China’s economic resilience in the face of the global pandemic is nothing short of remarkable. While many nations grappled with economic decline, “Brand China” emerged stronger than ever. According to Brand Finance, China’s national brand value skyrocketed to a staggering $18.8 trillion in 2021, rapidly closing the gap on the US, which stood at $23.7 trillion.

This impressive feat can be attributed in part to the Chinese government’s swift response to COVID-19 and the implementation of significant stimulus measures. As the only G20 economy projected to have achieved growth in 2021, China’s economic engine is firing on all cylinders.

But the story doesn’t end there. A report by McKinsey paints an even brighter picture, identifying a potential consumption growth opportunity in China valued at a whopping $5 trillion over the next decade! The question remains: how can foreign brands seize this once-in-a-generation opportunity?

In China, consumers are drawn to brands that offer more than just products. They crave a connection, a story, a sense of responsibility, and a positive shopping experience. This trend has fueled the rise of community-driven retail, where brands leverage social media platforms like WeChat and Douyin to build a loyal following.

Did you know over 66% of retail professionals say online communities have improved their customer retention? Moreover, 55% have witnessed a direct boost in sales. These statistics highlight the power of community in today’s retail landscape.

The rise of community-driven retail in China has created a golden chance for foreign brands to build a rewarding shopping experience for locals.

Lessons from the East: China’s Community Commerce Boom

While not the first to explore community-driven retail, China has become a breeding ground for innovative practices. Western brands have dabbled in platforms like Reddit and WhatsApp, but China’s unique landscape has fostered the rise of “private domain” communities built on WeChat. This model allows brands to directly connect with customers through private chat groups, bypassing traditional advertising channels and fostering deeper engagement.

The Rise of WeChat Communities

WeChat Work, a collaboration platform launched in 2016, saw a surge in adoption due to COVID-19 lockdowns. Brands, facing disrupted sales channels and rising customer service costs, turned to WeChat communities for a solution. This multi-purpose tool served as a platform for Customer Relationship Management (CRM), marketing, and customer education. A prime example is Perfect Diary, a domestic beauty brand that skyrocketed to success. They created “Xiaowanzi” (小丸子), a virtual “makeup friend” within their WeChat community, enhancing the shopping experience and driving sales.

The Power of Community for Chinese Consumers

Chinese consumers are particularly receptive to community-based marketing thanks to the prevalence of private domains. Often looking beyond a simple customer-store transaction, they’re more likely to join communities for exclusive rewards and a deeper brand connection.

Understanding customer interests helps build communities around topics that they would like. Younger consumers gravitate towards conversational communities. Grouping customers by demographics, interests, or product preferences can create a space for organic discussions and build a loyal following.

Engagement is key: Not all community members actively participate. However, “silent listeners” still hold value. Partnering with KOLs can help activate these passive audiences. Remember, brands should avoid becoming “spam bots” – impersonal messages turn vibrant communities into glorified newsletters.
Start Now, Reap the Rewards: Building a community is a journey, not a destination. Customers crave a space to connect and share experiences. For emerging brands, “seed customers” are invaluable for market fit discovery. Established brands can use communities to build deeper brand loyalty.

What To Look Out For In The Future

The rise of AI-generated content (AIGC) presents exciting possibilities for brand communities.

Personalised chats: AI assistants can have friendly conversations with customers, building stronger brand connections.
Affordable AI managers: Brands can train their own AI helpers to handle tasks and act as virtual brand ambassadors.

Communities are vibrant spaces where customers participate in discussions, connect with like-minded individuals, and actively engage with the brand. This two-way communication goes beyond passive surveys. Brands can gather real-time feedback on products and services, and build a sense of shared ownership with their customers.

Imagine video game companies co-creating new features with players or beauty brands collaborating with their community to develop innovative products that meet unfulfilled demands. Rihanna’s Fenty Beauty is a great example – its inclusive shade range was directly influenced by feedback from the global beauty community. This co-creation process empowers customers and has the potential to generate viral excitement for new launches.

Cracking the China Code in 2024: Top 3 Tips for Foreign Brands

China’s dynamic market continues to hold immense potential for international brands. Here are the top 3 focus areas for foreign brands seeking success in China’s thriving landscape:

1. Tailor Your Brand Strategy for the Chinese Consumer:

Gone are the days of a one-size-fits-all approach. Today’s Chinese consumers are digitally savvy, value authenticity, and seek unique experiences. Foreign brands must adapt their messaging and offerings to resonate with these preferences. Collaborate with local influencers, boost your presence on social media platforms like WeChat, and prioritise mobile-first experiences.

2. Embrace Agility: Adapt and Innovate at Speed

China’s market moves fast. Foreign brands need to be adaptable and responsive to changing trends and consumer demands. Establish a local presence with empowered teams who can react quickly. Experiment with new marketing channels and tailor product features to local preferences. Don’t be afraid to learn from successful domestic brands and adapt their winning strategies.

3. Safeguard Your Intellectual Property (IP):

Protecting your intellectual property is important. Foreign brands should invest in securing trademarks and patents in China. Building strong relationships with local legal counsel is crucial for navigating potential IP challenges.

