Marketing in China: Mobile Usage, Ecommerce Adoption Spreading Across China
Laure de Carayon
Founder and CEO
Laure de Carayon is the founder and CEO of China Connect, the largest gathering in Europe of experts devoted to marketing and digital and mobile strategies for reaching consumers in China. She spoke with eMarketer’s Lisa Barron about some of the major digital developments and media usage trends in China.
eMarketer: What was the biggest takeaway from the 2015 China Connect event [which occurred in March 2015]?
Laure de Carayon: China is now mobile-first. 2014 was a pivotal year, with the massive adoption of mobile services by over 560 million users and the rapid improvement of mobile devices like smartphones. Tech giants Alibaba and Tencent are also at the forefront of innovation in mobile payments with solutions like Alipay, Tenpay and WeChat payment.
We have also seen strategic alliances develop between digital champions and brick-and-mortar players, such as Alibaba and the Intime Retail Group, Yihaodian and Sinopec, or Baidu, Tencent and Wanda, the retail, real estate and cinema conglomerate. That highlights the essential role of mobile and the strategic nature of O2O [online to offline].
eMarketer: Are people using mobile mainly in the big cities, or is it a nationwide phenomenon?
de Carayon: Most people in China use mobile, including rural and migrant workers. It is not just in Tier 1 cities like Beijing, Shanghai or Guangzhou. Mobile is enormous. There are 520 million smartphone users, and smartphone penetration is expected to reach about 47% of the population next year. Mobile shopping jumped 251% from third-quarter 2013 to third-quarter 2014. And the mobile advertising market is expected to reach $4.1 billion in 2017, up from $2 billion in 2014.
With technology on the rise, the growth of the middle class, strong government support in R&D, a test-and-learn culture and 50% internet penetration still to go, China will probably be the world leader in digital finance, and it is ever more mobile-centric.
eMarketer: What does this mean for brands and their marketing strategy in China?
de Carayon: They should establish their presence across the most popular mobile applications, WeChat and [Sina] Weibo. Weibo is far from dead. There’s a lot of noise about more time being spent on WeChat and less on Weibo. But Weibo is still a powerful media platform for sharing public information. It is a pillar of China’s web culture, where the buzz takes place.
“Most people in China use mobile, including rural and migrant workers. It is not just in Tier 1 cities like Beijing, Shanghai or Guangzhou.”
WeChat is fantastic as a one-to-one tool—a killer app with more than 400 million monthly active users. Since people in China are now willing to do and say things more privately, it’s very much in line with the way this society is evolving. Ecommerce is also growing quickly.
The automotive industry is a great example. It’s leveraging mobile commerce in China like nowhere else in the world. Mercedes-Benz sold 666 Smart cars in 9 hours through a flash sale it launched on Weibo in January 2013 and 388 Smart cars in 3 minutes through WeChat in early 2014.
Sino-French carmaker DS [a division of Citroën], which targets the young business elite in China, created the first automotive crowdfunding campaign to drive sales of its latest model last year, [encouraging people to give RMB1.0 (16 cents) to a friend so that friend could raise enough money to buy a car]. From January through June, it leveraged WeChat as the key driver for conversation and sales, offering several layers of participation. By the end of May, there were more than 9,000 fundraisers across China, and more than 100,000 supporters had contributed to their friends. It was so successful that DS extended the campaign through October, and by the end of nine months they had sold 5,500 cars through WeChat.
eMarketer: How important is Tmall, Alibaba’s Chinese-language business-to-consumer (B2C) retail site?
de Carayon: Well, it represents around 57% of ecommerce in China, so it’s still key. Very fast and inexpensive shipping contributes to the popularity. But Alibaba outsources the delivery of its products to third parties, including China Post, which causes some delay. Its key rival, Jingdong (JD.com) has exploited this by using its own couriers, who sometimes deliver in less than 3 hours.
I think it’s interesting to follow Jingdong because it’s a different model. They have around 30,000 guys delivering things across China. JD encourages them to return from the big cities to their home in the provinces in order to meet ecommerce needs inland and develop national coverage.
Tmall is of course still huge. But they have to fight against counterfeit [products], and it’s expensive to be on Tmall. Many brands, including fashion and cosmetics brands, opt not to join. England’s Topshop recently chose fashion site ShangPin.com instead. Millions of consumers are also looking for individualization on less mainstream, more niche websites promoting Western and/or Chinese designers to find their own style. They are also looking for discounts, flash sales and secondhand items. Consumers are showing greater sophistication.