Creating your China digital marketing strategy
Foreign companies looking to develop a successful marketing strategy
in China must first understand the significant cultural differences that
exist in the local market compared to other countries. To sell,
distribute and market your product or services in China it is crucial to
implement a well-thought marketing plan that takes into consideration
the different rules and ways of doing business.
One of the most common mistakes made by foreign companies is underestimating the cultural barriers. Many businesses fail to acknowledge that consumers in the Chinese market often have entirely different mindsets and motivations to those in the West.
The challenge for foreign companies lies in the delicate balance between maintaining the integrity of the brand or product and adapting to satisfy the expectations of the Chinese consumers. On the other hand, the brand protection laws may not be as effective as manufacturers or service providers are used to in the West.
In China, the fast-changing world of social media is not dominated by the powerful Facebook, LinkedIn or Google. Other players govern the space: Xiao Hong Shu, WeChat, Weibo and Douyin, among others.
While WeChat is one of the most significant platforms in China, there are other popular social media networks such as Sine Weibo (a microblogging network), Tik Tok or Douyin (a recently popular video social media platform similar to Snapchat), Toudou & Youku (Youtube of China), Tencent QQ (China ICQ), Toutiao (Ai News Platform).
Because of the many options available, it is important to invest time in studying and researching your target market in China before you decide which marketing tools you will be using to promote your business and achieve your goals.
Having a great product is not enough. Without a solid marketing plan or strategy, your product or services will probably get lost in the sea of products currently flooding the Chinese market.
The most frequently used channels for advertising in China are Baidu, Tencent Channels (Including WeChat), Sina Weibo, and Toutiao. There are many other smaller channels, with different rules. For example, to advertise on Baidu, there is a minimum deposit of 30,000 RMB (5k USD) just to get started. This amount must be deposited to create an account, regardless of when it is used.
All advertising in China requires that the company has a valid industry license, with very strict rules on what can be advertised. Some platforms can be accessed only through a partnered agency, which will act as your company’s account manager and media buyer. For this reason, many businesses prefer to work directly with an agency rather than managing their own advertisement account.
Though you don’t need to have a license to sell directly cross-border into China, companies do need a license to advertise. A possible alternative is to work with a local trade partner that can help distribute your products on their own TMall or JD stores.
Certain advertising channels will allow companies to manage their own accounts, but if they don’t spend enough money on a monthly basis, they may not get the superior support which often will yield better results.
Another important component of an effective marketing strategy is KOL marketing, which stands for Key Opinion Leader. This is the technical term for influencer marketing.
Though many business owners believe that KOL marketing or influencer marketing is simply showing a famous person or social media celebrity taking pictures wearing their product, in reality it is much more than that.
An Influencer or KOL is someone capable of influencing the actions and opinions of viewers, audiences, and followers, in any type of industry. An example of this is the founder of Tesla, Elon Musk, who exercises a significant influence in the world of technology and business. Another one, is Oprah Winfrey, considered one of the biggest influencers in the world.
In China, companies invest large sums of money in KOL marketing. It is a powerful strategy, but one must consider carefully the influencer you will work with. KOLs have different tiers, from mega stars to smaller, less known personalities.
Influencer marketing has grown rapidly in China and is considered a necessary part of any brand’s marketing plan. Influencers or KOLs have become commonplace on e-commerce and social media platforms. Ruhnn Holding Limited, which acts as an “influencer incubator” has been listed on the NASDAQ since last April, representing a sense of the size of the influencer industry in China.
For advertisers, especially foreign brands not familiar yet with the ground realities in the China market, it is important to note the increasing reliance on influencers. In this environment, it is crucial to understand both contracting risks and specific legal requirements to cover every aspect of influencer marketing.
There are different ways of contracting influencers in China:
1. “Unions” managed by an individual manager. Some influencers, usually those early in their career or not famous, act individually or together as a "union” (公会) via WeChat groups organized by an individual manager. This form is not legally protected.
2. KOLs often use professional agencies also serving as incubators. This has become recently a much more common model. Advertisers can enter into an agreement with the agencies directly. Many popular influencers are contracted out by the agency exclusively. Therefore, the brand/advertiser must reach the agency to negotiate the details of the cooperation of the relevant KOL.
There are a few key points that should be considered when negotiating promotional agreements with influencers in China, such as payment of promotion fees, exclusivity, behavior of the influencer and enforcement of IP protections.
The calculation of promotion fees varies depending on the agency and KOL. Some are fixed as a package while others may change based on sales effect or other parameters for which it is important to clearly specify determination of sales amounts and profits to be gained from the influencers’ promotion.
KOLs may be under exclusive promotion agreements with specific brands or advertisers prohibiting them from promoting similar products for other competitive trademarks. The scope of exclusivity should be clearly defined when contracting with an influencer.
The influencer’s behavior is closely watched by his followers. Negative behavior or improper comments by the influencer, including postings on social media, may weaken their influence or even break the law with serious consequences. Any agreement with an influencer should include provisions regarding keeping a positive image and forbidden behavior.
IP protections are not always enforced in the e-commerce industry in China. The design of a dress that a famous influencer wears can be easily copied by other online shops and sold with fake tags at much lower prices. Hiring an influencer can push sales but it can also damage the brand due to IP infringement as a consequence of the level of exposure. It is crucial that advertisers learn to utilize the IP protection systems on platforms such as Ali IP Protection while also seeking legal relief including cease and desist letter, administrative complaints and even lawsuits to target infringers.
Most foreign companies understand that marketing is important, especially in China. But in order to design a meaningful and effective marketing strategy, they should listen to locals and remember that consumer motivations may not be similar to those in other countries. Understanding these motivations could be the secret of success in doing business in China.
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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.