On the heels of the successful ‘Empty Cities’ ad campaign, Taobao Mall is hoping to increase its share of the Chinese B2C (business to consumer) market with a new marketing strategy.
The ‘Empty Cities’ advertisements imagined a world where shoppers have fled from the busy shopping streets of major cities like Beijing and Shanghai to the convenience of their personal computers. The campaign’s motto “没人上街，不一定没人逛街” – roughly translated to, “no one on the streets, doesn’t mean no one is shopping” – expressed the ease of shopping online and its increasing popularity among Chinese shoppers.
Below is the original advertisement:
Similar campaigns were used in Europe and the United States during the 90’s, but unlike China, it would be almost impossible to imagine the luxury shopping streets of London and New York City completely abandoned. The lack of a dominant physical shopping infrastructure in China makes it a little more believable that Chinese consumers would retreat to their computers in search of better deals and more options. Because Chinese consumer culture is relatively new, the idea of “going out shopping” isn’t as big a draw, and companies are investing less in setting up large luxury stores and more in establishing a strong presence online. This has led to the incredible growth of e-commerce in China, and makes the ‘Empty Cities’ campaign particularly relevant.
TaoBao Mall has recently released its new ad campaign that emphasizes the luxury brands that can be purchased at the online mall.
Here is the new advertisement:
Taobao Mall hopes both campaigns will help solidify its dominance in the online shopping market. By effectively emphasizing convenience and the availability of premium brands, TMall will continue to lure Chinese shoppers off the streets and online.
Since the Cultural Revolution, China has had a strained relationship with the United States. Cold War pressures jeopardized political discourse between the two international giants. But President Nixon’s trip to China in 1972 marked an economic awakening in China.
In recent decades, China has proven to be one the most influential actors in international political-economy. Trade between the United States and China has sky-rocketed, tying the two nations together economically despite their political differences. Consumerism in China has developed alongside the market-led economy, further elevated by the explosion of e-commerce in the country. While socio-political discourse is heavily influenced by the Chinese government, economic agency has become increasingly available to the Chinese people. E-commerce allows for a diversity in product selection previously denied to the Chinese consumer before B2C platforms like Taobao and TMall.
Increasing wages, a rapidly growing GDP and desire for economic globalization are a few examples of how China’s economy is flourishing at an unprecedented rate. As is the trend in many countries transitioning from a developing to a developed economy, these staggering growth rates will eventually level off. But will consumerist behavior level off as well? Probably not.
There has been a reorientation of social and cultural values in China. As more and more Chinese become comfortable with satisfying their consumer desires through e-commerce, the consumer identity will be fused with and ingrained in their cultural and social consciousness. Furthermore, a central factor in the relative decline of growth in the Chinese economy will prove to be employment and wage increases. Though the GDP may not grow so ravenously in coming decades, the Chinese consumer will have a deeper pocket and thus more consumer power.
Does this mean that China will westernize? That’s a difficult question to answer, but if China has proved anything, it is that economic development does not necessarily equate with social or cultural conformity to Western standards. Consumerism may globalize regional identities to a certain extent, but China is marked by a national pride that is not easily undermined. One thing is for sure: businesses of the world should take heed, because the Chinese consumer has arrived and is looking for products. The line between domestic and international commerce has been blurred by B2C platforms like TMall. Opportunity is knocking and exporting to e-commerce consumers in China provides an efficient and profitable way of answering this call.
Consumerist China: Is it sustainable?
China is witnessing a cultural revolution driven by a shift in attitudes towards sex and relationships. Consumers born in the 80’s and 90’s are participating in new dating behaviors and romantic relationships now start with the individual. This shift in perception–in addition to increasing the acceptance of alternative lifestyles–has had a profound effect on how companies market to 18 – 30 year olds, the fastest growing consumer demographic in China.
According to the Chinese research firm Enovate, non-traditional tastemakers, especially those from the LGBT community are creating strong shifts in attitudes towards relationships. Members of this community are influencing the media – primarily in places like Hong Kong and Taiwan, but this influence is quickly seeping into the mainland.
