What can British brands learn from successful Chinese brands?
For Panel Session 2: The China View - Ran Guo, Director, Consumer Economy China, China-Britain Business Council was joined by Jerry Ji, General Manager of Public Affairs, Shanghai Hema / Freshippo , Zhu Dan, Business Operations Director, Douyin International, Grace Cheng, Head of Brand Business Development, HARMAY, William Lau, CEO of Bonnie&Clyde, Partner & Senior Vice President, USHOPAL, and Natalie Lowe, CEO & Founding Partner, The Orangeblowfish
After hearing about the UK experience, the focus turned to Chinese brands for a panel that explored how the Chinese retail experience, and how the evolution from offline to online has created ‘phygital’ spaces – where brands are no longer either bricks and mortar or online; they are both at the same time.
Ran Guo, CBBC’s Director of Consumer Economy, China, explained that China’s e-commerce market is almost the same size as the entire British economy and is only growing. However, offline retail still accounts for 72% of sales, with e-commerce at 20%, live streaming at 7% and cross-border retail at just 1%.
Although Alibaba, which owns Tmall and Taobao, accounts for 51% of e-commerce sales and JD.com makes up a further 20%, that shift is changing as live streaming sales pick up stream, led largely by Douyin. Clothing and daily necessities make up the majority of products sold on e-commerce platforms, while cross-border sales are made up mostly of cosmetics and food supplements, which are subject to stricter regulations in China.
Natalie Lowe, CEO and Founding Partner of The Orangeblowfish, said that the pandemic increased domestic luxury consumption in China, as shoppers restricted from travelling internationally looked to spend more at home. China currently accounts for a third of all global luxury consumers, and by 2030, 60% of all global luxury spending will come from China.
“Luxury brands are trying to make their products more accessible and integrated into their lives,” explained Lowe, using the example of Prada, which opened a store in a local fruit and vegetable market. This not only attracted a new audience but also went viral in the first 5-10 hours of the campaign. Louis Vuitton opened a restaurant in a century-old heritage building in Chengdu, which has enabled it to integrate into the local community, while outdoor equipment brand Arc’teryx designed a pop-up store that sees sunlight filtering through metal trees to create an immersive experience for customers. “Consumers don’t want transactions, they want engagement,” Lowe said.
William Lau, CEO of Chinese cosmetics company Bonnie & Clyde, described the journey of their average customer: first, they go to the shop and find a product, then they read reviews of said product on Xiaohongshu, and then they check prices on Taobao, where they will probably buy it.
This, Lau said, isn’t a problem as his parent company, USHOPAL, covers all elements of the digital purchasing experience, and nothing is lost to third parties. “The shop is a touch point where customers can see and experience the brand, not just a place that has shelves of product,” he says. Previously with offline sales, it was essential that sales were converted in-store, but today, he argued, stores are about experiencing the product and building a relationship between customer and product.
The event provided great networking opportunities
Grace Cheng, Head of Brand Business Development for multi-brand beauty product store HARMAY, said that HARMAY is a disruptor and different from traditional retailers as with more than 400 brands and 10,000 SKUs, they focus on variety and efficiency. HARMAY houses its stores in heritage buildings, integrating new brands with traditional culture and doesn’t differentiate between domestic and foreign brands. “We only care about quality and whether it will bring enough to consumers,” she said. HARMAY focuses on physical stores because “offline allows consumers to experience new products.” Nevertheless, when they shop in these offline stores, customers are rapidly converted onto the company’s CRM programmes, which include over 2,000 private WeChat communities and sales delivered by Meituan to ensure products are with customers within 30 minutes.
Jerry Ji, General Manager of Public Affairs for Shanghai at Hema, said that 30% of their business is online. “So why do we spend so much on offline? Because this is where consumers can come to experience the products. It is a place for Chinese consumers to see, touch and taste products; they might buy one item and then order online for further sales,” he explained.
Live streaming platform Douyin, which launched in 2016 and now has over 600 million daily users, is disrupting China’s e-commerce landscape, becoming the main e-commerce platform where entertainment meets commerce. “Douyin has made it easier and more fun to shop and connect with people and create content,” said Zhu Dan, Business Operations Director, Douyin International. “We have disrupted the consumer journey. The consumer’s decision-making process is very fast. From content to checkout - it happens in a snap.” With an incredible 80% year-on-year growth for e-commerce, it is clear to see that this strategy is working for Douyin.
Zhu Dan said that it is important that brands have a clear position and a clear target audience to succeed on Douyin. Of course, the quality of content and the use of key opinion leaders (KOLs) are also valuable. She references a video by an Australian hair care brand that resulted in three million product sales and said that brands, including Dermalogica, are increasingly becoming more sophisticated at in-house live streaming that has clear targeting and a defined audience.