According to The 47th China Statistical Report on Internet Development, the total number of Internet users in China reached 989 hundred million by December 2020, which is an increase of 84.50 million compared to March 2020. China’s internet penetration rate exceeded 70% by December 2020.
In addition, China has been the largest online retail market in the world since 2013. In 2020, the revenue of online retail sales reached CNY 11.76 trillion ($1.81 trillion), which was an increase of 10.9 % compared to 2019. The number of online shoppers in China reached 782 hundred million by December 2020, another increase of 72.15 million compared to March 2020.
With an ever-increasing internet penetration rate as well as an ever-growing online market, digital marketing becomes a priority of many businesses operating in China. If companies need to create their digital strategy, they can never ignore the three digital behemoth trio of China: Baidu, Alibaba and Tencent, which are known as BAT for short. Both Alibaba and Tencent have their own ecosystem with their star apps as well as their own payment service which companies need to leverage because Chinese people have gotten so used to the two online electronic payment methods already. Baidu has its own different ecology, and it was the pioneer to apply deep learning of all the BAT giants.
Definition of Digital Marketing
Digital marketing refers to a targeted and data-driven marketing approach that uses Internet, interactive digital media, search engines and mobile devices to reach customers and achieve various goals.
Strengths of using digital marketing in China
The price, specification, technical standard, warranty information, method of application, and common Q&A of a product can be displayed clearly on the Internet. With digital marketing, customers can access all this information more easily than with conventional marketing.
Integration and convenient conversions
Digital marketing integrates pre-sales promotion, transaction, and after-sales services into one chain of services, allowing customers to benefit the most from the services provided by the business. In the past, if a person became interested in a product after seeing a TV advertisement or a poster, the fastest way he or she could purchase the product is by calling the company to make a reservation and then pay on delivery. With digital marketing and its well-designed webpage or software, conversions are easier and more convenient. A person can simply click a tab on his or her phone or laptop to make the purchase.
Broad geographic reach
With digital marketing, an advertisement is not subject to geographic constraints. Once an advertisement is placed on the Internet or a social media platform, people from all over the country can see the advertisement.
Firstly, as the effects of an advertisement are not constrained by geographic boundaries, businesses do not need to place so many advertisements as before. Secondly, with digital marketing, businesses can directly sell their products to customers. The payment to local distributors can be saved. Thirdly, people who browse the information of a product on the Internet or social media platforms are usually those who have the tendency to purchase or are at least interested in the product. Thus, this avoids invalid clicks and ineffective advertisements to a certain extent. All these save costs for businesses.
Many websites and applications can track people’s browsing history. This enables websites and applications to provide people with personalized content. Since more targeted information is delivered to each consumer, a consumer is more likely to find needed products and make a purchase.
With big data analysis and advanced information technology, businesses are able to track the number of conversions made from implementing a certain digital marketing strategy. This allows businesses to adjust their digital marketing strategy according to the current market trend and people’s feedback on their products. Businesses can also adjust their inventories accordingly.
Most commonly used digital marketing strategies in China
Search Engine Optimization (SEO)
Search Engine Optimization (SEO) is often defined as “the art and science of making web pages attractive to search engines”. Businesses apply this strategy to improve the rankings and visibility of their websites on search engines. Search engines rank websites based on factors such as keyword relevance, quality of website’s content, level of user engagement, number and quality of inbound links, and structure of the website. SEO specialists use these factors as key indicators to help businesses improve their websites. Although being a widely used strategy, the effects of SEO can be limited for certain reasons: 1) The algorithms of a search engine change frequently. Businesses need to closely monitor these changes and make adjustments accordingly. 2) If the SEO of a website is made by amateurs or made inappropriately, search engines may punish this website by lowering its rankings or clearing its data on the search engine. In China, SEO is often implemented on search engines such as Baidu, Sogou and 360 Search. As these search engines struggle to read foreign languages, the website must be in simplified Chinese. The loading of pages and accessibility will be improved if the official website is hosted in China. Besides, the content should also comply with the law and respect China’s restriction on the themes of articles and videos.
