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Market Research – Insights into the Daigou Trader

Market Research – Insights into the Daigou Trader

For Western companies, selling to China is a recognised challenge. Moreover, this year I coined the term, “Daigou-to-Consumer” (D2C) to help companies conceptualise a powerful channel known as ‘daigou’ [1] that can assist them in the marketing, promotion and ultimately sales of their brands in China. To further understanding this channel we undertook research into Australia based daigou. . This research offers insights into the nature of daigou and the findings may help derive effective strategies to better engage and utilise this daigou community. The data was obtained by online survey of 103 Australian based respondents; recruited via WeChat Daigou groups. . The findings from this sample show that daigou are almost exclusively female (94%) and the majority (46%) are aged between 30-39 yrs old with 42% being aged 20-29 years and 12% indicating being in the 40-49 year old bracket. . Half the respondents said they spend 1-2 days a week conducting daigou business with 25% stating they spend more than 3 days a week. 30% of the respondents indicate that they are working as employee with 24% indicating that they are ‘housewives’, 12% are students and 15% indicate that daigou is their full time occupation. .

. Mother/baby and health related categories (predominately vitamins) both featured as most popular among their buyers. . When asked what product categories they expected to see demand for in 12 months; mother/baby and health related products remained the leading categories but 3C and Jewellery had 11% and 18% respectively suggesting these categories would grow in demand. . . The majority of daigou in this sample group were selling between $500 and $800 per month. . 40% of respondents said their margin was 10-12% with 33% of respondents saying they got 20-30%. . When asked what the daigou buyers cared about most when buying via the daigou there were three clear concerns; authenticity of goods (83%), price (66%) and brand awareness (56%). . A very telling question for brands relates to the reasons why Chinese buyers request particular products for the daigou to purchase. The respondents indicated that the Chinese buyers cared about the product ‘effect’ (75%), the known brand (65%) and that it was made in Australia (62%). . . When asked how many parcels they send to China on a monthly basis the majority of daigou (32%) said they post between 20-50. 8% of respondents were sending more than 150 per month.

. .

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What you should know about KOLs in China

What you should know about KOLs in China

Word-of-mouth has always been one of the most valuable forms of marketing. We tend to be more receptive to recommendations from a person they trust, than to ads or other corporate messaging. The power of word-of-mouth is especially significant in China than in any other countries, possibly due of the chaotic market and lack of trust between businesses and customers in China. That’s why KOL (Key Opinion Leader), or influencers as commonly known in the west, is an important key tool in any Chinese marketer’s arsenal. . Chinese KOLs are people who have large social media presence and followings who could influence consumers’ purchasing decisions. They do not only spread information, but also life attitudes, thoughts and ideas. KOLs in China are active across different social media, including Weibo, WeChat, Youku, Meipai, Yizhibo, Douban and so on. If being used wisely, engaging KOLs are powerful to magnify brand awareness, attract new followers, build brand credibility and ultimately alter purchase behaviours and habits.

Types of KOLs in China

1. Bloggers . Bloggers usually create and post original content. They share personal life stories and inspiring moments, aiming to connect with followers on a personal level. . Eg. 伞子No_Fan_No_Fun is a famous beauty blogger with more than 1.4M fans on Weibo .

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Getting Started with D2C (daigou-to-consumer); The SolarD Experience

Getting Started with D2C (daigou-to-consumer); The SolarD Experience

Last week I wrote a Bellamy’s Case Study highlighting how this brand mismanaged the Daigou channel and ultimately failed to understand the power of D2C. On the back of that post, I had a number of brand owners ask about examples of ‘who is getting it right’! So rather than simply highlighting one of the major brands, I thought it would be more interesting to showcase an emerging brand (in the context of Chinese consumers). . The brand I selected is SolarD; not because they have a flourishing Chinese business but its one that has aspirations of selling into China. This brand has not long started the journey and sharing what they are doing will have learnings for other emerging brands looking to enter the Chinese market.

The Brand

SolarD is at it’s core, a suncream. However, it boasts being a next generation cream that is designed to let in some of the UVB light that your body uses to naturally produce vitamin D whilst also screening out the harmful rays with SPF30 and SPF50. . . For the Chinese consumer this is a complex brand proposition and requires a degree of education to teach them about “Vitamin D”, the health benefits, the product differences and so forth. . Further, Chinese consumer behaviour around the use of suncream does not directly compare to Australian users and this has to be considered in the overall strategy.

How SolarD got started

When a company wants to start selling in China there are a lot of different variations of what this can look like. Do they want to do this via cross border ecommerce? Do they want to sell into retail in China? Have their products been product registered? Do they have a Chinese entity (i.e., WOFE) … a very long list of ‘to dos’ … When we start asking these types of questions, the company may quickly become overwhelmed. .

