Category: Blogs

Posted 2021-10-25

By Boulanger, Mathieu*

McCafé, the coffee-house-style food and beverage chain owned by McDonald’s, and Dove, a personal care brand owned by Unilever, collaborated this September 2021 on a co-branding campaign in China, centered on coffee taste and frothed milk texture. Dove is stepping into the coffee theme with the launch of a bundle of 2 new skincare products, an extra foamy face cleanser and body wash formula containing extract of arabica coffee beans, while McCafé is proposing a time-limited cold coffee topped with especially foamy frothed milk to create the link to the texture of body wash’s bubble, both brand strengthening their common selling point together in their communication.

This unexpected association didn’t fail to arouse the curiosity of the Chinese public, especially with the opening in Shanghai of a “McCafé x Dove bathhouse” pop-up shop. The bright and colorful shop was well designed to attract the targeted audience, college students and young adults, offering them quite an experience. All elements were designed to make the place photo-worthy, quickly becoming a must-go place for young people to create and share their next social media post.

Different items and backgrounds were available for you to use and spice your photo, like a microphone below a shower-head that is slowly leaking soap bubble, or some wearable items to borrow for the time of your photo shooting.

The McCafé x Dove bathhouse does a great job to make it an interesting experience that people want to try out and share, making it also customizable and different enough for everyone to make their own experience feel unique.

Aside from Shanghai’s bathhouse pop-up shop, Chinese consumers located in the rest of the country weren’t forgotten. McCafé’s stores located in 12 Chinese biggest cities were also decorated for the occasion, and the special drink was available at all McCafé in the country, with free stickers coming with it, allowing you to customize your drink cutely and funnily, and once again maximize the sharing potential on social media.

Overall, the target audience is more focused on young women by the cute and colorful visual thematic, the focus is on making it photo-worthy, target audience that match Dove’s target audience for its new product.

Dove target for this campaign was to quickly generate awareness for its new products and generate sales in its Tmall store, Dove’s bundle being tagged with Tmall’s “Hey box” (天猫小黑盒) on the packaging at launch, a tmall special marketing resource reserved for the launch of new products by big brand on its market place. Dove also worked with KOL and other social media accounts to seed content and the link to its store to funnel more efficiently traffic to its store.

For McCafé, the main purpose of the campaign is to increase its brand image to the young people; that tend to prefer other alternatives like Starbuck for coffee, which enjoy a stronger premium image, or the many local Milk Tea shops, that are a closer competitor for McCafé, as they do also sell coffee. Milk Tea consumption is largely done by young women, therefore the target audience makes sense in term market size and potential growth, while the choice of the drink, a cold latte coffee, make the transition from milk tea easier for those young women. After searching some data on coffee consumption habits, I was actually surprised to discover that post 80s women are the main consumer group of coffee. (I would have expected young men to be the main group) So the campaign targeting make clear sense now. Chinese coffee market is still at an earlier stage of development and McCafé tries to grow and secure its place in the market by improving its image, generating positive first time customer experience with the brand while making sure that more and more consumers are willing to try out its beverage, distributing “buy one get one free” coupon during the campaign.

Some Campaign’s Metrics:

Now that we covered the main story, let’s review some data to summarize the campaign.

On Weibo (a Chinese microblogging platform like Twitter), the campaign was more active on McDonald side, with 3 publications, the first one being a short video getting 99 likes and 213 comments, launching the super-topic 麦咖啡开澡堂 (meaning “#McDonald open a bathhouse”), topic totalizing 17 million views, 10 thousand comments, and 608 posters. While this is good exposure, those numbers still feel a little low on China size, when we compare with usual posts from McDonald’s Weibo account, the engagement is quite higher for usual posts than those for the bathhouse campaign, but concerning the super-topic numbers, my take is that most of the use of the topic was made on other social media like wechat rather than weibo, since it is the hashtag that was used in the pop-up shop to get access to a small lottery and gain coupons. Besides their own official account, there was also some publication from food KOL that generated large views and engagement to the campaign and the super topic.

For Dove, Weibo was not a strong channel, they sent 4 publications concerning this campaign, the first three not exceeding 20 engagements, while the last publication sent after the campaign ended, managed 150 likes but with the used of other hashtags related to the end of the Chinese national holidays.

On the social media platform Red (小红书), searching for 麦咖啡开澡堂 ( “#McDonald open a bathhouse”) shows 700+ publications, 麦咖啡泡泡拿铁 （The name of the drink in Chinese ）shows 800+ publications, 多苏咖啡泡泡 （#DoveCoffeeFoam）shows 1200+ publications. Overall, both brands appear together in most publications inside the platform and the general opinion on the co-branding campaign is positive, people liking the concept and finding it interesting.