Most commonly used search engine in China:
- Baidu—Baidu is the most popular engine in China and is the preferred search engine in the country. Baidu has around 70% of the market share in China, so it is crucial to focus on how to be highly ranked on Baidu. When implementing a SEO strategy, it is important to create fresh and new content if a company wants to devote itself for a high ranking on Baidu.
- Sogou— Sogou was established in 2004, and it is famous for its Sogou Input keyboard for mobile devices as well as tablets. The market share of the Sogou search engine in China is nearly 25%. It is worth noting that in 2013 Tencent acquired the search engine, as a result, Sogou searching engine is built-in on the WeChat platform, which is a unique advantage when compared with other search engines in China.
- 360 search– 360 search claims to have unique ranking algorithms. Thus, companies need to implement different SEO strategies for it. Besides 360 search, the company also owns several internet properties such as 360 directory and the 360 anti-virus program.
- Bing— Although often made fun of in the West, in China Bing is gradually and recommended by many Chinese netizens as it has the access to western search results. Bing has two search bars, one is for domestic searching only, and the other one is for international results.
Content marketing is a strategy to attract leads by delivering relevant content to targeted groups without conveying an advertising message directly. According to a survey from Pew Research Center , 81% of consumers’ purchasing decisions are influenced by ‘doing their own research online’, making content marketing important to get in touch with customers. In China, examples of content marketing include advertorial, press release, podcasts, blogs, audio, video, white book and infographics on Weibo, WeChat, search engines, official websites, and client-side applications. As Chinese netizens encounter content in the hundreds of thousands on their social network apps every day, creative and eye-catching content that convey the values of a brand can be the key for content marketing campaigns.
Pay-Per-Click Marketing (PPC)
Pay-Per-Click marketing refers to the strategy that drives traffic to a business’s website through paid advertisements. Businesses post an advertisement on an online platform and pay a certain fee each time this advertisement is clicked by an Internet user. Keyword research plays a most significant role in a PPC campaign. There is an extremely popular ‘cyberspeak’ on Chinese social media called “种草” (“Zhong Cao”). This means the desire to buy a particular product or experience something, or influencing or being influenced to long for a particular product or experience. The basic logic for “Zhongcao” is “approaching from different perspectives and then giving an unintended exposure to the product”. Brands actively develop their new products and products with new USP’s by implementing advertising campaigns to attract people’s attention.
Social Media Marketing
Social media marketing is a strategy to promote brand awareness, drive traffic and establish social trust by engaging people on social media and online discussion. Nowadays, the factors and media that influence consumer decisions have changed, so it is essential to create active and recurring content to attract consumers’ attention and give them the necessary information when they make decisions and conduct searches. In China, businesses often hire professionals to manage their social media accounts, including publishing new product releases, replying to followers’ messages, and initiating online discussions. Businesses also collaborate with celebrities and KOLs (Key Opinion Leaders) to promote brand awareness through online interaction on social media platforms. In recent years, more and more businesses also use social media platforms as direct sales channels. The most popular social media platforms in China include Weibo, RED, Douyin (TikTok), and WeChat public accounts. Because of interpersonal trust between KOLs and their followers on specific social media platforms, this way of marketing can increase brand awareness and shorten the time before a consumer decides to purchase. Furthermore, it can reduce the marketing expenses of brands while simultaneous long-tail effects on the content KOL are provided.
A report of “2019 China Digital Marketing Trends“, released by AdMaster, includes a total number of 240 samples (110 brand advertisers are included). The report mentions that, at the level of social media marketing, KOL marketing is gradually being regarded by brands as a top priority in social media communication, occupying 60% of the digital marketing industry. Live stream and short video contribute 55% of the digital marketing industry, then followed by official public account operation, with a proportion of 54%.