You need to understand there is a lot more to selling in China than having great products. . For SolarD, the cost of going directly in China did not make sense and therefore taking a D2C first approach delivered a number of tactical objectives; testing the products with a local Chinese audience, validating the new branding and communications and leveraging a daigou channel to create an awareness of brand in the Chinese marketplace. (The idea is that the D2C channel will lead then consider a B2B and B2C strategy).

Creating Brand Flagship eStore

SolarD created a Flagship Brand eStore on DaigouSales. Having an eStore provided them with visibility within the daigou community. The daigou can browse, purchase and ship SolarD products domestically or to China – even supports payments in RMB and dollars. The SolarD eStore also acts a central point for communications with daigou and offers a content location for daigou to get information, sample ads, company news and imagery etc.

Education fosters Brand Relationships

When considering the product information required for the daigou channel, there are two aspects to consider. The information and learning that the daigou needs to have in order to accurately represent the brand. Their core interest being in how to potentially make sales through their buyers back in China and secondly, the information needed by the daigou to help educate and persuade their end buyer. . . Education is a great way to spend time with daigou (online/offline) and thus develop a relationship. It is very important to form a brand relationship as much of the motivation for Chinese buyers to purchase via a daigou comes from the buyer’s trust in the daigou. If the daigou ‘knows’ the brand, has a relationship then there is a greater possibility for sales. . For SolarD, education is playing a key role in their strategy of developing this channel. . SolarD engaged a DaigouSales VIP Manager who developed an offline trade marketing program to bring products into various gift shops and offline daigou shops; the idea being if daigou saw the SolarD products in offline in these shops they would become curious and interested. The VIP Manager also has been active in daigou stores; holding training and product sessions. . Further, the VIP Manager created a SolarD WeChat group specifically for daigou — this group provides constant information and acts as a place to take/respond to brand questions. WeChat groups are critical for daigou to know more and engage brands. . Moreover, SolarD has leveraged KOL’s (key online influencers) to help promote and spread their brand content which is important. It helps the potential buyers back in China get exposed to the brand and thus helps the daigou when trying to promote it as well as recognising many of these same KOL’s are also doing daigou and this creates an opportunity to enlist them into a broader brand relationship.

Final Word

At the end of the day, it is important to create and nurture the daigou channel. Daigou respond positively to being treated with respect and appreciate brands wanting to work constructively with them. It is not always about the price (although this is very important) so taking a clear D2C approach SolarD has won some early daigou supporters. . It will take time to grow the daigou into a powerful SolarD sales engine but the brand has taken a reasonable, measured approach with a long term outlook. These are the attributes that will serve it well as it develops its long term China strategy. . .

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The Bellamy Case Study; Failing to understand D2C (daigou-to-consumer)

. Therefore, you need to consider what will help daigou become better brand advocates, better sales agents and how to inspire them to be curious about your products. After all, daigou can’t promote you if they don’t trust your brand, understand it’s heritage nor know your products. .

Firstly, lets agree the definitions?

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5 Key Elements of Successful D2C (Daigou- to – Consumer) Content Marketing

Daigou Management is Critical in Building Brand Relationships

For too long, many of the established brands have taken the daigou channel (D2C) for granted. Often not knowing if these Chinese ‘personal shoppers’ are friend or foe when it comes to the brand’s China positioning and pricing strategies. But for many of the emerging brands not yet in China and looking to break into that market, the daigou shopper offers both a sales and marketing opportunity. . This weekend, I attended our DaigouSales brand event to see how daigou buyers would respond to some of the newer brands (from an awareness perspective). The event is a kind of ‘speed dating’ format where we select only 4-5 brands to come and present to a smallish but select group of Chinese daigou (approx. 70 ). Each brand takes 10 mins to talk about their brand’s history, positioning and their ‘points of difference’ but the real value comes from the 30 or 40 mins after these speakers finish when the daigou can start to interact with all the products and ask all types of questions, from the functional aspects of the products to the types of competitors each product faces. Each brand represented at the event had a DaigouSales WeChat eStore with a unique QR code that the daigou can scan to purchase and ship products domestically or to China. . . For me, observing these interactions between the brand owners and the daigou buyers was a real epiphany. We had a largely female daigou group, seemly more interested in whether they themselves would use the products than acting as a buying agent for their contacts back in China. . . All were enthusiastically trying on the various creams and lotions, smelling the fragrances and even mixing and making milk powder for tasting. . But then I understood why this daigou phenomena was actually as big as it is. It is essentially to do with ‘trust’. Trust by the buyers in China requesting brands/products to be purchased by their ‘known’ daigou contacts in Australia and increasingly the trust the daigou builds with brands here and then in turn make product recommendations back to their Chinese buyers. It is the shift from simply taking a buying request to these daigou being recognised and indeed becoming a fully fledged ‘buying agents’. Someone that not only fascinates product purchases/postage but is making recommendations and looking out for the ‘next important brand’. .