Western standards of dating have been traditionally nonexistent in China. This has led to dating circumstances that utilize the internet to overcome relationship adversity.
Women’s empowerment is also giving women a greater voice. Traditional attitudes, gender roles, and stereotypes are beginning to shift.
According to Simon Cao, Brand Manager for Unilever China, “It’s increasingly vital for us at Unilever to understand youth relationship behaviors in order to create better and more relevant products. Chinese youth today rely on many of our products to attract members of the opposite sex and gain confidence after using them.”
Although brands and companies often have to curtail overtly sexual advertising to pass through government regulations, more and more brands are pushing the limits in order to reach this critical youth market.
If your brand or product is aimed at young consumers, China cannot be ignored. Attitudes and consumer habits are changing rapidly in favor of western companies. Export Now can help companies that are trying to tap into this vital market succeed on a global scale.
China Dongxiang recently invested $100 million in the Yunfeng Fund LP, a private equity fund through which Alibaba Group Inc. channels investment. Giant Interactive Group, a Chinese internet company, has also invested $50 million in the fund. Alibaba Group has launched its share repurchase scheme and plans to use the investment to further restructure Taobao. The restructuring entails placing new regulations on businesses that will maintain product quality, consumer confidence and business diversity. In order to assist small and medium size businesses in adapting to the new regulations, Alibaba has invested some of this money to provide loans to members of Taobao and TMall that do not have the resources to compete with larger businesses.
The loans provided by Alibaba Group’s e-commerce financial services will be offered in a group buy deal. Five hundred Taobao merchants joined the deal in the first ten minutes, capitalizing on the 75% discount on interest.
The loans represent a gesture of good will on the behalf of Taobao and Alibaba, which aims to retain its small and medium business merchants as well as its larger players. The number of merchants taking the loans from Alibaba has reached 20,000 and continues to climb, with a total of RMB 1.4 billion being loaned out so far.
China has experienced an explosion of growth in e-commerce that has changed the landscape of the consumer market. Accessibility and affordability have become the mantra of Chinese e-commerce B2C platforms. But one thing has not been guaranteed to the Chinese “netizen”: product quality. With so many competing e-commerce ventures in China, consistency in product quality can fall to the wayside. Though most B2C platforms value quantity over quality, there is one e-commerce giant reversing this trend: Taobao.
Taobao recently announced that it’s restructuring its management system and introducing new regulations to monitor product quality. Essentially, businesses selling their products online will be held to the standard of quality expected by the consumer upon purchasing. In a volatile e-commerce market, Taobao is looking to restore trust between the consumer and the business.
Taobao, with its new approach to managing member businesses, is removing the disconnect between consumer and business that has plagued the e-commerce world in China. Though many small and medium businesses feel pressured by new regulations, Taobao has assured them that if product quality is maintained, no business will suffer losses due to the regulations. Taobao may practice tough love, but it is all toward a necessary end that will restore consumer confidence in e-commerce.
China’s Taobao Mall hits merchants’ pockets to improve service
With an explosion of growth in China’s e-commerce world, the Chinese consumer is as accessible as ever. Taobao, with a 30% share of the e-commerce B2C platform market in China, has proven that TMall is as appetizing to businesses interested in exporting as it is to Chinese entrepreneurs.
Gap Inc. has recently shown its intentions for expansion in China by tripling the number of stores it operates in mainland China. But the prospect of new Chinese customers is not the only driving force behind this decision. Gap has experienced a decrease in sales in North America over the last couple years and is looking to make up lost territory in the much more reliable Chinese consumer market. Starting with its lowest priced brand, Old Navy, Gap hopes to edge its way into the Chinese economy and establish the trade mark as common addition to the Chinese wardrobe.
