of the famous Johnny Walker Blue Label whisky and creating designs for Chinese festivals, including Lunar New Year.

Sarah Rotherham, CEO of Fontaine Group (which owns the fragrance brand Creed), explained that the first Creed store in China opened in the midst of the pandemic in November 2021. The brand now has 18 stores and aims to make China its third biggest market within three years.

Creed started in 1760, and “that heritage gives people a reason to believe and trust in us,” Rotherham said. However, with the core China consumers aged between 18 and 25, the brand needs to remain relevant and part of the conversation, she said. To do this, they have built a strong local team. “You can’t sit in London and try to understand how to show up in China,” she says. “You need local talent to tell you what’s relevant, what will resonate, and what’s the right tone of voice.”

Creed has also worked on a number of collaborations that showcase the brand’s values, including a collaboration with Chinese rap artist Benzo, embedding the fragrance into one of his songs, and with Chinese art toy ROBBi, in which limited-edition collectables were scented using Creed fragrances and sold along with non-fungible tokens (NFTs).

Creed has also worked with Chinese artists and virtual influencer Ayayi in the metaverse to ensure it remains relevant to its youthful audience. “The innovation that comes out of China enables a China-fronted campaign to be rolled out globally,” Rotherham explains. Creed’s award-winning metaverse campaign garnered a huge amount of global attention and reached an audience of millions within days. It’s important to learn “how to engage and be part of their world without advertising to them,” Rotherham said.

Managing Director of Harrods, Michael Ward, noted that the level of sophistication of Chinese consumers has developed enormously. He said that Britain’s ‘great gift’ is its soft power: “An episode of The Crown or Downton Abbey has more impact than any tradeshow because it represents what is great about Britain.”

Following up on some of Becker’s earlier points, Ward said that “It’s no longer sufficient to simply go and sell products [to China]; you have to give back and show partnership, and it is part of our DNA to do that.”

“Harrods support initiatives where we invest in brands such as Shanghai Fashion Week,” Ward said, educating and building long-term relationships and giving something back. “We have to work with the youth of today to show them the path of tomorrow,” he said. “The fashion schools in Europe are full of Chinese students who want to learn and bring their skills back to China – and we are here to support them.”

British fashion retailer Burberry has 30 years of experience in China, says Josie Zhang, President of Burberry China. During that time, the Burberry team has seen that Chinese consumers are extremely passionate about fashion, socially savvy and eco-conscious. Zhang described how Burberry opened a social retail store in Shenzhen with Tencent that has created a digitally immersive shopping experience, merging online and offline and bringing together the customer journey. This demand for a seamless online-offline experience is only growing and was touched on a number of times throughout the day.

Like other successful British brands, Burberry has also focused on localising its offering by creating special capsule collections and activations for festivals like Chinese Valentine’s Day and Lunar New Year, including launching an avatar with Douyin, called Zaizai, who is dressed in Burberry. This is very appealing to young, tech-savvy consumers, says Zhang.

The second panel saw Hema, Douyin, Harmay, Ushopal and The Orangeblowfish discuss how they incorporate British brands and products in China’s integrated retail and e-commerce space

What can British brands learn from successful Chinese brands?

After hearing about the UK experience, the focus turned to Chinese brands for a panel that explored how the Chinese retail experience and how the evolution from offline to online has created ‘phygital’ spaces – where brands are no longer either bricks and mortar or online; they are both at the same time.

Ran Guo, CBBC’s Director of Consumer Economy, China, explained that China’s e-commerce market is almost the same size as the entire British economy and is only growing. However, offline retail still accounts for 72% of sales, with e-commerce at 20%, live streaming at 7% and cross-border retail at just 1%.

Although Alibaba, which owns Tmall and Taobao, accounts for 51% of e-commerce sales and JD.com makes up a further 20%, that shift is changing as live streaming sales pick up stream, led largely by Douyin. Clothing and daily necessities make up the majority of products sold on e-commerce platforms, while cross-border sales are made up mostly of cosmetics and food supplements, which are subject to stricter regulations in China.

Natalie Lowe, CEO and Founding Partner of The Orangeblowfish, said that the pandemic increased domestic luxury consumption in China, as shoppers restricted from travelling internationally looked to spend more at home. China currently accounts for a third of all global luxury consumers, and by 2030, 60% of all global luxury spending will come from China.

“Luxury brands are trying to make their products more accessible and integrated into their lives,” explained Lowe, using the example of Prada, which opened a store in a local fruit and vegetable market. This not only attracted a new audience but also went viral in the first 5-10 hours of the campaign. Louis Vuitton opened a restaurant in a century-old heritage building in Chengdu, which has enabled it to integrate into the local community, while outdoor equipment brand Arc’teryx designed a pop-up store that sees sunlight filtering through metal trees to create an immersive experience for customers. “Consumers don’t want transactions, they want engagement,” Lowe said.

William Lau, CEO of Chinese cosmetics company Bonnie & Clyde, described the journey of their average customer: first, they go to the shop and find a product, then they read reviews of said product on Xiaohongshu, and then they check prices on Taobao, where they will probably buy it.

This, Lau said, isn’t a problem as his parent company, Ushopal, covers all elements of the digital purchasing experience, and nothing is lost to third parties. “The shop is a touch point where customers can see and experience the brand, not just a place that has shelves of product,” he says. Previously with offline sales, it was essential that sales were converted in-store, but today, he argued, stores are about experiencing the product and building a relationship between customer and product.

Grace Cheng, Head of Brand Business Development for multi-brand beauty product store Harmay, said that Harmay is a disruptor and different from traditional retailers as with more than 400 brands and 10,000 SKUs, they focus on variety and efficiency. Harmay houses its stores in heritage buildings, integrating new brands with traditional culture and doesn’t differentiate between domestic and foreign brands. “We only care about quality and whether it will bring enough to consumers,” she said. Harmay focuses on physical stores because “offline allows consumers to experience new products.” Nevertheless, when they shop in these offline stores, customers are rapidly converted onto the company’s CRM programmes, which include over 2,000 private WeChat communities and sales delivered by Meituan to ensure products are with customers within 30 minutes.

Jerry Ji, General Manager of Public Affairs for Shanghai at Hema, said that 30% of their business is online. “So why do we spend so much on offline? Because this is where consumers can come to experience the products. It is a place for Chinese consumers to see, touch and taste products; they might buy one item and then order online for further sales,” he explained.

Live streaming platform Douyin, which launched in 2016 and now has over 600 million daily users, is disrupting China’s e-commerce landscape, becoming the main e-commerce platform where entertainment meets commerce. “Douyin has made it easier and more fun to shop and connect with people and create content,” said Zhu Dan, Business Operations Director, Douyin International. “We have disrupted the consumer journey. The consumer’s decision-making process is very fast. From content to checkout – it happens in a snap.” With an incredible 80% year-on-year growth for e-commerce, it is clear to see that this strategy is working for Douyin.

Zhu Dan said that it is important that brands have a clear position and a clear target audience to succeed on Douyin. Of course, the quality of content and the use of key opinion leaders (KOLs) are also valuable. She references a video by an Australian hair care brand that resulted in three million product sales and said that brands, including Dermalogica, are increasingly becoming more sophisticated at in-house live streaming that has clear targeting and a defined audience.

The China Consumer 2023 audience enjoyed insights from a wide range of speakers

Into the Chinaverse

As a leader in global technology, China is creating groundbreaking methods to reach consumers through both online and offline means. The third session of the event discussed the “Chinaverse”, which was defined by the panel speakers as a space for innovation in retail and consumer engagement which includes Web 3 iterations but also phygital (retail) and brand collaborations. The speakers also discussed how the Metaverse in China differs from iterations being applied in the rest of the world.

Rachel Daydou, a Partner at EY Fabernovel, recently published an in-depth report on the Chinaverse. She said that it is technically very different from the rest of the world, with big companies such as Baidu, Alibaba and Tencent creating their own systems that are not intra-operable between China and the West. There will be a race between the Chinaverse and the Metaverse to see who comes out on top, she said.