Daigou can be a powerful brand ambassador and vocal advocate.

For me, our daigou event was not just an opportunity for lesser known brand to have their products tested but has created a catalyst for building a true and authentic relationship that was certainly appreciated by the brand owners and daigou buyers alike. . (Daigou; literally translated means “buying on behalf of” — pronounced dye-goo) .

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Daigou Management is Critical in Building Brand Relationships

Daigou Management is Critical in Building Brand Relationships

For too long, many of the established brands have taken the daigou channel (D2C) for granted. Often not knowing if these Chinese ‘personal shoppers’ are friend or foe when it comes to the brand’s China positioning and pricing strategies. But for many of the emerging brands not yet in China and looking to break into that market, the daigou shopper offers both a sales and marketing opportunity. . This weekend, I attended our DaigouSales brand event to see how daigou buyers would respond to some of the newer brands (from an awareness perspective). The event is a kind of ‘speed dating’ format where we select only 4-5 brands to come and present to a smallish but select group of Chinese daigou (approx. 70 ). Each brand takes 10 mins to talk about their brand’s history, positioning and their ‘points of difference’ but the real value comes from the 30 or 40 mins after these speakers finish when the daigou can start to interact with all the products and ask all types of questions, from the functional aspects of the products to the types of competitors each product faces. Each brand represented at the event had a DaigouSales WeChat eStore with a unique QR code that the daigou can scan to purchase and ship products domestically or to China. . . For me, observing these interactions between the brand owners and the daigou buyers was a real epiphany. We had a largely female daigou group, seemly more interested in whether they themselves would use the products than acting as a buying agent for their contacts back in China. . . All were enthusiastically trying on the various creams and lotions, smelling the fragrances and even mixing and making milk powder for tasting. . But then I understood why this daigou phenomena was actually as big as it is. It is essentially to do with ‘trust’. Trust by the buyers in China requesting brands/products to be purchased by their ‘known’ daigou contacts in Australia and increasingly the trust the daigou builds with brands here and then in turn make product recommendations back to their Chinese buyers. It is the shift from simply taking a buying request to these daigou being recognised and indeed becoming a fully fledged ‘buying agents’. Someone that not only fascinates product purchases/postage but is making recommendations and looking out for the ‘next important brand’. .

Daigou can be a powerful brand ambassador and vocal advocate.

For me, our daigou event was not just an opportunity for lesser known brand to have their products tested but has created a catalyst for building a true and authentic relationship that was certainly appreciated by the brand owners and daigou buyers alike. . (Daigou; literally translated means “buying on behalf of” — pronounced dye-goo) .

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The rise of D2C (Daigou-to-Consumer) and what it means for brands

The rise of D2C

Every day, around the world Chinese shoppers living overseas buy up tonnes of products purchased on behalf of their friends and family back in China and either transport them back as ‘gifts’ in luggage or via freight couriers.

This is a practice known as Daigou — literally translated means “buying on behalf of”. (pronounced dye-goo). It basically defines a network of shopping agents who buy things for residents on mainland China that are unavailable, hard to find or for those that people that simply don’t trust that brand brought within China. Essentially, it is a channel of commerce between mainland Chinese buyers and overseas (semi) professional shoppers, sometimes referred to as the “grey market” but one I am coining “D2C” — in recognition that this channel, estimated as a one Billion dollar ($A1,000,000,000) industry in 2016 and that’s just for the Australian market. I argue it now deserves and needs to be recognised as it’s own legitimate channel.

Previously, brands would discount this ‘grey channel’ as irrelevant or not necessary when looking at their China strategy (Australian Consumer Brands Marginalise Daigou at their Peril) but increasingly established brands, even with established Chinese distribution are looking to harness the brand advocacy and selling power of these Chinese buyers.

Emerging brands often only have this daigou channel (D2C) as they have yet to get their product registered for export (CIQ) into China and/or have yet to make the large capital investments needed to bring their Chinese brand to market.

The Australian newspaper reported, “In Australia, about 95 per cent of infant formula is sold either in supermarkets or pharmacies, compared to only 25 per cent in China. One quarter is sold through mother and baby stores, another quarter through cross-border e-commerce channels (into bonded warehouses in China and then delivered) and about 27 per cent is sold through daigous.”

Companies such as embattled Bellamy’s organic infant formula have found to their detriment that trying to cut out the daigou or grey export channels by undercutting their sale prices using direct Chinese e-commerce sites such as JD.com and Alibaba, can lead to daigou shunning their product completely, collapsing China sales.

So, D2C is alive, well and legitimate. Time for brands to add D2C into their channel mix strategies and include equally within B2B, B2C & C2C thinking (wow — and long live acronyms).

