Chinese consumers boast a high disposable income and strong desire to travel, so with one of the busiest holidays in the Chinese calendar drawing to a close, we take a closer look at how to engage this complex audience.
The impressive spending power of Chinese consumers, coupled with their love of travel, presents serious opportunities for Western brands, both at home and abroad.
Key dates for the calendar are China Single’s Day (11 November) and Golden Week (1-7 October), a week-long holiday established in 1999 by the Chinese government to boost consumer spending.
In 2016 alone an estimated six million overseas trips were booked by Chinese consumers during Golden Week, according to figures by Chinese travel firm Ctrip. A report by Ctrip and the China Outbound Tourism Research Institute also finds the average Chinese tourist spends over 8,000 yuan or £1,020 during their Golden Week trip.
The good news is, Western brands consistently prove popular with Chinese shoppers. Some 82% of Chinese consumers believe Western brands are as desirable as ever, according to survey of 1,000 respondents in mainland China conducted by survey specialist Toluna exclusively for Marketing Week.
Of these, 49% see the UK as a destination for experiences, followed by luxury shopping (31%) and discount shopping (20%).
Over half of those questioned (54%) say TV advertising is the most common way Western brands communicate with consumers in China, followed by outdoor marketing (36%) and working with influencers (26%).
Some 25% interact with Western brands on WeChat, the social media site for instant messaging, commerce and payment services, 21% on e-commerce site Tmall and 20% on microblogging website Weibo. The research finds 7% of British or Western brands are engaging with Chinese consumers on Zhihu, the Chinese question and answer website similar to US site Quora.
We felt that with having someone Chinese in our team we’d be able to get more of the brand across in those communications.
- Nicola Davy, Cambridge Satchel Company
Once in the UK, Western brands are adopting different strategies to communicate with Chinese consumers. Facebook is the most common medium brands employ (76%), followed by Instagram (51%), TV advertising (47%) and outdoor marketing (41%). Twitter (28%) and Snapchat (17%) are, by comparison, far less popular.
The majority of respondents agree Western brands could do more to engage Chinese consumers during Golden Week by advertising on social media platforms like WeChat, giving more bilingual information and offering gifts, discounts and tax refunds. The feedback also suggests brands should promote other aspects of British life and culture, not just shopping.
Arnold Ma, CEO of UK-based Chinese digital marketing agency Qumin, explains that while there is an older generation looking to interact with consumer brands, Chinese millennials are interacting with destination and experience-led brands.
“There’s the emerging middle class, this slightly older generation who are becoming more affluent and want to travel aboard. They buy mid-level luxury items to show off their status and wealth when they go back home. Now the pound is quite weak because of Brexit they’ll come over and buy because it’s cheaper than buying in China,” Ma explains.
“The other group are the younger generation, the kids of the parents who have grown up in the newly affluent China. These 18- to 24-year-olds are more of an audience for destinations, specific experiences and unique things.”
Having meaningful conversations with Chinese consumers before they travel to the UK means understanding their preferred forms of communication. The key platforms Western brands need to look at are WeChat and Weibo.
These social platforms give brands further access to influential ecommerce sites like Tmall and JD.com. However, part of navigating these sites means understanding a bit about the background, explains Ma.
“Tmall is banned on WeChat, meaning you can’t visit it on the WeChat browser. Tencent owns WeChat and they have a partnership with JD.com, so if you want to promote things on WeChat it’s best to use JD.comm” he advises.
“If you want to promote things on Weibo it’s best to use to use a Tmall store because Weibo has a partnership with Alibaba, which owns Tmall.”
Qumin recently worked on a WeChat campaign with Watches of Switzerland aimed at boosting brand awareness and driving footfall to the company’s flagship Regent Street store.
After accessing the campaign site through WeChat, users were prompted to answer two questions about their personality and interests. The site then automatically generated a custom video of “hidden gems” – locations in London off the typical tourist map like The Southbank Centre, Notting Hill and the Watches of Switzerland store. On launch day alone the campaign page attracted around 2,000 viewers.
Qumin also used a third-party CRM system to segment Watches of Switzerland’s WeChat followers depending on their preferences. Shoppers were able to make lists of the watches they wanted to view when they visited the UK via the WeChat app.
Katie Jansen, CMO of mobile marketing platform AppLovin, believes WeChat is the most important platform for Western companies to use when targeting Chinese consumers in the domestic market.
“Chinese consumers live on WeChat – it serves as their social network, messaging, commerce and payments, voice calling, gaming, entertainment, customer service channel and more,” she explains.
While WeChat is best for building and maintaining customer relationships, Weibo is best for advertising your brand and products, says Jansen. To take advantage of both platforms, she advises companies to use Weibo for brand awareness and then maintain those relationships through WeChat.
“WeChat should serve as your primary interface with your current clients and your target audience. If content marketing is part of your strategy, use WeChat as a way to spread your message,” Jansen adds.
“Weibo should serve as your channel for promoting your brand/product to your target audience. If you want to create something in the hopes that it will go viral, Weibo is the place to go.”
Dominating popular opinion
China is the Cambridge Satchel Company’s fastest growing market and second only in size to the UK. This summer the brand hired a China marketing assistant who runs the brand’s Weibo and WeChat platforms, as well as testing emerging new platforms.
“We were working with an agency that was based in China, but actually we felt that with having someone Chinese in our team we’d be able to get more of the brand across in those communications,” explains head of brand communications, Nicola Davy.
Despite segmenting its email database to target Chinese consumers, the Cambridge Satchel Company finds social media is the most effective mode of communication, in particular working with key opinion leaders (KOLs), the Chinese version of influencers.
