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The ultimate guide to Digital Marketing in China

Digital Marketing in ChinaChina is one of the toughest markets in the world. The opportunities are huge, but the rest of the world knows this as well so it is important that you have a sound understanding of how to effectively market in China.

There are a number of factors that contribute to making Marketing in China difficult. The varied culture and geography of the country, the sheer size of the population and country and differing levels of economic development all contribute to the challenges of entering the market. A one size fits all marketing strategy will not work.

One of the most common mistakes businesses make is assuming that the digital activity and consumer behavior of Australian consumers translates over to China – it varies in significant ways, including the activity level and purpose of social media, higher use of mobile and QR codes.

Consider working with an independent marketing expert, experienced in international trade and China marketing, to ensure you have captured all the relevant elements required in a China specific marketing strategy - including potential in-market business partners, business and cultural characteristics.

Multiple Transitions: Current Social Trends in ChinaChina’s population is at an historical turning point, with an increasing urban population (more than 50% of the population lived in urban areas at the end of 2010), a migrating population from rural to urban, a high percentage of ageing population and an increasing income gap between rural / urban dwellers and east / west geographical regions.

In the three decades since economic liberalisation began, China’s urban population has risen by more than 500m giving rise to the emergence of ‘Tier 3 and 4’ cities with urban populations greater than the total Australian population.

By 2030, Chinese urban areas will contain around a billion people - about 70% of China’s population. China’s high-spending middle class (est. 300m people by the end of 2012) has significant spending power with each estimated to have access to financial assets amounting to around ¥1.3million ($240,000).

This spending power contrasts with the disposable income of rural residents, which was approximately 33% of their urban counterparts.

However, more than 250 million rural residents will move to urban areas in the next two decades, joining over 220 million farmers who have already migrated to the cities. This migration accounted for 65% of the urban growth, posing challenges to social, political and education systems.

By 2020, China will have over 166 million residents over 65, representing 12% of the population. This will increase to 24% of the population by 2050, meaning China will have the world’s largest elderly population. (Source: Xizhe Peng, Fudan University).

Nice to meet you: the emerging Chinese Middle ClassChinese middle class have a strong preference for novelty, which leads them to constantly seek out the newest products available. While they enjoy the status conferred by luxury brands, they usually lack the emotional ties that would lead to brand loyalty.

Chinese luxury buyers are younger than their counterparts elsewhere in the world. An estimated 45 percent of Chinese luxury consumers are age 35 or younger, while the average Chinese millionaire is 37, compared with 56 in the Australia.

They are early adopters of new technology. China Internet users totalled 632 million by the end of June 2014, and its number of mobile subscribers tops 850 million. Overall, total internet penetration rate in China reached 46.9% (Source: CNNIC).

China’s urban population has risen by over

500 million in

the last 30 years

China has over

632 million Internet users

Find out more about China Digital Marketing

Watch our 60 minute webinar on Social Media in China with Senior Marketing Consultant Laila Hage-Ali and Manager for Greater China Region Sara Cheng.

China’s middle class has enthusiastically embraced digital and social media. Of the estimated 1.2 billion social media users worldwide, 400 to 450 million of them are in China. It is one of the most socially engaged markets in the world, with 84 percent of its Internet users participating at least once a month in activities such as video uploading, photo sharing, and microblogging.

Gain an understanding of the Chinese MarketAccess to market data and research is not as easy to source or commission, as it is in Western countries. Before undertaking any marketing or business venture in China, we recommend that you continuously develop your understanding of the market through:

• Undertaking a low risk, in-market test with potential buyers and distributors to collect feedback on your product attributes and branding. Programs such as our Export Growth China program can facilitate this at low cost.

• Monitoring consumer preferences and perceptions of your product.

• Monitoring competitive activity, and be prepared to modify and introduce new products or upgrade your marketing efforts.