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Cross-border e-commerce makes it easier for Australian products to Reach China

This story (Brands-cross-border-e-commerce) starts with a meeting that occurred between myself and a fellow from Melbourne a few years ago. He was one of the most enthusiastic people I had met when it came to explaining what he was trying to do – a new milk brand that he felt would be able to take on ‘the big boys’ and be able to crack the Chinese market. This, on the surface was not only highly ambitious but seemed very naive. I then heard for the next few hours about how his product was “better” and “different” and how I would just have to build some Chinese marketing assets and job done — China cracked.

Although reading this you may think that this meeting was an anomaly and that such ideas are held by the privileged few; it is not the case. I would suggest that most of the meetings I hold with (mainly smaller) Australian and New Zealand producers / manufactures come with these same enthusiastically ambitious goals.

So what is the different about the brands that succeed and those that fail with their Chinese market quest?

Lets be honest and just acknowledge that for some brands looking for China success, had a degree of luck and timing. For others, looking to make their own luck they can struggle for years and often end up making little progress after investing significant time and money. The Chinese market is such a double edged sword — and a temptation very few don’t consider. If you want to ‘play’ in China you need to consider and plan a lot of aspects. Everything from the levels of capital needed to an understanding of the various rules (Government, cultural, business etc) and that is even before you review your brand, pricing and distribution. After which many just say China is all too hard! But there is another, simpler path I am advocating brands consider. This is not a certainty for success and won’t even be a fit for every brand but it is certainly a pathway many should at least explore. This is the use of China’s cross border, eCommerce channel where Aussie brands can sell products to Chinese consumers without the need for costly Chinese Government product registration (CIQ approvals) and requirements for establishing a Chinese company in China. OK, now I know you are thinking how do the Chinese consumers find my brand and more importantly, buy my products. One way (traditional route) is to build a Chinese eCommerce website (and/or go Tmall/JD.com), develop your Chinese social media channels (Weibo/WeChat), plan for paid search on Baidu and Qihoo etc, etc, etc…. Now this approach will fit some brands and be the right direction and it will require a significant capital investment and a more complex marketing/execution team. For other brands, I believe leveraging the Chinese community already living in Australia and using their ‘word of month’ to help you get awareness and product acceptance back in China. But not just the general Chinese community but the large groups involved in a practice called ‘Daigou”. I have written a number of posts relating the power of the daigou on brands and cross border strategy (Brands, Cross Border & Daigou; the intersection of opportunity & Australian Consumer Brands Marginalise Daigou at their Peril). Daigou, being a term for Chinese living overseas and who purchase goods on behalf of others living in China — just take a read through my past articles if you want to understand more about the size and influence that this group is now commanding. Reach China, a Digital Jungle sister company, created a WeChat eMarketplace (DaigouSales) for Australian brands and daigou to engage, shop and ship. This platform has already seen significant interest from both established brands and newer brands looking to promote their wares via eStores. Additionally, the Daigou Stores operating as physical retail outlets can also establish an eStore (these are private within the marketplace) to give them an eCommerce solution for their offline customers to buy within the eStore. Daigou can simply visit the eMarketplace to review the various eShops, make an order, pay in RMB or dollars, have the products shipped to addresses in Australia or China. Very simple convince. For private eStores (like Daigou Stores) they share their eStore WeChat QR code to their customers and these customers will only be able to visit this private store. Daigou Stores have become a key group using this platform as it gives them a full WeChat eCommerce solution as well as allowing them the ability to offer a wider ‘online’ range of products; often the emerging brands that would never be seen in their offline stores. Note, there are still Chinese Government regulations on the way eCommerce cross border operates such as logistics companies requiring their parcel receivers to register online, using their Chinese identity cards, before they will deliver products. This is to ensure a single customer does not buy more than 20,000 yuan worth of goods each year without paying import duty. That said, for many Australian brands the opportunity exists to sell your products to Chinese living in China via daigou and leveraging the Chinese cross border eCommerce channel. Just be open to a whole new way of marketing and selling than you do with your Australian retail channels. Oh, and what happened to the milk guy from Melbourne. Well, we became great mates, I brought into his dream and I am helping him with his Daigou and Chinese (in market) programs. Although early days (1 year) his brand is starting to see Chinese acceptance and sales moving through.

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Brands, Cross Border & Daigou; the intersection of opportunity

Over the past year, a number of changes to regulations, product registrations and tax have been introduced by the Chinese government that impact brands looking to export to China. This has caused some anxiety for existing brands exporting from countries such as Australia and New Zealand and for brands yet to make this leap, created a degree of uncertainty. However, that said, Chinese eCommerce is also evolving at a pace never seen before. Australian and New Zealand brands now have access to online these online channels and combined with China’s small parcel, cross border initiatives the opportunities and access have never been easier.