Many of the key pillars that the Metaverse is based on are not applicable in China. Crypto mining and trading are banned, there is no secondary market for NFTs meaning they can be bought but not sold, and legislators have heavily restricted gaming. However, there is a huge appetite for newness and digital products in China, Daydou said.

According to Daydou, before long, we will all interact with the metaverse in one form or another. “Lots of consumers already use Taobao Augmented Reality to decide what to buy,” she pointed out. “The integration of AR with live streaming is what we will see more in the future, and video games are the first space where we will likely see immersive tech being used on the blockchain.” She used the example of Tencent, which purchased 40% of the gaming company Epic Games – not for their games, she said, but for their gaming engine.

“It will take another 10 years for a fully functional metaverse to exist. It is the new iteration of the internet – we are talking about user-generated content, immersive experiences, and decentralised systems.” However, “the metaverse will be a new layer on top of the internet rather than replacing it.”

Many British companies have been experimenting with the Metaverse in China. Ada Yang, Senior Market Manager for Molton Brown, described how Molton Brown has created a virtual store with a personality test that helps consumers select a suitable fragrance and then creates a unique digital collection for them. The store has been launched on Tmall on the blockchain and uses an augmented reality digital collection.

Simon Mitchell, Co-Founder of the architecture firm Sybarite, is pleased that physical stores still exist and are coming back into fashion – albeit with an interactive twist. Sybarite has been working with Chinese department store SKP for a number of years after winning an international design competition – not with a physical design but with a total rebranding exercise aimed at creating an experiential shopping experience aimed at a younger, more sophisticated consumer. “In Beijing’s SKP, 65% of the space is experiential, not product focused. We used 3D designs created by graduates of Beijing art and design schools,” Mitchell said.

Each of Sybarite’s SKP projects creates different episodes and stories. “In Beijing, it was about life on Mars; in Xian, it was returning to post-apocalyptic earth; and in Chengdu, it’s about parallel worlds where gravity behaves differently,” he explained. These wild and adventurous concepts appeal to consumers who want to be taken somewhere where the metaverse and the physical world meet.

Gary Chan is Vice President of CAA Brand Management, specialising in brand collaboration – specifically, intellectual property collaborations. He showed examples of how Paddington Bear and Peter Rabbit have been used to sell everything from clothing to tea. But finding local concepts and adapting to them is key. “Easter doesn’t exist in China, which is what rabbits are most associated with in the West, but the mid-autumn moon festival is associated with Rabbits in China, so we focused on that instead to resonate with the Chinese audiences,” he said.

Chan said that it is essential that companies have a long-term plan for growth, as current market entry routes, like using virtual (or human) KOLs, can be expensive and not always cost-efficient. Sometimes partnering with an existing IP will help you leverage your brand and take part in the conversation in China, he argued.

One of the afternoon breakout sessions focused on Chinese tourists and the promise of Hainan

Why Hainan should be on the radar for British companies in 2023

Zero Covid is over, and Chinese travel has rebounded. This was one of the key messages in the Hainan breakout session hosted by CBBC’s Director, Consumer Economy China, Ran Guo, which addressed the return of Chinese tourists and the promise of domestic consumption.

Susan Huang Zhong, Head of Global Shopping Partnership, EMEA, Trip.com Group, gave an overview of the current state of Chinese tourism, explaining that at present, most Chinese tourists are travelling to countries in the Asia Pacific, including Thailand, Vietnam, Japan, and Singapore. Going to Europe is still popular, but Chinese tourists are choosing closer destinations due to the waiting times on visas.

Although people are keen to travel abroad, the southern Chinese island of Hainan is also gaining popularity due to its sandy beaches and tropical weather. When China’s borders were still closed, the island became the number one domestic destination as options further afield were unavailable. With plans for the island to become duty-free in 2025 and with a reduced tax level from 20% to 15%, the island is also becoming a destination for retailers looking to take advantage of tax breaks and the well-heeled tourist trade.

Liya Zhang, Vice President Marketing, Pernod Ricard, Global Travel Retail, said that regardless of product, the key is still building your brand. Travel retail is not just a commercial opportunity but a platform for building your brand.

Jason Cao, Vice President of Hainan Holdings (GDF) and Founder of DutyFreeExpert, explained that further offshore development is in the pipeline, but to successfully enter the Hainan market specifically, it is crucial to have product differentiation with exclusive or limited-edition products to entice customers, i.e., as discount prices won’t be enough to beat the growing competition from other brands. He also pointed out that creating a price war would be in no one’s interest, so thinking creatively, focusing on omni-channels and using technology are critical strategies.

Another breakout session looked at the various e-commerce and social media platforms available in China, a key consideration for many brands

How to choose the right e-commerce platform for your brand in China

During the event’s Private Domains and Beyond session, the complexity of what is private and what is public within China’s complex digital ecosystem was explained. Social media is a public domain, whereas WeChat (or WhatsApp) groups are private domains.

Shlomi Mahfouda, Co-Founder & CEO of Up2China, explained that in the UK, consumers buy from brands’ websites, but in China, that simply doesn’t happen. Brands do have the opportunity to sell directly to consumers, but it is all done via one of the country’s many e-commerce platforms. He emphasised that different companies should use different e-commerce sales channels depending on their audience and their development in the China market.

For example, Tmall can be a fast-track to the market as it offers cross-border trading, allowing brands to bypass the often-complex regulations of distributing domestically. JD.com is about high logistics efficiency and high-quality products, whereas Pinduoduo focuses more on group purchasing. Kuaishuo focuses on third and fourth-tier cities with lower consumption levels, whilst Douyin is rapidly becoming the leader in live streaming sales.

Mahfouda said that it is important to have a strategy that will allow you to grow sales and scale your business. For example, live streaming is a booster for sales, so it can be a good entry point. “It might not be the best in terms of high consumer loyalty, but it’s a good booster,” he said. “Next, use key opinion consumers (KOCs) and KOLs to support credibility for your brand, build brand equity and get regular loyal consumers. You can take them to the private domain when you have a solid group of consumers who you can talk to directly.”

Benji Lamb, Director of China and South Asia for Vitabiotics, said that he uses KOLs to reach new audiences and KOCs to help the brand sell in private chats. “WeChat groups in China can be very effective if key opinion communities are pushing products through and mobilising with great content and brand support,” he explained. Private referral is human to human, and if people are following a KOC and trust them, they are much more likely to buy a product based on that referral.

“Livestreamers are influencers who can sell through to their followers… In the UK, people search for products they want to buy, but in China, they follow live streamers and make impulsive purchases based on their recommendations rather than via keyword search,” he noted.

Lamb also said that different demographics can be targeted on live streams depending on which KOL or KOC partners are used, but that Vitabiotics increasingly uses an in-house live streaming team to build direct relationships with customers.

Many young people in China watch live streams to feel less lonely, and it is how they spend a lot of their free time, said Robin Liu, Co-Founder of Influencer Hub International. The segmentation breakdown between KOLs to KOCs to key opinion sellers (KOSs) is important depending on what stage of market entry you are in. Some KOLs might have a huge following, but if your products are not targeted correctly, there might be a tiny conversion rate, and the costs can be vast. On the other hand, a suitable KOC might have just 2,000 followers, but if they have a 99% conversion rate, this is much better value.

Ntola Obazee, Trading Director at the ceramics company Emma Bridgewater, explained that the only way to establish trust and loyalty is via social media and streaming platforms. “It allows customers to get closer to the brand,” she emphasised. Live streaming in China now accounts for 10% of Emma Bridgewater’s sales, with live streamers often creating videos of the unboxing experience and doing live reviews of products.

“If you don’t have huge amounts of capital to invest, then working with KOLs can have an influence on the brand. 45% of our sales take place during the gifting period between November and January, and live streamers, who might not be the best for brand growth, can certainly help with direct sales.”