Unilever Tmall Flagship store (联合利华官方旗舰店):

The 2 bottles bundle is currently sold for 109 CNY (~$16.92). The store page of Dove’s bundle accumulated more than 300’000 units sold, which would be (very grossly estimated) 32.7 million CNY (more than 5 million USD) and 33 300 reviews. Reviews are largely positive and about the scent of coffee. In terms of units sold, this place the product at the 10th place among all other links, for only a period of a little more than one month. Most sales are probably concentrated in the first 10 days of the campaign.

Final thought:

McCafé x Dove co-branding campaign was an original and surprising one that generated a large exposure for both brands. It helped Dove to launch successfully its new product, but we will need to see how this product’s sales maintain onward, as the counter of units sold for the last 30 days already dropped to 2000+ units. Regarding McCafé, this campaign is part of its longer strategy to improve its image, and this campaign alone will not be enough, the brand will now have to work on how it can retain those newly acquired consumers.

Posted 2021-10-25

By Boulanger, Mathieu*

Double 11, also known as “Singles’ Day” originated as a shopping festival first initiated by Alibaba in 2009. Since then, it has become the world’s largest e-commerce event, and a period of extreme competition for brands, social media, and e-commerce platforms. Let’s check out some of the adjustments made by e-commerce and social media platforms before the launch of this year 2021 edition of the festival.

Taobao’s Product Seeding machine (逛逛种草机)：

“What should I buy during double 11?” is probably the question Chinese consumers ask themselves the most in this period of the year. From October 1st and until October 20th, the date at which Double 11 pre-sales phase start, a new content marketing tool has been implemented inside the Taobao APP, called Guangguang seeding machine (逛逛种草机) to help consumers answer that question. Guangguang is an already existing content channel where merchants, influencers, and consumers can publish short blog posts to recommend products. So, what difference does the new functionality bring to this channel then?

First, Chinese influencer content is more emphasized on the home page, and we have access to 3 types of trend ranking: by Topics, by Brands, and by influencers. The content is more focused on short videos and live-streaming, matching the current marketing trend of entertainment marketing.

Secondly, the experience is made more interactive for users with tasks to complete, like reading 15 posts or sharing a link to a friend, which will give you access to a lottery up to four times per day. A lottery that can reward coupons up to 49’999 CNY (~7760 USD) of purchasing power to happily empty your shopping cart.

Finally, a public benefit message is also associated with the activity, converting the “seeding energy” into support to the Asian Elephant population.

This new tool will help consumers to discover new products to add to their watchlist in preparation for the coming discount, by providing them with easier access to Chinese stars and influencers’ recommendations without having to leave the platform.

Taobao’s Senior-friendly mode(长辈模式APP):

Before this year edition of Double 11 festival, Taobao released an update of its APP on October 12th that include the new “Senior-friendly mode” (长辈模式). The mode simplifies the interface by removing many functions and contents less relevant to senior consumers while increasing the size of characters and making the voice search function easier to access.

This is a welcome move from the Chinese senior population that cited their difficulties to purchase online as one of their biggest concern.

Apart from impacting the display of information, the senior mode will also affect the product recommendations made by the application to better match the needs of senior consumers. We will have to wait and observe how this change impacts the consumption habits of the senior population and if it will lead to increased market opportunities, but for now, some obstacles remain in the purchasing process. They are still some part of the app that is not impacted by the resizing, such as written content on product’s page, but multiple solutions are already being beta tested by Alibaba’s team to solve the remaining issues.

JD.com’s one-hour delivery service (小时购)：

JD.com, the second-biggest Chinese e-commerce marketplace announced on October 12th a new purchasing/delivery model for its platform, called “小时购”, which means that products with this tag on their store’s page can be purchased and received by the customer in the following hour.

Speed of delivery is an important factor for Chinese consumers’ satisfaction, where the standard delivery time is already expected to be less than 4 days. JD.com is using its already strong and integrated logistic infrastructure to gain a competitive advantage over its competitor. This will be made possible with the collaboration of Dadakuaisong (达达快送), a Chinese delivery service, and the use of local store’s inventory in the proximity of the customers, from which goods will be collected and then delivered.

The model is not new in China, with many platforms having similar services but they were mostly centered on purchasing from supermarkets, fruit stores, and other specific types of stores. Here JD.com is expanding the model by integrating local shops as local “warehouses”. This new model will be especially impactful for smaller or remote cities that don’t have sufficient or local warehousing facilities. Concerning the profitability of this model, data is already supporting the fact that quicker delivery leads to more sales and growth. And the timing of launching this model just before double 11 is relevant, since the stress that the festival put every year on the delivery industry is enormous, and package can often take two weeks to reach their buyer, which can be two to three times the average time.

In the coming five years, this model is expected to become the new norm for the delivery time, which will prove challenging for cross-border brands that lack local presence and distribution channels, as their delivery speed will be considered slow.