China has overtaken the United States to become the world’s largest e-commerce market. Only several years ago in 2010, Chinese online transactions contributed only 3 per cent of Chinese private consumption. Since then, the number of online shoppers has nearly tripled, with online transactions now accounting for 9 per cent of private consumption and continuing to grow. China’s Ministry of Commerce expects the country’s cross border e-commerce trade to reach 6.5 trillion yuan (about A$1.6 trillion) this year.

The evolution of e-commerce in China coupled with the daigou phenomena means Australian and New Zealand brands have a once in a life time opportunity to break into the Chinese market cost effectively.

In recent years daigou (Chinese personal shoppers) have also become a new force in the China–Australia/New Zealand trade relationship. There are estimated 40-70,000 active daigou living just in Australia, which includes students, housewives, young professionals and tourists sending parcels from Australia and New Zealand back to China. This industry is worth more than A$1 billion, according to a conservative industry estimate.

Daigou are playing an important role in helping Australian/New Zealand brands cut through in China. This army of personal shoppers has already helped a handful of Australian vitamin and baby formula companies — such as Swisse, Bellamy’s and Blackmores — grow to billion-dollar valuations. Other brands estimate daigou is responsible for a significant percentage of sales into China. Products can be personally promoted via ‘word of mouth’ to friends and families, which is undeniably an excellent marketing method – particularly in China.

The motivation for Daigou is simple – to make money through buying cheap and selling high. With prices of manuka honey running as high as 1789 RMB (A$400) for a 500g jar in Shanghai, it is often much cheaper to buy products directly out of Australia or New Zealand then the difference becomes the daigou’s profit.

On the Chinese buyer side, there is still deep concerns in China about the safety of products – something that was already in place when the country experienced its melamine scandal a few years ago with infant milk formula and countless news stories in China about ‘fake’ meat. Instead, Chinese consumers now just want to seek out products directly from somewhere or somebody they trust.

It is these two dynamics which have lead to a daigou system representing a multi-billion dollar business around the world . Here at Digital Jungle, we are also starting to see brands in Europe and America question us on how they can also tap into this under utilised resource. It can be argued that daigou can help put innovative new products on the radar more cost effectively than any other channel.

But tapping into the daigou community is no simple matter and brands need to understand that the vast majority of this group don’t buy frequently — they happen to be full time students or working throughout the week. If you want to explore this daigou channel for your own brand purpose then reach out to my team at Digital Jungle – [email protected] or post in the comments below. Daigou is not your Chinese market entry strategy but certainly a key aspect to a well rounded approach.

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Australian Consumer Brands Marginalise Daigou at their Peril

Chinese buyers that purchased Western products on behalf of their family and friends back in China, now better known by their Chinese name ‘daigou’, started to gain public attention in Australia a year or so ago when media highlighted the baby formula shortage and started to take notice if how Blackmores and Swisse had been driving their impressive domestic sales revenues.

Fast forward to 2017 and many of the leading consumer brands, especially in the cosmetics, health supplements and infant formula categories are fully aware and often fully engaged into this daigou channel. This leads the smaller, emerging brands wanting to understand more and try to emulate the success of this Chinese buying group.

From the brands, many questions arise.

Like, who are these ‘daigou’? Where can we find them? How can we engage them? Are they a benefit or danger to my brand? Where to start?

There is no simple answer and each brand needs to reflect on a wide range of issues (from pricing to distribution to brand equity). But at the end of the day, it is not the brands that engage with the daigou but the daigou seeking out specific brands because they have requests or interest from their buying agents or actual buyers back in China.

So it you are a a new or emerging brand (normally with small or non existing Chinese marketing budgets) you will have a very difficult time getting on the radar of Chinese consumers back in China and thus will by of little interest to the Daigou who are making these local product purchases. It is for this reason, Digital Jungle had to adopt some innovative Chinese marketing strategies and approaches to assist these brands with Daigou that were low cost, low risk but lead towards a Chinese market entry strategy should that path be chosen.

At the heart of the daigou marketing program is a Daigou buying eMarketplace called “DaigouSales” and this quickly became a community of Chinese daigou buyers looking for the cheapest wholesale products based on requests from their Chinese agents/buyers. Although a passive marketing channel for the brands (meaning they did not actively chase the daigou buyer) it offered the daigou with an easy to find, easy to buy, easy to ship solution that saved time and money. For the newer brands it gave them a chance to develop their brand awareness and test out their Chinese marcomms, pricing and even packaging designs. But when combined with a Daigou VIP Manager (a complimentary program) they had their own Chinese daigou brand advocate who represented them in the broader Chinese community, provided Chinese WeChat advertising for buyers/agents and actively pushed in offline seminars and training — an active selling program that gives smaller brands traction through reverse word of mouth. The daigou in effect became KOL (key opinion leaders) and their information/recommendations has started to draw interest and more importantly product requests back from their Chinese buyers.