Obazee also uses Emma Bridgewater’s social communities and private domains to get product feedback and work out what is important to consumers. She also emphasised that customer service is crucial, as negative feedback in a private WeChat group could lead to big problems for a brand.

Woodburn’s Kristina Koehler-Coluccia gave a presentation on how to launch your China business and avoid the most common mistakes

Business leaders on what brands need to know about China

The afternoon was rounded out by a session with Kristina Koehler-Coluccia, Head of Business Advisory, Woodburn Accountants and Advisors, on how to launch your China business and avoid the most common mistakes, as well as a leadership conversation hosted by CBBC’s Chief Executive, Andrew Seaton.

During the session on how to launch your China business, Koehler-Coluccia sat down with Nick Parker, International Development Director, Holland & Barrett International, to discuss what brands need to do to prepare to launch their China business and avoid the most common roadblocks along the way. Parker shared Holland & Barrett’s experience in the market and valuable key learnings and takeaways from their China journey.

During the leadership conversation, Joy Isaacs, Founder and CEO of ARgENTUM, told the incredible story of her entry into the Chinese market after the daughter of superstar Wang Fei posted pictures of her beauty products online. She received a call from a Chinese distributor who wanted to help sell her products in China in 2015, and since then, she has gone from strength to strength, growing 300% in China last year.

Isaacs experienced early teething issues as the many distributors she had chosen to partner with started to undercut each other, and product prices kept falling, so they stripped it back and found a partner who could control the brand, price, and image.

“Working in China is much more creative than I ever thought,” Isaacs said. “It is fascinating what the KOLs can do around archetypes and other ideas that I would love to bring back to the UK. Customers in China want to know a lot more about the products, so we need to go into story-telling mode and show even the raw materials and how the products are made. In the UK, it’s ‘less is more’; in China, they want the detail,” she said.

William Butler-Adams OBE CEng, Chief Executive Officer, Brompton Bicycle, described a China journey that started 20 years ago with a Shanghai shop that flopped but now sees the company flying high.

“The world is facing some big global problems, and those problems will be solved by business,” he said. “We are trying to solve urban transport issues, so we need to get people on bikes in cities in China and engage with communities like we do elsewhere in the world.”

Butler-Adams says that the 20-35-year-old generation cares about the quality of a product and its social and environmental impact. They don’t want cheap products that have a negative impact on the environment or fakes that are potentially dangerous.

“The retail expectation in China is higher than anywhere else in the world. It allows you to go wild and do things differently. What we are doing with our Shenzhen store is bonkers. If we did that in Berlin, it would freak them out,” he said, explaining that China is a great place to try things first that can then be rolled out around the rest of the world.
He said that his advice for people entering the China market would be first to go out there and see the country. Even from a 10-day trip, it will be clear if there is an opportunity or not.

“The retail expectation in China is higher than anywhere else in the world. It allows you to go wild and do things differently. What we are doing with our Shenzhen store is bonkers. If we did that in Berlin, it would freak them out”

China’s ambassador to the UK Zheng Zeguang addressed the CBBC Summer Reception, which rounded out China Consumer 2023

CBBC Chair Sir Sherard Cowper-Coles addressed the CBBC Summer Reception, which rounded out China Consumer 2023

The day was concluded by CBBC’s Summer Reception, which was attended by the Chinese Ambassador to the UK, Zheng Zeguang, who, alongside CBBC Chair Sir Sherard Cowper-Coles, addressed delegates, speakers and CBBC members.

The Summer Reception brought together the UK-China business community to mark a turning point, with the end of Covid travel restrictions, the focus on economic growth in China, and the improved UK-China political context adding up to a significantly more positive environment for UK-China business after the challenges we have seen over the past two years.

The event proved an enjoyable occasion to catch up with old friends and network with new contacts whilst celebrating the achievements of CBBC and our members.

CBBC would like to thank our sponsors for their support in delivering China Consumer 2023 and the Summer Reception: Woodburn Accountants & Advisors; Diageo; HSBC; Bank of China; China Europe International Business School; and The Orangeblowfish. We would also like to thank our Supporting Partners: Food & Drink Exporters Association; Manchester China Forum; Scottish Development International; UK Government; and Walpole.

For further enquiries about China Consumer 2023, please email Antoaneta.Becker@cbbc.org

To enquire about membership at CBBC, please email membership@cbbc.org or visit www.cbbc.org/membership

The post China Consumer 2023: How British Brands Can Succeed in China appeared first on Focus - China Britain Business Council.

Tell us more about how Harrods entered the China market

At Harrods, we have been actively involved in the Chinese market for over 10 years, building strong relationships with Chinese customers both in London and in China. We are proud to have been the first department store in Europe to embrace Chinese payment methods such as Alipay, showcasing our commitment to catering to the needs of Chinese customers. From day one, we recognised the importance of Chinese social channels, and our teams have been dedicated to regularly visiting the market to stay connected.

In recent years, we have taken significant steps to further strengthen our brand in China. One notable initiative is The Harrods Hive, where we bring together industry leaders and emerging creative talent. We have held networking events and industry-led discussions in Shanghai and Beijing, fostering knowledge exchange and nurturing connections within the creative community. The Harrods Hive has been instrumental in establishing us as a respected and influential player in the Chinese market, while also helping us to discover exciting new talent in the fashion and creative industries.

To expand our presence, we are now focused on introducing exclusive food and beverage offerings in China. In Shanghai, we have opened The Harrods Tea Rooms and The Harrods Piano Bar, providing a constant connection to our iconic Knightsbridge store.

Overall, our presence and continuous journey into the Chinese market have been marked by our strong efforts to engage and understand our Chinese customers. We value the long-standing relationships we have, and we strived to ensure that even when travel to London was not possible during the pandemic, Harrods remained a byword for luxury for our Chinese customers.

What major successes and growth has Harrods experienced in that time? How about challenges?

Like any business, we faced multiple challenges during the Covid-19 pandemic. However, in 2021, despite the difficult environment, Harrods successfully launched The Harrods Hive with our first event in Shanghai and opened the Harrods Tea Rooms in Shanghai. The Tea Rooms proved to be a significant success, providing a quintessentially British experience for Harrods’ Chinese customers who were unable to travel to the flagship store in Knightsbridge, creating a sense of connection and bringing the Harrods experience closer to customers in China even when borders were closed.

How critical is the China market to Harrods’ global strategy?

The Chinese market is extremely important to our brand’s international strategy. As one of the fastest-growing economies with a strong appetite for luxury goods, China represents a substantial current and potential client base for Harrods. The Chinese market provides opportunities for both growing sales in our Knightsbridge store and our e-commerce channels. We have recently soft-launched our .cn pages to grow our online presence in the region, with a full rollout to come in the near future.

Tell us a little bit about how Harrods connects with consumers in China. How does the Chinese market differ from other major markets you operate in?

One key difference is the distinct social media landscape in China. Platforms such as Weibo, WeChat, Xiaohongshu and Douyin (TikTok) hold significant influence among Chinese consumers. We have adapted our strategy to leverage these platforms and engage with customers in a more playful and creative manner. For example, we created custom WeChat stickers celebrating iconic elements of the Harrods brand, such as the Green Men and teddy bear, which have been extremely popular.

By infusing creativity into our digital interactions, we aim to strengthen connections and foster a sense of shared enjoyment with our Chinese customers. We also work closely with KOLs and influencers on these digital platforms for seasonal campaigns and to showcase our offerings in China, such as the Harrods Tea Rooms and the Piano Bar in Shanghai.

Overall, we have established and will continue to develop a well-rounded approach that incorporates multiple digital and physical touchpoints and embraces the unique characteristics of the local luxury market to effectively connect with our Chinese customers.

What are your thoughts and reflections on the Chinese consumer landscape today, and how has this changed over the pandemic?

The Covid-19 pandemic disrupted spending initially, but Chinese consumers’ strong appetite for luxury goods has returned. What we see now is a market shaped by the trends that accelerated during the pandemic, i.e., the consolidation of the digital evolution and the desire for experiential luxury. Adapting to these changes and understanding evolving preferences is vital for businesses operating in the Chinese market.

