What brands get wrong about China – and how to put it right

China

(Josh Appel

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ruby Chui, Partner, Brandnographer & Lyra Jiang, Research Lead, Brandnographer


In April, Burger King was forced to pull a promotional video it had aired in New Zealand following an angry reaction from consumers living 11,000km away.

The video, which featured a customer trying to eat burgers with chopsticks, had caused an outcry in China. Dolce & Gabbana suffered a similar fate last year after the company posted a video of a model trying to eat pizza and spaghetti with chopsticks, a move which ultimately led to a boycott of their products in China.

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These examples demonstrate not only the importance of understanding and being sensitive to Chinese consumers’ tastes and views – they also show how getting it wrong can have an enormous – and global – impact for brands.

Today, companies need to think beyond their tried-and-true branding strategies, marketing gimmicks and celebrity endorsements. As the Chinese consumer becomes more sophisticated, companies have to put in the work to really understand the Chinese market in order to gain relevance and market share – and they have to be aware, too, of how their actions in other markets may still influence their image in China.

Enhanced transparency builds trust and creates value

Nong Fu Spring, a Chinese mineral water and fresh produce brand, has effectively leveraged behavioral research to build trust and inspire brand loyalty. In 2016, Nongfu Spring launched its ‘17.5° digitally traceable orange’, which allows consumers to scan a QR code in order to find out where their orange comes from, how it was grown, its growing process, and other details regarding its quality.

 How do you like them oranges?

Image: Brandnographer

These oranges sell for a premium on the Chinese e-commerce marketplaces – double the price, in fact, of similar brands of oranges that originate from the same region. Why do 17.5° oranges sell well despite their price premium? Behavioural research suggests the following factors have helped to build confidence in the 17.5° product among end-consumers:

(1) Creating a benchmark that consumers can use

The perception of sweetness varies from person to person. By adopting an industry standard to quantify sweetness (in this case 17.5%), consumers have a benchmark they can use to objectively gauge their preferences for sweetness in oranges.

(2) Tech-enabled transparency builds consumer trust and brand loyalty

Consumers who scanned the QR code gained a more positive impression of the 17.5° brand. Openness around the production process, area of origin and even the name of the supervisor in charge of cultivating the fruit demonstrates to customers that the company is committed to transparency and accountability. By making this information easily available, a relationship of trust can be maintained between company and consumer.

(3) Consumers are willing to pay more for guaranteed quality

Many consumers cited the QR code when explaining why they were willing to pay a premium. To them, the information provided by scanning the code demonstrates that 17.5° oranges have gone through a rigorous selection process. The 17.5° standard helps consumers differentiate between a premium product and a less premium one.

Key takeaways:

● Companies should explore whether there are more objective, quantifiable and easily understood measures to highlight the premium quality of their products. This transparency will help consumers make an objective evaluation and more likely to choose one product over another.

● In order to build trust, companies should be open about providing the information customers want about their products.

● Product quality often varies widely between a premium and less premium product. Setting a standard is key to educating consumers about why certain products may cost more.

Celebrity endorsements are not what they used to be

The latest behavioural research suggests that celebrity endorsements and influencers who have a lot of paid and sponsored posts are falling out of favour with Chinese millennials. Instead, users are flocking towards grassroots, ‘long-tailed micro’ key opinion leaders (KOL) who provide more honest and candid reviews of their products. These types of KOL are ordinary people who specialise in niche markets and have a smaller number of followers.

 Authentic, grassroots endorsements are now more valuable than sponsored celebrity posts

Image: Brandnographer

Xiaohongshu, or Little Red Book, is a popular social media and e-commerce platform in China. Initially created as a platform for users to review products overseas and share their shopping experiences with other users, Xiaohongshu has since evolved into a major player in the social e-commerce platform space. The platform allows users to share product reviews, travel blogs and lifestyle stories and now boasts over 200 million registered users. Research has found that users of the platform preferred to engage with KOL who provide authentic, knowledge-specific content rather than celebrities.

To see this in action we can compare two social media posts, one posted by celebrity influencer AngelaBaby and another posted by Kaixingua, a grassroots influencer. Kaixingua posted a step-by-step series of photos which comprehensively documented her skincare routine. This post won her over 40,000 likes. Around the same time, celebrity influencer AngelaBaby posted about a baby product from a company by whom she is sponsored. This post was liked only 8,000 times.

Key takeaways:

● Companies should look beyond celebrity KOL as users become more selective and crave a more authentic experience with social media influencers. Content that is honest, genuine and unbiased wins ahead of sponsored posts that rely on celebrity alone.

● Companies should align their branding with their target customers. Behavioural research and ethnography can help to uncover the values, attitudes and aspirations of their desired user base and determine which grassroots KOL are best-placed to provide authentic engagement with their products.

A great lifestyle fit is more important than price

Traditional brands positioned their products at different price points based on quality (i.e. higher quality products command a higher price). As a more sophisticated generation of consumers in China start to penetrate the market, they are looking beyond price and quality and identify more strongly with brands that fit in with their lifestyle. Behavioural researchers and ethnographers can help brands to understand these consumption habits, and to uncover the underlying motivations of young Chinese consumers in order to unlock their spending power.

Uniqlo is one brand that Chinese consumers are finding to be a great lifestyle fit. In 2018, Uniqlo was crowned the top seller during Taobao’s ‘Double-11’ shopping festival in both the men’s and women’s clothing categories, earning CNY100 million (Chinese yuan) of sales in just 35 seconds.

Uniqlo is well known in China for its high-quality basic clothing, but it is Uniqlo’s approach in creating innovative products for any occasion that has been the key to winning over Chinese consumers. By creating versatile and high-quality apparel that integrates seamlessly into the everyday lives of its customers, Uniqlo has been able to gain a foothold in China.

Key takeaways:

Uniqlo produces a wide range of innovative and versatile products that appeal to Chinese consumers.

Chinese consumers are willing to pay for high-quality essentials that integrate into their everyday lives.

What does the future hold?

As older members of China’s Generation Z come of age, pressure is mounting on companies to understand how this generation differs from those that preceded it. It is no longer enough to use the same tried-and-true methods of traditional marketing to reach these consumers; moving forward, it will become increasingly important to work with behavioural researchers to uncover the underlying values, attitudes, and aspirations of young Chinese consumers and to track how they change over time.

Written with input from Sharon Lo and Garkay Wong

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