The double edge of the B2C platform and e-commerce accessibility has taken its toll on Apple. Xiaomi, a cheap cellular alternative to Apple’s iPhone has grown in its Chinese popularity and been dubbed the “iPhone killer.” On TMall, the new Xiaomi reached its 300,000 preorder limit in just 34 hours. One can only speculate what the numbers will be once the phone is released, with preorder numbers being resold on Taobao and other e-commerce websites at higher prices. If the Chinese market is going to be accessed by foreign business, companies can’t sit on their hands and expect their international reputation to bring the sales to them. The initiative of Gap and the troubles faced by Apple are great lessons to take into consideration for any business looking to export to China. Selling a product internationality does not simply happen, it is the result of precise planning and even more nuanced execution.
A mall for men recently opened in Hong Kong. This 60,000 square-foot shopping area is solely dedicated to menswear, grooming and gadgets. Along with rise of salons for men in China, the mall represents some of the differences between the male Chinese consumer and their western counterparts.
Coach recently announced that 45% of their bags sold in China were bought by men. And according to figures published by Bain & Co., Chinese men spent 7 billion RMB on their wardrobes last year. Women spent only 2.8 billion.
This mass consumption of luxury and fashion goods is indicative of the value Chinese men place on luxury brands. Societal stigmas and biases towards appearance are different in China, and men are often interested in buying Coach bags or Gucci shoes. Gentlemen’s Tonic, an upscale salon in China, reports that Chinese men are much more willing than western men to experiment with new spa treatments and facials are more popular than in western countries.
China presents an opportunity for companies to sell to a new type of consumer. Smart brands are taking advantage, taking their goods and services that might not be popular among western men overseas.
Baidu is China’s leading search engine with a nearly 80% market share of online search engines in the country. Alibaba is looking to loosen Baidu’s foothold with ETao.com, which will provide Chinese “netizens” with a vertical e-commerce search engine while simultaneously boosting sales for the already successful Taobao B2C platform, which along with other Alibaba subsidiaries accounts for a 90% share of the e-commerce market in China.
Alibaba has already seen results. Baidu recently retracted its proposed launch of “Youa,” an e-commerce site that would have directly challenged Taobao.
While Taobao secures it position as the most successful B2C platform, other e-commerce sites wage a different war. As Dangdang, 360buy and Amazon all claw for the top position in Chinese e-commerce, a “price-slashing” battle has begun. Dangdang recently congratulated itself on “Beheading operation” that cut prices on the site to a level that undercuts many competitors. Others have followed this very same path, with 360buy attacking Dangdang by selling books online (an important product for Dangdang) at a price that almost ensures little to no profit.
If profit is not the motivating factor in this battle, what is? The answer is clear: the larger the market share an e-commerce platform can garner will result in exponentially greater future profits. So, while e-commerce sites compete now, it is the consumer that wins out. Let it be noted that despite this struggle, Taobao still maintains an estimated 20% lead in market share for e-commerce. Alibaba couldn’t be happier.
Every business needs to know their customer. But the near-constant changes in Chinese Internet behavior can make understanding the Chinese online shopper a daunting task. Keeping these three facts in mind can help companies better understand the e-commerce landscape in China:
1.) Female online shoppers outnumber males
Although male internet users outnumber females 53% to 47%, women make up 54% of all online shoppers in China, according to the state-run China Internet Network Information Center (CNNIC).
2.) More than 80% of online shopping customers have used the internet for more than 5 years
According to a study conducted by IResearch, it takes 2-3 years of internet experience before Chinese netizens begin online shopping. In order to have access to the internet for years at a time, users have to be affluent enough to afford a personal computer or time at an internet café. In fact, 51% of online customers have a salary of over 2000 RMB per month. As wages begin to rise and people begin to use the internet earlier in life, internet usage is sure to rise.
3.) Determinants of online purchase decisions are different for men and women
When shopping online, male consumers care more about after sales services and price, according to Iresearch. Women on the other hand place importance on feedback from other buyers. However, both men and women note the seller’s reputation when buying online. Understanding these differences can assist companies that are looking to market their brand and products to both men and women.