Daigou are not for all brands but if you don’t thoughtfully consider this channel then be this at your peril.

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Ten Tips for Branding in China without Tears

While many Western marketers complain about Chinese consumers often switching brands or having poor brand loyalty it is not an inherent characteristic of Chinese culture, as some may suppose. Rather, Chinese consumers remain fickle because China has been in a fifteen year rapid rise of its socio-economic situation and where Western companies have entered China and started to bombard consumers with brand choices, brand messages and glittering images of the latest International luxury trends. Throughout this period, I would argue that many multinational companies have not always done an adequate job of identifying and understanding their core Chinese audience and for that mater, target branding appropriately in order to create a brand that resonates for a Chinese consumer.

Here are ten tips for brand marketers looking for some direction when exploring the Chinese landscape.

1. Don’t treat China as a single market. There are large variations in behaviour, language and culture – more so than in all of Europe – both when it comes to purchasing power and knowledge about product categories and brands. Unless you have massive resources, focus on a narrow area, perhaps a single city or group of Tier cities.

2. Chinese customers sometimes value your brand in a different way from what you have in your home market. It is important to understand that the Chinese consumer may need to be educated about the product or in some cases the brand owner can learn a few new tricks from the actual consumer in the way their products are used.

3. Select the right distribution channels. For example, in China, beauty products are sold in department stores and supermarkets with dedicated counters, in cosmetics retailers such as Watson or Sephora, in spas, in drugstores and of course on e-commerce platforms. Each distribution channel has its own advantages: customer advice and the opportunity to try products are important factors in a Chinese consumers mind.

4. Talk to your customers to find out what their needs and expectations are. Don’t be surprised if you have to adjust both product and messaging, as the Chinese market is often different from your home market.

5. Communicate that you are taking the Chinese market seriously by selecting a good Chinese brand name, using highest-quality translations, localized photos etc. Don’t just use material from somewhere else, it won’t be taken seriously.

6. Create a unique customer experience. Chinese customers are nowadays more interested in the experience you can offer than in the brand name. A well-thought storytelling, an attractive packaging, the use of sensory marketing in stores will definitely impact their decision. Just look at this years Singles Day on Tmall and you will notice most of the luxury brands going all out on packaging and design.

7. The Chinese media market is huge has a fragmented geography and readership. Don’t expect to advertise your way into the market, as it will be hard to reach a narrow audience through paid media. Focus instead on a strategy that aims to get your customers talking and influencing each other.

8. China isn’t that cheap anymore. This goes for hiring employees, buying products, living in China and especially undertaking marketing.

9. Take online and social media seriously. In a country as vast as China, online media offers good coverage, and Chinese internet users are very active in sharing their experience with products and services. It is necessary to have a strategy that takes this into account.

10. Leverage the power of the Millennial. China’s young people are avid consumers and promoters of brands they love. They have a strong preference for social messaging (WeChat is everything) over email, and have a greater trust in brands that use social media.

Like everywhere in the world, brand strategies for China need to be planned, taking in account that some Chinese consumer segments will mature rapidly, especially in the Tier 1 cities, and that shoppers can quickly become loyal to certain brands. As income levels rise across China, a bulk of new consumers will still be first-time buyers of many products and services, all eager to try new brands.

The nuances will become more subtle, yet even more crucial. As Chinese consumers come to better understand the product categories and brands within these categories, their expectations will rise and they will continue to want more quality, value and interest. No longer will they be content with a brand simply because it is big, foreign, or expensive. They will expect their brands to understand and meet their needs, both rationally and emotionally.

China remains one of the world most exciting locations to develop a brand yet it is littered with companies who have tried and failed. Nothing is certain but using some common sense and taking a test and learn approach will help mitigate falling into the deep holes of those before you.

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Daigou Sales becoming Integrated Into Mainstream Marketing Strategy

Daigou — literally translated as ‘buying on behalf of’ — is a channel of commerce where overseas shoppers buy on behalf of mainland Chinese buyers.

A daigou can be anyone based overseas who shops for goods on a customer’s list and ships the goods back to China. In the context of Australia & New Zealand, daigou’s are typically Chinese students who while studying abroad look to make some extra income buy purchasing goods then sending back to friends or selling via platforms like Taobao (C2C).

The daigou phenomena has emerged over recent years as the Chinese demand for luxury goods grows and as the fears within China of food safety issues and as fake/counterfeit goods become less appealing to Chinese consumers.

