Are you providing a customer experience that best suits the needs of the customer, whoever - and wherever - they are? Whether in the physical store or online; all retailers need to make sure their service evolves with the customer's expectations. Steve Borges, Co-founder of Biglight reveals how big brands are keeping up and how you can too...
We all know there are nine million bicycles in the capital city of Beijing (as Katie Melua has been singing for nearly a decade). But did you know there are now more than 700 million mobile phone users across China, driving the world’s largest e-commerce market? It’s a far more compelling tune for international marketers to take note of.
The fact is, massive smartphone take-up by Chinese tech-savvy millennials has resulted in a boom time for online retail – an e-commerce revolution, as money maven Morgan Stanley puts it.
And those young, mobile-loving e-shoppers are getting older – and richer. Their country, now a global economic powerhouse second only to the US, has raised its status over the past three decades, moving from an international goods producer to a more consumer-focused economy. Urban Chinese consumers have become urbane, aspirational, sophisticated – they have gone shopping on their smartphones and what they see, they like. Further research from Morgan Stanley predicts that within the next ten years, China will ‘break out of the middle-income trap and join the rarified ranks of high-income society’.
Factor into this recent research from BrandZ – the ‘Top 100 Most Valuable Chinese Brands’, which reveals:
- Brand value of the Top 100 has hit its highest ever level, up 6% to $557.1bn
- Tencent retains the No 1 spot, growing 29% to $106bn
- Urban middle class consumers are driving a switch from price to premium, benefiting technology, travel, education and retail sectors, in particular.
- Export success is increasingly important. The Top 10 export brands now get an average of 40% of revenues from outside China, compared to 24% in 2011.
What we are now seeing is that those living in Chinese towns and cities are switching on in their millions to m-commerce and, increasingly, they have the cash to reach out to international traders for goods to enhance their lifestyles: premium and luxury brands.
Millennials power Chinese e-retail boom
Millennials are playing a more evident role in commercial and brand success in China, the report shows. Consumers want products/services that offer quality, are trustworthy and help make their lives better – but millennials are more likely to favour brands that are famous or trendy. The research shows the most successful brand at increasing millennial loyalty was mobile phone handset brand OPPO, up 157% since 2014.
The WPP and Kantar Millward Brown study shows that technology, banks and telecom providers led in the report’s category brand value rankings. Technology player Tencent remains China’s most valuable brand, growing its brand value 29% to $106 billion.
In China, brands providing products and services for urban middle classes are showing impressive strides forward. Education and travel agencies were the fastest-growing sectors, up 46%, although the much larger categories of technology and retail showed far higher increases in dollar terms, up 16% to $163.7 billion and 22% to $74.2 billion respectively.
Niche markets, wealthier customers
Many brands have now reached the limits for penetration-led growth and are therefore focusing on ‘premiumisation’ to attract wealthier consumers. The success of this strategy can be seen from Top 100 newcomer travel agency brand Caissa (at number 79), which has identified a niche market of travellers, looking for a more refined experience.
Technology brands continue to lead the way, with Tencent strengthening its hold on the number one spot – thanks to the popularity of social media platform WeChat, while other sector players are also performing strongly. Tencent was also one of three technology brands in the Top 20 ‘risers’ rankings.
David Roth, CEO EMEA and Asia, The Store, WPP, commented: “China has come to terms with a ‘new normal’ for its economy, but there are still massive opportunities for strong, distinct brands to address the aspirations of the rising urban middle class and drive superior value for shareholders.
“The strong brand value growth we have seen this year in the technology, travel and education sectors demonstrate that brands that clearly meet a defined consumer need will thrive.”
Chinese brands also continue to make strong inroads overseas. Impressively, many top technology brands now derive a significant proportion of their revenues from sales abroad. Lenovo was the most export-focused brand in the BrandZ’ China Top 100, with 72% of revenues gained from overseas revenue, while Huawei secured 58% and ZTE 47% of their revenues from outside China.
The report also shows that the global perceptions of Chinese brands are changing – this shift will continue as those brands seek to boost overseas growth via organic expansion, acquisition and marketing activity beyond China.
Overseas transactions conducted last year by brands on the BrandZ Top 100 Most Valuable Chinese list include Haier’s purchase of GE Appliances and the acquisition of UK online travel aggregator Skyscanner, by China’s travel e-commerce giant, Ctrip. Midea Group, the parent of appliance brand Midea, acquired two companies: Kuka, a German robotics company; and Japan’s Toshiba Appliances.
Some entrepreneurial Chinese brands are now looking for overseas success before returning their attention to their home market – examples include digital brands DJI, Anker, Elex and Ninebot.
Deepender Rana, CEO, Greater China, at Kantar Insights, said: “This year, we have seen many firsts. With China emerging as a technology powerhouse, it is fitting that in Tencent we have the first brand from China to break the $100 billion brand value barrier. ‘Brand power’ of Chinese brands continues to grow and, for the first time, has started to surpass that of multi-national rival brands.
“We expect this trend to accelerate in future years as Chinese companies realise they need to build differentiated brands to command a premium in a competitive market, where penetration led growth is plateauing off in many categories.”
Seven brands entered the BrandZ China Top 100 for the first time in 2017, with two returning. Newcomers were: retailer vip.com (at number 40); China CITIC Bank (number 48); technology brand iQiyi (number 50); men’s apparel brand Helian Home (number 62); travel agency Caissa (number 79); car brand Geely (number 93); and Vatti (number 99), a home appliance maker. The two returners were apparel brand Semir (number 95) and the retailer Gome (number 100).
Doreen Wang, Global Head of BrandZ, said: “Chinese brands are taking the leap and going global on the back of three key factors: the country’s rising international stature; pressure to find alternative sources of growth as the domestic market slows; and increasing overseas consumer receptivity to Chinese brands.
“Young consumers around the world are increasingly positive towards Chinese brands and we now see entrepreneurial Chinese brands starting overseas before they make waves in their home market.”
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