NAVIGATING THE digital landscape of china
China delivered more than half the global growth in luxury spending between 2012 and 2018, and is expected to deliver 65% of the world’s additional spending heading into 2025, according to research based on UnionPay transaction data for the 2019 McKinsey China Luxury Report. In order to reach Chinese consumers, it is very important for international jewelry and gemstone companies to understand the Chinese digital economy landscape.
By Chen Shen
China has one of most advanced digital eco-systems in the world, one that is very unique compared to all others. Facebook, Google, Instagram and WhatsApp are basically non-existent in China. Mobile technology has leapfrogged laptops and credit cards. Cheap, reliable and efficient Chinese delivery companies supercharge e-commerce. Chinese home-grown WeChat, Meitu, Douyin (the Chinese version of Tiktok) and other apps are the dominate players in China’s digital world. And, this vast digital eco-system makes it easier for consumers to spend.
Mobile technology is the center of this fast-changing world. Mobile payment platforms have revolutionized how consumers in China carry out their purchase transactions. The nation’s US$16 trillion mobile payment market, which represents nearly two-thirds of the country’s online spending, is about 3.2 times that of the U.S. mobile payment market and considerably larger than mobile payment markets in the rest of the world.
Mobile payment methods make it easier for consumers to spend without having cash in hand. They encourage more impulse buying and higher levels of spending. It is the key force behind the Chinese digital economy. According to 2019 Q4 numbers, AliPay has a 51.1% market share and WeChat Pay has a 38.9% market share. For any companies doing business in China, it is imperative that they accept AliPay and WeChat Pay.
As Chinese consumers become more sophisticated shoppers, companies are finding that brand prestige, product quality or even price no longer wield the influence they once did. Companies that create seamless, convenient experiences for consumers across channels and across the purchase lifecycle benefit from improved customer satisfaction and more impulse buys.
Companies are finding that online traffic is more expensive; customer acquisition is more difficult; and business growth is more of a challenge. According to McKinsey China, the typical Chinese customer requires eight brand touchpoints before making a purchase decision. That’s four more than Western consumers. It is recommended to have an omnichannel strategy that involves different social media platforms. In China, social media platforms can generally be divided into core social media platforms and derivative social media platforms, based on their different emphasis on user relationship or content.
Below are four platforms that are the most relevant to the jewelry and gemstone industry. Two of the most important core social media platforms are WeChat and Sino Weibo.
WeChat is integrated into daily life and has reshaped online relationships for users of all ages. It is the electricity and water in Chinese digital business and personal life. A company can add Chinese contacts at trade shows and use its “moment” function to promote business and products. Also, a company needs to establish an Official Account or mini program.
WeChat Official Account (OA)—also called Public Account—is a marketing platform that acts as a complete brand hub to: gather followers; send them targeted content marketing and service notifications;
and redirect them to a website/e-commerce.
Mini programs operate within WeChat. They offer brands an additional online platform to market and sell their products, and users can perform similar functions without having to download a separate app.
Brands can use mini programs as supplements to—but not substitutes for—large-scale e-commerce platforms. Used as a secondary sales channel, they can list in-demand items that sell quickly through flash sales promotions. Mini programs can also be used as a branding tool; brands can create interactive, visual mini programs to better engage customers and encourage them to share content with friends.
WeChat mini programs now support augmented reality (AR), which overlays virtual imagery onto the physical world. The first of this type was Armani’s cosmetics mini program, which allows users to test the appearance of different makeup items, such as various shades of lipstick, through users’ self-facing camera on their cell phones. This can also be used for selling jewelry, for example, to try rings or earrings on the hand or ears.
More companies are moving into WeChat mini programs to conduct e-commerce. WeChat Pay is the power behind these e-commerce transactions. It makes impulse buying as easy as possible.
Sina Weibo is a Chinese microblogging website. It has a very large number of followers, making it a must-have marketing platform for businesses to engage their customers. It is very common for smaller Chinese companies to not have a company website, but rather have both WeChat and Sina Weibo accounts for marketing. In additional to core social media platforms, there are two must-have derivative social media platforms for jewelry and gemstone companies.
Video-based socializing satisfies the need of many people to kill time when they are feeling bored or lonely. As the “hot” short video app in the news this year, Douyin (internationally known as Tiktok) helps brands to go viral on social media. By building a content-based ecosystem and using algorithms to assist push messaging, it enables users with similar interests to expand their social networks via content sharing. Users get satisfaction from “acquiring information” while enjoying the fun and recognition from “sharing information” with friends. Therefore, users quickly become addicted to the platform. Douyin is the ideal social platform to share jewelry and gemstones.
In October 2019, Douyin added a new e-commerce feature called Marketing Label, which assigns a label to content in order to help retailers target consumers who want to search for products. For example, a jewelry retailer who works with KOLs (well-known people) to produce jewelry-promotion videos might use an “emerald jewelry” marketing label. Viewers would then be able to click the label to be redirected to a page where they can explore more content related to that theme.
In November 2019, Douyin allowed all users to sell products through the platform. Douyin is transforming into a video-based e-commerce site.
Xiaohongshu, also known as RED, is a derivative social media and e-commerce platform. By July 2019, Xiaohongshu said it had over 300 million registered users, with 70% born after the 1990s and 80% are females. The number of monthly active users is over 85 million. The app allows users and well-known personalities (KOL or KOC) to post and share product reviews, travel blogs and lifestyle stories via short videos and photos. It is China’s premier influencer marketing platform. Xiaohongshu also operates RED Mall, which sells international products to Chinese users. Its large female user base makes RED a good option to promote and sell jewelry and gemstones.
There are many more social media applications and platforms to sell jewelry and gemstones in China, but these four social media platforms are good starting points for any international jewelry and gemstone company wanting to enter the China market. If you feel overwhelmed by the Chinese digital eco-system, there are many consulting companies that can help.
A few final words: Content is the key to success on these platforms.
This article is drawn from an article that first appeared in the Fall 2020 edition of InColor magazine, and is republished herein with permission.