According to The 50th China Statistical Report on Internet Development, the total number of Internet users in China reached 1.051 billion as of June 2022 and the internet penetration rate reached 74%.
China has been the largest online retail market in the world since 2013. Online retail sales revenue in 2022 reached CNY 13.79 trillion (USD 2.00 trillion), marking a 4% increase from the previous year. Online goods sales increased by 6.2% in comparison to 2021 and accounted for 27.2% of the total retail sales of consumer goods in 2022.
With an ever-increasing internet penetration rate as well as an ever-growing online market, digital marketing has become a priority for 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, also known as BAT.
Definition of digital marketing
Digital marketing refers to a targeted and data-driven marketing approach that uses the Internet, interactive digital media, search engines and mobile devices to reach customers and achieve various goals.
Benefits of using digital marketing in China
1. Comprehensive information
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 conventional marketing.
2. Integration and convenient conversions
Digital marketing integrates pre-sales promotion, transactions and after-sales services into one chain of services, allowing customers to benefit the most from the services the business provides. In the past, if a person became interested in a product after seeing a TV advertisement or a poster, the fastest way to purchase the product was by calling the company to make a reservation and then paying for 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.
3. 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.
4. Cost efficiency
Firstly, as geographic boundaries do not constrain the effects of an advertisement, 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 information about a product on the Internet or social media platforms usually tend to purchase or are at least interested in the product. Thus, this helps to avoid 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 personalised content. Since more targeted information is delivered to each consumer, a consumer is more likely to find needed products and purchase them.
6. Quantifiable results
With big data analysis and advanced information technology, businesses can track the number of conversions made from implementing a certain digital marketing strategy. This allows businesses to adjust their digital marketing strategy according to current market trends and feedback on products. Businesses can also adjust their inventories accordingly.
Most commonly used digital marketing strategies in China
1. Search engine optimisation (SEO)
Search Engine Optimisation (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 keyword relevance, quality of the website’s content, level of user engagement, number and quality of inbound links and website structure. 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:
- The algorithms of a search engine change frequently. Businesses need to closely monitor these changes and make adjustments accordingly.
- If the SEO of a website is done by amateurs or 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.
These search engines struggle to read foreign languages, so the website must be in simplified Chinese. The loading of pages and accessibility will be improved if the official website is hosted in China. The content should also comply with the law and respect China’s restriction on the themes of articles and videos.
Most commonly used search engines in China:
- Baidu is the most popular search engine in China and is the preferred engine in the country. Baidu has around 75% of the market share in China, so it is crucial to focus on how to rank high on Baidu. When implementing an SEO strategy, creating fresh and new content is important if a company wants to devote itself to a high ranking on Baidu.
- Sogou was established in 2004, and it is famous for its Sogou input keyboard for mobile devices and tablets. The market share of the Sogou search engine in China is nearly 15%. It is worth noting that in 2013 Tencent acquired the search engine; as a result, the Sogou search engine is built-in on the WeChat platform, which is a unique advantage compared to other search engines in China.
- 360 search claims to have unique ranking algorithms. Thus, companies need to implement different SEO strategies for it. The company also owns several internet properties, including the 360 directory and the 360 anti-virus program.
- Although often made fun of in the West, in China, Bing is gradually improving and is recommended by many Chinese netizens as it has access to Western search results. Bing has two search bars, one is for domestic searching only, and the other one is for international results.
2. Content marketing
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 advertorials, press releases, podcasts, blogs, audios, videos, white books 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 applications every day, creative and eye-catching content that conveys a brand’s values can be the key to content marketing campaigns.
3. 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 online and pay a certain fee each time an Internet user clicks this advertisement. Keyword research plays the 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 giving unintended exposure to the product. Brands actively develop new products and products with new USPs by implementing advertising campaigns to attract people’s attention.
4. Social media marketing
Social media marketing is a strategy to promote brand awareness, drive traffic and establish social trust by engaging with people on social media through online discussions. 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.
