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Three key aspects before
entering the Chinese market

April 20th, 2020

Brand Adaptation - Digital Culture

Reaching Out to Chinese Consumers

China, as number two economy in the world, has always been distinct, especially when it comes to digital culture. The provision of internet services only started late in 1996, and by 2000 the total share of internet users was only 1.8% of its total population. Today, the number of internet users has exceeded over 800 million users, making China the country with the most internet users in the world.

Since then, technology and internet companies are quickly growing non-stop. The use of WeChat and Alipay increased from single-purpose apps to a wide range of different functions, from chatting with friends, renting a bike, paying for a taxi, buying train tickets, booking a hotel or grabbing movie tickets, to topping up your mobile, paying your electricity bill, ordering food delivery, shopping online or even sending gifts to your friends and family. All of these can be accomplished by just using one single app. Paying cash is no longer state-of-the-art in the urban cities of China. In fact, not using digital payment methods leads to social exclusion, as nowadays, most services in China are online, while some are exclusively online and only accessible by apps.

Furthermore, the craze for QR codes is also an integral part of daily digital life in China, where also beggars and street performers present a QR code to receive donations. Even the coffee culture, which is enjoying growing popularity and began with the entry of Starbucks into the Chinese market, is not immune to digitalization. With Starbucks in China, orders can be received through the company’s Wechat mini-program, so with the app, customers can order and pay, with the options of picking up the order at a nearby store, or having it delivered to an address.

KFC in China is stepping up their game even more with food delivery service by robots and drones, or (with another more traditional option) by humans through the delivery services Meituan and Ele.me.

At Alibaba's Hema grocery supermarkets, with operations in over a hundred cities in China, customers use their phone to scan a QR code at their table and begin ordering from the menu, all through the Hema app. While preparing the dishes requires human beings, delivery to tables is done by the robots, providing a frictionless customer experience.

Designing in Red and Gold Is Not Enough

Before you enter the Chinese market, what could your first impression of it be? It is surely not enough to just translate your brand’s content into Chinese and change every color to red and gold to thrive in the Chinese market. For a better approach, and without losing the brand’s own DNA, the design of your brand needs to be adapted to the Chinese culture, and not just by changing colors.

An important key factor here is mobile accessibility: According to eMarketer.com, in 2018, of the over 840 million internet users, 80% of them are accessing the internet from their smartphones.

As CNNIC said that, when it comes to online purchases, 95% of Chinese users prefer to access the internet from their mobile devices, it goes without saying that Chinese netizens consider smartphones to be their primary device.

On average, Chinese people spend 3 hours per day on their smartphones for different purposes: ordering meals, hailing a taxi, paying for transportation and, of course, online shopping. For this reason, it is crucial for brands to have an adapted design that delivers the right message through the right device to the right audience.

Chinese users prefer a greater level of content details, especially on e-commerce platforms. This is partially due to two reasons. First, Chinese educational training is primarily in reading and writing. A better content description gives the users a better understanding. Second, customers want to make sure that they are not buying counterfeit goods. A brand needs to provide the necessary amount of information in order for customers to feel safe and confident in making their buying decisions.

A key element for convincing potential customers is a page section which highlights origins, ingredients and manufacturing dates. Good content is made complete by nice, clear images to make customers feel welcomed and to encourage them to purchase. The visuals for holidays and campaigns are crucial and essential to reach the sales targets.

To create a pleasant interface, gradients are used in the background and buttons placed to soften the vivid colors for readability. When it comes to scenarios, they are more emotional compared to western web photos, and store images usually show a lot of storytelling and entertainment.

Compared to the past, designing in China has become more exciting because it now allows more room for designer creativity and innovative functions which combine not only e-commerce but also social media channels. In some respects, China has become the leader for several new trends in the design world.

What about Budget?

As a foreign brand, it is easy to be blinded by the promise of growing revenue when entering the Chinese online business. Germany, the largest national market in the European Union, has around 44 million potential customers in online trading, while the entire European domestic market has approximately 180 million potential online customers. The Chinese market is much larger: In 2019 China had over 840 million active e-commerce users.

The compelling idea with such a large number of potential buyers is that the sales should be far higher than those in the domestic market. So hypothetically speaking, if there are 19 times more potential customers in China, shouldn't the sales be 19 times higher? The potential is definitely there, but the complexity increases with the size of the market.

The competitive landscape in China is comparatively very different from what companies are used to in the European domestic market. Naturally, the size and attractiveness of the Chinese market has a strong appeal to companies and brands from all over the world. And as in the past, European brands might face competitors who only played a minor role before. In China, the best brands in the world compete with each other, with far-reaching implications. It is mandatory to carefully consider the brand positioning as well as the product assortment. Chinese consumers greatly benefit from these market conditions, and they are used to being able to get the best products with the best service for the best price.

The complexity of the Chinese e-commerce market is not only related to the competitive environment. The landscape of relevant digital channels is also much larger and more diverse than in Europe. While there are only a handful of relevant social media and online advertising channels in Europe, such as Instagram or Facebook, the landscape in China contains many local social media players. This means good knowledge and local expertise are key to selecting the right channels and investing the appropriate amount of resources in high-potential channels and campaigns.

The amount that a company has to invest in order to be successful in the Chinese market depends on many factors. Is the brand already known within the Chinese audience and, if so, how well known? Is the defined target group extensively courted? Who are the relevant competitors, how strong and how many are they? Depending on the answers to these questions, an appropriate budget must be allocated. One thing is true, especially for China: There is no such thing as a free lunch.

Sources: link.springer, webpower-group, it-consultis, qpsoftware, statista, destatis, europa, e-ir.info, internetlivestats, cnbc.

Photo: Tmall.