Douyin’s Double 11 strategy (抖音好物节玩法):

Douyin (Chinese version of the APP TikTok) published its platform strategy for this Double 11 festival. The strategy revolves around supporting merchant sales through six programs that will bring rewards to best performers and best content. The overall strategy aims to reward quality of content over quantity, with gradual incentive programs linked to metrics like viewership, time spent on content, and sales generated, leading to financial reward and reduced cost for participants that reach the platform’s established targets.

The program is not open to anyone though, influencers and merchants wishing to participate need to first meet some requirements that are mostly related to viewership and the quality of content for influencers, while merchants are evaluated on their sales volumes and quality of service.

With this strategy, Douyin is trying to seduce top brands to invest more into its platform by offering them exclusive exposure and reduced marketing costs, while strengthening its integrated e-commerce capability.

Of course, those are only few of the many things happening prior to the festival. What about you? What do you think will have a great impact on this year Double 11 edition?

China’s Double 11, way more than just a crazy day of sales

Posted 2019-11-07

By Boulanger, Mathieu*

“Double Eleven”, also know as China’s “singles’ Day” and “Bachelors’ Day”, is China biggest and most famous E-commerce festival, and it is just few days away from now! But what do you really know about China number one shopping Festival? I am sure we all heard at some point about the craziness of Double 11,and read about those gigantic numbers that completely shadow any retail festival in the world in term of sales, revenue, and logistics. But Double 11 is way more than just a day of discounted price. And since it’s creation in 2009, it ceaselessly grew in-depth and complexity over the years.

Double 11, started on Alibaba’s E-commerce platform Tmall for the first time in 2009, with only 27 brands participating. Even so, the sales were a great success and the event was reconducted every years until now, becoming the major retail event as we know it nowadays.

In 2014, Alibaba trademarked the term“Double 11”to prevent it’s use by other E-commerce platforms, but such a huge potential cannot be let unchallenged by competitors. Therefore, all Chinese’s E-commerce retailer joined the game, competing for consumers’ attention，using different schemes and strategies. For example, JD.com hold eleven days of discounted price starting from November 1^st .

Behind the scenes of “Double 11”:

As we said before, there is a lot more happening than just discounted price.
Preparations for Double 11 often start two months prior the peak of the event.

#1 – Planning Phase:

Starting in September, Merchants must plan their marketing strategies and decide if they want to join Double 11 event. As merchants wishing to take part must apply for the event first, around mid-September, and wait for Tmall approval. They should actively raise their brand awareness and reputation as early as September, because the closer we are from Double 11, the fiercer the competition for consumers’ attention become . Therefore, brand should reinforce their presence in most of Chinese social media like Wechat and Weibo, and have more collaboration with Chinese KOL.

#2 – Storage Phase :

One of the main concern of Chinese consumers that will directly impact their satisfaction is the delivery time. Double 11 will stress test your logistics capabilities, and it will be one of the greater challenge to any merchant participating Double 11 festival for the first time. Alibaba will requires all packages to be shipped within four days following the purchase, either your are based inside ou outside of China. You must be sure that you have enough stock and that your team is ready to ship most of it in those few days delay.

#3 – Warm-up Phase:

Starting three weeks before Double 11 festivals, it is time to aggressively raise your products awareness. As Chinese consumers tend to do quite a lot of research before making a purchase online, you want to be sure there are aware and educated about your product because they will not have the time to do it during the heat of Double 11, where they will be to busy getting the products they want before stocks run out.

During this phase, you will be able to secure sales through Pre-sales. Pre-sales are advantageous for both merchants and consumers. Merchants can better prepare their stock, and consumers can secure purchase of product they want at the best discounted price. It is common during this phase to reveal the final discounted price in order to create a sentiment of urgency for consumers and give them incentives to pre-order or be ready for the final day.

#4- The D-day of Double 11:

Double 11 is here, Chinese consumer will start the spending spree on November 11, from 00:00 and until 23:59. The biggest challenge will be to have a customer service ready to answer questions all night and until the end of the event to not miss any sale opportunity. Your logistics department will have to work fast to handle the rush of packages and meet shipping date’s deadline and minimize customer’s waiting time.

Consumers’ attention will be completely monopolized on getting the best deal, competing on flash sales, following KOL to discover good offers, and trying to validate their order while Alibaba’s E-commerce platform slowdown under the massive traffic. This is why all brand need to careful prepare and conduct their marketing strategy prior the final day.

For this year Singles Day festival (2019), over 200,000 brands are expected to be a part of the festival. They will offer a selection of one million new products to more than 500 million customers, an increase of almost 100 million over 2018.

Want to be part of next year festival? Contact our team of experts and be fully prepare to enjoy the biggest E-commerce festival in the world.

Tmall Global: Your key to the cross border Chinese e-commerce market?

Posted 2019-09-28

By Boulanger, Mathieu*

So you have decided that Tmall Global is the platform that suits your business better than the alternatives, but what are the next considerations and the requirements to establish yourself on the platform?

