Brand Entry to China: An Intro – Stan Pearson (FGI New York)

Every day we walk around with a personal computer in our hands allowing us to keep up with our friends, celebrities, and favorite brands. Whether they consider themselves influencers or amateurs, we are able to see where they vacation, their new handbag, and where they found the best avocado toast.   And you’d be lying if you said you weren’t checking Air B&B for rooms in the Maldives after someone you follow posted amazing pictures from their recent trip there. Whether it be through envy or inspiration, we are influenced daily by everything around us.

In the United States, we go to our nearest Bloomingdales on a mission to find something similar to a trend that caught our eye but this is not the norm for those in other countries. In fact this is a rarity in China where the average consumer does a majority of their shopping from their handheld device through social media channels such as Weibo and WeChat.

These platforms are similar to our Facebook and Twitter but not only do they dwarf their Western counter parts when comparing users, they are also shoppable. A Chinese social influencer, social media manager, or brand is able to create content and have followers immediately buy products without ever having to leave the app. The simplicity of this process leads to quick sales, but it is not only simplicity the Chinese shopper is looking for. Chinese consumers want style and quality, which is something people globally can agree on.

While it remains a communist country, Chinese brands have ramped up their presence on social media and rightfully so. China is equally obsessed with staying connected as American Millennials. In comparison, Facebook users spend roughly 50 minutes a day browsing through the site. WeChat, with equivalent shopping capabilities, accounts for about 30 minutes of daily browsing time. Weibo, the equivalent to Twitter, has 340+ million active monthly users users compared to Twitter’s 328 million active users.

Status-conscious consumers in the US and China agree that quality and brand recognition is very important when shopping for any item. A 2016 McKinsey China consumer report found that 55% of the 413 million online buyers in China use social media to research brands status and avoid knock-offs before buying.

In particular, Chinese shoppers tend to seek out U.S. and European brands to portray high status and the general quality guarantee that those brands offer, benefiting both parties.

Zhao Ji, CEO of Caixin Enjoy, a tech company that provides shopping tips, explains that the Chinese consumer not only wants high quality but something that will differentiate them from their peers. “Today’s young people, especially those born after 1990, care more for how the product will help to define and differentiate them.” Consumers in China will continue to buy from foreign brands because as Zhao says, “people today need something intangible… to help the buyer stand apart from the rest and even appear to be high-class.” In a 2015 study almost half of polled Chinese consumers agreed that, provided it was in their price range, they would “always pay for the most expensive and best product,” an increase of 20% since 2011.

As China continues to break away from traditions of their past, consumer spending continues to rise exponentially and disposable income is at an all-time high. The majority of the estimated 400 million Chinese millennials, raised during the “one child” era, come to the market with fewer debts, such as college loans. Known as a generation of little emperors and empresses, they are free spenders on travel, experiences and consumer goods.

It is now up to brands to embrace these energetic, dynamic and motivated customers by emphasizing experiences, individuality, and quality. Investing in international social e-commerce is the first step to success in a globalizing retail world.

Author: Stan Pearson (Executive Member – FGI New York)

Mr. Pearson brings nearly 30 years of experience in the asset management business; collaboratively built a variety of successful businesses, managed teams, and raised assets for equity strategies for business owners, with particular leadership experience in business development strategy, strategic positioning and relationship management.

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