What do you think will be the hottest consumer trends in China over the next five years?

China’s consumer trends will continue to revolve around the next generation of fashion designers and the promotion of Chinese cultural pride. Emerging designers are redefining Chinese fashion by blending traditional elements with contemporary styles, and there is a growing demand for fashion that reflects Chinese culture.

The prestigious Yu Prize, of which I have been fortunate to have been a judge in previous years, along with our Harrods Hive series, supports and nurtures up-and-coming talents in China, providing exposure and opportunities for their growth, and we are proud to be shining a spotlight on some of the country’s very exciting creative talents.

What are Harrods’ future ambitions and plans in China?

China continues to be a very important market for us, and we have some significant plans for how we will extend our current footprint in China with new concepts, which will be announced later in the year. In addition, the recent soft launch of our .cn website will further grow our online presence in the region. This has been a significant investment for us, demonstrating our ambition to create a seamless experience for our Chinese customers, whether they are in Knightsbridge or at home.

If you could give one piece of advice to UK consumer brands entering China, what would it be?

Invest in a truly deep understanding of the local market and consumer preferences through customer research and, most importantly, spending time with key stakeholders and clients in the region. Building strong relationships, embracing the fast-paced movement, and recognising and understanding local trends and preferences will be the key to success for brands entering into the Chinese market.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post How Harrods leveraged the digital revolution in China appeared first on Focus - China Britain Business Council.

Despite the lingering effects of the Covid-19 pandemic, this year’s Dragon Boat Festival holiday saw a remarkable surge in travel numbers, both domestically and internationally, as well as a considerable increase in overall tourism spending.

There was a surge in domestic tourism as Chinese citizens embraced the opportunity to explore their own country. According to CGTN, 106 million trips were taken during the three-day holiday, and domestic travel revenue recovered to 94.9% of pre-pandemic levels in 2019. Concerts and music festivals proved to be major draws, while evening activities also saw a boost due to record high day-time temperatures.

Ctrip, a leading travel booking platform, revealed a substantial rise in outbound travel bookings during the holiday period, increasing more than 12 times year-on-year. People from the post-80s and post-90s generations made up 73% of all bookings, with the most popular destinations being Hong Kong, Bangkok, Macau, Tokyo and Singapore (short haul destinations likely being the main choice due to the short duration of the holiday).

The willingness of Chinese consumers to travel is good news for destinations like the UK, as post-Covid “revenge spending” on hotels and shopping overseas is thought to have the potential to boost the UK economy.

The Dragon Boat Festival holiday also proved to be a boon for China’s entertainment industry. Chinese cinemas reported the second-highest box office gross ever during the holiday, raking in RMB 910 million (£98.9 million) between 22-24 June. The most popular film was Lost in the Stars, a Chinese remake of the 1990 Russian film A Trap for Lonely Man. The surge in cinema attendance signifies the revival of consumer confidence and the desire for relaxing, escapist activities after a challenging period.

Despite the positive trends, concerns about the longer-term health of China’s consumer market remain, especially after the growth in consumer goods spending dropped from 15.9% in April to 10.9% in May. The South China Morning Post reported that a Beijing-based think tank, China Macroeconomy Forum, has called for subsidies of RMB 1,000 per person to be issued in the form of digital yuan to boost disposable income and avoid uneven economic recovery.

The post Dragon Boat Festival Tourism Boosts Confidence in Consumer Demand appeared first on Focus - China Britain Business Council.

According to Statista, almost 60% of China’s online live commerce shoppers are female, and they make up around 51% of Chinese e-commerce users in general. But with so much noise, and so many choices, what influences the platform they decide to shop on, and how can their habits inform your China strategy?

We asked four women what their typical buying journey looks like: Jenny Jing, a 38-year-old production manager and mother of two living in Beijing; Cecilia Wu, a 38-year-old editor living in Kunming; Fiona Yang, a 34-year-old teacher living in Beijing; and Cicely Shang, a 34-year-old working in tech and living in Shanghai.

What were the last products you bought for yourself online?

Jenny Jing: Skincare products from a Canadian brand called Cocoon.

Cecilia Wu: Two pairs of Birkenstock sandals

Fiona Yang: Bleaching agent (for clothes). I accidentally died my favourite jacket blue and wanted to get it back to white again. It worked! Made my jacket good as new.

Cicely Shang: Cosmetics, coffee capsules and catnip

Which platform did you use to make your purchase and why?

Jenny: Xiaohongshu this time. But I often use Taobao. I follow a skincare professional on Xiaohongshu who has her own clinic, so she is able to share industry knowledge, insider tips and secrets. Taobao used to be my first choice for this kind of thing, but now I only go there for Li Jiaqi.

Cecilia: Douyin. Normally I use Taobao because they have almost everything, but for these Birkenstocks, the brand’s official Douyin store offered a discount, so I went with that.

Fiona: Taobao. I always use Taobao because it puts the customer’s needs first. If you have a dispute or an issue arises between you and the seller, you feel confident that if something goes wrong, they will fix it. In general, you have more options with Taobao than JD.com and the quality is almost the same.

Cicely: The Harmay mini programme, then Tmall. Harmay [a retail chain selling beauty brand samples with a market value above US$76.4 million] carries so many niche brands and the prices are below market rate.

If an influencer persuaded you to buy this product, tell us more about them. Which influencers do you like and trust, and why? 

Jenny: Yes, there are loads of small influencers on Xiaohongshu who influence me, I’d say. The main one is called Haha Chen. We have a similar body size, she lives in Beijing like me, has a daughter like me. She’s aged around 34. The fact that we are similar means I can trust that I won’t be going too wrong if I follow her lead.

Cecilia: No influencer persuaded me to buy the Birkenstocks.

Fiona Yang: I wasn’t influenced by a streamer this time. I don’t even have Douyin downloaded now because it’s too addictive.  

Cicely: This time, I was watching 钳钳妈阿曼达 (‘Qian Qian’s Mom Amanda’) on Xiaohongshu. I think she’s just over 30 years old and I’ve been following her for more than three years now. Her style/aesthetic is similar to mine, and the items she recommends are always really practical and it’s clear she uses them herself.

What convinced you to buy this product when it came down to it?

Jenny: Nothing really, I just wanted to try something different, and you can return the product within seven days so it was a pretty low-risk purchase.

Cecilia: In this case, the time-limited discount!

Fiona: It was the best price I could find. If I didn’t get this deal, I knew I would regret it. In general, these time-limited deals definitely make me more impulsive. If a site or a person says ‘take advantage of this deal or you’ll miss out’ I usually just pull the trigger.

Cicely: The product seemed to perform well according to the influencer, so I thought I’d give it a try.

Did you get a special discount on this item?

Jenny: Yes, the influencer gave a discount price on the items I bought.

Cecilia: Yes, because I bought on Douyin, the price was RMB 100 (£11) lower than the store.

Fiona: Yes, that’s the major reason why people like me prefer to buy online these days instead of at a shopping mall.

Cicely: No discount this time.

Did you buy the product directly in the app or did you see it in one app, then go and buy it in a different one?

Jenny:  Yes, I bought the items directly from Xiaohongshu because the discounted price can only be claimed during the influencer’s live stream. But sometimes, before I decide to buy it in Xiaohongshu, I quickly go to Taobao, search the same item and check people’s reviews and comments there too.

Cecilia: Yes, I bought the shoes directly from the Douyin app, because it’s cheaper and the delivery is fast.

Fiona: I don’t shop around. It’s too time-consuming. That’s why I really just use Taobao. It gives me a headache doing lengthy comparisons. I prefer to have options because I want to see different styles and prices, but overall I prefer just to buy from a platform I trust and know than shop around for the cheapest products.

What I like about the way Taobao functions is that once you see a product you like and click ‘Like’, when you go back to the previous page, Taobao automatically shows you options for the same product (so you don’t need to search again) and makes it super easy to do your own price comparison. It takes so little effort. Then you can just focus on the reviews rather than the price.