Introduction

Tmall Global is the largest cross border e-commerce platform in China and since the platform was introduced in 2014 the number of cross-border e-commerce retail consumers has grown rapidly, having increased tenfold by 2017. This strong growth trend has continued to steadily increase since then.

Tmall Global helps streamline the process into the vast and diverse Chinese e-commerce environment. It allows cross border businesses access into the market without many of the crucial documents and requirements that are needed in order to establish a regular TMALL flagship store.

For any company that seeks to enter into and flourish in the Chinese market, the opportunity presented by Tmall Global may sound like an attractive proposition. This article will further inform you on the platform, it will explore the various options that it has to offer and will highlight a number of important factors that are worth taking into consideration.

Requirements

Tmall Global works upon an invitational basis. Specific companies are selected and offered the opportunity to join the platform. Only highly sought after overseas merchants are desired, as they appeal most to the high-end consumers interested in luxury foreign goods. Generally Tmall Global target businesses that have been operating for over two years and which generate more than $10 million dollars revenue.

It is focused around opening the Chinese market to companies that are based and registered abroad, and have not yet established operations on the Chinese mainland. Unlike a regular Tmall flagship store, establishing a Tmall Global store does not require your business to have been registered in China for a year nor does your business need a Chinese trademark.

While a Chinese bank account is not required for Tmall Global, you must set up an Alipay account. Alipay is an online payment system that can be compared to PayPal. Once this is set up payments linked between your Alipay merchant account and your domestic bank account.

Tmall Global requires more basic merchant information than the regular Tmall platform. Fewer and more easily attainable documents are needed, such as trademarks in the businesses country of origin, stock certificates, completed brand and product category forms, a valid business licence and copies of bank statements are among the most significant required documents.

While you are required to provide fewer documents on the Tmall Global platform in comparison to the regular Tmall platform, your brand and its products must comply with Chinese consumer laws. You must be able to prove your products are genuine and pass both Chinese customs and Tmall Global security checks. Product webpage descriptions and labelling must also be provided in Chinese, and importantly, Chinese language customer support and after sales teams are required in mainland China, Hong Kong, and Taiwan, if you sell commodities to those respective regions. This is a necessity, as they deal with returns and any issues customers have post purchase, which is linked to the deposit payment.

Tmall Global Partners

Tmall Global has Third Party service providers, Tmall partners, who assist your company through the process of store application and development. They guide your businesses entrance onto the platform and into the Chinese market. They assist in your preparation of all the relevant documents and information that is required, as mentioned above. Tmall partners help you overcome many of the issues that may otherwise arise from the various requirements of establishing a regular Tmall flagship store. These are outlined in the in the previous article (click link here).

For example, Tmall Global does not require your company to have arranged your own storage facilities and a logistical network within China. Tmall partners can arrange bonded warehouses and help your company with the logistical difficulties by providing assistance from their trusted partner Cainiao, a large logistical company that is also part of the Alibaba group. This would act as an alternative to the other Tmall Global cross border option, where your business would directly deliver packages from its domestic supply source.

This additional support and streamlining process does come at a cost though. The initial deposit that is required to establish a store on Tmall Global ranges from 25,000 USD up to around 45,000 USD depending on the companies industry and its products. This is a one-time fee (held in Tmall Global’s Alipay account) and is used as a guarantee in the case of any damages or expenses incurred by Tmall Global or any customer, or as a result of merchants’ breach of the terms and conditions. Additionally the annual fee is either 5,000 USD or 10,000 USD depending on the product. While the higher start up and maintenance fees include additional services, it is important to be aware of the additional costs and to take them into consideration.

Time To Market

The entry process of establishing a Tmall Global storefront can be divided into the following steps: entry preparations, store application, store development, pre-launch and eventually launch. This process often takes around 4 to 8 weeks to complete and may seem like an attractive alternative if your company is not yet registered in China. This is compared to a regular Tmall flagship store, which requires your business to have been registered in China for a year. The prospect of this considerably shorter time to market would save your business crucial time and money.

Another factor that applies specifically to Tmall Global and drastically decreases the time to market is that there is no requirement for products to be approved and licenced by the National Medical Products Administration (previously known as the Chinese food and drug administration, CFDA). This is often a costly and lengthy process, and avoiding it means that Tmall Global merchants their products can be sold directly from the foreign country to the Chinese consumer. This applies most significantly to the foreign, luxury, cosmetic and supplements industries that perform extremely well in the Chinese e-commerce and cross border spheres.

With years of experience in the Chinese e-commerce and Chinese cross border business market, our specialists can help establish your business onto the Tmall Global platform. If you feel that Tmall Global is right for your business, but you have not been invited onto the platform, contact us and we will help with your entrance into the Chinese market.

Also be sure to check out our upcoming articles, which will focus on China as the largest e-commerce market in the world, and how the foreign and luxury goods market are booming.

Posted 2019-09-10

By Boulanger, Mathieu*

Tmall and Tmall Global are both crucial e-commerce platforms in China, but how do they differ from one another and which one suits your cross border business best?