By prioritising these key areas, foreign brands can unlock the vast potential of the Chinese market and establish a strong foothold in this ever-evolving landscape.

How Can Foreign Brands Thrive in the Competitive Chinese Market

Forget about just competing with local Chinese brands – use them to your advantage! How can foreign companies learn from domestic players and adapt their strategies for success in China? Here’s all you need to know.

Understanding the ‘Guochao’ Trend

Chinese consumers are increasingly drawn to brands that embrace their heritage. ‘Guochao’ translates to “national tide,” and it signifies a preference for products that incorporate Chinese elements into design and marketing. This goes beyond simply adding Chinese characters; it’s about showing a genuine appreciation for Chinese culture and a commitment to the market.

Foreign brands can follow suit. Look at Nestle’s Cantonese-inspired ice cream, a great example of incorporating local cultural elements.

Mastering Social Media Marketing in China

Digital marketing reigns supreme in China, with platforms like WeChat offering a treasure trove of interactive features for both B2C and B2B companies.

WeChat: The “super app” is perfect to attract more customers. Use its gamification and customisation tools to create engaging experiences for consumers. Direct communication on private group chats builds a stronger connection.
Live Commerce: Platforms like WeChat, Tmall, and Douyin (TikTok) allow for real-time interaction with customers during their shopping journey. This interactive approach builds trust and caters to online shoppers' evolving needs.
B2B Marketing: WeChat official accounts help find new clients, connect with industry professionals, and build brand awareness through training sessions, live product launches, and exhibition invites.

Optimising for Speed and Efficiency

The Chinese market is known for its rapid pace of change and increasingly sophisticated consumers. Here's how to stay ahead:

Embrace Technology: Innovative solutions are readily adopted in China. B2B tech companies offering cutting-edge solutions find fertile ground here.
Shorter Supply Chains: Being physically present in China gives domestic brands a logistical advantage. Consider relocating manufacturing for faster product delivery and a more efficient supply chain.

Creating a Buzz-Worthy Product

Social media is a powerful marketing tool in China. Here's how to use it to make a buzz:

Design for Instagram (or Xiaohongshu): Eye-catching packaging like Saturnbird’s colourful coffee cups can go viral and organically boost your reach.

Collaborate with KOCs: Encourage organic product endorsements from everyday people who genuinely love your brand. Partner with platforms like Xiaohongshu and Douyin to tap into this powerful marketing strategy.
Empower Employees as Brand Champions: Turn your team into brand advocates by encouraging them to share company content and products on their social media.

Engaging in Online Forums and Digital Magazines

Unlike the West, forums in China remain a popular source of information.

Participate in Online Discussions: Platforms like Zhihu, a forum with over 95 million users, offer a stage to showcase your expertise and establish thought leadership. High-ranking forum posts can also boost your Baidu search engine visibility.

Bridging the gap between your brand and the local market can be easier with a helping hand. Consider partnering with a local marketing service provider to gain valuable insights and stay on top of Chinese consumer trends.

Building Trust: How To Win Over Local Chinese Communities

China's massive consumer market offers incredible opportunities, but building trust is crucial for success. Unlike Western consumers, the Chinese tend to be more cautious. Here are some strategies that will help you establish your brand as a reliable and trustworthy entity in the eyes of Chinese consumers.

Understanding the Chinese Consumer Psyche

China's economic boom has attracted major international brands, but cultural nuances play a significant role in purchasing decisions. Here's what you need to know:

Confucian Values: Family, respect for authority, and moral principles hold immense importance.
Face Matters: Products that enhance social status and offer value for money are highly sought after. Luxury brands are popular for their ability to elevate one's social standing.
Social Connections: Recommendations and word-of-mouth heavily influence buying decisions.
Evolving Preferences: China's growing middle class and Westernised younger generation are driving demand for high-quality products, creating openings for foreign brands.

Building a Strong Reputation

Positive Reviews and Testimonials: Building a strong online presence fosters trust. Encourage happy customers to share their experiences.
Embrace Transparency: Showcase your commitment to quality through certifications and endorsements. Highlight product safety measures to address concerns.
Corporate Social Responsibility (CSR): Demonstrate your commitment to social good through environmental sustainability or poverty alleviation initiatives.

Learning from the Best

Domestic Powerhouses: Brands like Huawei and Xiaomi prioritise innovation, quality, and affordability. They also build strong relationships with social media influencers and KOLs.
Localisation is Key: Successful foreign brands adapt their marketing efforts and change their messaging to adopt local preferences and lifestyles.

Building trust takes time and effort, but the rewards are significant. By implementing these strategies and understanding the Chinese consumer landscape, your brand can thrive in this dynamic market.

For more such in-depth insights, follow Comms8 where we help your brand expand into foreign markets.

At Comms8, we specialise in helping businesses leverage the power of cross-border marketing in Asia. With our expertise, we can assist you in harnessing the influence of marketing strategies to boost your brand’s credibility and awareness. Contact us today to learn more about empowering your brand in the dynamic Asian market.

China’s Booming $5 Trillion Market: How Can Foreign Brands Engage With Local Communities