To make sure the best practice of marketing, Chinese companies usually implement mixed digital marketing strategies but with different emphases.
Most commonly used social media platforms in China:
- Wechat: WeChat is the most popular social media in China. WeChat has now reached 24 billion monthly active usersin the first quarter of 2021, making it the 5th most popular/used social media platform worldwide. WeChat has a lot of features consisting of voice messaging, text messaging and video calls, such as group messaging and calls. Wechat can also be used for payments, short video creation and sharing, creating posts on their newsfeed, live streams, games, and official accounts (which can be registered by individuals and by organizations). It also provides services like payment for living expenses, and QR codes for public transportation and mobile top-ups etc.
- Sina Weibo—also known as Weibo, is a micro-blogging site in China released in 2009. Given the character limits it is usually labelled as the Chinese version of Twitter. With nearly 500 million users on the platform, it is the second most popular social media in China. Users can upload images, videos and gifs for information sharing and the opportunity to engage with each other. Organizations, corporations, and celebrities from different fields joined Weibo to interact and share information with their followers, customers, and fans.
- QQ—QQ is the first popular chat app developed by Tencent. While WeChat has become the market leader, QQ still prevails among younger users. The advantage for QQ is that it does not require phone numbers to sign up, which attracts youngsters to register when they are not even allowed to have their own phones yet.
- Zhihu— Zhihu can be seen as a Chinese equivalent of Quora, it is the largest online question-and-answer sharing community in China. It is reported that Zhihu had over 85 million monthly active users in the first quarter of 2021.
- TikTok–In China, TikTok is known as Douyin, and it is the most popular video-sharing platform nowadays. This short-form video platform is rich in various genres with plenty of corporate accounts publishing creative video clips on it.
- Xiaohongshu—also known as RED or Little Red Book, it is a social media and cross-border e-commerce platform. The latest data of Red shows that it currently has over 100 million monthly active users, with nearly 300 million notes (shared information with upmost 1000 characters) released in 2020. More than 90% of the platform’s users are female, who use the app for both searching and conducting research on skincare and cosmetic products as well as popular brands in various areas. Most of the users are white-collar, the urban middle-class, exquisite mothers, and urban Gen Zers with strong spending power. As a result, the platform comes with the attribute of recommendation by KOLs and a high purchase conversion rate naturally.
- Toutiao – Toutiao is the hottest news and information platform right now, not only do official company accounts publish formal news, but it is available for individuals to create content in different fields as well. Readers can leave comments to the writers for interaction.
Future emphasis in digital marketing in China
Accurate value proposition
Although big data analysis plays a large part in digital marketing, it should not be the ultimate focus of businesses. Besides functionality, the value proposition of a brand is what really attracts and retains consumers. In the Internet era, when searching for a certain product online, people can easily be dazzled and diverted by the hundreds of advertisements. Without a clear value proposition, it is hard for a brand to establish a stable long-term relationship with customers. Under a prosperous economic condition in China, customers often seek a higher-level satisfaction when conducting a purchase besides meeting basic needs. Businesses therefore should consider developing a unique brand culture and a clear value proposition that accurately match the demands of their targeted customers. In this way, customers will perceive a dual satisfaction, both material and spiritual when purchasing these businesses’ products. In this way, an emotional connection is established between the business and its customers, further strengthening the business’ attraction to its customers. On top of that, digital methods should be used to ensure that valid information, high-quality content, and the clear value proposition of a brand are delivered and made visible to the correct group of targeted consumers.
Active Online Communities
Since the number of frauds and false information increase as more new brands emerge online, more and more consumers indicate that they value other customers’ feedbacks higher than the information provided by the businesses. In China, consumers tend to search on social media platforms, such as RED, for evaluations provided by other users before purchasing a product. On many social media platforms, there are various online communities consist of people who share the same interest in a certain product, brand, or value. KOLs, regular customers of a brand or people with related professional backgrounds are often regarded as authorities in these online communities. These authorities often hold a substantial influence over consumers in their communities and can sometimes affect market trends. Therefore, it is significant for businesses to build such online communities consisting of their own leads or develop ‘loyal’ regular customers and KOLs who are active in relevant communities. Businesses may also interact with consumers directly and respond to consumers’ questions in online communities through their official accounts. In this way, businesses can not only have a better understanding of consumers’ needs but also establishes social trust with consumers.
