Why luxury brands are forced to engage on Chinese social media (even when they don’t make money)
Many of us are aware of how fast the luxury market has been growing in China, it is currently the second largest market in the world for luxury goods. China is also a country with most internet users, so it’s pretty obvious that luxury brands should start targeting netizens and let Internet plays huge role in their marketing strategies, but they all face the same problem; Chinese people still don’t purchase online.
There’s no Paypal in China, other than popular site like Taobao (Chinese version of eBay), Chinese people do not trust many online payment platforms due to safety issues, so purchasing online is not as common as other countries. Especially for industries like luxury fashion goods, consumers prefer to buy at offline stores so that they can actually try them on.
Why many brands are still not on Chinese Social Media
There are of course many reasons behind brands for not engaging on Chinese social media, but I can see 2 major reasons for it.
1) Complexity of Chinese social media landscape – People (including most agencies in China) still can’t figure out how to develop a proper social media strategy for China as the online space is very different from any other country in the world. Government and mainstream media still play a huge role on social media in China as they have so much control over it.
2) Unclear ROI – As I mentioned above about the weak payment method, many luxury brands have very traditional marketing teams that are not very comfortable with the ROI when considering investment on social media since e-commerce is very weak in China, they don’t see, and perhaps don’t know how to measure how engaging on social media can directly benefit the brands financially.
Why are brands on Chinese Social Media?
China is the world’s youngest luxury market, high Internet penetration with users who are extremely active on social media, Chinese also love to share branded messages online more than any other countries. But beside all these obvious reasons, there’s one huge opportunity in China that many brands have ignored…
I’m not expert in fashion, but lifestyle and fashion trends are extremely driven by social media in China, people are influenced by what other netizens think, the peer is the true trend setter. For example, whenever a product is featured on Taobao, or most voted by other users, it would become the new trend in fashion. Singers/ celebrities actually dress themselves based on what people like, or what’s hot on social networks like Kaixin, not the other way around like most other countries where celebrities can easily influence purchase decisions. Although they don’t purchase it online (yet), the power of this peer trend setter drive obvious sales offline, and the good news is… there are ways to measure it!
Photo Credit: Ivan Walsh @ Flickr