beyondbrics

Chinese consumers are no longer doormats, and Chinese brands (including Baidu and Geely) are making foreign companies sweat.

So now may be a good time to ask: how do you reach today’s Chinese shopper? Forget billboards and magazines: the Chinese are more internet-focused than their Western counterparts, and the key to capturing this expanding group is going online. But you have to be clever about reaching them.

The fact that a growing number of China’s consumers are turning to the internet to research brands and evaluate products won’t come as a huge surprise. What is new is the scale with which ‘netizens’ are doing so, and the extent to which they now trust online information from their peers.

In a consumer report published by Nielsen on Chinese online consumers, the market research group identifies the Chinese social-media sweetspot: bulletin board systems (BBS), a type of online chat forum where, according to SmartBlog on Social Media, 117m Chinese connect, play games and find themed communities – and where netizens debate the merits of products. Nielsen says:

Bulletin board systems underpin popular social media behavior in China – more than 80 percent of social media content is bulletin board systems. Social media games are used as a stimuli to drive new users and gain reach with existing users, while content sharing behaviors are more popular among the more experienced users.

Virtual product placement within social networking site games is becoming one of the most profitable methods of revenue for social networking sites.

This chart, care of McKinsey’s 2010 report, demonstrates how word-of-mouth media reach (in red) has been steadily increasing in China (56 per cent in 2008 to 64 per cent in 2010), at the expense of print, tv and outdoor advertising:

(click table to enlarge)

According to their research, online product reviews are increasingly important for higher-value products. That’s no surprise. But the growth in trust is:

In our 2010 survey, some 56% of consumers said they regarded online advertising as credible, up from just 29% in 2009…

On average, some 25% of mainland shoppers said they used the internet for product research vs. 12-16% in the US; for big-ticket items such as autos (45%), numbers can be significantly higher.

Another consumer report by Roland Berger Strategy Consultants found the same trend, but warns against the temptation to use automated spamming – known as ‘seeding’; Chinese ‘netizens’ are too smart.

The Roland Berger report gives the example of two fashion bloggers, Little Chili Peppers and Big C. They were a smash hit, allegedly attracting tens of thousands of hits a day – until someone discovered they were receiving clothes at a significant discount. Overnight the two fashionistas became an online disgrace.

So what’s the lesson foreign companies should take away from this? Whatever you do, don’t ape China’s 50 cent Army and plant positive comments in chat rooms. And know that Chinese consumers won’t buy brands just because they’ve heard of them.

They want good value products – marketed subtly. (See video below. Nokia featured magician Liu Qian in a viral ad doing magic tricks with his Nokia phone.)

Related reading:
Chinese consumers reluctant to spend, FT
Levi’s launches new brand in China, FT

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