Cicely: I saw the recommendation on Xiaohongshu and then went to Harmay and then finally to Tmall to make the purchase.

How often do you buy imported/foreign brand products on these platforms? 

Jenny: I never buy foreign brand clothing, but I do buy many international brand products for the children as well as skincare products. I buy foreign brand skincare and make-up every two or three months on Taobao and kids’ stuff every one or two weeks, such as baby formula, Vitamin D or A and nappies.

Cecilia: I’d say I buy foreign brand beauty products like La Roche-Posay and Lancôme once every one to two months.

Fiona: I buy imported brands from Taobao (Tmall) since it was one of the earliest platforms to stock foreign brands, and the prices are always similar to duty-free shops at the airport. I also think Tmall has stronger relationships with overseas brands and better quality control. I know it’s the real thing. Mostly I buy cosmetics like Lancôme or Dior or Cote perfume. Sometimes I buy little things from Coach or sports brands like Puma or Nike. If they have something that domestic stores don’t, that’s when I buy them from Tmall because I’m getting something I couldn’t otherwise.

Cicely: I’d say I buy foreign brand products once every quarter – mostly Lululemon and Nespresso!

What influences your decision to buy those foreign brands, and which country’s brands do you trust the most?

Jenny: For me, it’s about quality and safety. In general, I trust Japanese and German brands the most because I know they are serious about quality control. Also, there is a British clothing brand called Next that I like a lot! The designs are really cute, it’s good quality and the price is good too. Unfortunately, it only had an online shop in Taobao for a while, and then it closed, so now there are no online or offline shops in mainland China for it, but it is available in Hong Kong, I think.

Cecilia: The quality and safety aspect, for sure. I feel products from the UK, Europe and the US are especially good.

Fiona: I just buy things based on my personal taste. I seldom try new things. I’m quite a loyal customer. If I like a brand, I use it for years, like Lancôme, for example. Most of the brands I like are from the US, and in general, I think that’s because I see them as mid-range luxury. They’re more affordable than high-end European brands.

Cicely:  I like Lululemon because I know it’s a durable product. And Nespresso holds up for daily consumption too.

Which is your favourite e-commerce platform and why?

Jenny: It’s hard to say. I use Xiaohongshu mostly for myself, JD.com mostly for the children and Taobao for daigou or stuff I can’t buy on JD mall.

Cecilia: Taobao because of the sheer selection, and JD.com for same-day or next-day delivery.

Fiona: Taobao.

Cicely: Tmall for brand assurance, fast logistics, and convenient returns and exchanges.

Are there any platforms that you never use? And if so, why not? 

Jenny: Amazon. I don’t see the reason why I need it. Many years ago, the page looked messy, and the payment method wasn’t China-friendly, but I haven’t used it for years, so maybe they’ve made some changes [Amazon shut down its domestic operations in 2019].

Cecilia: I don’t use Xiaohongshu. I feel like the content is more about showing off, whereas people on Douyin are just having fun.

Fiona: Pinduoduo. It’s like Taobao but with a much lower price, sometimes even below RMB 10, but the quality can’t be guaranteed, so I don’t like it. I also get annoyed by their model. You can make things cheaper by getting bonus discounts for sharing deals with your friends. In other words, you have to ask your friends to help click on the link Pinduoduo sends you to get the price down, usually by just RMB 1 or 2.

But so many friends send you these links. Ok, it’s an easy favour to do for people, but it’s so annoying! Go there and click, go there and click. I didn’t want this app on my phone, but I felt obliged to download it to help my friends get cheaper deals. Since then, I deleted the app. Now when friends ask me to open their links to get them discounts, I just say, “sorry, it’s not worth it for RMB 1!”

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post How Chinese women really shop: 4 case studies appeared first on Focus - China Britain Business Council.

China is the world’s leading e-commerce market, generating 50% of all global transactions. Attempts to pin down the value of the country’s e-commerce market vary, but they are always in the trillions, with estimates suggesting the market will be worth over US$3.5 trillion (£2.8 trillion) by 2024.

It’s clear that Chinese consumers are very comfortable buying online, but how and where they buy is continuously in flux, presenting both challenges and opportunities for international brands. The rise of over 200 million Gen Z’ers as a driving consumer force is setting new trends in communicating with target customers, the most salient of which is the decentralisation of the e-commerce landscape.

For years, Alibaba’s Tmall and rival JD.com have been the first port of call for both consumers and international brands. But the winds of change are increasingly blowing consumers towards social commerce platforms like Douyin, Xiaohongshu (RED) and Kuaishou, that bring together entertainment and shopping. And brands are having to follow suit.

In this article, we review some of the latest developments in the social commerce field so that you can choose the right platforms for your brand.

Foreign brands can now sell directly through Douyin

In the past few years, the social commerce platform Douyin (China’s version of TikTok) has been making waves as it establishes itself as a leader in e-commerce live streaming (also called live commerce) and short videos. Douyin was already a top player in this category, having reached a GMV from live streaming of $1.5 trillion in 2022 and launched Douyin Mall, a shopping interface like Tmall that can be accessed directly from the app. And Douyin’s share of the pie is only going to get bigger as it has now started allowing all brands – including foreign brands – to apply to sell products on the platform directly through cross-border e-commerce.

As Sandra Weiss from RedFern Digital notes, “Brands can now sell directly on Douyin without setting up a domestic entity or establishing a business license within mainland China. This means that they can take advantage of Douyin’s massive social influence and link products directly in short videos and live streams, decreasing the loss of traffic when driving customers to make purchases.”

Weiss adds that the ability to sell directly on Douyin emphasises the need to explore brand-run content, especially live streams, rather than relying solely on influencers. “Over 50% of sales on Douyin among the top 500 brands on the platform came from brand-run live streams in February 2022, and in 2023, the market share of brand live streaming is estimated to exceed 50%.”

Kuaishou records first profit in several years

China’s second-largest short video company and major Douyin rival, Kuaishou, recently realised its first quarterly profit, reporting an adjusted net income of RMB 42 million (£4.8 million) for Q1 2023 compared to a loss of RMB 3.7 billion (£423 million) in 2022, according to Technode. A large portion of this success can be attributed to the platform’s e-commerce business, which achieved total sales of RMB 2.25 trillion (£257.45 billion) in Q3 last year.

Kuaishou users are typically located in lower-tier cities (think Shijiazhuang, not Shanghai) and have a fairly even age spread – while most of the users are young, like any app, just under a quarter are over the age of 50. They are also on the lookout for bargains, with lower-priced clothing and cosmetics and everyday household items selling well in Kuaishou KOL live streams (note: unlike Douyin, Kuaishou doesn’t have its own built-in mall yet).

This means that Kuaishou won’t necessarily be a good fit for every international brand looking to enter the Chinese market, but it could work for budget-friendly products or companies that already have a fun, tongue-in-cheek brand aesthetic (think along the lines of what Duolingo has been doing on TikTok).

Xiaohongshu remains a game changer for product discovery

Xiaohongshu, on the other hand, is the perfect launch site for boutique high-end brands. Its main users are affluent, educated women who are actively looking for new products to try, using it to share product and brand experiences and give and obtain recommendations and tips. As one of the most popular platforms in China, Xiaohongshu currently has over 150 million monthly active users, representing a 50% growth in traffic compared to January 2020.

Xiaohongshu has introduced commerce to the platform, allowing users to either buy directly from a brand-owned Xiaohongshu store or by linking externally to a Tmall or WeChat store to purchase. However, as Mark Bellamy from Aiken Digital cautions, “user-generated content (UGC) is still the lifeblood of Xiaohongshu, so when it comes to standing out and succeeding, recommendations are everything. To get brand exposure, it is not about how much you pay, but how big your brand’s tribe of followers is.”