• Reviewing marketing activities in line with consumer behavior and digital platforms. A ‘set and forget’ marketing strategy will not work

• Implement a gradual roll-out approach so that you can test for ROI on each marketing activity and make changes quickly.

• Ongoing education and information resources for key staff on the China market.

Developing a China Marketing StrategyApart from wealthy modernised pockets of population, the idea that you can market and position your products and services is a relatively new one in China. In many places China is still a developing country. For example, in urban areas hypermarkets, supermarkets, convenience stores and retail malls account for 65 percent of consumption, compared with 20 percent in rural areas.

Before deciding what marketing activity you want to use to set up in China, you should complete your China business strategy covering objectives, finance, experience, capacity, markets, products and pricing. This will guide your marketing strategy, including a definition of target audience and segments.

Your market entry strategy will affect the level of marketing resources required and approach taken. For example, working through a distributor may reduce the amount of marketing undertaken directly – as opposed to managing your own promotions, sales and promotions directly or online.

It is important to work with an experienced China Export consultant to identify and understand the implications of each option and determine the best market entry strategy for your company.

Setting up a China websiteIf you’re serious about a Chinese audience, you will establish a special Chinese website hosted locally and available in Mandarin – as less than 1% of Chinese web search is performed outside of the China internet firewall.

At a minimum, ensure you have Chinese language options on your current website for potential trading partners who are researching your company.

56.2% of consumers say the ability to obtain information in their own language is more important than price. 95% of Chinese online consumers indicate greater comfort level with websites in their language; whilst only one percent of US-based online retailers offer sites specific to China. (Source: The Globalisation and Localisation Association.)

In planning the design and layout of your website, you should make a conscience decision regarding the words, terms, phrasing or aspects or branding that remain in English as they have the potential to add value to the markets perception of your product.

SEO in ChinaWhile Google dominates web searches in the West, Chinese consumers are more likely to use its Chinese counterpart Baidu, the “Chinese Google”. Ensure that your site is fast to load (generally through hosting in China) and optimised for search on Baidu.

Online search is dominated by Baidu with 66.91% China search engine market share in the first quarter of 2013 by user visits, followed by 360 with 13.42% and Sogou with 9.32%. Google ranked a low 4th in Chinese market. (Source: EnfoDesk)

Unlike their counterparts in the West, the Chinese are more likely to click on a paid advert over an organic search result. Baidu continually warns consumers that organic search results are ‘unregulated’. That, combined with the rigorous set-up process to conduct PPC, almost guarantees the quality of the advertisers and improves buyer confidence.

Setting up a campaign can be difficult for businesses in Australia. Rather than working directly with Baidu from your Australian office, it is recommended that you work through your Chinese office (if you have one) or through a partner such as China Search International, which is Baidu’s certified partner here and in the US, or an agency. The process takes many weeks and the forms are numerous, so it’s important that you plan ahead, but a partner will safely navigate you through the pitfalls.

< 1% of Chinese web search is

performed outside

of the China

Internet firewall

Baidu

has 67% of the Chinese search engine market.

Google is the 4th

ranked search

engine in China.

Selling OnlineChinese consumers buy a wider range of products online than their Western counterparts. The top five categories account for only half of the Chinese market compared with 70 percent in leading Western markets.

Up to a quarter of online demand is for products consumers can’t find in physical stores. Research shows that most shoppers start their search with online retailing marketplace Taobao.com which in 2010 accounted for 80 percent of ecommerce volume. More products were purchased on Taobao in 2010 than at China’s top-five brick-and-mortar retailers combined. (Source: Boston Consulting Group)

There is a high use of social networking sites to check for product recommendations and price is not everything. Online shoppers are also concerned with finding unique products not available offline, better service, convenience and the fun of the online discovery process.

Mobile commerce is critical. In 2013, the Chinese mobile internet market reached 5.37 trillion Yuan (US$876 billion) and was expected to grow by 41.6% in 2014 to US$1.21 trillion. (Source: iResearch 2013)

Social Networks in China: the Major PlayersUSA/Western-based platforms such as Facebook, Twitter and Instagram are virtually nowhere to be found in China. Either banned or unable to compete, these globally recognisable brands have been usurped by local big-hitters such as Weibo, Qzone and WeChat.

