Free consult

Blog

Playing to win, not to participate, in China’s consumer market

by

The last 18 months have been an important point in AgencyChina’s growth.

We’ve been fortunate to work with household names (like Johnson & Johnson), as well as up-and-coming brands (like VeraCova). Our insights and expertise has been recognized by Wall Street Journal, Bloomberg, Reuters, Vogue Business and Business of Fashion. We’ve also added consumer research and e-commerce teams to complement our core marketing and social media business.

Over this period, whether our partners are large or small companies, there’s something that unites them: a winning aspiration. 

That is, our partners enter and operate in China with the mindset to win a sub-category or niche. They don’t just play to ‘get a slice of the action’.

This article explains why this is important.

What’s a Winning Aspiration?

We’re big fans of Playing to Win, and we hope you are too. For those familiar with it, you’ll know a wining aspiration starts the strategic choice cascade.

The operative word is “winning”. The simple reason is, that if you’re not winning, you live in fear of the competitor in your space that is. If they’re winning and you’re just participating, they can use the resources that derive from winning to beat you up.

The only place in competitive endeavors with any degree of safety is that of the winner. If you’re not winning or attempting to unseat the winner, you’re simply playing a game that will leave you bruised and battered with only marginal gain to show for it.

So, what do winning aspirations in China look like?

Winning aspirations start from framing questions the right way.

  • If you’re entering the China market for the first time, then your research questions should look more like “What will it take to win in x category?” rather than “What do we need to enter China?”.
  • If you’re already in China but not seeing the results you want, you may need to ask “In what sub-categories can we focus on to win?”, “What do we need to win in the channel?” or “What will it take to win with light buyers/heavy buyers?” rather than “How can we turn things around?”
  • And, if you’re in China and already seeing positive results, you should be asking “How can we extend our advantages to win further in the future?”

The insights you gain from these questions may lead to winning aspirations like the examples below:

  • “Our winning aspiration is to be the ice cream with highest brand recall” (general winning aspiration)
  • “Our winning aspiration is to be the top brand on Tmall Global for pet supplements next year” (time-bound winning aspiration)
  • “Our winning aspiration is to win one in every three purchases of organic baby food in China’s Tier 1 cities” (geography-bound winning aspiration)
  • “Our winning aspiration is to be the first foreign bruise treatment cream available in China’s leading supermarket and convenience chains” (channel-bound winning aspiration)

Why is a Winning Aspiration Important?

You get it, a winning aspiration displays your intention to be dominant in a sub-category, channel or with a type of consumer. But why is that important?

First, when you have a winning aspiration, you consider a fuller range of options. Because you’re playing to win, as opposed to playing to participate, you are emboldened to think of new possibilities. Considering a fuller range of options also shows you how many ways there are to win.

For instance, an organic French skincare brand we advised realized it couldn’t win in China from its own brand strength alone. It would stretch and overcommit the brand, without delivering desired returns. So, it sought out a production partnership, supplying a local Chinese brand with organic skincare treatments that supported the brand’s expansion into high-margin categories.

In another example, a Nordic snack food brand we worked with realized that its stodgy packaging wasn’t good enough to meet its winning aspiration in China. So, it redesigned the packaging with Chinese consumers in mind, and came up with smaller formats to better suit the consumption occasions it wanted to win.

Second, when you have a winning aspiration, you find and direct resources appropriately. A winning aspiration, and a clearly-formulated strategy, gives management a better indication of what resource levels – from funds to talent – are needed and why.

Third, a winning aspiration inspires employees, stakeholders and even consumers. It’s tough for your local team to come to work if management are content being #54 in a product category. It’s even more tough for retailers to support, or consumers to repeatedly purchase the #54 brand.

The bottom-line? Play to win, not to participate in the China market.

If you’re trying to work out your winning aspiration in China, or are interested in what categories and propositions could be winners in the categories we keep a watchful eye on, get in touch.

Buddy Belts

by

Since then, multiples of thousands of BUDDY BELT have been cut, sewn and assembled. This number keeps multiplying exponentially, as do sales. Now it has become a globally successfully pet brand for small dogs.

