Posted On 2015/06/02 By In Business, Branding, Economics, News, Research, Internet, Media, Mobile, Social Media, Statistics With 510 Views

Why China has a five-year Lead in Social Media & eCommerce

Travelling in China gives a fresh perspective on the European and US internet markets. What if a single social media platform integrated commerce, location, messaging, and social networking?

You’d need to combine Amazon for shopping, Facebook for branded communities and promotion, PayPal or online banking service to pay bills, and WhatsApp for messaging. Your mobile phone would support every aspect of your personal life.

There’s no doubt we’re close. How long do you think it is going to take to achieve this level of unified service? Maybe three to five years?

Looking East for insights into the future of mobile and social media

I wouldn’t bother marking up your diary for 2020 because the service already exists and is being rapidly adopted by Chinese consumers.

On a recent trip to China a colleague in our Beijing office told me how she’d shared photos with her family of her daughter’s first day at nursery, and a recommendation and map for a new yoga studio with a group of friends.

She helped a colleague benchmark property prices, bought groceries and then ordered a cab. On her journey home she browsed the latest fashions by a hip young Shanghai-based designer. She did all this in ten minutes on a single app.

This app is the fifth largest online community in the world after Facebook, YouTube, QQ and WhatsApp. It’s also the fastest growing. It’s called Wēixìn (WeChat in other markets)from a company called Tencent.

Tencent is a China-based holding group for a variety of media, entertainment, internet and mobile companies, including email and messaging service QQ. WeChat is three-years-old (launched January 2011) and has an estimated 600m active users. That number is up 40% in the 12 months to 2014.

The service is like Instagram and SnapChat. Users share messages with friends in their network and publish images and short videos called Moments to a timeline. Brands can also publish content to a public timeline for anyone that follows them to see. Consumers need to connect with the brand and opt-in.

More than a numbers game

China’s scale, political structures and raw energy is enabling it to leapfrog generations of technology. The China Press and Publication Academy reported this month that an average Chinese adult reads on WeChat twice a day for more than 40 minutes.

iResearch says that mobile transactions in China quadrupled in 2014 to $36.4bn. Total online payments reached $104.15bn. Chinese internet companies are leading the world but half of the 1.35bn population is yet to access the internet.

Wēixìn is leading the market thanks to the integration of micropayments and messaging. Consumers like my colleague enter bank information in their account settings enabling them to play games, book cabs, buy tickets, shops, and send money to friends in their network.

An app for all of life

Users like the ability to connect with brands or people and conduct transactions. It’s not so much a social network as a complete customer relationship management system for brands. The opportunity for brands is to build a community and engage with consumers.

Wēixìn isn’t a retail channel but it is a payment platform. It has two partners on board: JD.com; the largest ecommerce platform by volume; and MeiLiShuo selling fashion and cosmetics to young women.

The rapid growth of the service is thanks to simplicity of the platform in integrating online and offline, and social and commerce, but also Tencent’s savvy promotion of the service. It has held a hugely popular red packet campaign for Chinese New Year for the last two years. The exchange of money in a red envelope is a Chinese tradition.

Users were able to take a sum from their bank account and share it in random amounts to their network. Friends grabbed an envelope by shaking their phone. Tencent also gave away red envelope gifts to users during the Chinese New Year period this year. It reported 810m shakes, and 120m envelopes were distributed per minute at the height of the promotion this year.

Fiercely competitive market

China’s top three internet companies are jostling for pole position: Amazon-like serviceAlibaba; search firm Baidu; and Tencent.  Tencent blocked Alibaba and its payment service Alipay from Wēixìn in January. Instead it is promoting number two player JD.com after it acquired a 15% stake last year.

Websites frequently block Baidu from indexing their content because it frequently places its own products at the top of search results. The behaviour isn’t unique to China. We also see it in Europe and the US. In China, like in the West, critics call for open standards, transparency and regulation by authorities over internet companies.

Other social networks in China

Wēixìn isn’t the only social network in China. Tencent also owns QQ, the largest network by user numbers in China. Like Gmail, or Hotmail before it in the UK or US, it’s the ubiquitous consumer email account.  When Tencent launched Wēixìn in 2011 the primary sign-up method was via a QQ account.

Weibo is a mix of Facebook and Twitter with 600m users. It is more open than Wēixìn, enabling more open two-way conversation but is fast being overtaken by the newer entrant. Users and brands can have pages. There are three means of communication: posts; comments; and direct messages. Posts are up to 140 Chinese characters and nine images.

Finally there’s LinkedIn and Renren. LinkedIn is a new entrant to the market. It is working hard to integrate with local culture. Renren is mainly used by students and has been overtaken by Wēixìn and Weibo. Social media monitoring and planning tools are nascent. It is firmly a work in progress.

Handsets: Apple and Google enter market

Mobile phone adoption has reached saturation of one device per person. The majority of these devices are based on Google’s Android operating system and are made by local manufacturers.

China has become Apple’s second largest market by volume and is growing three times faster than Europe or the Americas. Apple’s large screen iPhone 6 and tablet range is favoured by consumers for mobile shopping. There is no shortage of handset options.

Consumers have more than 11,000 handsets to choose from, many running the Android operating system. Google is another Western company benefiting from the growth of the Chinese market. There is still considerable opportunity for growth in the market. Internet penetration has yet to hit 50% in China, compared with approximately 90% in the UK and US. Mobile and desktop Internet usage is expected to reach parity by the end of 2015.

