China_Luxury_social_Media

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.

Weak e-commerce

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

10 CommentsLeave a Comment


  • Lewis Rosa

    8 months ago

    Interesting stuff Tim. I was just wondering, how easy is it to monitor and measure sentiment on Chinese social media platforms? A lack of confidence in e-commerce is definitely a handicap but hey, you cant buy through a billboard or TV ad (yet). So, does this put more emphasis on the integrated campaign? Are Chinese netizens suspicious or encouraged by the transparency of social media marketing? Ultimately, brands are accountable if they enter a shared space. Aren't consumers warm to this? Sorry for all the questions – just a thought provoking post I suppose! Cheers, Lewis

  • Interesting thoughts, but it's a bit disingenuous to say there's no PayPal in China. PayPal is still dwarfed by Alipay in China, but it's there (https://www.paypal.com/cn), and has linked up with UnionPay and Alibaba over the course of this year.

    Also, for certain high-end brands, especially those in the cosmetics industry, their efforts to reach consumers in China online have paid off. Companies like Lancome have started social media “communities” with millions of subscribers, and that kind of interaction has actually had a positive effect on sales. So it's not really an issue of “social media doesn't pay off in China,” it's more like “social media CAN pay off in China” in certain segments.

  • Tim Ho

    8 months ago

    Hi, thanks for the interesting points!
    Sorry about the confusing, I didn't mean paypal as in paypal the company or it's existence in China, I was saying more about how there's no platform that Chinese netizens use that is as common as how other countries use paypal.

    I agree about cosmetics and I've studies the Lancome case, but it's actually completely different from luxury fashion brand as many high-end brands want to engage with consumers but at the same time try to keep their exclusive image in the market, unlike cosmetic industry which they would try to reach as many people as possible.

  • Tim Ho

    8 months ago

    Hi Lewis,
    We should never entirely rely on machines/ listening tools to measure sentiments if that's what you were asking about, tools can never be accurate as they use certain keywords (sometimes completely irrelevant) to determine whether a person is positive about something.

    Chinese netizens are extremely aware of the tone of people who try to spread brand messages, they can tell who are the spams, and which companies are mentioned because they hired ghost writers.

  • Lewis Rosa

    8 months ago

    I totally agree. We are a long, long way from any monitoring tool that can come close to successfully grasping consumer sentiment. If, as was stated in the 'OgilvyOne Connected' report, Chinese netizens are more inclined to comment, is more time invested in organic (human) sentiment monitoring?

    In your opinion, do corporate blogs and off-site, ghost-written articles perform less well in China than the West? Or do you view these methods as the last bastion of an outdated, conventional PR technique?

  • Manoj Kandasamy

    7 months ago

    Do you think they are forced by the competition or the consumers? My doubt is, if a brand decides to be in social media just because their competition is there, they already lost the social media game. On the other hand, if they wish to establish engagement because their consumers are there, then i think that will make a difference. What do you think tim?

  • Jason Zhan Jia

    7 months ago

    Hi Tim,

    Some of my POV on “Luxury Brand x Social Media in China”.

    Firstly, yes we Chinese don't have PayPal, but AliPay is extremely popular here. A recent Nielsen report shows Chinese people do online shopping most among the APAC. So, I cannot agree with you about “week e-commerce” in China.

    Secondly, if you have a chance to talk to a luxury brand, you will find the key concern of doing e-commerce & social media in China for luxury brands is the balance between “luxury image (a.k.a distance)” and “engagement”.

    If you engage with mass consumers on an active level, you are NOT a luxury brand anymore. Especially on a SNS platform which full of (relatively) low-education and low-income people.

  • Weihong Zheng

    7 months ago

    I agree with Jason on his first point, that without Paypal doesn't make China a weak-ecommerce -market, but felt conservative on the argument of “exclusivity” vs “luxury image”. I guess, in contrast to the good old days, no one single brand wants to be perceived that “far far away” nowadays (most apparently, ever since we see the first Louis Vuitton commercial on TV). And if we take facebook and its advertisers as a mirror from the future, what we have witnessed, such as Gucci's 404,000 fans on FB, has done a great job in saying “follow us anyway, because you know one day YOU WILL be able to own it”. Alternatively, the rise of local niche SNS sites like p1.cn, ushi.cn and the like, has opened up another door for more exclusive social media for luxury goods, in which the invitation-only nature helps limit the demographics and SESs. And more recently, we have also seen luxury brand opening up their private SNS site, like GenerationBenz.com, an invitation-only site for consumers to offer feedback, and share driving experience.

    And I still believe with Web2.0, right at the moment as I type this paragraph, hundreds or even thousands of new ideas or new ways of marketing/advertising would have just gotten available and some will simply CHANGES EVERYTHING, AGAIN (sorry Jobs).

    Weihong

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