For Western companies such as Coca-Cola, Maybelline and Nestlé, the century-old brand has long provided a strong advantage to local Chinese competitors.

But these established groups are increasingly threatened by Chinese start-ups, whose growth is driven by smart social media marketing and optimized supply chains.

According to data released by the Internet group Alibaba, this month’s “618” e-commerce festival is China’s second largest annual shopping event. This shift highlights this shift, as the local brand Babycare surpassed P&G’s Pampers in sales. .

This is not a one-off: Chinese beverage company Yuanqi Forest surpassed Coca-Cola and Pepsi in “online sales” last year.Singles day“This is a multi-billion-dollar event and the largest shopping holiday in the country.

A year ago, the local cosmetics brand Perfect Diary surpassed Maybelline and Estee Lauder to become No. 1 on Singles Day. In 2019, the snack brand Three Squirrels surpassed Nestlé.

“In the past, foreign brands represented the superior western lifestyle and had an advantage in the Chinese market. But Chinese consumers are now more confident in’Chinese style’,” said Albus Yu, investment manager of China Growth Capital, which invested in Lululemon’s China. Challenger Maia Active and other brands.

The outstanding status of Chinese brands marks a turning point for a country where foreign products have always been regarded as safer and higher quality. For more and more multinational companies, this is also a huge challenge. Seeking growth in China.

This is also in line with China’s political priorities.General Secretary Xi Jinping urges the country Focus on domestic demand For growth.

“The next decade will be the decade of Chinese brands,” said Elijah Whaley, vice president of marketing for Asia Pacific at Analytics firm Launchmetrics. “Domestic brands will occupy a large share of China’s growing consumer market.”

According to a report by Kantar Worldpanel and Bain, in the first three quarters of 2020, domestic sales of Chinese FMCG brands increased by 2% year-on-year, while sales of foreign brands fell by 6% year-on-year.

Analysts said that the recent success of local brands is largely due to huge investments in marketing, especially on social media. This benefits from the strong support of venture capital.

“Marketing makes Chinese products cool. They don’t have traditional brand equity that they want to protect, which means they are willing to take risks and act quickly,” said Mark Tanner, managing director of marketing company Skinny China.

According to Launchmetrics, marketing can account for more than 60% of Chinese consumer start-up spending, while foreign brands in China account for 15-25%.

“Overseas brands have more organic marketing methods. They want slow growth. This is how it works in other markets. But here, everything is accelerating because there are too many venture capital involved,” said WalkTheChat, a cross-border marketing software agency. Co-founder Jenny Chen said.

Chinese brands are also very flexible in developing their supply chains. Due to their proximity to the manufacturing cluster in China, they have established relationships with suppliers, which has accelerated the development of new products and reduced costs. Usually, these suppliers are the same as those who purchase goods from high-quality foreign brands.

A line chart of the number of social media posts per month shows that Chinese start-up brands get more marketing than Western competitors

“The magic lies in the low-volume ordering. TechBuzz’s Chinese technical analyst Rui Ma said: “You can produce thousands of products and see which ones can stick to it. “

Beauty brand Shanghai Zhimei went from designing to selling facial masks for three days. Tanner of Skinny China pointed out that this process took a foreign shampoo brand three years.

Analysts say that diversity and speed are important because young Chinese consumers have eclectic tastes and are more keen to follow trends than Western consumers. Tanner added that while GlaxoSmithKline provides European customers with 400 products in one oral care category, there are 12,000 products in China.

Young Chinese consumers also look forward to Mature e-commerce experience. When buying lipsticks, they may first watch the promotion of internet celebrities on Douyin (the Chinese version of Douyin), then use the social media platform Xiaohongshu to listen to the comments of professional beauty bloggers, and finally consult customer feedback and photos Later, I bought it on Alibaba’s Taobao.

some Chinese internet celebrities Has a huge fan base, such as “Lipstick King” Li Jiaqi with 45 million Douyin fans. Li’s endorsement can make the product sold out in a few minutes. He has previously criticized foreign brands such as Hermès and Chanel.

Zhang Qiping, a 28-year-old employee of a Chinese foreign company, discovered the domestic brands Florasis and Perfect Diary while watching Li’s live broadcast.

“I think the lipstick looks good, and then I went to Xiaohongshu and found that many people recommended them, so I went to buy it,” said Zhang, who bought lipsticks from Dior and Yves Saint Laurent.

China Venture Capital Chart for the past six years

But the influence of “micro-influencers” is much smaller, with less than 10,000 followers, and they are also an important group for brand marketing. They are usually regular customers that the company has transformed into brand advocates, offering them free products or small payments.

“In China’s online celebrity industry, you can find the price of almost everything: sponsored events that look like native content or small posts of micro-influencers,” said Chen of WalkTheChat.

Another effective way for brands to reach Chinese customers is through groups on messaging platforms such as Tencent’s WeChat, which have a limit of 500 users. This allows brands to interact with consumers in a more intimate environment, but some Western companies believe that the return on investment they provide is uncertain.

“Chinese brands are more willing to take risks,” Huili said.

Chinese media recorded how Perfect Diary opened thousands of WeChat groups headed by “Xiaowanzi” or “Abby”. Virtual beauty influencer Supported by a large marketing team.

On the last weekend of 618 promotions, Abby’s 200-person WeChat group was overwhelmed by brand promotions, while shoppers posted pictures, questions, and feedback.

When asked about the WeChat interview, Abby replied that a dedicated staff member would respond and sent a picture of the cartoon mouse Jerry holding flowers.

When asked how international brands can win her back, Zhang, a consumer working in a foreign company, replied: “When it comes to changing brands, I usually read reviews on Douyin and Xiaohongshu. It all depends on the brand’s capabilities. Whether to get the promotion of beauty bloggers.”

Source link