Introduction

The Chinese e-commerce market is the largest single market in the world, far surpassing even the USA in terms of both the number of consumers and the annual revenue.

The Alibaba Group dominates the Chinese e-commerce market operating the largest e-commerce website in China, the C2C platform, Taobao.com. The largest B2C platform, Tmall.com, is also part of the Alibaba group and holds over 61% of the B2C market share. It is the most visited B2C retail website in China, with 97% of Chinese online shoppers using the platform. In a not entirely accurate comparison, Taobao can be likened to a Chinese eBay, a busy online marketplace with a large numbers of vendors. Tmall on the other hand is closer to Amazon, a more structured online shop, where the goods sold, come from quality brands and are either sold directly by the brand at a flagship store, or alternatively by reputable third party e-stores.

Tmall flagship stores offer brands an opportunity to exclusively sell their own products and connect directly with the customer through their own interface, as opposed to third party merchants selling their products. Establishing a Tmall flagship store is not dissimilar to creating your own website. Businesses can design, create and manage their flagship stores on the Tmall platform and are responsible to independently promote their brand and organise customer service and logistics. The key benefits of a Tmall flagship store is giving your brand a better degree of credibility and exposure to the vast consumer traffic that Tmall receives, recorded at over 500 million active monthly users in 2018.

Tmall

Opening a Tmall flagship store exposes any business to an entirely new market with regular traffic of over half a billion potential customers. While this process could become hugely profitable for you business, there are a number of challenges that are worth taking into consideration.

There are a number of requirements that need to be met in order to set up a Tmall flagship store, these can take time, and could prove problematic for businesses seeking to engage in cross border trade. To be accepted onto the platform and begin trading, your company must have been a registered business in China for at least one year before your application is approved. It also must have a registered capital of at least 1 million RMB. Additionally your business must have an offline presence in China, meaning some sort of logistical arrangement where your products are stored and can be delivered within the Chinese mainland.

In addition to these prerequisites there are a number of different regulatory and licencing documents that must be obtained or produced to open flagship storefront. These are outlined in the table below:

As the graph below indicates Tmall generates remarkable revenues, and looks set to continue to grow at a substantial rate. Access to the huge consumer base and revenue stream, does come at a cost, and this depends on which products you are bringing to market. The initial deposit is either 50,000 or 150,000 RMB (approx. $7,000USD or $20,000USD). An annual fee of either 30,000RMB or 60,000RMB (approx. $4000USD or $8000USD) is also charged by Tmall.

Establishing a Tmall storefront may seem a daunting task and difficult logistically with the resources at your disposal, but do not despair! If tapping into the largest e-commerce market in the world seems like a valuable proposition for your business, take a look at our website which explains our various services that can be tailored specifically to your needs, and do not hesitate to get in touch.

Tmall Global

Alibaba also offer Tmall Global a separate channel on the broader Tmall.com platform. It has completely revolutionised the cross border e-commerce market in China and makes entrance a more streamlined process and therefore a much more attractive prospect to many companies.

The platform allows businesses located outside China to take advantage of the huge and highly lucrative Chinese e-commerce market, by helping to solve many of the administrative, logistical and legal challenges they may otherwise face. You don’t need to be a registered business in China for a year nor do you need a warehouse in China, Tmall Global can organise bonded warehouses and its trusted partners, such as Cainiao, can fulfil the logistical requirements. Unsurprising for all this assistance there are higher financial outlays both initially and annually.

While Tmall Global somewhat simplifies the process of establishing and growing a foreign business in China, a significant barrier is the fact that entrance onto the platform works on an invitational basis. With customers paying premium prices, both the platform and its consumers desire only popular and premium brands and products. Unless you are a well established and highly sought after brand, it could be difficult entering the Chinese market via Tmall Global, though not be deterred by this, Up2China and its specialist partners are able to assist your business in the invitation process.

If Tmall Global sounds like it might be the right platform for your business find out more about the platform and the opportunities that it presents in the Chinese e-commerce market in our next article.

China, a country where cash doesn’t exist – WeChat, Alipay

Interestingly, China (more specifically Chengdu) was the first country to introduce paper cash, yet it now dominates cashless mobile transactions. In 2016, the Chinese spent $5.5tn through mobile payment platforms. For comparison, this is 50 times more than the US. For this reason, it is crucial for your business to tap into this market and use China’s high smartphone usage to reach Chinese consumers.

This blog post will discuss ways to take advantage of this massive smartphone market, such as ensuring your website is mobile-friendly, compatible with Chinese phones, and integrated with Chinese payment methods.

Payment methods – in-store

How would you summarize China’s payment methods? In just three words: “QR codes everywhere”. It is very common for people to carry nothing but their smartphone. In fact, a recent survey found that 70% of people thought carrying cash was unnecessary². Long gone are the days when people would use cash and cards; nowadays, instead, people carry phones and power banks!