Don’t forget to localise your branded website

An often-overlooked channel is direct sales through brands’ own global .com sites. Consumers often visit retailers’ and brands’ websites to cross-check information they have seen on platforms like Xiaohongshu. While many customers will then move on to an e-commerce platform to make their final purchase, having a good localised website is still an important part of creating a complete brand experience.

“Unlike Amazon platforms, with their quick-in-and-out transactional stores, China’s e-commerce stores are much more information-rich and as much a marketing channel as a sales channel. Many consumers still look up products on e-commerce platforms, even if they are buying it somewhere else,” notes Mark Tanner from the China Skinny.

However, many brands are still not making simple adjustments, such as adopting Chinese payment methods like WeChat Pay and Alipay or ensuring sites load quickly in China. The relatively low-cost investment in these adjustments is often well worth it because they typically have a higher conversion and average basket than in the home market.

What does the social commerce revolution mean for your brand in China?

“There is no golden rule for determining which e-commerce platform to sell on in China, and brands should evaluate the platforms based on their target audience, category and objectives,” says Mark Tanner from China Skinny.

It is also essential to look for growth opportunities across all platforms to meet the consumption patterns and preferences of a changing shopper. As emerging platforms look to expand their brand portfolio, there is a burgeoning opportunity for international merchants to diversify their sales channels.

From a risk management perspective, a decentralised approach to e-commerce avoids the difficulties of being overly reliant on one channel or influencer to drive revenue. Different challenges arise around pricing management and ensuring no SKUs become over-distributed and devalued. Both can be managed with adequate planning and resource.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post E-commerce in China: Tmall, Douyin or both? appeared first on Focus - China Britain Business Council.

China is a global leader in influencer marketing, with the market for key opinion leaders (KOLs) – the more common term for influencers in the Chinese context – reaching RMB 340 billion (£41 billion) in 2021. The Covid-19 pandemic has significantly increased the amount of time people spend online, and KOLs have become a crucial part of successful marketing in China, with Chinese consumers ranking the opinions of influencers such as live streamers almost as highly as recommendations from family and friends when it comes to making purchasing decisions.

Li Jiaqi competing with Alibaba’s Jack Ma to sell the most lipsticks during a live stream (captured from Youku)

Austin (Jiaqi) Li: Big isn’t always better

Taobao Live followers: 73.4 million

Known by the moniker “the lipstick king” after selling more than 15,000 lipsticks in five minutes on Taobao Live, Austin Li is one of the most prominent faces of China’s live commerce revolution. The former shop assistant first gained fame for his marathon live streams, where he would apply hundreds of different lipsticks, and he soon became Taobao Live’s most lucrative seller, playing a key role in the rise of shopping festivals like Singles’ Day and 618. In 2021, Li was one of the few Chinese people to be included on the Time 100 Next list.

The charismatic star’s selling power has attracted many of the world’s biggest brands, including NARS, Hilton, and Coach. However, the success of major streamers like Li has drawn increased scrutiny from the authorities and led to several uncomfortable scandals.

Li became a cautionary tale in early June 2022 when one of his live streams abruptly went off the air after he presented an ice cream cake resembling a tank the day before the anniversary of the Tiananmen Square protests (although his team blamed the outage on technical issues). Li was nowhere to be found on social media for several months, before making a triumphant comeback in the run-up to Singles’ Day 2022, with his first stream clocking up over 50 million viewers.

His successful return put paid to speculation that the era of the live streaming megastar was over; however, his absence served as a reminder that hitching your brand’s bandwagon to an internet celebrity can leave you open to being tainted by association if a scandal ensues. Moreover, while working with a superstar like Li can help raise demand for hero SKUs for brands with an established presence, it is unlikely to be an accessible strategy for brands that are still building awareness, which may be better served working with smaller KOLs on platforms like Xiaohongshu.

A Kuaishou video from Dandan advertising a live stream for the 618 shopping festival

Dandan: The importance of multi-platform coverage

Kuaishou followers: 86.3 million

China’s e-commerce ecosystem – traditionally dominated by Tmall and JD.com – is becoming increasingly fragmented, with social commerce platforms like Douyin, Xiaohongshu and Kuaishou representing an ever-growing proportion of total sales. Short video platforms, in particular, are seeing massive growth, with China Skinny reporting that Douyin and Kuaishou’s combined sales in Q1 of 2023 made up 97% of the value of all sales on Tmall, with fashion and personal care and cosmetics demonstrating particularly high merchandise values.

Kuaishou KOLs like Dandan may not attract as many column inches in the West as superstars like Li, but they have immense selling power. Trendy, fast-talking Dandan reportedly generated a staggering 17.8 billion units of gross merchandise volume in 2022, becoming Kuaishou’s top seller.

Unlike many KOLs, who tend to focus on one product category, Dandan and other top sellers on Kuaishou hawk a wide variety of items, from litre bottles of soy sauce to mid-range cosmetics brands. This appeals to Kuaishou’s user base, who tend to be located in 3rd or 4th tier cities and are looking for discount prices as much as branded products. As a result, Kuaishou KOLs can be a useful tool for testing the waters outside of big cities like Beijing and Shanghai, and often have lower fees.

Ayayi in a campaign for a contact lens brand (Photo:@ayayi.iiiii/Instagram)

Ayayi: Is it better to go virtual?

Real-world KOLs are facing increasing competition from an unlikely source: virtual influencers. “A virtual influencer is a computer-generated fictional character who has the realistic characteristics and personality of a human. They can be used for a variety of marketing-related activities and are becoming a real force in the influencer marketing industry,” explains Arnold Ma, CEO of digital creative agency Qumin.

One of China’s best-known existing virtual influencers is the so-called ‘meta-human’ Ayayi, created by Ranmai Technology in May 2021. Hoping to capitalise on the virtual idol, whose debut on Xiaohongshu attracted more than two million views and garnered over 95,000 likes, Alibaba ‘hired’ Ayayi as a digital manager for Tmall Super Brand, where she curated campaigns and even created NFTs.

Virtual influencers tap into the desire for novelty among Gen Z Chinese consumers, as well as their willingness for the latest tech to be integrated into their day-to-day lives. Using a virtual influencer can show that a brand is forward thinking.

From a business perspective, virtual influencers could be less risky than traditional influencers, especially in the wake of scandals like the one that embroiled Li Jiaqi in 2022. “Virtual influencers … reduce the risks of general agency operation issues and PR crises for IP owners and brands,” says Robin Liu, co-founder of Influencer Hub International. So while they may not be able to build ‘authentic’ or ‘emotional’ relationships, they can be effectively programmed to fit in with a brand’s aesthetic or values without the risk of dealing with a chaotic celebrity personality.

The CBBC view

Working with KOLs should be a key part of any consumer brand’s marketing strategy in China. Still, with potentially huge amounts of money at stake, it is worth considering whether engaging a major KOL is the right approach.

Many brands are increasingly finding success working with mid-size KOLs or micro-influencers (content creators with a small but highly-engaged following in a niche segment, sometimes referred to as Key Opinion Consumers (KOCs) in the Chinese context, especially if they are new to the market.

Brands should also consider cultivating owned channels on platforms such as Douyin rather than relying entirely on third-party creators. This removes the risk of becoming embroiled in a scandal if controversy arises around a popular KOL while also giving the spotlight to the people who know the most about your brand. When tied together with product seeding via more-established KOLs, this creates a more well-rounded, sustainable brand strategy.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post What 3 top KOLs can tell us about influencer marketing in China appeared first on Focus - China Britain Business Council.

The value of China’s live-streamed e-commerce (aka live commerce) market reached RMB 2.27 trillion in 2021, and some estimates suggest that it could reach a value of RMB 4.9 trillion (US$704 billion) by the end of 2023. Douyin alone saw 1.5 trillion RMB in GMV from live streams in 2022, becoming China’s largest live streaming platform. For millions of Chinese consumers, live streams are a major part of the e-commerce experience, watched as much for entertainment as they are for convenience.