In 2022, AgencyChina’s TP team were honored been selected as BUDDY BELT‘s Tmall Partner (TP), which brought convenience to existing BUDDY BELT fans in China.

 Here’s how AgencyChina went into action:

AgencyChina undertook research in-platform and off-platform, start from sketch to define brand’s positioning and core target audience.

AgencyChina opened and still operates the BUDDY BELT Tmall store as a TP, achieving a rapidly growing monthly sales. Please free to take a look at the store.

to the Buddy Belt store

Hunter China

by

As a German leading brand in the pet supply industry, HUNTER was founded in 1980 by Rolf Trautwein. Leather is what HUNTER is passionate about. Every leather product from HUNTER is a very special item that has undergone numerous complex production processes. Their high quality standards are applied right from the start, when the raw materials are inspected on arrival at their manufacturing facility, only to bring a unique experience to the dogs and their owners.

HUNTER decided to provide high-quality pet accessories to Chinese consumers by opening its offical Tmall Official store.

Hence,  HUNTER turned to AgencyChina to operate its Chinese e-commerce accounts and social media with the aim of improving awareness and providing better options to Chinese pet owners.

In 2022, Agencychina has become the exclusive agent of HUNTER in China to expand more B2B channels online and offlines.

Here’s how AgencyChina went into action:

AgencyChina undertook research to understand and strategies the market opportunities and core target audience for HUNTER.

From then,  AgencyChina launched and operated social media accounts such as WeChat, Weibo, Red, and Douyin, and Tmall Global Flagship Store. After 3 years of operation by our team, sales have reached a considerable level, with an annual growth rate of 50%. Please free to take a look at the store.

to the Hunter shop

RIP Michael Norris – our beloved colleague

by

It is with profound shock and great sorrow that we have to announce the death of our respected colleague Michael Norris, a very important member of Agency China, who passed away unexpectedly on May 26, 2022 after a sudden physical illness that failed to be rescued in Shanghai Sixth People’s Hospital.

With the loss of Mr. Norris, we have lost such a talented colleague and a trusted friend, and we extend our most heartfelt condolences and sympathy to Michael’s family for the lose of their beloved one.

It’s hard to put into words in this moment of great pain.

Mr Michael Norris, may your soul rest in peace.

2022 China E-commerce Calendar

by

China is the world’s largest e-commerce market. From the overall penetration rate of e-commerce, there is still a broad space for improvement, and potential categories determine the future growth space of the industry. In terms of the overall category, the penetration rate of e-commerce is about 25% at present. But the penetration rate of categories is different, especially for fresh food and beverage that the penetration rate of e-commerce is below 10%. These are large categories with trillions of dollars, so there is still a lot of space for ecommerce development.

From the perspective of consumer transaction scenes, the world has entered the era of video and live streaming. The most direct impact on e-commerce is the improvement of conversion rate. Live streaming room with more intuitive commodity display, anchor stimulating words, can greatly improve the conversion rate. According to research data from iResearch, the conversion rate of livestreaming e-commerce has increased from 0.5% to 4.3%.

Agency China has put together your 2022 China E-commerce Calendar to help you identify critical e-commerce shopping festivals to focus on, and to prompt deeper thinking about content and sales rhythms.

(Download your 2022 China E-commerce Calendar at the bottom of the article!)

January: New Year’s Day

A new marketing journey will start from the New Year’s Day. “Welcome the Chinese Year of Tiger” serves as a starting point to discuss on social media, such as New Year wishes, New Year’s image, etc. Brands also need to prepare “New Year shopping streets” and Spring Festival music for consumers in advance to create a hot atmosphere, so as to promote your marketing needs.

(Image Resource: Gucci)

February: Spring Festival & Valentine’s Day

Valentine’s Day in 2022 just happens to be during the Chinese Spring Festival. As a traditional Chinese festival focusing on “Reunion” and a Western festival focusing on “Love”, combination of the keywords of these two festivals and carrying out the brand marketing campaigns around the related topics will help a brand be more easily accepted by Chinese consumers.