Chinese consumers do not just use their smartphones to purchase products online through websites and mobile apps; they also use them to pay in physical stores. China is far ahead of any other country in that matter, with over 38% of shoppers using their smartphone to pay for products in-store³.In some cities, even buses, street vendors and market stalls support this payment method. Furthermore, in Hangzhou, home of technology innovator Alibaba, visitors of the major Buddhist temple can even make electronic donations with the payment apps. This works through two different providers, WeChat Wallet or Alipay.

The two Payment Methods in China: Alipay and WeChat

China’s mobile transaction market is immense. During the first three months of 2017, transactions amounted to 18.8tn CNY ($2.76tn)⁴. Alibaba’s Alipay and Tencent-backed Tenpay (embedded in the WeChat app and called WeChat Pay) hold 90% of the market share1 for mobile payments. This leaves little room for competitors and makes market entry difficult. A prime example is Apple; even in China, a well-distinguished firm, it launched its own payment method in 2016 but struggled to become a genuine threat to the dominance of already established Chinese versions.

WeChat Wallet (微信支付)

WeChat is a very popular multi-functional “super” mobile app with more than 938m active users globally (almost 1/7 of the world’s population). 500m of these are in China alone. There, WeChat users make up 79.1% of all mobile phone messaging app users⁶. In fact, WeChat is considered the most advanced mobile messaging app globally because of its functionality and the array of services it offers to users and businesses⁴.

WeChat links users’ bank cards to the app, allowing them to scan QR codes to make payments. The WeChat wallet function is a very popular feature with over 300m users (as of 2017) having their credit card linked to their account⁷. The feature provides a clear and simple way to make in-store purchases. Users get an immediate notification when the code is scanned, and a separate ‘service message’ notification appears in the app’s chat section once the payment goes through. By clicking the service message, users can view previous transactions, making it easy for Chinese consumers to track their spending. Additionally, for those concerned about privacy, money is sent as a one-off, meaning there’s no need to sign up for mailing lists and no user information is exchanged.

WeChat Pay is a truly multifunctional app which also allows firms to provide coupons and loyalty cards. Coupons allow users who follow the company’s WeChat Official account to get discounts when making a purchase. A common way to do this is through “VIP cards”, which help increase customer loyalty by offering better prices, discounts, money-off, and rewards. This allows consumers to get better value for money and enables firms to gain customers’ loyalty, increased popularity, and self-promotion.

But it doesn’t stop there. WeChat’s wallet feature can be used not only to pay in physical stores but also to transfer money between two individuals through a “simple transfer” or a “red packet”. The former refers to the direct transfer of money into the other person’s account; the latter is based on the Chinese tradition of ‘hongbao’ (red envelope), where money is given as a gift.

Each of these money transfer methods is simple to use and takes effect almost immediately, making it easy to track incoming and outgoing spending. In addition, the app lets users move money between their bank account and the app effortlessly, as much as they like, which further supports expense tracking.

Alipay (Zhi-fu bao 支付宝)

Alipay is China’s most popular payment app, with over 450 million registered users worldwide (2017)⁸, 100m daily active users⁹ and 300m users in China¹⁰. Alipay is known as the “Universal PayPal,” which, in fact, overtook PayPal as the world’s largest mobile payment platform in 2013¹¹

Alipay offers a payment system similar to WeChat, allowing users to pay for day-to-day expenses, pay bills, transfer money between individuals, and move funds to and from their bank accounts. Alipay provides payment services globally for 65 financial services, including Visa and Mastercard¹², as well as payment services for Taobao and Tmall, China’s largest online retailers (like Amazon and eBay in the Western world), along with over 460,000 Chinese businesses¹³. Furthermore, Alipay currently supports transactions in 14 major foreign currencies.

Alipay recently launched facial recognition and “smile-and-pay” technology in Hangzhou to attract younger users. This technology doesn’t even require users to carry their phone and is one way Alipay hopes to expand globally and ensure future growth.

Although Alipay is available worldwide, it doesn’t command the same dominance in Western society as it does in China. This is because established mobile payment apps like Apple Pay and Google Pay make it difficult for Alipay to enter the market. However, its expansion still mainly aims to support Chinese tourists who travel abroad.

Summary

These payment methods provide a range of benefits to Chinese consumers, allowing them to make quick, easy in-store payments, pay bills, and transfer money. Individuals can track their spending and receive immediate notifications. The rise of mobile payment apps is especially important because Chinese customers don’t like to use credit cards, as it technically puts them in debt. A recent study found that only 1% of transactions in China are made by credit card15. Therefore, the mobile payment market seems like the logical way to establish a cashless society.

Thus, to expand your business successfully, it is crucial to be aware of this and use online, mobile, and non-cash payment methods. This way, your business will reach Chinese consumers more easily and get the most out of expanding into China. People buy using QR codes, and vendors sell using QR codes; this makes everyone a potential customer!