By contrast, live streaming brought in sales of about US$11 billion in the US in 2021, with the main players including Amazon, Meta, Twitch, and YouTube (which has partnered with Shopify for its live commerce initiatives). While live streaming has made a big impact in industries such as gaming and e-sports, viewership numbers have failed to translate into sales, and major platforms have seen limited success with live commerce initiatives. Meta pulled the plug on live shopping on Facebook in late 2022, and even TikTok has reportedly scaled back the development of TikTok Shop in Europe (although TikTok has denied these reports).

The reason why China and the West have taken such different paths when it comes to live commerce can be attributed to three main factors: the e-commerce ecosystem, consumer habits and influencer mindsets.

China’s e-commerce ecosystem was ready to integrate live commerce

“China largely skipped the desktop internet generation and went straight into a mobile focused internet economy, with apps being at the core of communication and e-commerce,” explains Jimmy Robinson, director of PingPong Digital.

“The e-commerce landscape in China is largely based on platforms rather than individual onsite e-commerce,” he goes on to say, which has made it easier for platforms to quickly integrate new features such as live commerce.

Taobao Live, for example, is seamlessly integrated into the Taobao app, which is, in turn, linked directly to Alipay, meaning that consumers can purchase directly from live streams in just a few clicks.

By contrast, in Western markets, a much higher percentage of purchases take place on sites or apps owned directly by brands or retailers. This means that apps like Instagram and TikTok are used for discovery, not purchase, with customers then going to other sites to shop around for the best possible prices.

Entertainment and education vs speed and convenience

Consumers in China and the West approach e-commerce – and thus live commerce – in different ways.

Chinese consumers value the educational value of live streams and make purchases based on the live stream host’s demonstration (think “lipstick king” Li Jiaqi comparing two different shades of red lipstick).

“During live streams the host has a clear opportunity to provide brand and product education, explaining how products work and their key benefits and functions. Consumers value the chance to see products in action and trust recommendations from live streamers,” says Ryan Molloy, CEO of Redfern Digital.

On the other hand, consumers in the West generally don’t need to be sold to; they’re shopping online with a purchase already in mind. As a result, speed and convenience are key, and e-commerce websites often prioritise presenting the bare minimum of information as efficiently as possible.

Robinson also points out that multiple scandals have caused Chinese consumers to lose trust in big platforms, while influencers are perceived as more trustworthy and authentic. This has led to a rise in influencer-driven sales and the explosion of live stream commerce in China, “as it allows netizens to have authentic engagement with influencers and get their product questions answered from a source they trust.”

“Another key thing that makes live streaming in China unique from similar practices, such as TV shopping, is its role in socialising and entertainment,” says Qing Na from Dao Insights. As social anxiety has become more commonplace among China’s younger generations, digital spaces have grown into places where they can find comfort in communicating with strangers. “Live streaming allows for direct interaction with the host, and sometimes even celebrities. Such immediate interaction not only helps brands build consumer trust and intimate relationships with their target audience, but also enables a more playful and participatory online shopping experience, thereby fuelling consumer enthusiasm and further spurring consumption,” Na adds.

Can influencers make the shift to live streaming?

The role of hosts in the success of live commerce cannot be understated. In China, many of the best-known hosts became famous for live streaming rather than transitioning from another genre of influencing, as live commerce streams require a fairly specific set of skills – more akin to a salesperson than an Instagram content creator.

Moreover, many hosts are signed with a multi-channel network, a type of video production agency that helps them create high-quality, super-shoppable content and liaise with platforms.

Western influencers are less likely to want to sign up with an agency (although they do exist in the UK) as the independent influencer model works so well. Many of the most successful influencers in the UK and US built their following organically by posting authentic content, then transitioned to sponsored content that chimes with their brand only once they were established. Conversely, in China, people usually expect influencers to have a commercial component.

How should brands approach live commerce in China?

The lukewarm reception to live commerce in the West is yet another reminder of just how different Chinese preferences, culture and retail structures are from those in the West. So how should brands targeting the Chinese market adjust their mindset?

As with most aspects of digital marketing in China, any conversation about live commerce has to start with clarifying brand position and key messaging. As PingPong Digital’s Frank Ye emphasises, “It’s likely that a brand will resonate with a Chinese audience very differently than in its home market. Therefore, the first step is to have a properly localised brand strategy and corresponding key message, then choose the right channels that can optimise both branded communication and conversion.” (For example, if your Taobao is your key sales channel, then there is no need to set up live-stream channels on JD.com).

Sandra Weiss, media executive at RedFern Digital, also cautions that although live streams have a clear educational component and people do use them to discover new brands, “live streaming is most successful when brands already have some recognition in market.” Brands just entering the market may be tempted to shell out huge fees to work with larger live stream hosts, but even their endorsement may not be enough when there is a lack of brand recognition and trust. Instead, brands can consider working with micro-influencers (known as KOCs in China) on platforms like Xiaohongshu and Douyin or even creating their own channel hosted by knowledgable in-house staff.

Finally, pricing should be a key consideration. “Despite rising income and increased demand for premium products, China largely remains a discount culture,” says Weiss. “It is generally suggested that livestreams should provide the lowest pricing of the product across any sales channels within the last 30 days. Brands need to consider this when coming up with their promotional and discounting calendar for the year.” This may also mean that live commerce isn’t an ideal strategy for luxury brands.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post Why is live commerce so popular in China? appeared first on Focus - China Britain Business Council.

Projections suggest that revenue in the Chinese food market will amount to US$1,386 billion in 2023. The market is expected to grow annually by 9.34% (CAGR 2023-2027), and, most notably, approximately 34.6% of total revenue will be generated through online sales by the end of the year.

Consumers are choosing healthier, more premium brands

The trend of consumption “upgrading” in China is not a new one, with consumers in higher-tier cities already used to buying premium and luxury products. However, today, more Chinese people in lower-tier cities are choosing more branded products, and while the pandemic dampened spending to some extent, the trend is still present and increasing. 

The F&B industry is experiencing a similar pattern. Affluent and informed Chinese consumers have begun to prioritise better health and a better quality of life. As a result, products aligned with healthier lifestyles have seen increased demand.

This is evident across the beverage industry. Packaged drinking water is the biggest beverage segment in China’s soft beverage market. While purified drinking water has a majority share of this segment, natural water and mineral water have increased rapidly in recent years because of growing health consciousness. Likewise, reduced or no-sugar teas, cleansing juices and nutritional drinks have all experienced higher demand.

A recent survey revealed that 86% of consumers from tier 1 and 2 cities considered food safety before buying produce. Fresh food, including vegetables, eggs, meat and fruits, is a high-demand category as it is considered natural and chemical-free. In line with this, healthy packaged food such as salads is another area that is seeing growth.

Besides health and safety, Chinese consumers are showing a preference for premium brands. Relating to alcoholic beverages, consumers are now placing more value on experience and enjoyment and hence are prepared to pay more for products that fulfil this need. 

Companies that offer a variety of premium products that focus on the idea of being “authentic, natural, healthy and high quality” will enjoy a significant advantage in the Chinese F&B industry. 

Food shopping moves online 

Like consumption upgrading, online shopping is not a new development. Mandatory Covid lockdowns accelerated the pace of adoption among consumers, and e-commerce is now a vital part of consumer shopping behaviour in China, with 34.6% of total revenue generated through online sales.

The e-grocery (fresh produce and fast-moving consumer goods) rate, however, has lagged at 10% penetration, and this is likely due to the short shelf-life of fresh food, which puts demand on logistics, as well as offline channels such as convenience stores that cater to on-demand items. Improved infrastructure and distribution channels, as well as brands shifting online, are expected to accelerate e-grocery penetration rates to 33% by 2025.

Digitally savvy younger consumers enjoy the convenience of buying groceries online. And it is not just consumers in tier 1 and 2 cities that are doing so; shoppers in tier 3-5 cities are also embracing this trend and are expected to contribute to more than half of the increment in the e-grocery market size between 2019-2025.

