China Consumer 2022 | How British Brands can win in China
The first day of CBBC’s China Consumer 2022 Conference was held in London on 28th June, with over 120 delegates attending to hear from a line-up of expert hosts and speakers discussing the future of retail in China, and current and future trends in the consumer sector. The event was composed of dedicated panel discussions as well as tailored breakout sessions, and offered cutting-edge insights and actionable takeaways for UK consumer brands in attendance, no matter what stage they were at on their China journey.
View the event photos here
View the event recording here
The day started with CBBC’s Chief Executive, Andrew Seaton offering Introductory remarks on China’s retail landscape. Soon to be the biggest importer in the world and with a middle class that is set to double to over 600 million people by 2030, China, he said, is an economy that UK businesses cannot afford to ignore. “With a high propensity to consume and a booming digital market, China has the power to transform businesses, and success with China means jobs and prosperity across the UK.”
He said that although China and the UK might currently have political differences, it is in the UK’s interests to look to rebuild exports as an important source of economic growth. “If post-Brexit Britain is not trading with the world’s biggest economy, then the losers are British workers, British businesses and the British economy,” he explained.
Above: CBBC's Chief Executive, Andrew Seaton offers introductory remarks
Antoaneta Becker, CBBC’s Director of Consumer Economy and organiser of the Conference, introduced the day’s sessions explaining that the last two years had seen changes in China that have caused people to question the liberalisation and opening-up of the country. Closed borders, government focus on domestic consumption and domestic tourism, the ongoing zero-Covid policy, and the repatriation of luxury spending have made the China market landscape more complex for British businesses.
Furthermore, the Chinese Government’s promotion of the Dual Circulation policy to boost domestic production and consumption and the Common Prosperity policy to even the gap between the wealthy urban population and the rural poor and redistribute wealth has been manifested in crackdowns on private education, the consumer Internet, Big tech and the gaming industry.
However, frequent lockdowns that saw people in China spend extended periods of time at home have only served to accelerate a digital transformation with China leapfrogging the UK when it comes to smart retail, social selling and creating full digital retail experiences.
The future of China retail is now
One of the main themes that kept being raised throughout the Conference was China’s digital advancement and the potential of digital retail and the metaverse: concepts that all British businesses planning to enter China should be fully aware of. Jeff Astle, Managing Director, Shanghai of APCO Worldwide, said that China was five years ahead of the UK when it comes to its digital economy.
It is also a myth, said Simon Boyd, Advisor to CurrentBody, that older people in China are not tech savvy. The WeChat ecosystem means that people of all ages shop, pay their bills and bank online via their mobile phone.
Jeff Astle said that whilst many companies are pulling out of China for various geo-political, logistical, or Covid-related reasons, now is the time to stand out. “Are you committed and willing to show your value to that market?” he asked, stating that brands that show they are invested in China and Chinese society for the long term will see the benefits compared to companies who are regarded as only being in China for short-term profits.
Above: Speakers - Tom Duke, Chloe Reuter, Chantal Khoueiry, Jeff Astle and Antoaneta Becker at the Panel Session: China Retail – Forecast of the Future
The common prosperity policy encourages all companies – including foreign companies – to do good and to give back, whether that is through training such as Harrod’s mentorship programme or through environmental or social programmes that showcase a commitment to Chinese society. As Carmen Chiu, Regional Managing Director, APAC of Fortnum and Mason pointed out, companies that fail to prove their credentials will get called out by Gen Z consumers who take to social media to criticise or champion products and brands.
An optimistic outlook
Although China’s zero-Covid policy and prolonged period of lockdown has led to an economic slump, Tom Duke, Deputy HM Trade Commissioner, DIT from the British Embassy Beijing, predicted a bounce back in the coming months, with a growth phase ahead.
Overall, Tom Duke, like most of the speakers, had an optimistic outlook for China over the medium to long-term. By 2030, China’s high-income bracket (those earning more than USD 40,000) will be higher than the entire APAC region, including India, Australia, and Southeast Asia, he said. He went on to explain that at this level, consumers look more at the quality, safety and environmental or social impact of products.
This shift towards a focus on products that meet the higher sustainability and safely expectations of consumers will be the dominant trend not just regionally but globally. This was echoed by global retail leader, Gillian Drakeford MBE in an afternoon breakout session on the differences between consumers in the UK and China.
“The Chinese consumer is passionate about ESG (Environment, Sustainability and Governance). It is very different today to a decade ago,” Gillian Drakeford said. Chinese consumers have shifted from a focus on price to a focus on safety, and now they are gradually putting bigger demands on visibility and traceability, she emphasised.
There has also been a recent wave of China Chic – known in China as guochao – a movement that celebrates Chinese heritage, nostalgia, pride, confidence, and experience, said CBBC’s Antoaneta Becker.
Finding your niche with Influencer marketing
Another noticeable trend mentioned many times throughout the Conference was the impact of Key Opinion Leaders (KOLs) and Key Opinion Consumers (KOCs) and how to work with them across an increasingly complex e-commerce and social commerce landscape.
Experts including Andrew Atkinson of China Skinny and Mark Bellamy of Aiken Digital spoke alongside CBBC’s Retail and E-Commerce Sector Lead, Pearl Zhu about the wide variety of platforms, their pros and cons, and how they serve different needs for different companies and consumers.
Finding the right platform for the right business, they all agreed, was essential. Many speakers touched on the fact that China is no longer cheap and investing in multiple platforms can be expensive if you want to break through the noise created by so many brands. Therefore, finding the right platform for the right company is the way forward.