References:

1 – https://www.npr.org/sections/alltechconsidered/2017/06/29/534846403/in-china-a-cashless-trend-is-taking-hold-with-mobile-payments

2 – A survey recently conducted by Beijing Youth Daily showed that
3 – https://www.applause.com/blog/mobile-payments-global-adoption/

4 – China’s WeChat and Alipay lead the world into a cashless society
5 – https://techcrunch.com/2017/02/28/apple-pay-china-one-year-on/
6 – China’s WeChat and Alipay lead the world into a cashless society
7 – from blog number 1, older version
8 – https://techcrunch.com/2017/05/09/alipay-first-data-us-point-of-sale-expansion/
9 – https://expandedramblings.com/index.php/alipay-statistics/

10 – https://www.cultofmac.com/430111/in-china-you-pay-with-cash-or-alipay/
11 – John Heggestuen (11 February 2014). “Alipay Overtakes PayPal As The Largest Mobile Payments Platform In The World”. Business Insider.
12 – ↑” About Alipay”. Alipay. Retrieved 10 October 2013.
13 – https://bafybeiemxf5abjwjbikoz4mc3a3dla6ual3jsgpdr4cjr3oz3evfyavhwq.ipfs.inbrowser.link/wiki/Alipay_(payment_platform).html
14 – https://www.techinasia.com/alipay-mini-programs-open-to-devs
15 – https://www.marketplace.org/story/2008/09/05/chinese-prefer-paying-cash

Posted 2019-07-02

By Boulanger, Mathieu*

China’s unique e-Commerce industry is not only the largest in the world, but is setting the precedent for online retail on a global scale. Characterized by innovative social business models, credible payment procedures, secure delivery processing along with exponential growth in online mobile purchases, a number of opportunities are available to companies looking to expand their business operations.

However, organizations need to be aware of the prevalent intricacies when formulating marketing strategies to penetrate China’s e-commerce industry, especially when compared to how differently it’s Western counterpart functions. To overcome these challenging obstacles and increase your brand’s presence, we have recently launched our new and innovative Express Model, designed to aid your company in directly reaching the Chinese consumer at a cost-effective price.

With modern global consumer patterns showing a higher level of demand for sharing economy services, as seen with the rapid growth of Uber and Airbnb, our Express model offers your company the perfect opportunity to take advantage of this efficient resource maximization concept. By using our own flagship web-store, which currently hosts a multitude of international brands, we will allow you to compete on some of the largest e-commerce platforms in China whilst complying within national regulations. We will handle all elements of online integration, which consists of digital product set up, translation, store maintenance and a monthly data analysis report to better improve performance.

Our web-store offers your company the chance to safely test the Chinese waters and takes away the financial and time-intensive burden of opening your own store. This method allows us to walk your company hand in hand through the complexities of the Chinese market and significantly reduce set up fees, maintenance costs and building store credibility. Our expert e-commerce personnel will be able to significantly boost your brands exposure and engagement whilst also handling all aspects of logistics, supply chain, search-engine optimization and customer management.

With over 600 million Chinese online shoppers, and 1.5 billion daily visits to Taobao and Tmall per day, the Express Model gives you the perfect chance to take your company to the next level and explore an unparalleled amount of opportunities in a diverse Chinese market hungry for high-value Western products.

Based in Shenzen, Tencent are one of Asia’s most successful and influential firms worth over more than $500 billion USD, making it China’s most valuable public company. CEO Ma Huateng, also known as Pony Ma, has significantly expanded the corporation to become a global powerhouse, diversifying into several industries to strengthen its position in the market whilst solidifying their customer loyalty and brand awareness.

There are generally three major cornerstones of Tencent’s company, each of which contributes to its global success. These include its social networking systems, most notably Wechat, its online mobile gaming development sector and its e-commerce operations along with its innovative digital ecoystem tying its virtual assets and value-added services simplistically together to over 1 billion users.

Tencent’s Wechat is not just a messaging app used to communicate with others, but effectively integrates the functionality of key components from Facebook, PayPal, Netflix, iMessage, UberEats, Instagram and Skype amongst others to create an intricate ecosystem of which has become a necessity for Chinese citizens. By regularly maintaining and updating these various functions, whilst at the same time investing in new and innovative technology such as recent developments into AI-based health care disruption, Tencent are leading the way in creating a unique and globally competitive conglomeration.

Tencent’s 18% equity investment stake in JD has allowed it to start effectively competing with Alibaba in the Chinese e-commerce industry also. The integration of JD’s shopping platform through the Wechat app has allowed not only JD to more than double its sales from the same quarter a year earlier, but has allowed Tencent to further its digital reach and corporate awareness amongst Chinese consumers. It’s recent partnership with Vipshop has reinforced this expansion, and the move looks to continue to leverage its wechat social media platform as to combat Alibaba’s firm grip on the Chinese e-commerce industry.