March: Women’s Day

In China, Women’s Day is better known as the Queen’s Day, which describes women in the new era around independence, self-confidence and individuality. Women’s Day is the start of a year of competition between e-commerce platforms. In addition to various promotional activities on ecommerce platform, brands will also launch off-platform campaign to boost brand influence. Taking advantage of the hot event during the Spring Festival when the Chinese women’s football team won the gold medal at the Asian Championship, Nike launched a hashtag: Follow Your Way and released a commercial on Women’s Day, telling a story of Pubuzhma, a female football player who led the men’s team. In addition, Nike invited four representative women who dared to challenge the rules to share their opinions in a talk show, which generated a lot of discussion on social media.

(Image Resource: Nike)

April: April Fool’s Day
April Fool’s Day is a good time for creative marketing. In recent years, in the major e-commerce platforms, it is not difficult to find that there are always some brands to bring consumers some unexpected products at this time.

March: 520

May 20th or 520 is known as the modern-day Valentine’s Day in China because “Five Two Zero” in Chinese sounds like “I love you”. In the past, 520 marketing was more based on giving gifts to express love for loved ones or relatives.

However, with the mainstream awareness of women caring for themselves, 520 marketing on e-commerce platforms focuses more on the value of “self-support to improve happiness” which subtly eliminating the sense of distance between the brand and women.

June: Children’s Day & 618

Children’s Day

Children’s Day has been a popular shopping day in China, where elders spoil children with many gifts, such as clothes, toys, etc. However, it should be noted that children’s Day has spread from children to adults, and people hope to find the memories and happiness of childhood through this festival.

Brands need to adapt quickly to these changes in perceptions and preferences. Everything from the target group, campaign topic to the marketing copywriting and page design needs to change.

618

618 is the most influential e-commerce campaign in the first half of each year, and it began live-streaming last year. In last year’s 618 live broadcast war, the leading host broadcast 17 live shows, bringing in 3 billion RMB of sales amount. The popularity of live broadcast will continue to this year, and the product category will be more diversified.

August: Qi Xi

As the Chinese Valentine’s Day, Qi Xi has been a great marketing opportunity for jewelry, restaurants, clothing stores, flowers, movie theaters, cosmetics and gift shops. In last year, Chanel invited two brand ambassadors to shoot a special Qi Xi festival short film.

(Image Resource: CHANEL)

September: New Academic Year

For Chinese students, September is the beginning of a new academic year, which is a good opportunity for educational products to be promoted and usually achieve good sales. Although the campaign seems to be aimed at students and their parents, it is often easier for brands to engage with creative marketing, such as co-branding campaigns.

October: Golden Week

The National Day holiday is also called golden Week, which lasts for seven days from 1st October, is a good opportunity for most people to take a vacation or go back to their hometown. It is important for travel related brands to pay attention to the fact that consumers usually plan their travel arrangements in advance, so we recommend that marketing campaigns should be arranged at least one month ago.

November: Double Eleven Campaign

As the largest e-commerce festival in China, double eleven of 2021 achieved 540.3 billion RMB on Tmall and 349.1 billion RMB on JD, with a total of 290,000 brands participating. According to QuestMobile, Taobao, Pinduoduo and JD had 684 million de-active users on the launch day of double eleven campaign.

Livestreaming e-commerce is still very popular. In terms of sales categories, beauty cosmetics, food and beverage are still popular. Taobao livestreaming sales account for 91.2% of beauty cosmetics and 5.7% of food and beverage.

We suggest never miss the Double 11 campaign and strive for a new annual sales record through it.

December：Christmas Day

Christmas Day is the most important festival in the West, has become very popular in China in recent years, especially among young people. The survey found that 70 percent of Christmas goers in China are younger than 38 years old, and 45 percent of them have strong purchasing power. Therefore, for businesses and businesses, Christmas is the last marketing opportunity at the end of the year.

As you can see, China offers a ton of opportunities for brands to promote their products on the countless e-commerce holidays on the various big and smaller platforms. Our advise for every brand is to pick and choose wisely, finding relevant events for their niche and target audience. Participation in the biggest events such as Double 11 and 618 might be a must. But it is best to plan the years promotion budget split for the other events based on where your brand could achieve the best possible outcome.