Watch the Chinese digital tribes carefully - China’s social media trends change rapidly, and these new players have rapidly gained traction over incumbents such as RenRen.

China’s Social Media users are big on creating content and also much more likely to give feedback online for products and services they have received – 75% of internet users in China have provided a direct review for a product, service or experience at least once in the last year but up to 90% of online shoppers have commented on an experience using Social Media. By comparison, in Australia this figure is closer to 25%.

Weibo

Weibo.com has over 536 million registered users, with a large percentage actively accessing the platform via mobile devices. Launched in 2009, Weibo is a mico-blogging platform, actively used by companies to maintain contact with a large fan base. It is one of the most popular sites in China, in use by well over 30% of Internet users, with a market penetration similar to what Twitter has established in the USA.

QZone

QZone was launched in 2005 as Tencent’s answer to Weibo as a micro-blogging site. Realising that they needed to be more competitive, Qzone added multiple functionality to add value. Features such as games, photo sharing with audio tags and video appeal to the Chinese market of content creators and the number of monthly active users of Qzone has grown to over 645million, with 500 million active monthly users logging in via smart device

WeChat

One of the biggest online activities in China is instant messaging and WeChat’s 600 million registered users & 438 million monthly active users is testament to that. WeChat dominates mobile messaging in China with 82% of the market, and is emerging as the new giant in China social media - introducing new functionality in 2014 for mobile users and companies including photo, video and location sharing functionality.

Online Shopping and Online Payment were listed as some of China’s fastest growing online activities. WeChat caters to these activities by linking the app to a bank account, providing a payment gateway for users to pay for any number of online purchases from in-game purchases through to booking and paying for a taxi or buying a coffee. Following Tencent’s recent acquisition of a stake in oil company Sinopec, users will soon be able to pay for petrol too.

As most Chinese users don’t use credit cards (rather a national bank card), WeChat is the easiest way to shop for apps – including on the iStore (for which you need a credit card) so WeChat has significantly supported Apple’s app sales in China.

Business Networking sites

The total number of business social networking users in China was only 3.7 million in 2008 - but experienced high growth rate over the last few years to over 140 million.

LinkedIn’s English language site has been available to users in China for some years however the number of users has more than doubled to 5 million since LinkedIn launched its Chinese version in February 2014.

LinkedIn has recently achieved bi-directional connection function with Wechat accounts. Users can add Wechat profile as part of LinkedIn contact information and their LinkedIn profiles, LinkedIn Namecard, can also be displayed on Wechat. This is a very useful feature for users and powerful features for LinkedIn’s expansion as Wechat is now also widely used in business meet-ups.

Regardless, Linked In still has a way to go to catch up with its competitors: Dajie (27 million members), Wealink (20 million members) and Tianji (14 million).

Snapshot: A Typical China Social Media User

• Born after 1980 (82%)

• Completed secondary education (80%)

• Lives in 1st or 2nd Tier cities

• Purchase 54 % of goods and services in China

In 2013

China’s mobile

Internet market

exceeded 5trillion Yuan

90% of online shoppers in China have

commented on an

experience using

social media.

Astroturfing: Cutting your grass?

Astroturfing is when individuals are paid to go online and either leave positive reviews or comments in online forums for a product or brand; or to leave negative feedback against a competitor’s product or brand. Reportedly there are over 2m people employed in this activity in China.

WECHAT

BAIDU

QZONE

WEIBO

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Laila Hage-Ali Senior Marketing Consultant Laila has over a decade of experience in marketing. Her clients have ranged from small industrial businesses to multi-million dollar global organisations. Laila’s area of expertise range from high level strategy setting

and tactical campaign planning in a digital space and offline to copy writing and refining the customer service experience.