Online gaming is also one of Tencent’s core revenue streams, so the large-scale investments don’t stop at just JD and Vipshop, with the company also buying out Riot Games in 2015, the company that developed the massively popular online PC game League of Legends. The company is also looking to bank in on the opportunity provided through the rise of mobile gaming, with industry experts expecting that by 2020, will be larger than all traditional platforms. Much of Tencent’s revenue growth is attributed to their mega-hit mobile games including PUBG, Honor of King and Crossfire Mobile, all of which include real-life money micro-transactions to make in-game purchases on various digital assets such as character unlocks, cosmetics and more.

Tencent’s sprawling international success simply comes down to how effectively the company monetizes from their massive user base through the selling of their various virtual assets and value-added services. The level of brand loyalty Tencent has managed to gain by broadening its business operations into various strategic markets including social networking, corporate expansion, mobile internet and online gaming development has allowed it become an indispensable component of modern Chinese culture.

In just it’s first year, Douyin, the short form video-streaming platform launched by ByteDance is taking China by storm, reaching an astounding 500 million monthly users and 1 billion views per day. For an app that was reportedly developed in only 200 days by a team of 8 people, this is quite the impressive feat, and as the developers look to expand its e-Commerce capabilities by strategically partnering with Alibaba, only the sky appears to be the limit.

What makes Douyin popular is in part thanks to its convenient and user-friendly editing interface. It allows users to easily add a variety of effects and music into their videos, providing audiences with creative and at time humorous content.

The apps major success however, is in how it maintains it’s high retention rate or “user stickiness”. With over 80% of users aged under 29 according to Jiguang data, ByteDance have accurately catered to the needs of the Chinese Gen Z market, by successfully making their young and upscale audiences feel like movie stars. By attracting prominent and attractive influencer’s, many of which who flaunt expensive an d exotic branded clothing, young audiences are inspired to recreate their celebrity role models video’s.

Whilst this app isn’t necessarily revolutionizing the video-sharing industry, it’s providing users a well-executed platform to effectively interact in a fun and unique way. Considering it’s the world’s fastest-growing short video app since it entered the overseas market last August, it’s no wonder businesses are using the platform for digital marketing. With Douyin (known as TikTok in foreign markets) being launched in over 150 countries, brand’s can penetrate international audiences at a cost-effective price.

ByteDance will be hoping this exponential growth continues into next year, and with their recently announced Alibaba partnership, that reality is most definitely plausible. With the implementation of the new e-Commerce feature, where content creators can link products through a shopping cart icon, Douyin can provide brands with innovative conversion-based KOL marketing approaches. Lu Zhenwang from Wanqing Consultancy stated that a Douyin integration “can be a strong weapon for e-commerce, especially for Alibaba who wants to reach to younger consumers and those living in smaller cities”. With various other international companies such as Pizzahut, Airbnb and Chevrolet already creating collaborative marketing campaigns with Douyin, the return on investment looks to still be high for those brands wanting to tap into the young affluent Chinese market.

Starbucks and Alibaba’s historic partnership announced earlier this year in August is aiming to expand the coffee companies business operations and brand presence in China, as they further break into the local market historically monopolized by tea. The partnership will allow for the seamless integration of Starbuck’s digital experience offerings with Alibaba’s online ecosystem, and looks to set the precedent for coffee e-commerce on a global scale.

Starbucks CEO Kevin Johnson has boldly stated that“Our transformational partnership with Alibaba will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers.”

But what does this unified collaboration between the two global companies entail? Well, quite a lot.

Firstly, an innovative and centralized online management hub has been developed by Alibaba, with aims of delivering a uniquely personal, yet uniform Starbucks customer experience across a multitude of digital platforms including Alipay, Ele.em and Koubei. A customer simply needs to place an order on the Starbucks app, and an alert is sent to one of over three million drivers registered to Ele.me, China’s leading on-demand food delivery company which Alibaba acquired in April of this year. The entire process occurs in the one simplified transaction within under 30 minutes, which Starbucks` believes will revolutionize the traditional offline-to-online system.

The American coffee company is also expanding its app and website into Alibaba’s multitude of Chinese e-commerce sites, most notably Taobao and Tmall. Their current Tmall flagship store includes a wide range of products, including coffee vouchers, gift cards and specially-designed e-cards, with efforts to integrate their Rewards Membership program already underway. This will allow Starbucks to better penetrate the local Chinese market, offering innovative product differentiation aimed to bring about a truly unique and personalized customer experience.

The prospective partnership not only allows the company to easily track its sales data via a singular access point, but opens the door to over 500 million Alibaba users. Starbucks hopes the move will increase its digital reach and corporate awareness amongst the new and emerging Chinese middle class, who are hungry more then ever for higher-value western products. But with Starbucks main competitor Luckin brewing up huge levels of local demand themselves, only time will tell if Alibaba’s aim to boost their digital on-demand services will align effectively enough with Starbucks mission “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” to take this partnership to unparalleled levels.