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- 29 Sep 2011
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What Means for Luxury Brands in China


Tina Liu, creator of pH7 THE 3rd, tells us why the Chinese world is watching, and most importantly, why it is a lucractive consideration for luxury brands.

Youku (优酷) was founded by Sohu’s former president, Victor Koo, in Beijing, China. Comparable to the western world’s YouTube, the company initially emphasized user-generated content, but since it’s launch in 2007, has shifted focus to professionally-produced videos licensed from over 1,500 content partners. The site also joined forces with MySpace China in 2010 and later that year, became the sole online video provider embedded in the China Edition of popular web browser Mozilla Firefox.

Its initial public offering IPO on the NYSE on December 8, 2010 totaled a whooping $202.85 billion in gross proceeds. Although followed closely by Tudou, Inc and other big names in the Internet sector, Youku is still far ahead in the game, proven by its financial prowess and popularity. According to 2011 Q2 financial statements, Tudou’s (土豆) net income totaled $17.82 Million, with an increase of 94.5%, while Youku’s net income totaleds $30.6 Million, with an increase of 178%. Youku’s monthly viewership in June has reached 6.3 Billion, approximately 2.5 times that of Tudou’s.

Youku’s success is not only attributable to the video quality but also its lightning speed in presenting new features. Its numerous constant introduction of live shows, licensed content from over 1,500 independent partners, and the the promotion of the hottest events are directly challenging the unshakable authority once enjoyed by TV, quickly redefining the meaning of entertainment for today’s Chinese youth.

 Comparable to the western world’s YouTube, its initial IPO on the NYSE totaled $202.85 billion in gross revenue 

Who is Miss Puff?

One immensely popular original from Youku worth mentioning is a slice-of-life cartoon called Miss Puff (泡芙小姐), in which the protagonist, Miss Puff, spends her days philosophizing the meaning of love with the different men she encounters in her lonely city life. The power of Miss Puff lies in its realistic portrayal of the lives of today’s urbanites. Her thoughts, philosophies, and idealistic nature are often admired and praised by China’s educated young. The comments left by the viewers reveal, to a large extent, the viewers’ attitudes toward the modern products and novel ideas shaping Miss Puff’s life.

Miss Puff Viewer Demographics

1. Gender distribution shows that male audiences constitute 51.36% while the female audiences constitute 48.64%
2. Age distribution shows that the two largest groups of viewers are from the 22-29 and 21 and below age groups, resulting in approximately 57.72% and 25.61%, respectively *
3. Employment distribution shows that the two largest groups of viewers are made up by students and white-collar workers, resulting in approximately 33.95% and 33.46%, respectively *
4. Geographical distribution shows that the three largest concentrations of viewership come from Beijing 25.54%, Shanghai 11.73% and Guangzhou 11.94%

Miss Puff began as a Chinese internet animated short film and has since become a popular original series on Youku

Market Psychology

One thing worth noting is the embedded marketing (sponsored or not) in the Miss Puff series. In episode 8, Miss Puff’s Lipstick, one simply can’t deny the presence of the Mac laptop, Yves Saint Laurent Rouge Volupté, a Marlboro cigarette pack, and an Alexander McQueen Leopard Pony Skull Box Clutch, which form the backbone of a modern, cosmopolitan lifestyle that many of China’s young are envisioning and working tirelessly for.

Another noticeable show on Youku is Naked Wedding (裸婚时代), a TV series portraying today’s post-80s couples’ changing attitudes about the necessary components of a marriage – a nice car, homeownership and a heavy-duty bank account. The two protagonists’ brave decision to marry without any of those three has personally spoken out to each one of the audiences (consisted mostly of those from the 22-29 age group). The important takeaway message from these two shows is an open-ended question for the luxury brands: how to capture this market of hot-blooded youth?

Youku + Luxury Brands

Many of Miss Puff and Naked Wedding’s viewers are educated, under 30 and harbor the same rags-to-riches dream. Those viewers won’t be able to casually afford a Louis Vuitton Neverfull and certainly don’t have the luxury to line up in front of an Apple store for the release of the newest i-whatever gadget like the average American consumers. Still, those don’t stop them from dreaming of a cosmopolitan life equipped with a Mercedes-Benz, iPhone, and Louis Vuitton bag.

These viewers are actually at an important crossroad in their life facing a consumerist rite of passage– a transition in which they are learning to become consumers. Here’s where the luxury brands can fill in the gap. If brands are able to teach Chinese youth to identify with luxury from an early stage of their life, it is likely they will turn it into a lifelong pursuit. It’s up to the brands to understand what drives the post-80s Chinese young, who are increasing gaining momentum as the next big buyers.

 If brands are able to teach Chinese youth to identify with luxury from an early stage of their life, it is likely they will turn it into a lifelong pursuit 

Youku remains too lucrative a choice to bypass. The advertising on Youku remains oligopolized by a few foreign carmakers, home appliances brands, and KFC, leaving a pristine market for luxury brands to break into. The numerous indie projects also provide ample sponsorship opportunities for the luxury brands. To continue Miss Puff’s winning streak, Youku introduced One Step Away (幸福59厘米), a Philips-sponsored movie series exploring the varying themes and perspectives of happiness, to an entertainment-hungry crowd.

The stories are diverse, full of colorful local characteristics, and none of the overplayed TV clichés. It’s not surprising to see it as a hit among the educated, urban young. If luxury brands can cash in on the vast potential behind the indie projects and the video commercials, they will no doubt secure their places in the hearts of the Chinese young during the consumerist rite of passage.

Perhaps the answer to the Chinese market is just one step way?


Tina Liu is the creator of pH7 THE 3rd, an identifier of trends and advocate of emerging Chinese creatives and talents. Ms. Liu writes about Chinese design and consumption trends and holds a high interest in Chinese consumer behavior and psychology.