Conversion rate over traffic
Digital marketing is more than driving traffic. A valid digital marketing strategy should be able to convert public traffic to private traffic, and then to a purchase. A valid digital marketing strategy should ensure that consumers do not find advertisements annoying or treat advertisements as something merely for watching. Businesses should monitor whether a digital marketing strategy is able to encourage consumers to follow the company’s official account on social media platforms, such as RED, Weibo and WeChat, to check the company’s official website, to search for other products provided by the company initiatively, to sign up for the company’s newsletter email list, and to eventually make a purchase.
Potential difficulties for foreign companies to implement digital marketing in China
Different mainstream social media platforms
Social media marketing plays an irreplaceable role in digital marketing in both China and foreign countries. Nevertheless, the mainstream social media platforms in China and most western countries differ significantly. In China, mainstream social media platforms used by digital marketing include Wechat, Weibo, RED and Douyin (TikTok). In most western countries, mainstream social media platforms and websites are Facebook, Instagram, Snapchat and YouTube. No matter how successful these western companies’ campaigns are on foreign social media platforms, Chinese consumers do not have access to them since these foreign social media platforms are blocked by firewalls and local bans.
In addition, since foreign companies, especially those that have never entered the Chinese market before, have little or no experience in using Chinese social media platforms, these foreign companies need to spend lots of effort to adapt to these platforms and to understand the stance of branding and advertising in China. It can be hard for these companies to start a successful social media marketing campaign without proper assistance.
The gap between online and offline
A digital marketing strategy is most successful when online promotion is combined with offline events. Many Chinese companies hold creative offline events to support online promotion. Companies also invite brand icons for new product releases. Based on customers’ feedback on products and their experiences of offline events, Chinese companies can adjust the strategy of offline events efficiently and flexibly. For foreign companies, such close collaboration between online and offline events is often hard to achieve. The effectiveness of digital marketing is often undermined.
Stricter personal information protection policies
During the 13th Standing Committee of the National People’s Congress in 2020, Cybersecurity Law of the People’s Republic of China and Personal Information Protection Law of the People’s Republic of China were published for comments. The Laws prohibit the exploitation of consumers’ personal information. Moreover, these policies will serve as a legal reference when new issues arise. Nevertheless, the definition of exploitation is somewhat ambiguous. Since digital marketing relies on big data analysis heavily, these policies can hinder the implementation of certain digital marketing strategies for both Chinese and foreign companies.
Cultural & lingual challenges
For the purposes of the Intercultural Studies Project, culture is defined as the shared patterns of behaviours and interactions, cognitive constructs, and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a cultural group while also distinguishing those of another group. Although globalization and the spreading of the internet have an extent solved the problem, still the local cultures and their understanding matter for effective marketing. China has a 5,000-year history with profound destiny. A deep understanding of the Chinese culture is a challenge for foreign companies, not only because of the complex language system, but the metaphoric meaning can be rich as well. When it comes to digital marketing, things become more complicated. Like Western people, especially for the youth, cyberspeak has been infiltrating into daily communication in China. However, cyberspeak is even changing the original meanings of Chinese characters. It forces reluctant domestic companies to adapt the way they communicate with their target customers. The culture of foreign companies should adapt to local cultures by implementing proper Chinese language in line with their digital marketing branding and promotion. Brands need to know what kind of advertising slogan can be resonated with a particular group of Chinese in the market.
If you want more information about doing business in China, feel free to contact us, Acclime China. Our team can advise you on any queries you may have, and we can offer solutions for doing business in China.