Assessing Digital Opportunities in China Amidst COVID-19


Iris Chan | May 19, 2020

As brands continue to grapple with the impact of COVID-19 on their businesses across the globe, DLG Partner & International Client Development Director Iris Chan addresses some of their most burning questions about the China market at the moment.

With many cities around the world still in lockdown, and others enforcing strict social distancing measures, COVID-19 has undeniably changed the way consumers interact with brands and shop – perhaps irrevocably. Brands are currently scrambling to adapt to this new normal, looking for solutions to plug the gaps in the now-interrupted consumer journey.   

In the latest edition of DLG’s ongoing webinar series on China’s Digital Market, we discussed the Digital Assets Brands Should Leverage in China Now, focusing on the variety of online channels available to brands operating in China (including livestreaming), as well as key ways to partake in e-commerce activities. During the session, we found that the questions raised by members of the audience mirrored the ones surfacing in recent conversations with luxury brand executives. As such, we have put together a compilation of the most pertinent questions asked by digital marketers of late.

China has many different digital applications and platforms – are there similar platforms outside of China? 

One of the elements that fundamentally challenges a possible comparison between a Chinese application and something outside of China is the level of functionality and integration. China’s applications might have first been known for a key functionality – such as WeChat for one-to-one chat messaging; Tmall for e-commerce; or Little Red Book for consumer-to-consumer product reviews and discovery – but all inevitably grew to include other built-in functions and features, creating a more all-encompassing user environment. 

By evolving and offering new functions within existing environments, platforms minimise friction from both a development and user standpoint, making it that much easier for users to adopt and develop new behaviours. However, this also means that there are many overlaps between applications in China, adding to the complexity of the digital environment. For instance, there are not just one or two applications for livestreaming available on the market – there are several.  While some focus on short videos and streaming content like Douyin and Kuaishou (integrated with other functionalities like e-commerce, no less), others like WeChat and Little Red Book have added livestreaming to their suite of features over time.

We’ve all tried to make comparisons but they’re not all that relevant when it comes to functionality and user behaviours. Comparisons often heard include: Weibo is like Twitter (probably the closest possible comparison); Little Red Book is like Instagram (not at all, really); Tmall is like Amazon (they are both e-commerce marketplaces – but that’s where the similarities end); Douyin is like TikTok (while both are ByteDance companies, there is a significant difference still as Douyin has much more functionality than TikTok, at least for now).

Naturally, it is near impossible to find an overseas equivalent of China’s most renowned all-in-one app, WeChat. While other popular Asian applications like LINE and Kakao Talk (by South Korea’s Naver Corporation and Kakao Corporation respectively) are similar in terms of interface and integration with lifestyle components such as payments and social media, neither offers as wide a range of integrated functions as WeChat. This has been largely facilitated by WeChat’s introduction of Mini Programs (also known as mini apps within WeChat that require no installation), which has allowed brands to offer related services to users within the WeChat ecosystem.

Do you see livestreaming for online shopping picking up in other regions?

There is much to be taken from the China market to try and apply to the West, as the digitally dominant market in the world. But it should be noted that the livestreaming trend in China is not a result of, but was instead catalysed by, COVID-19. The underlying behaviour has been present for years among huge numbers of participants of varying demographics and facilitated by the plethora of livestreaming options, which hasn’t been the case elsewhere. With the inherent multi-functionality of applications, there is also more to livestreaming than just the content itself. There is in-content product linking for commerce, “See Now, Buy Now” for real-time purchasing, limited-time offer features to drive attention and action, direct engagement and community building to adapt content live, and more. These features and functionalities bring additional dimensions to the content and provide a toolkit for hosts to deliver more engaging livestream sessions that drive to sales. Chinese consumers are not wary of this direct and transparent selling approach by brands who leverage their brand teams, celebrities, and KOLs to bring in huge audiences for hours at a time.

This time in containment, however, serves as a good start in helping to generate livestreaming participation in other regions where it might have been more of a niche activity before the crisis. That said, it remains a chicken or egg situation – platforms need to consider user behaviours and expectations on when it comes to livestreaming in order to develop functionalities that enable them to do more than passively take in content. In turn, this would also allow users to derive more value from spending time and engaging with livestreams.  

From a data tracking point of view, what are the main differences or challenges between Chinese and Western platforms? 

Like other markets, China has a data privacy law that protects and requires consent of personal data usage, and has continued to update the requirements. But generally speaking, there is a very different view on data usage among consumers in China. Chinese consumers are much more willing (9 out of 10 consumers) to consent to companies utilising their data if it means improving their experience, compared to the global average (76%). 

With consumer willingness and more immersive platform environments, brands are able to get an even clearer picture of consumer preferences and behaviours. Take WeChat for instance – the application is not used just for social networking and chatting, but also for personal (finance, mobile top-up, health tracking, etc.), leisure (travel, shopping, entertainment, F&B;) and professional (file sharing, news sharing, conference calls, etc.) reasons. The various behavioural habits and associated data points, and then application of those data-driven insights within a cohesive environment, results in brands having a richer understanding  of their customers. Consequently, they are able to better optimise and develop consumer services and experiences, rolling out comprehensive social CRM initiatives within WeChat.

What about Travel Retail? It’s difficult to identify the right channels given the current situation.

Many brands are grappling with the challenge of travel retail. Chinese consumers are such an important consumer group for the luxury goods category, estimated to account 40% of global luxury sales by 2025, and the primary driver of continued growth in the sector. However, until recently, the majority of that purchasing activity was done abroad. Now, with travel restrictions in place, a huge void has been created, especially for luxury travel retail and destinations reliant on tourism shopping. 

In the last webinar, we shared an overview of some of the China e-commerce options for brands, including WeChat Mini Program stores and Tmall. Cross-border options such via as  Tmall Global, WeChat Mini Programs, and Little Red Book stores are also available. However, along with the lack of travel itself, the math and feasibility may not work out, when you take into consideration the costs associated with setting up payment methods, logistics, customer service, and delivery fulfillment for a temporary measure.

With countries and states still in lockdown, figuring out how to maneuver for the mid-term (realistically) is pressing, but it may be more important and worthwhile for brands to focus on the long-term game plan when it comes to these cross-border options and operations. The way the virus is playing out differently across markets will affect global activity for some time and potentially change the way we do global commerce and travel retail altogether. But more than that, this might be the right time for brands to rethink how they operate globally – from functional departments and market teams to business units and budget allocations. Does it remain relevant to have strict marketing budget lines between your brand’s China team and other global markets, when Chinese consumers constitute a significant proportion of global sales? If it’s not relevant, brands might find their teams empowered to work more cohesively on mutually beneficial objectives, making the dollars in their budgets work more efficiently. 

Stay tuned for more insights in the ongoing DLG Webinar Series: China’s Digital Market.

COVID-19 | China | Livestreaming | Marketplaces | Opinions | Social CRM | Travel Retail