Would you like to get support in making your annual promotion calendar, and finding the right ways to reach your target audience during these popular e-commerce holidays in China? Don’t hesitate to get in touch for an initial consult with our local team of experts. Let’s make 2022 a great success for your brand in China!

Local Challenger Takes On Foreign Brands In China’s Supplement Market

by

In April, we wrote a popular post on how China’s Saturnbird Coffee is taking on Nestle in China’s instant coffee market. Given we love innovative products that unlock new growth, here’s a new example in China’s Supplement Market: BUFFX.

BUFFX is a vitamin and supplement start-up that launched in April this year, not long after China returned to work after a pandemic-induced lockdown. BUFFX attracted two sets of seed investment before its products launched online in September. In its first two weeks, BUFFX accrued CNY 1 million in sales. To us, this is a signal that the brand is doing something right. We think they’ve got plenty of success ahead of them.

Below, we outline what BUFFX did to secure early success in the China Supplement Market:

  • Solve a consumer pain point
  • Go where others are reluctant to go
  • Be bold and distinctive
  • Get investors to support launch

Let’s look at each of these in turn. If you work in FMCG, you’ll find the learnings practical and relevant.

BUFFX Solves A Consumer Pain Point In Vitamins And Supplements

Vitamins and supplements are a fast-growing category, posting a CAGR of 10% between 2013 and 2019 – much faster than the FMCG category average.

Vitamins and supplements are traditionally an area where imported brands, such as Swisse and Blackmores, have performed well. Given concerns around the quality and efficacy of domestic vitamins and supplements, the category is highly conducive to cross-border e-commerce.

However, there’s a consumer pain point which has long been overlooked by imported brands – consumers are daunted by imported vitamin and supplement pill sizes. If you compare pills and caplets in China to overseas, you’ll find there is a demonstrable size difference. Through in-home interviews, our research team has found that difficulty swallowing a supplement is one of the top reasons Chinese consumers stop taking supplements.

China Supplement Market - old style packaging

BUFFX understood this and designed a gummy supplement – the type that you might typically find for children. This has a taste and texture profile which is far more palatable to local consumers, which increases the chance consumers will make purchasing BUFFX a consistent habit, rather than a once-off.

BUFFX Goes Where Others Are Reluctant To Go

Common supplements in China include Vitamin C and E.

BUFFX wasn’t content with making a gummy version of Vitamin C and E supplements. Instead, it looked at specific niches. Skin, sleep, eye care and digestion are commonly-reported ailments among young Chinese consumers. That’s exactly where BUFFX went. Its initial SKUs include formulations for sleep, eye care, digestion and virility. In the category, eye care and virility had been overlooked in recent years and hadn’t seen much new product development.

We can’t stress how important this type of research is – looking for mismatches between consumer needs, existing propositions and new product development.

BUFFX Is Bold And Distinctive

A quick look at BUFFX’s packaging shows how bold and distinctive they want to be.

China Supplement Market - Buffx packaging

BUFFX have a clear ambition to be the most distinctive vitamin and supplement brand in-market. This marks a break from the minimalist design features which have defined consumer goods in recent years.

We also think the name BUFFX is important. First, it’s easily searched online. Second, it’s memorable. Third, the term ‘BUFF’ is understood by China’s gamer generation as a term which means an enhancement. That flips traditional impressions of supplements on their head – instead of fixing a deficiency, BUFFX augments and empowers.

This sort of branding and positioning work is essential if you’re looking to build a lasting brand in-market.

BUFFX Used Investor Support To Launch

Launching and succeeding in China isn’t for the faint of heart. You need to play to win. One of the first questions we ask brand partners is what resources they can commit to their expansion in China. That’s because we know that China is a commitment. Even n iterative, test-and-learn approach needs to be adequately supported.

As a start-up, BUFFX didn’t have the resources of category leaders like Swisse or GNC. So, it went to investors and pitched the idea – gummy supplements with distinctive packaging, targeting graduates who want to work and play hard. These investors are no doubt pleased with BUFFX’s launch in September – expertly timed for traction and a pop over this year’s Single’s Day.