Above: Speakers - Hugo Yang, Joshua Lim, Kai-Chuan Chao, Andrew Atkinson and Pearl Zhu at the Panel Session: Cutting through the noise – creative IP brand collaborations and unique marketing strategies that sell in China
As Simon Boyd noted, it’s ok to “find a niche within a niche within in a niche” and focus on that – as that niche opportunities may well still have an audience of hundreds of thousands. Spreading your brand thinly across too many platforms and trying to reach all audiences will be expensive and unlikely to lead to success.
“China is not a place where you can go in on a low budget with digital. It is a huge market with huge platforms, so you need a budget to get up in front of consumers and rise up the algorithms,” said Tom Duke.
“China is expensive, competitive and not for the faint-hearted,” said Chloe Reuter, Founding Partner of Gusto Luxe. Brands need to focus and understand what is possible, she said. They need a long-term plan.
Reuter explained that by 2025, 50% of luxury spenders will be Chinese. Therefore, it is important to understand Chinese Gen Z consumers, to take inspiration from them, and apply the findings here in the UK. It is not enough to just attempt to sell Western products to Chinese consumers without serious localisation.
Jake Xu, Co-Founder of men’s makeup brand, ShakeUp Cosmetics, pointed out that localisation no longer just means renaming products or adapting these for Chinese tastes; it now means adapting to expectations on speed, quality, customer service and payment processes. As well as using images and video over words and text and using live streaming and KOLs over traditional advertising.
According to Mark Bellamy, brands in the UK struggle to understand how video content produced in China is localised. “It’s very different,” he said.
Team up to stand out
Localisation and video content strategies were discussed at length in a session on IP sharing and brand collaborations. In China, it would not be uncommon for a luxury brand and fast-food brand or an alcohol brand and a gaming brand to collaborate.
CBBC’s Pearl Zhu said that consumers don’t just want a cross-branded logo on a product – they demand more in-depth collaborations. Kai-Chuan Chao, Head of Cultural and Commercial Partnerships at the British Library, explained how in addition to cross-cultural exhibitions and partnerships, the British Library has also licensed IP to companies including an electric toothbrush company. This is something that would be hard to understand in the UK, she said, but made perfect sense in China.
British supplement brand, Holland & Barrett has over 800 physical stores in the UK but is only selling via cross-border e-commerce into China, explained Joanna Zhou, the company’s China Manager. She observed unique market trends with other brands localising by infusing vitamins and supplements into bubble teas, rather than just selling pills and capsules. And for Holland & Barrett, using KOLs and live streaming events from their UK flagship store in Manchester has proved a big hit: reaching six-digit sales during one event alone.
Innovation, says Simon Boyd, is essential. Brands can’t just rely on their British heritage and expect to remain relevant. It is essential to constantly innovate otherwise local companies will innovate past you. Therefore, it is key to have new products constantly hitting the marketplace. Brands must also find local teams and partners to ensure they are aware of the latest trends and make sure promotions, marketing solutions and products are in line with the demands of local consumers.
Above: Speakers - Carmen Chiu, Simon Boyd, Joanna Zhou, Joy Isaacs and Anson Bailey at the Panel Session: Meet China’s Consumer Tribes – from mainstream shoppers to counter-culture communities
Keeping up with China’s changing tech landscape
The metaverse and new technology came up again and again throughout the course of the day, and Ayayi, China’s superstar virtual influencer, was mentioned many times. Joshua Lim, creator of Ayayi, explained that a virtual or programmable influencer can provide immersive experiences that humans can’t, as well as offer reliability to brands. This is particularly relevant after a number of high-profile KOLs and live streamers have been taken offline for committing cultural or political faux pas.
Keeping up with China’s changing tech landscape is something that has become harder for British companies in recent years as fewer people have been able to visit China, so it was useful for delegates to hear more about the various social and e-commerce platforms and how they are used from companies on the ground in China.
For example, Jake Xu explained that he might use Little Red Book (Xiaohongshu) for seeding, i.e., implanting an idea to a wider audience using a KOC, then Douyin for growing awareness of that product to a greater audience, and then Zhihu for garnering opinions on the product, and Tmall for harvesting and converting those viewers into customers. The entire social media system and the use of KOLs in China is completely different from that of the UK.
Above: Guests attending the Conference Day's Panel Sessions
The future of British brands in China
Over the course of the day, some key takeaways and themes emerged time and again. The importance of digital was one of those, including finding the right platforms, keeping on top of technology and understanding UK-China difference. Live streaming might well be giving way to the metaverse and virtual influencers but, as John Gearing - Vice President & Managing Director, Kontoor Brands Inc., Asia-Pacific - said, don’t be the first to move, make sure that the new technology is really going to take off before investing too much.
The importance of offering social or other non-commercial value to China and its consumers also came up again and again. Nationalism and domestic consumption are rising, with support from the central government, so it is important that brands ensure that their ethics reflect this. It is important to be seen to be doing the right thing for China, the Chinese economy and Chinese society.
This also ties into the increasing demand from Gen Z consumers for brands that are sustainable and can prove their green credentials throughout the supply chain.
But most importantly, the speakers all said that although there might be some short-term dips, consumption will bounce back and British businesses should remain invested in China for the long term so as to capitalise on the country’s growing consumer power.
The second session of China Consumer 2022: Meet the China Buyer and Chinese Influencer and Student Brand Ambassador Focus Groups will be held on 30th June 2022.
View the official event brochure here
For further enquiries about China Consumer 2022 please email CBBC’s Director of Consumer Economy, Antoaneta Becker at Antoaneta.Becker@cbbc.org
To learn more about CBBC’s Membership offer please email Membership@cbbc.org or visit www.cbbc.org/membership