This web page is not available

The internet has been filtered in China since 1997 to prevent non-Chinese organisations or governments from sharing political messages with Chinese citizens. Sites come and go. Facebook, Google, Instagram, and Twitter are all censored, but Amazon, LinkedIn, WhatsApp and Wikipedia are not.

Motivated users use a Virtual Private Network (VPN) as a workaround but most don’t because there are such strong local networks.

Information leakage beyond borders

Data is hard to come by but colleagues in Beijing estimate that between 1% and 2% of Chinese citizens use Facebook. This community is made up of students and Chinese expatriates that are studying or working overseas or native Chinese using (VPN) servers.

It’s a behaviour repeated on other networks. A sixth of WeChat’s estimated 600m users are outside mainline China. Messages are moved back and forth across the internet from East to West by these modern day telegraphs.

Company announcements and branded social media content is no longer confined to mainline China for very long, or vice versa. Social forms of media offer a huge opportunity for brands. The challenge for brands in building communities and relationships with consumers in China is no different to any other market.

The culture, language and networks may be different to Europe and the US but brands need to seamlessly integrate new forms of media as part of a customer journey.

10 lessons for brands heading to China

  • Market. Hong Kong has traditionally been the entry point for European and US companies that are seeking to start out in China. It’s a good well-connected base but is no replacement for heading to the mainland.
  • Politics. Whatever your view of China’s governance structures if you want to work in the market you must respect its politics and structures. The Chinese people are very proud of their culture and heritage. Any foreign effort to promote change will be shut down.
  • Networks. Whenever you travel share your plans on LinkedIn or Twitter. People in your network will connect with you, provide insight and offer to make introductions. There are plenty of expats and Chinese business people willing to help.
  • Chinese operations. The governance for starting a business in China is complex. The most common route for an organisation is in partnership with a local company. It’s a good way to learn about the market and de-risk an investment.
  • Research. Seek out help from embassies and trade organisations. There’s also a large community of Chinese expat students in Europe and the US who will also help you understand the market.
  • Mobile. China’s internet users are mobile. Content needs to be designed for mobile first and should integrate with a call to action, typically a purchase, as quickly as possible.
  • Social media. Use both Weibo and Wēixìn for content marketing. Integrate offline wherever possible. You’ll need paid effort for influencers or to sponsor communities. Build direct relationships with customers.
  • Content without boundaries. Media censorship is a reality in China. VPNs, and messages passed back and forth via social media, make it porous. Do not regard it as isolated or separate from other markets.
  • Creative. European and US organisations are celebrated by Chinese consumers for their brand and design. Western brands should use these strengths as the basis of content marketing and storytelling.
  • Speed. The Chinese market is vibrant and fast moving. WeChat is three years old and launched micro-payments 18 months ago. It will almost certainly have completely changed in another 18-month.

Learn more in our Global Ready China Seminars


Sources:

Article: econsultancey.com / Image: Silly Rabbit

Travelling in China gives a fresh perspective on the European and US internet markets. What if a single social media platform integrated commerce, location, messaging, and social networking? You’d need to combine Amazon for shopping, Facebook for branded communities and promotion, PayPal or online banking service to pay bills, and WhatsApp for messaging. Your mobile phone would support every aspect of your personal life. There’s no doubt we’re close. How long do you think it is going to take to achieve this level of unified service? Maybe three to five years? Looking East for insights into the future of mobile and social media I wouldn’t bother marking up your diary for 2020 because the service already exists and is being rapidly adopted by Chinese consumers. On a recent trip to China a colleague in our Beijing office told me how she’d shared photos with her family of her daughter’s first day at nursery, and a recommendation and map for a new yoga studio with a group of friends. She helped a colleague benchmark property prices, bought groceries and then ordered a cab. On her journey home she browsed the latest fashions by a hip young Shanghai-based designer. She did all this in ten minutes on a single app. This app is the fifth largest online community in the world after Facebook, YouTube, QQ and WhatsApp. It’s also the fastest growing. It’s called Wēixìn (WeChat in other markets)from a company called Tencent. Tencent is a China-based holding group for a variety of media, entertainment, internet and mobile companies, including email and messaging service QQ. WeChat is three-years-old (launched January 2011) and has an estimated 600m active users. That number is up 40% in the 12 months to 2014. The service is like Instagram and SnapChat. Users share messages with friends in their network and publish images and short videos called Moments to a timeline. Brands can also publish content to a public timeline for anyone that follows them to see. Consumers need to connect with the brand and opt-in. More than a numbers game China’s scale, political structures and raw energy is enabling it to leapfrog generations of technology. The China Press and Publication Academy reported this month that an average Chinese adult reads on WeChat twice a day for more than 40 minutes. iResearch says that mobile transactions in China quadrupled in 2014 to $36.4bn. Total online payments reached $104.15bn. Chinese internet companies are leading the world but half of the 1.35bn population is yet to access the internet. Wēixìn is leading the market thanks to the integration of micropayments and messaging. Consumers like my colleague enter bank information in their account settings enabling them to play games, book cabs, buy tickets, shops, and send money to friends in their network. An app for all of life Users like the ability to connect with brands or people and conduct transactions. It’s not so much a social network as a complete customer relationship management system for brands. The opportunity for brands is to build a community and engage with consumers. Wēixìn…

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About

Stefan

Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds two Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.

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