—

Now’s your chance!

Alibaba wants to bring 1,000 overseas brands to China. Last year, Tmall Global piloted the incubation program with brands like Fenty Beauty, DPC and Brandfree. However, to get backed by Alibaba, brands need to put in the work. We think BUFFX is a good example.

If you like the sound of BUFFX’s approach to market, our team has the requisite skills across research, marketing and commerce to launch a product from scratch, or adjust your product and business model to the needs of China’s consumers. Get in touch to find out more.

What’s Behind the Rise of Chinese Domestic Brands?

by

The rise of Chinese domestic brands is the talk of the town.

Chinese domestic brands leveraged “home court advantage” to identify consumer needs and create demand across social media and e-commerce. This has resulted in increased market share across a variety of product categories.

It’s our observation that Chinese domestic brands’ success is poorly understood. It’s often been simplified to patriotic consumer preference. We created a workshop exercise, called the “Domestic Brand Rorsarch Test” to break the idea local brand success can be simplified to one cause. Here’s an extract from the exercise (which you can download here) to show you the multitude of factors at play.

Indeed, if you read previous introductions to local brands like Saturnbird and BUFFX, you’ll know that domestic brand success is down to great choices on where to play and how to win.

If you want unfiltered, nuanced advice about what’s required to compete in China, get in touch with our experts.

Silver Consumption Patterns

by

The biggest consumption trend for seniors is in the industry of smart digital products. Last year, the number of people between 45 to 55 who purchased smart equipment had doubled, and that for people above 56 had also grown by 250%. Other than catching up with the society’s technology trend, they are buying other ingeniously designed items for emergencies, such as wireless emergency buttons, and portable oxygen machines.

Prospects for Oat Milk in China

by

Have you heard of Oatly? If so, chances are you know a little about the market for milk alternatives. But what are the prospects for milk alternatives in China?

Read on to find out what China’s market for milk alternatives looks like today, with a focus on oat milk.

Growth Tailwinds for Oat Milk In China

Before getting into some of the tailwinds, it’s worth noting that Chinese cuisine already has a number of alternative milks, like soy milk, almond milk and peanut milk. Indeed, these kinds of milk are alreadt enjoyed at breakfast tables across China. We think this means the barriers for consumers to accept alternative milks are lower in China than other countries. Further, when you consider some 90% of Chinese adults may have some level of lactose intolerance, you get a sense of alternative milks’ potential in China.

So, what does the size of China’s alternative milk market look like?

In 2020, China’s alternative milk market was worth RMB55 billion (USD$8.5 billion). This includes a wide-range of beverages, principally soy milk, almond milk, oat milk, walnut milk, peanut milk and coconut milk. You could say 2020 was a watershed moment for plant-based milks in China. Tmall’s Plant-based Protein Beverage Innovation Trend Report showed an 800% increase in plant-based protein beverages sold through the platform.

We expect this market to grow between CAGR 2% and 4% to 2025. Outside of lactose intolerance, the other factors driving growth in alternative milks are:

  • Perceived nutritional benefits
  • Low fat and low cholesterol properties
  • Purchase convenience, availability and affordability
Are you looking to find out whether your food or snack brand has a taste profile that works for Chinese consumers? Contact us to see how research solutions like focus groups and product trials might be able to help!

Early Movers for Oat Milk In China

Oatly has had much success in China. Indeed, some commentators have gone as far as to say that Oatly’s future fortunes are tied closely to success in China. However, Oatly isn’t running this race alone. In May this year, it was observed that there are over 50 oat milk brands on Alibaba’s Taobao and Tmall, an increase of 152% year on year. Of these, the brands who have raised VC funding and have a compelling go-to-market proposition include:

  • Oakidoki
  • Yili
  • Oatoat
  • Cereal Planet
The oat milk market in China: From cafés to nation-wide e-commerce
An Advertisiement for Yili’s Oat Milk Beverage

Ongoing Themes for Oat Milk In China

Whether optimizing their own nutrition, pursuing new beverage trends or experimenting with healthier lifestyles, Chinese consumers will likely have plenty of alternative milks to choose from.