China’s most popular social media platforms 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 2019 China Digital Marketing Trends report released by AdMaster includes 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 streams and short videos contribute 55% of the digital marketing industry, then followed by official public account operations, with a proportion of 54%.
To ensure the best marketing practice, Chinese companies usually implement mixed digital marketing strategies but with different emphases.
Most commonly used social media platforms in China
- WeChat is the most influential social media in China. WeChat reached 1.3 billion monthly active users at the end of December 2022, making it the fifth most popular/used social media platform worldwide. WeChat has many features consisting of voice messaging, text messaging and video 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 organisations). It also provides services like payment for living expenses, QR codes for public transportation, 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 China’s second most popular social media. Users can upload images, videos and gifs to share information and engage with each other. Organisations, corporations and celebrities from different fields joined Weibo to interact and share information with their followers, customers and fans.
- QQ is the first popular chat application developed by Tencent. While WeChat has become the market leader, QQ still prevails among younger users. The advantage of 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.
- 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 an average of over 100 million monthly active users in 2022.
- TikTok is known as Douyin, and it is the most popular video-sharing platform in China. This short-form video platform is rich in various genres, with plenty of corporate accounts publishing creative video clips.
- Xiaohongshu also known as RED or Little Red Book, is a social media and cross-border e-commerce platform. The latest data of RED shows that it had over 150 million monthly active users in 2022. More than 90% of the platform’s users are female and use the app to search and research skincare and cosmetic products and popular brands in various areas. Most users are white-collar, middle-class, exquisite mothers and urban Gen Zs 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 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 for digital marketing in China
1. 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 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 higher satisfaction when purchasing besides meeting basic needs. Businesses, therefore, should consider developing a unique brand culture and a clear value proposition that accurately matches the demands of their targeted customers.
In this way, customers will perceive a material and spiritual satisfaction when purchasing these businesses’ products and 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.
2. Active online communities
Since the number of frauds and false information increases as more new brands emerge online, more and more consumers indicate that they value other customers’ feedback 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, various online communities share the same interest in a certain product, brand or value. KOLs, regular brand customers or people with related professional backgrounds are often regarded as authorities in these online communities.
These authorities often substantially influence consumers in their communities and sometimes affect market trends. Therefore, it is significant for businesses to build online communities consisting of their leads or develop loyal regular customers and KOLs 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 have a better understanding of consumers’ needs and establish social trust.
3. 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 can 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
1. Different mainstream social media platforms
Social media marketing is irreplaceable 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 for 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 cannot access them since firewalls and local bans block these foreign social media platforms.
Additionally, 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.
2. The gap between online and offline
A digital marketing strategy is most successful when an online promotion is combined with offline events. Many Chinese companies hold creative offline events to support online promotions. 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.
3. Strict personal information protection policies
During the 29th Session of the Standing Committee of the 13th National People’s Congress on 10 June 2021, the Data Security Law of the People’s Republic of China and the Personal Information Protection Law of the People’s Republic of China were officially published. 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 heavily on big data analysis, these policies can hinder the implementation of certain digital marketing strategies for Chinese and foreign companies.
4. Cultural & lingual challenges
For the Intercultural Studies Project, culture is defined as the shared patterns of behaviours and interactions, cognitive constructs and affective understanding learned through socialisation. These shared patterns identify members belonging to a particular cultural group while distinguishing those of another group. Effective marketing still requires an understanding of local cultures, even though globalisation and the widespread of the internet have made some progress in solving the problem. China has a 5,000-year history with profound destiny. A deep understanding of Chinese culture is a challenge for foreign companies, not only because of the complex language system but because the metaphoric meaning can also be rich.
When it comes to digital marketing, things become more complicated. Like in the West, especially among youth, cyberspeak has been infiltrating daily communication in China. However, cyberspeak is even changing the original meanings of Chinese characters. It forces reluctant domestic companies to adapt their communication 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 resonate with a particular Chinese group in the market.
If you want more information about doing business in China, feel free to contact us at Acclime China. Our team can advise you on any queries you may have, and we can offer solutions for doing business in China.
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