Another area hit hard by Covid lockdowns was the food service sector. However, China has the fastest-growing food service market in Asia, estimated to reach US$ 914.09 billion by 2027. China’s per capita income has been growing year on year, so eating out is becoming the norm. The market demand for food services is increasing since its citizens are looking for a more convenient life, which implies that the future will also have a broader foodservice market.

During the health and economic crisis created by Covid, the purchase of local products also became significant for Chinese consumers. Despite the financial difficulties many families face, the quality of food products remained top of mind. During lockdowns, home delivery had seen tremendous growth; however, as dine-out reopened, the situation returned to balance.

Innovative products in demand

With competition in the F&B industry in China increasing rapidly, companies are looking to innovation to attract consumers. New products, new packaging, new channels and new ways of marketing are also part of the latest market strategies. 

In the beverage segment, companies are continuously creating new products to cater to younger consumers. Likewise, China’s local condiment producers have launched customised, functional products to meet the demands of different consumers. For example, in the soy sauce category, there are customised sauces for clay pot dishes, Hainanese chicken rice and steamed fish. The retail prices of these sauces may be more than double those of ordinary products. 

Technology is also playing a huge role in helping innovation; for example, the popularity of live streaming has helped many new product launches attract the attention of younger consumers. Online live broadcasting and direct-to-customer (DTC) online sales channels have become popular and efficient ways to reach consumers for brand building, marketing and sales, especially for emerging brands. 

What F&B categories are seeing the most growth?

In terms of F&B categories, analysts believe that premium alcoholic drinks, yoghurt and fresh dairy, innovative compound condiments, packaged drinks and health supplements will experience above-average growth rates. 

Experts admit that the current Covid situation in China makes consumer trends unpredictable at the moment, despite China’s official data showing low infection figures and few deaths. Observers believe the lifting of the strict controls on movement could, in fact, boost the economy, regardless of the resulting increase in infections. 

Chim Lee, a China/Asia analyst for the UK-based Economist Intelligence Unit (EIU), predicts that the end of China’s Zero-Covid policy will have a mixed but ultimately net-positive impact on packaged food sales. Lee notes that, relative to other retail categories, food sales were a bright spot in 2022, as the packaged food industry benefited from people stockpiling food in anticipation of lockdowns and other restrictions on mobility. 

Research group GlobalData noted that the overall value sales of packaged food in China crossed the US$1 trillion milestone in 2022, with an increase projected in 2023. GlobalData says meat, dairy, soy, bakery and cereals are set to be the largest categories in 2023, contributing well over half of the overall packaged food sales in China by value.

Citing a recent survey conducted among several securities brokerages, analysts from Stockstar found that a total of 30 food stocks traded on Chinese bourses achieved growth in net profits in 2022. It singled out Guangxi-based Yanjin Shop Food, which mainly manufactures and sells snack foods containing nuts, tropical fruits and marine products, for its year-on-year profit growth (up 102.3%). 

The service also highlighted three other companies: Sichuan-based Teway Food Group, which manufactures hot pot ingredients (for the home-based cooking of tabletop hot pot recipes), seasonings and condiments; Shandong-based Delisi Food, which processes and sells meat products; and Shanghai-based dairy-maker Milkground (each exceeding 70% year-on-year profit growth).

Even as China pursued its Zero-Covid policy and implemented sporadic lockdowns, the packaged food industry still attracted investment. Multinational cheese maker Bel snapped up 70% of Chinese cheesemaker Shandong Junjun Cheese Co. Bubs Australia entered into a venture for infant-formula production in China, while Thai Union Group set out plans to invest in China’s pet food market. Major south-east Asian dairy group Vinamilk invested in its domestic production in part to help support exports to China.

Research by GlobalData suggests there was a dip in deal-making in China last year, but some observers believe that the country’s packaged food sector may be headed into a period of consolidation, as the shift away from Zero-Covid could cause issues along the supply chain and upend consumer demand patterns. In general, the overall situation may benefit the larger players who have better funding to weather a disjointed consumer market over the next one to two quarters and with a better distribution ability.

In the meantime, the green food sector in China also experienced significant growth. Green food is defined as food that is sourced from high-quality environments and produced using specific techniques with strict production quality process control, rendering these products safe for human consumption. 

For example, innovations in technology have sparked a plant-based food renaissance. In China, the plant-based meat industry is projected to be a $13 billion industry in 2023. And with long-term plans to reduce meat consumption by 50% this year, China is becoming a key target for businesses looking to expand or enter the plant-based food industry.

Studies have shown that transitioning to a plant-based diet can reduce carbon footprint by up to 73%. Moreover, China’s growing middle class have the expendable income to make more health-conscious purchasing decisions.

What policies and regulations should brands be aware of?

In the past decade, Chinese consumers have been increasingly focusing on the safety and quality of food products, especially after a few highly publicised cases of adulterated products. Since 1 March 2023, the only regulation in China that specifically addresses the general requirements for manufacturing and selling food-related products (including food-contact materials and articles) has come into effect.

China’s State Administration for Market Regulation (SAMR) released the Interim Measures for the Supervision and Administration of the Quality and Safety of Food-Related Products (“Interim Measures”) developed from a draft version that was published on 31 July 2020 for comment. Compared with the overarching Food Safety Law (FSL), the Interim Measures refine some requirements targeted at food-related products but are not significantly different from the existing laws and regulations or current practice. 

Although the Chinese government has developed more stringent regulatory measures, serious incidents have been recorded in the past, including unsanitary conditions in factories and contamination of food products by pathogenic microorganisms, pesticides and heavy metals. The most famous case was contaminated baby formula, which resulted in the death of six infants and over 50,000 hospitalisations.

For this reason, the Interim Measures list a series of prohibited food-related products, such as products that use raw materials and additives not conforming to food safety standards, as well as other substances that may endanger human health or use additives beyond the scope or limitation.

The list includes products that have been ordered by the government to be prohibited/phased out from the market, products that forge the origin or forge or falsely use another’s factory name, address, etc. and any other products that do not conform to laws, regulations and food safety standards.

In recent years, China has also tightened its management of plastic pollution and has banned the production of certain plastic items, such as ultra-thin plastic shopping bags with a thickness of less than 0.025 mm. Industry players will need to pay closer attention to the development of industrial policies that will affect the supply of food-contact plastic products, since more restrictive policies are expected in the future.

Basic quality control requirements in the whole production process of food-related products are included as well. These requirements are principles and do not exceed what is expected for production quality management of food-related products. 

Food products must have “identification information” (e.g., name, production date, shelf life, type, category, precautions and warnings) which does not necessarily refer to “labelling” information. In this respect, the Chinese GB (“Guo Biao”, Chinese for “National Standard”) food packaging standards are more specific. For example, GB 4806.1-2016, the General Safety Standard, regards the information on the label, the instruction manual, or the declaration of compliance all as product identification information, and therefore allows the identification information to be provided on the label, in the instruction manual, or in accompanying documentation. Fines will be imposed on food manufacturers and operators who violate these rules.

Companies must obtain a Food Production License to engage in food production in China. The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) is responsible for the nationwide administration of food production licensing, while local Quality and Technical Supervision Bureaus (QTSBs) are responsible for administrating the scheme within their respective administrative regions. 

In terms of requirements, the enterprise must possess the means for processing the specified type and volume of food products and must maintain the cleanliness of facilities. All staff involved in food service must undergo China Food and Drug Administration (CFDA)-approved safety training, and a system must be in place for ensuring food product safety, including the prevention of cross-contamination. These requirements also apply to Food Distribution and Catering Licenses.

Applicants for a Food Production License should additionally set up a health inspection and inspection records system or other health management systems for their personnel, establish a goods purchasing and pre-delivery inspection records system, and other food safety management systems for basic food ingredient inspections and manufacturing processes. 

Site inspection by two to four inspectors will be conducted at the food production venue, and a product sample inspection will be required. Food Production Licenses are valid for three years, and applications for renewal should be submitted six months prior to expiry.

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post Practical guide to China’s food and drink market appeared first on Focus - China Britain Business Council.