Top 6 China Digital Marketing Trends in 2020

According to McKinsey, “China’s online retail sales are expected to reach $1.5 trillion, larger than the retail sales of the next 10 markets combined” (Figure 1). The dominant e-commerce market share and stable explosive growth make China an important market for many international brands.

Figure 1

However, the Chinese market is always shifting and popular opinion changes quickly so do digital marketing in China. It’s essential to keep up with the trends and stay connected with Chinese consumers. Therefore, we identified 6 major trends in China digital marketing in 2020 to help you shape your strategy accordingly.

Trend 1: Lower-tier cities drive the new growth of e-commerce

“The lower-tier cities comprise 59% of the country's GDP and 73% of its population. While investors perceive larger cities as offering the most important consumer base, we believe that lower-tier cities will be bigger, wealthier and more eager to spend, and could contribute two-thirds of incremental growth in national private consumption toward 2030”(Figure 2), said Robin Xing, Morgan Stanley’s chief China economist.

Figure 2

Nasdaq-listed Pinduoduo (Figure 3), China’s 3rd largest e-commerce platform that pioneered the group-buying business model, truly shown the value of targeting lower-tier cities.

Figure 3

From PDD’s 3rd Q 2019 Financial report, GMV in the 12-month period ended September 30, 2019, was RMB 840.2 billion (US$117.5 billion) with an increase of 144% from RMB 344.8 billion in the 12-month period ended September 30, 2018. Active buyers in this 12-month period were 536.3 million, an increased of 39% from 385.5 million in the last 12-month period. Pinduoduo also announced that the majority of active users come from lower-tier cities who are starting to explore a more diverse selection of products.

PDD has not been the only e-commerce player in China to identify the massive potential of lower-tier cities. Alibaba reported that 70% of its new annual active users came from less developed areas across the nation. Release reported, during the 618 Festival in 2019, sales were driven by China’s lower-tier cities, where transaction growth was twice as high as the overall growth on this site. Besides, also launched its group-buying app and WeChat mini-program “Jingxi” this September to target consumers in China’s lower-tier cities.

Just as what ChinaDaily stated, “China’s next big wave of consumption is likely to occur in the lower-tier cities, as consumers living there put more emphasis on high-quality and imported products, along with in living standards and rising disposable incomes”, international brands should craft their digital marketing strategies to attract consumers in China’s lower-tier cities.

Trend 2: An aging population goes digital

"The elderly of different ages have distinct requirements for products and services in terms of food, housing, transportation, travel, shopping, medicine, and entertainment, which has formed a large-scale, diversified and colorful 'silver economy' in China," said Fu Yifu with the Suning Institute of Finance.

According to a State Council plan, China’s senior population (aged 60+), is expected to exceed 255 million by 2020, accounting for 17.8% of the total population. Recently the Chinese government has introduced new measures to bring its older citizens into the digital age in order to further boost this “silver economy”. As of April 2018, only 10% of internet users were + 50, but with new programs and experienced internet users entering their 50/60, it’s expected that this number will steadily increase.

Following the trend, Alibaba’s online shopping platform Taobao launched a new channel designed specifically for seniors, which allows elderly users to link their accounts with those of their children/spouses, share purchases/items in group chats, and make payments for each other with the “pay for me” option.

Another early mover in this “silver economy” is an app (Tangdou) that caters to the community of elderly Chinese women who like to dance to loud music on a public square. More than 200 million Tangdou users watch dancing videos and communicate with like-minded individuals. Since its establishment, Tangdou has attracted many brands that target the aging population. For international brands, working with such apps would be a good way of tapping into this emerging “silver economy” in China.

Trend 3: The dominance of short video

According to McKinsey (Figure 4), Chinese consumers spend 44% of their time on social media apps. 33% is spent on social applications such as WeChat and Weibo’s microblogging service. Another 11% of their time is spent watching, sharing, and creating short videos on apps such as Douyin (also known as Tik Tok) and over-the-top video streaming services. McKinsey also noted that 50% of its survey respondents saying they had become aware of a product on a social platform, 25% said they had made a purchase directly through a social media channel.

Figure 4

Live streaming has been a dominant trend in Chinese social media, fueling fortunes and stardom. Users are now, however, increasingly migrating away from such platforms. Instead, short videos (typically lasting between 15 seconds to a few minutes) are becoming one of the main methods of communication, CNBC reported.

China’s short video market is expected to hit around 96.2 billion yuan (about US$14.08 billion) by 2020, according to IHS Markit. The main players are Douyin, Kuaishou, and Huoshan. Douyin had more than 1.5 billion global monthly active users and more than 700 million daily active users as of June 2019.

Although the short video market is huge, how to make the most use of it and get the brand message across to the audiences is the key for international brands to consider when doing digital marketing in China.

Trend 4: The rise of Micro KOLs/KOCs

When the words KOLs are mentioned in China, people will think of KOLs with millions of followers and expensive campaigns. Most of them try to work with as many brands as they can, sometimes, leading to a sense of distrust among Chinese consumers.

However, Micro KOLs (followers under 250K) mostly create strong connections with their followers as they are interested in building their personal brands and follower base. They are able to reply directly to the comments and engage with fans, creating a shared sense of community and belonging.

KOCs (Key Opinion Consumers) is the latest form of influencers in China, who are experts in testing and reviewing products. Given that their content is highly reliable, they play an important role in the decision-making process of their readers, regardless of the relatively small audience size.

Both KOLs and KOCs are strongly connected to their followers, moreover, they are also cost-effective. It’s good for international brands to work with multiple Micro KOLs &KOCs instead of one top-tier KOLs.

Trend 5: Brand crossover-Leveraging brand synergy

Crossover brands building cooperation with each other for new products is the new buzzword for companies looking to gain an edge in China's rapidly changing retail marketplace.

New crossover products that have made waves recently include

  1. a White Rabbit lip balm. White Rabbit is famous for its creamy candy. It worked with a cosmetic company named Maxam to launch the White Rabbit lip balm.

  2. a bottle of pink perfume jointly developed by baijiu maker Luzhou Laojiao

  3. a Palace Museum lipstick.

  4. South Korean makeup brand Face Shop has the smell of Coca-Cola

There is definitely a broader trend toward brand collaboration happening in China, It allows brands to connect with a broader group of consumers and imbibes a feeling of nostalgia.

Trend 6: Digitally-powered physical retail innovation-Omni Channel Fulfilment

Omni-channel refers to the sales ecosystem that provides the customer with an integrated shopping experience. The customer can shop online from a desktop or mobile device, via smartphone, or in a brick-and-mortar store, and the experience will be seamless. More and more Chinese customers are into such a convenient and thoughtful shopping experience.

Taking China’s largest e-commerce category apparel for example (Figure 5), 85% of shoppers now engage with both online and offline touchpoints, according to McKinsey.

Figure 5

Here are 5 ways to fulfill the omnichannel shopping which retailers and brands need to pay attention to in order to provide customer seamless shopping experience, increase engagement and leave a lasting impact on the target audience.

  1. Shop online, pickup offline

  2. QR code available for online research & purchase

  3. Check offline, stock online

  4. Deposit online, full payment offline

  5. Personalized delivery

2020 will be a challenging year for international digital marketers. The above 6 digital marketing trends in China will guide you through the important decision-making process. Meanwhile, never forget that hard work and good insight into your audience will always pay off. Set it as a goal to make your message more targeted to your audience and as real-time as possible.

Do the top 6 digital marketing trends make you excited about the Chinese market?

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