5 Chinese marketing terms you need to know in 2020
To understand marketing in China in 2020, you first need to have a good knowledge of these five terms that have become an integral part of Chinese marketing.
They are not just passing fads, but lasting trends that reflect the changing preferences and habits of Chinese consumers.
If you would like to know more, read on
- Xiachen (下沉)
- Private traffic (私域流量)
- KOC (Key Opinion Customers)
- E-commerce online (电商直播)
- Guochao (国潮)
I. Xiachen (下沉)
In the past, brands seeking to reach Chinese consumers have generally focused on cosmopolitan consumers in China’s first and sometimes second-tier cities.
However, in recent years, consumption growth in these cities has slowed as the market has become over-saturated. These mature consumers are overwhelmed with choices and it is costly for brands to break through the noise.
Xiachen literally means “sink” or “submerge”. This term means that the marketing efforts of brands are adapting to sink or move to lower-tier markets. Consumers in China’s least developed urban centers and rural areas are driving the next wave of consumption growth in the country.
Some key characteristics of consumers in these cities :
- Lower cost of living
- Less stressful work schedules, but also fewer entertainment options, allowing more time to spend online. Whether it’s shopping, playing video games, watching short videos and live streams, or chatting with strangers on social networking platforms.
- Their content and product preferences are not the same as those of consumers in first and second-tier cities.
- They have different tastes and images, and the messages used in other markets are often too far removed from their lives.
- As rising incomes lead to improved lifestyles, these consumers are increasingly looking for higher quality products, but at reasonable prices.
While the preferences and behaviours of these consumer groups may be more difficult for Western companies to understand, brands that want to succeed in China over the long term must stop avoiding this market and start devoting significant resources to it.
II. Private Traffic (私域流量)
As online traffic has become more expensive in China, the term private traffic has become a buzzword.
This term refers to Internet users that you can contact directly or who come to pick up your channels without you having to pay to reach them.
As with Facebook and Instagram, organic reach is severely limited on most Chinese social media and e-commerce platforms, forcing brands and influencers to pay to reach their own followers, and brands are looking for alternatives.
The Western equivalent of private traffic would be a blog or an email list, which are proprietary channels.
However, in China, people rarely visit websites or use email, so influencers and brands are looking for ways to have “proprietary” private traffic, albeit on social media sites.
Currently, the WeChat super app is the largest private traffic channel in China.
Brands such as the popular cosmetics brand Perfect Diary use personal WeChat accounts and WeChat groups to create consumer communities.
Although this is a labor-intensive process, it reduces the distance between the brand and the consumer and helps build consumer loyalty.
In 2020, it is likely that more and more brands will be managing these communities using personalized chatbots.
Brands are also creating their own online communities on mini-programs that are lightweight applications within WeChat.
Another way for brands to leverage private traffic is to rely on influencer-led groups.
Instead of paying an influencer to publish only on their public accounts, they publish branded content within their private groups that typically contain thousands of their most loyal fans.
III. KOC (Key Opinion Customers)
In many parts of Asia, influential people are called KOLs or key opinion leaders.
This year, a sub-segment of KOL marketing has taken off, namely KOCs or key opinion leaders/customers.
KOCs are essentially long-tailed micro-influencers.
They are ordinary everyday consumers who like to share their experiences on social media.
In general, they are well informed on certain topics.
Unlike KOLs, they may only have an audience of several hundred to a few thousand followers and therefore generally have a much closer relationship with their followers than a KOL.
Unlike KOL campaigns, KOC campaigns are generally unpaid – KOCs receive free products in the hope of sharing content.
There are several reasons why KOC marketing has taken off:
– Chinese consumers are increasingly sophisticated, they have many options to avoid traditional advertising.
Their attention span is also declining, which means it becomes harder to keep their attention once you have it.
– Unlike a few years ago, consumers are now very aware that KOLs promote products because they are paid to do so.
They need more content that is not influenced by commerce.
– China’s social media landscape is increasingly fragmented.
Consumers can turn to a number of platforms for information, which creates complexity for brands who do not know which platforms to be active on or how to make the most of each platform as they have their own rules and best practices.
– Recent years have seen a decline in the performance of KOLs in China, but costs have increased and become unbearable for many brands.
There have also been many cases where KOLs have inflated their performance.
To be effective, KOCs need to be marketed on a large scale, with the aim of strengthening brand value and gradually increasing sales in the medium to long term.
Over the past two years, we have seen several Chinese national brands take advantage of KOC marketing to achieve great success, and this marketing/Business method will continue to be popular in 2020.
IV. Live-commerce (电商直播)
While streaming e-commerce has existed in China for several years, it took off in 2019, as was clearly shown at this year’s Singles Day shopping festival, where live streaming on the Alibaba Live Streaming Platform in Taobao generated $2.85 billion in sales or about 7.5% of the day’s total sales.
The growth of live e-commerce is largely due to its strong appeal to consumers in China’s lower-tier cities.
As mentioned above, the lower tier or “Xiachen” markets are seen as the next big opportunity and national and international brands are eager to try new ways to connect with this audience.
Alibaba’s Taobao live streaming platform is both a pioneer and a leader in the field of live streaming for e-commerce, and in recent years has developed a solid base of high-performance live streaming hosts.
Although Alibaba is the undisputed leader in this trend, almost all major Chinese social media applications, including Douyin, Kuaishou, WeChat, and soon Pinduoduo xiaohongshu
(RED), have integrated live streaming for e-commerce into their platforms.
V. Guochao (国潮)
In recent years, China has seen a resurgence in young consumers’ interest in domestic brands and products that incorporate traditional Chinese style and culture, a trend known as guochao.
Young Chinese adults, especially those aged 20-25, have grown up in a different environment than previous generations.
They have seen the emergence of China as a global economic powerhouse.
While the older generations grew up in an era when foreign brand products were always considered better quality than domestic brands, these young consumers do not necessarily feel the same way, especially when it comes to cosmetics, skincare, F&B, and fast fashion.
Guochao is not only about the rise of domestic brands, but also about the resurgence of traditional style and cultural elements.
The historic Forbidden City of Beijing has become extremely popular with Chinese youth through its many product design collaborations with national and international brands and influencers.
In this context, international brands that are willing to adapt to consumer demand for local elements succeed.
Last year saw a number of IP collaborations between national and international brands, such as the global cosmetics brand M.A.C. and the popular Chinese mobile phone game Honor of Kings.
However, simply working with a national brand or adding Chinese graphics is not synonymous with success.
International brands need to ensure that they work closely with Chinese teams to ensure that collaborations are appropriate and that they do not interpret Chinese culture in a clichéd or offensive way.
Due to the isolation of the Chinese Internet environment, the strength of local social and e-commerce platforms, and the rapid evolution of consumer preferences and behaviours, Chinese marketers have developed their own set of practices.
Learning how to connect with Chinese consumers is a complex task, and a fundamental understanding of these five key terms is the first step.
very good post. I enjoy this new term in Chinese. Useful.