Sara Cheng Manager, Greater China Region With over 20 years’ experience in international trade and business consultancy both in China and Australia, Sara is a widely recognised expert on doing business with China and co-authored the book Engaging

China – The realities for Australian Business. Sara has assisted over 200 Australian companies with various business models across a broad range of industry sectors to successfully do business with China.

Jenny Zhang Senior Consultant, China Jenny has over 14 years of experience in international trade and business development in both China and Australia, across a broad range of industry sectors to successfully trade with Chinese counterparts. She has

also engaged with various Chinese government Ministries, Agencies and Industry associations at the highest levels to assist her clients and their business needs.

Phillip Parisis Digital Producer Phillip has over 10 years’ experience in strategising, creating and developing web solutions, lead funnels and optimising conversions for ASX200 listed companies, large and small online retailers and small businesses.

Phillip’s background also includes lecturing in web design principles and digital marketing strategy, as well as workplace experience from both client side and agency perspective.

About Us:Australian Business Consulting and Solutions is a multi-disciplined professional services business that helps companies improve their business operations and manage their compliance.

We support business growth in the areas of employee relations, OHS, business improvement, marketing, and international trade and currently consult to 300 businesses large and small. In the online solutions area, we provide online solutions to over 10,000 users annually.

A benefit of being a wholly owned subsidiary of NSW Business Chamber is that we are able to harness the connections and reach of NSW Business Chamber and the chamber movement, nationally and internationally to develop solutions that stimulate business growth.

Underpinned by business research and product development methodology, our services are continually reviewed and updated for relevance in the marketplace.

Our content development experience covers a range of business growth topics including:

• Strategy and planning, process and operations

• Marketing strategy, digital enhancement, brand development, web presence

• Trading in China, India and Latin America (exporting, FTA interpretation, gaining finance)

• Managing IR legislation and compliance (Fair work explained, the A-Z of IR compliance)

• Managing HR issues in relation to compliance (performance management, training, payroll)

• OHS management (system design, manual handling, return to work etc)

Untangle China’s Social Media

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BAIDU

QZONE

WEIBO

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Untangle China’s Social Media

Top Social Networks in CHINA

625M

45M

355M

40M

129M

300M

210M

8.2M

QZONE

RENREN RENREN

WECHAT WEIBO

WECHAT

MOMO

BAIDU

by monthly active users

The largest social network in China,

monthly active usershas 625,000,000

QZONE

DEVICES that Chinese use to go ONLINE

NETIZENS 98% Have a social media

account

Top Business SocialNetworking Websites

that’s more

than half of

global monthly

active users

equivaliant

in china

active users

users

topic boards

daily users

in 2013

China’s

China’s

Social media, but not as you know it ...

China’s

59% in

Australia

Banner

advertising

feature

44%

70% Desktops

Laptos

81% Mobiles

Dajie.com 926KWealink.com 369KRenhe.com 98KTianji.com 84KUshi.com 26K

China Hyper Social Media

300M

2M

75%

AUSTRALIA vs CHINA42.5M 2.1BSocial media accounts

Better international trade

Source: Chinainternetwatch.com, statista.com, InternetWorldStats, cnnic

brought to you by

australianbusiness.com.au

CHINESEwhispers

use review feedback before purchasing

People are paid to Astroturf (review)

of all online users provide feedback

Average Astroturf payment 7¢

CS

1865

australianbusiness.com.au Call 1800 505 529

Australian Business Consulting & Solutions

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Locked Bag 938 North Sydney NSW 2059

DX 10541 North Sydney

375 Wickham Terrace Brisbane QLD 4000

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Australian Business Consulting & Solutions works with thousands of businesses Australia-wide: we deliver professional consulting services and develop online business tools and resources.

Through our close relationship with the business chambers, we share their mission by helping Australian businesses succeed. Australian Business Consulting & Solutions is part of Australian Business Solutions Group.

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