Chinese buyers living in China can find daigou through personal referrals from other happy buyers; often through their WeChat network or search Taobao for particular products/categories of interest. They then either provide their shopping list, make a down payment and pay in full on receipt of the goods or shop via the eCommerce platforms (i.e., Taobao) or official daigou websites and purchase items right away — much like ordinary online shopping. Chinese buyers often prefer daigou websites over regular eCommerce sites because they prefer reading in Chinese and given the trust is often low with online sites, a Daigou gives a level of assuraiety about the nature of the goods being purchased.

Over the past year or so, various media outlets have written much about daigou buying up various products like infant milk formula, Weetbix, vitamins & supplements, skin & health products and even clothing. The extent of this buying has created issues in the supply chain for local consumers and has resulted in some markets restricting the number of products brought, for example, the number of cans of milk formula that can be purchased at one time from a supermarket.

Moreover, given the daigou has such purchasing power it is no wonder that Brands are starting to address them as a completely new segment and target them. Local Brands are creating Chinese language marketing and social media programs that specifically talk to the daigou and their needs. At Digital Jungle, we have seen a 130% increase over the past year in Brands wanting Chinese websites and Chinese social media (Weibo/WeChat) targeting Chinese consumers (often daigou) in their local markets rather than Chinese in China. A clear indicator of the awareness being placed on this group.

There is a number of implications for Brands that have both a domestic and existing China business, such as the price differentials that commonly exist between markets and product ranges/ingredient/formulations. This requires some refinement of the marketing and communications strategies but does not preclude running a domestic Chinese marketing program. Should you want to know more then please reach out.

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Understanding China’s Rapidly Growing Cosmetic Market

China’s cosmetic market has been experiencing significant growth over the past few years and retail sales in China are projected to exceed RMB 240 billion (US$ 36 billion) next year. Further, the market is forecasted to continue this growth trajectory for the next 5-6 years.

The Chinese cosmetics market is arguably the most competitive given the large variety of domestic and international brands, all vying for business from ever increasingly self conscious Chinese consumer.

According to the Chinese Ministry of Food and Drug Safety, France, South Korea, the United States and Japan are the top four cosmetics exporters to China.

FAST FACTS

Current structure of China’s consumer market of cosmetic products:

Skincare products: skincare products represent the fastest growing sector in the cosmetics market.

Shampoos and hair care products: the shampoo and hair care products market is becoming saturated and its growth has decelerated.

Make-up products: the make-up market is far from saturated, particularly in rural regions and inland cities. Sales of eye make-up products recorded significant growth in recent years.

Products for children: sales of cosmetic products designed for use by children continue to soar.

Sunscreen products: sunscreen products ensure sales in traditional quiet seasons.

Anti-aging products: cosmetic products that help consumers stay youthful and fight aging are increasingly popular.

Sports cosmetics: many consumers who love sports and pursue body fitness are keen to maintain an attractive appearance as well. They need sports cosmetics that can help prevent the loss of moisture and are anti-odour, anti-sweat, anti-bacteria and of compact portable size.

Cosmeceuticals: consumers have growing awareness of products which combine cosmetic and pharmaceutical features, namely “cosmeceuticals”, such as spot lightening cream, acne treatment lotion and acne ointment.

Green/natural cosmetics: these cosmetic products contain natural or nutritional ingredients such as aloe and vitamins.

Source: HKTDC Research in 2016

CATEGORY SUMMARY

Retail stores remain the major distribution channels in the overall market. However, revenues from eCommerce are on the rise and will continue to grow as consumers embrace Tmall and JD to purchase these types of products.

Although there are hundreds of cosmetics brands in China, the International leaders of this category include Clinique, Lancome, Sasa, Jumei, Yoka, Jurlique, and Lamer. Chinese mainland cosmetics producers include Chinfie, CMM, Houdy, Longrich, Herborist and Chando and are catching up fast with their international counterparts and have built up positive reputations in China.

Previously, Chinese domestic brands emphasised value-for-money in mostly second and third-tier markets but now we are seeing some of the larger Chinese domestic cosmetics brands starting to develop higher quality products, aiming to target the domestic mid and high-end segments.

Global brands need to adapt their offerings according to Chinese regulations governing the industry. China’s cosmetic regulations are complicated. Products are granted the Cosmetics Production Permit following approval by The China Food and Drug Administration (CFDA). Rising emphasis on protection of consumer rights has increased pressure on cosmetic companies to ensure product quality and safety. Retail and eCommerce channels are complicated to setup and establish and the established brands need to continually evolve and develop as their consumers are continually being temped away.

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The Dramatic Rise of Grocery into China via eCommerce

It is no secret that China is the world’s largest e-commerce market, thanks to the staggering amounts of money Chinese consumers have been spending online. According to China’s National Bureau of Statistics, online retail transactions in the country hit 3.877 trillion yuan ($589.61 billion) in 2015, a 33.3 percent increase from a year earlier.

