2020 was both a challenging and interesting year for marketers looking to earn their patch in China’s competitive marketplace, and unsurprisingly, 2021 is looking to be equally full of change. Digital transformation leads the change for this year’s most significant trends, so make sure you, and your business, are ready to snatch these exciting opportunities.
It’s time to get generational – shifting consumer audiences
The demographic of users who are now spending time online is looking to shift again in 2021 and marketers’ favourite customers are becoming conscious of consumption. Those in tier-1 and 2 cities with a large population size, better education, higher average income with a more saturated and civilised internet market are a key audience for marketers. However, in the post-Covid situation, when the general economic downturn resulted in an average income drop, these groups are becoming more conscious about market consumption, particularly in online shopping, and are reluctant to spend large amounts of money. Trust is another obvious reason for the behavioural change, consumers are more likely to spend money through familiar channels and their consumption behaviours are usually driven by community influencers, promotion intensity, and loyalty programmes.
Xiao Zhen Qing Nian, (‘小镇青年’), usually refers to 20-30-year olds who had a good education and live in tier 3-4 or lower cities. Due to the lower housing costs, better job opportunities, and emerging digital and lifestyle economy, the consumption behaviours of Xiao Zhen Qing Nian are driven by brands that tell a strong story that they can resonate with. With an, “I see it I want it” mentality, this group looks to purchase products that are in line with their values and express their personality. This creates large opportunities for market players who are seeking to segment customer groups or new markets.
The ‘Silver Generation’, senior citizens aged over 60, makes up 17.4% of China’s total population. Last year, our trend report forecasted this group’s consumption behavioural change towards e-commerce where huge buying power would be released. 2020’s Covid situation further contributed and accelerated this emerging change. According to Alibaba, the average spending of the Silver Generation on F&B products is 3.6% higher than other online users, and travel spending is three times higher than millennials; the delivery app Meituan says the Silver Generation makes up 36.7% of new users in 2020. With over 100s of millions of active Silver Generation mobile users, it presents a rising opportunity for digital marketers.
Video and virtual – the new normal
Other than consumption behaviour changes, users’ online content engagement behaviour has been changing aggressively. The number of China’s video users now exceeds 900 million, with 818 million short video users and 562 million live-streaming users, the video market is something brand owners don’t want to miss in 2021. With 5G technology set up and cheap mobile data available, 2021 is going to present a digital transformation from a mix of text, visual and video content. Although Chinese consumers are hungry for content, the driver for higher engagement is the content that helps to fulfil self-satisfactory emotions, such as happiness, curiosity, practical learning, problem-solving, and self-realization.
For the B2B market, the pandemic has forced brands who heavily relied on traditional engagement models to completely rethink their business models and strategies and start to embrace changes online. We expect more online business interactions, video meetings, online events and digital product management to occur this year. Virtual events rose to popularity in the second half of 2020 and the popularity, scale, and technological abilities of these events will only continue to grow in 2021. However, with internet security becoming increasingly important, we expect to see brands take security more seriously in 2021 to protect their data, particularly when executing events on online platforms.
Live streaming will steal the spotlight
China’s key opinion leader market (called ‘influencer’ in the western world) will continue to flourish this year with a continuous shift going towards the live-streaming market. As faster 5G data infrastructures are set up and cheaper data available, this live-streaming commerce game is only going to get bigger. Earlier adopters have turned their heads to this space, but the competitive KOL market has made it hard to define their return on investment.
Like TV shopping, live streaming enables viewers to watch a video of a KOL demonstrating or discussing a product and purchase it in real-time. Proportionately, there are currently few Chinese influencers that take part in live streaming, but those who excel at it are making impressive profits and sales and are in demand from many brands. Bigger social media platforms such as Douyin and Red have begun to better support live streaming with increased functionalities such as payment availability, product listing, and group purchasing. Some smaller platforms have even started to sponsor free advertisements and web traffic.
A key trend we are seeing in this space, and one that will prove interesting to watch in 2021, is the number of sport and movie celebrities that are moving to live-streaming. As celebrities are usually used as brand ambassadors and in TV commercials, live streaming is a new field for them, and it will be interesting to see how they perform against experienced KOLs during 2021.
Let’s get digital
As 2020 proved, the importance of having a strong digital transformation plan plus digital infrastructure and inventories in place are imperative to succeeding in China’s competitive marketplace.
Businesses will need to consider shifting investment into the digital space to include online to offline operation models, strategic talent structures, a good knowledge base of different digital channels, and tactics in response to fast-moving changes. There will be more unexpected changes in 2021, but going digital is vital to meeting the needs and expectations of modern-day consumers.
As UMS’ experts suggested, be mindful of consumer behaviour changes, social engagement model shifts, and the KOL live-streaming commerce phenomenon, which will be significant for your 2021 marketing activities. If you need to talk to China, talk with us.