What’s particularly interesting about alternative milks in China is that it marks the intersection of a number of themes in China’s food and beverage market:  weight concerns, changing lifestyles and new preferences.

We’ve seen similar themes in functional dairy and sports nutrition. If you’ve got an interesting food or beverage proposition, talk to us.

Douyin and Kuaishou Open China Cross-Border e-Commerce

by

China’s two largest short video platforms, Douyin and Kuaishou, have embraced cross-border e-commerce. This further illustrates how these short video platforms are building out their e-commerce capabilities.

Last December, Douyin flagged its intentions to help merchants sell through Douyin via cross-border e-commerce. It subsequently started onboarding merchants in January 2021. Kuaishou quickly followed and began onboarding cross-border e-commerce merchants in May 2021.

This means overseas brands can launch an e-commerce presence on Douyin and Kuaishou, China’s largest short video platforms, without having a local Chinese business entity.

Why Douyin or Kuaishou For China Cross-Border e-Commerce?

When people think of China cross-border e-commerce, they typically think of Tmall Global. By GMV share, Tmall Global is the leader in China’s cross-border e-commerce channel. However, there are compelling reasons why Douyin or Kuaishou may be suitable for China market entry for cross-border e-commerce.

  • Douyin and Kuaishou are among China’s largest apps. Douyin is reported to have 600 million Daily Active Users. That places it as one of China’s largest apps. Kuaishou is no slouch, either. It has Monthly Active Users.
  • Douyin and Kuaishou have significant e-commerce ambitions. By GMV, last year Douyin transacted around $28 billion and Kuaishou transacted $56 billion in GMV. These figures pale in comparison to established e-commerce players, such as Alibaba ($1.2 trillion of GMV in 2020), JD ($398 billion of GMV in 2020) and Pinduoduo ($255 billion of GMV in 2020). However, these com[anies have grand ambitions for e-commerce. Douyin’s parent company, Bytedance, has ambitions to triple e-commerce GMV this year. Kuaishou reckons its GMV will double this year. As such, the excitement around Douyin and Kuaishou’s burgeoning e-commerce businesses comes from future potential, rather than current scale.

What Are The Advantages of China Cross-Border e-Commerce?

Cross-border e-commerce in China holds a specific distinction. International companies are allowed to sell certain goods to Chinese consumers online, through platforms such as Tmall Global, Kaola, Douyin and Kuaishou at preferential duty rates and without a license to operate a business in China. As you can imagine, that’s a significant reduction in red tape. It also lowers the cost of doing business in China.

As we’ve previously discussed, launching via cross-border e-commerce also has a number of advantages:

  • Test Market Demand: A launch via cross-border e-commerce allows new market entrants to de-risk their entry into China and assess market demand over a 12 or 18-month period, before looking to commit further resources and explore distribution opportunities within China’s massive consumer market.
  • Validate Market Entry Business Case: North American and European brands prefer test-and-learn approaches to market entry. Entry through e-commerce allows brands to gauge what sort of effort and resource commitment they’d need to pursue entry into China. In addition, it also allows newcomers an opportunity to test and finesse assumptions about their unique value proposition, marketing, pricing, merchandising and relative strength against domestic and international competitors.  
  • Build in-Market Presence: Although there are indirect channels to reach Chinese shoppers (like overseas influencers and airport retail), these don’t deliver the return-on-investment that in-market presence does.

What Are The Next Steps To Enter China via Cross-Border e-Commerce?

Overall, cross-border e-commerce is an effective channel for overseas businesses to test and learn market entry China. With Douyin and Kuaishou in the mix, brands have more choices about which cross-border e-commerce channel they enter China with – they can enter through Tmall Global, Kaola, Douyin, Kuaishou or even Pinduoduo. If you’d like to know more about cross-border e-commerce, please get in touch with one of our team.

About us

About China

Contact us

Get in touch

Linkedin-in Weixin Weibo Twitter Youtube

Privacy Policy

Disclaimer

Jobs

Contact us

This website uses cookies to improve your experience. We only use this information for general analytics.
To find out more about the cookies we use, see our Privacy Policy.

© 2017-2020 All Rights Reserved