Online grocery sales in China over the past few years rose nearly 50 percent, while hypermarket and supermarket sales rose only 6.7 percent. Due in part to the intersection of eCommerce adoption and the Chinese culture emphasising food; occupying their daily life, celebrations, festivals and holidays.

Chinese consumers are loving foreign grocery/food products. Health-conscious middle class Chinese consumers are seeking imported grocery products that are clean, green and trustworthy, even if they have to pay a little more.

Chinese consumers are typically purchasing from a range of established cross border/eCommerce marketplaces (Tmall, Tmall Global, JD, Yihaodian – Number One Store) from a wide range of International grocery players. These same grocery retailers are now also evolving their strategies to include branded eCommerce sites and developing their social commerce channels.

One Australian grocer, Woolworths has established a presence and is rapidly growing their Chinese social media channels (on Wechat and Weibo) to grow brand and engage their increasingly growing social community. (Note: Digital Jungle manages these social media channels on behalf of Woolworths)

Woolworth Sina Weibo Account

Sainsbury’s started with Tmall last September, joining British grocery retailer, Waitrose. Waitrose plans to export own-label products to China sold under the Waitrose Duchy Organic and Waitrose Baby brands available via the Royal Mail store on Alibaba Group-owned Tmall Global. Initially 30 products will be on sale in China, including biscuits, cereals and nuts as well as organic and non-food items. The UK retailer will extend its offering in China to include Essential Waitrose and Waitrose 1 items later this year.

Woolworths, Sainsbury’s and Waitrose are in the company of Carrefour, Walmart, Tesco and many other International grocery retailers. All vying for the Chinese consumer and their interest in Western goods.

Further to that, new entrants from regional and non traditional geographies such as South America, Eastern Europe are getting involved. Online grocery shopping will continue to grown but face some challenges in particular sub-categories of grocery (i.e., fresh foods) due to the slow development of cold-chain delivery infrastructure and shipping standards.

Additionally, Chinese consumers are frequently moving across channels, platforms and devices when they do their grocery shopping, and are increasingly looking for an integrated shopping experience. Grocery retailers in China will have to implement initiatives to transform themselves into omni-channel retailers to provide convenient and satisfying shopping experience by expanding single channel offerings to multi-and cross-channel, such as bricks-and-mortar stores, online platforms and social media. In addition, online-to-offline (O2O) strategies need to be adopted by hypermarkets and supermarkets to get leverage on social media and brand cut through.

Certainly an interesting sector and one that is rapidly evolving. But at the end of the day, it will be price, quality and delivery that will bring repeat business.

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Digital Jungle Strengthens Global Presence with Bangkok Office Opening

BANGKOK, January 25th 2016

Digital Jungle (http://bit.ly/1XRPZTo), a leading cross-cultural digital marketing Agency that works with international clients to connect with Chinese audiences living across the world, announced today at they will continue their advancing success with the opening of the newest international office in Bangkok, Thailand. The new office location will allow Digital Jungle to support brands in south east Asia with their plans to target Chinese living in Asia or mainland China.

Dr. Mathew McDougall, Founder & CEO of Digital Jungle said, “We are experiencing growth around the world but in recent months are seeing more brands from south-east Asia wanting to develop their Chinese marketing offering. As the demand for our services increases in Asia, we have found it necessary to open an Asian office located close to these brands to make it easier to understand and communicate with their business and being their marketing bridge to Chinese consumers.”

Since founding six years ago, Digital Jungle has seen an explosion of growth and now has offices in Beijing, Shanghai, London, Sydney and Auckland. its client base has grown faster in 2016 than in any year prior. An escalated demand from Luxury, Tourism and FMCG sectors has produced new opportunities for the Agency to develop teams to support these sectors. Our single focus is on connecting brands with Chinese speaking audiences and as Chinese continue to immigrate, study and travel overseas, we are seeing a realization from brands that they need to have a Chinese digital marketing presence to capitalize on this trend. Our Bangkok office will consolidate our growing global presence, while welcoming quality clients of all industries that we hope to work with for years to come.”

Digital Jungle has headquarters in Beijing, China that is composed of 5 divisions which include their Consumer Insights Division, Brand Strategy & Development, Digital Planning, Media, Search & Social Group, and their largest division, the Content Studio.

1. About Digital Jungle

Digital Jungle is a cross-cultural digital marketing agency that works with International organizations to deepen their relationships between their brand and Chinese consumers; living in China or abroad. With offices in Beijing, Shanghai, Sydney, Auckland, London and Bangkok; with partners in Europe and North America, Digital Jungle is truly the best placed to help you create and succeed with your Chinese focused digital marketing programs.

For more information please check out our website: http://bit.ly/1XRPZTo

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