Over the past couple of years the business has built relationships with a handful of influencers in the fashion and lifestyle area who have an affinity with the brand. Davy explains that it is crucial to work with KOLs who are relevant to the Chinese market as UK influencers do not have a presence on WeChat or Weibo.
Jansen agrees that KOLs are a crucial part of the marketing ecosystem in China, although the degree to which they should dominate the strategy depends on the brand.
“If you are a luxury brand, then yes, reaching KOLs should be the keystone of your strategy. In the mobile gaming industry, KOLs are becoming one of the most popular ways for publishers to launch and promote their new mobile games,” she explains.
“But if your brand is business facing, KOLs might be less important or at least not leveraged in the same broad-based way they are for consumer facing brands.”
The importance of platforms like WeChat does not lessen when Chinese consumers arrive in the UK. Davy explains that as soon as they arrive in store Chinese shoppers are chatting on WeChat with their friends, filming items and asking their friends which styles they want them to bring back.
“They use WeChat to transfer money between each other and it’s really easy to say ‘send me £100 and I’ll buy it for you’. We can see that they are looking on WeChat for recommendations and to see how people have styled it. That’s from the content we put out, but also what the KOLs and customers have shared,” says Davy.
“Because they’re travelling and taking things back for friends their average order value is much higher because they’ll buy seven bags, rather than one for themselves.”
Despite boasting a successful partnership with Hong Kong-based luxury department store Lane Crawford, Fortnum & Mason’s focus is targeting in-bound Chinese tourists to ensure they make its Piccadilly flagship store part of their travel itinerary.
Customer experience director Zia Zareem-Slade explains that while Fortnum & Mason is exploring the opportunities offered by Chinese social media, the brand is best experienced in person and therefore it is important to drive shoppers in store.
Alongside its newly forged partnership with TripAdvisor China, Fortnum & Mason is also taking part in the Best of British Exhibition in Shanghai this month to gauge levels of awareness and connection to the brand, in a bid to determine its future Chinese strategy.
Making the shopping experience as seamless as possible for Chinese consumers is also high on the agenda for the Cambridge Satchel Company. The brand has ensured its stores are located in tourist traps like central London, Edinburgh, Brighton and Cambridge. Then when it comes to deciding the location for a new store, Davy and her team analyse where Asian shoppers travel in Britain, right down to where the tour buses drop them off.
“We’re looking at growing our store footprint over the next few years and we’re looking at that map in terms of where would be good, knowing where tour groups go,” she explains.
“We have good relationships with the tours that operate there and work with the tour guides on an individual basis.”
High end tastes
For luxury destinations like Harrods or Harvey Nichols in Knightsbridge, holidays such as Golden Week and Chinese New Year provide a significant uplift in Chinese visitors.
Customer service and experience is a key focus at Harvey Nichols, which employs Cantonese and Mandarin speaking staff with an in-depth knowledge of Chinese cultural trends and traditions. Chinese consumers are also given the opportunity to purchase through China Union Pay and Alipay.
Over the past couple of years Harvey Nichols’ group stores director, Paul Finucane, has noted an evolution in taste among Chinese luxury consumers: “While traditionally Chinese customers have shopped the large international brands, over the past few years we have seen a shift in their shopping habits, as they seek newer niche labels and pieces with a playful twist, alongside the heritage British brands that they love.”
Alongside established names like Stella McCartney, Alexander McQueen and Valentino, Harvey Nichols is now seeing Chinese consumers selecting lesser-known fashion brands like Kent & Curwen, Loeffler Randall and Ming Ray.
The Cambridge Satchel Company’s Nicola Davy notes a preference among Chinese consumers for timeless British design, with red and oxblood leather satchels in small sizes proving especially popular. During Golden Week these styles are made more prominent in store, complemented with Chinese language point of sale. The brand also ensures visiting customers are made aware of its presence on Weibo and WeChat.
Instead of discounting, the focus during Golden Week is on value added incentives, such as a gift with purchase or personalisation, which involves embossing the satchels with the customer’s initials.
Tim Little, owner and creative director of premium footwear brand Grenson, agrees that Chinese consumers are often looking for products that are different from what they would normally be able to buy in their own market.
“From what I understand, they find certain Western brands and goods interesting because they are fairly new to that market and they’re able to buy things that they couldn’t buy before,” he explains.
“However, they do tend to be more interested in the big well-known brands that show their branding much more overtly. So they are more into a Gucci, Prada, Burberry or Louis Vuitton because they are famous Western brands.”
By comparison to the Chinese consumer, the Japanese customer is much more savvy about smaller niche brands like Grenson, showing a real interest in authenticity and heritage, says Little.
“I don’t know if the Chinese customer will develop in the same way as the Japanese market, but it’s a fascinating market for me because it’s more about the story than just the brand name. Whereas in most markets around the world the brand name is the most important thing and an interesting story comes second,” says Little.
Grenson is reviewing the Chinese market, where it currently sells wholesale to a Hong Kong-based retailer and online via its global website. When it comes to catering for Chinese consumers in the UK, Little admits location is everything.
“We definitely have Chinese customers in our stores, although not a huge amount. Most of our stores tend to be slightly off the beaten track, in more local locations in Soho and Shoreditch. We’re not in Covent Garden and Knightsbridge,” he adds.
“We have just opened a store in Jermyn Street. I was in there on Saturday and I saw some Chinese consumers in there then. Although again I think it’s the more obvious places where they shop the most, like Knightsbridge and a big retail complex such as Bicester Village.”
For any brand looking to attract Chinese consumers it is essential to really understand what makes them tick. Whether it is an appreciation of their changing tastes, an understanding of where they like to travel or how they interact with social media, brands who have done their homework on the Chinese consumer are perfectly positioned to reap serious financial rewards.