Industry figures share their views on the latest issues. If you have an idea for a guest column, email firstname.lastname@example.org
How Chinese brands can break the West
Asked to name the world’s biggest or most successful brands, most in the west would suggest either Facebook, Apple, Amazon, Netflix or Google — the so-called Faangs. Ask someone in China, though, and the answer would be a far cry from those powerhouses.
Unlike their American counterparts, brands like Tencent, Weibo or Xiaomi aren’t yet household names in the west — despite the former being bigger than Facebook. When it comes to digital advertising, China has some of the most advanced marketers on the planet and the market is booming. Spend was $61bn last year, and is projected by Statista to continue growing by over 10 per cent per year to $108bn in 2022
But as China’s domestic market and its close neighbours approach ‘peak stuff,’ its brands are now strategically looking at how to effectively enter new markets across Europe and the Americas.
Breaking Europe, for instance, means a fresh approach is needed to resonate with western consumers. Chinese brands traditionally view Europe as a single entity. They tend to focus on channel level execution in Europe rather than integration— it’s the Chinese way, and works well domestically.
But, within the whole, they recognise the benefits of partnering with western agencies that are experts in the multitude of ways media is traded, consumer behaviour and the cultural and linguistic nuances in western markets.
Few will be surprised to learn that digital-first businesses, like mobile gaming brands, often take a digital-first approach to marketing. The domestic market is heavily skewed towards digital by some margin, with the average person watching far less telly than their western counterpart.
In the west, there is more of an equilibrium to strike between online (typically demand harvesting) and offline (demand generation) channels — with the latter being comparatively exotic territory to these types of Chinese brands looking to internationalise.
I wouldn’t go as far to say there is a suspicion of traditional formats like out of home or print, more, a cultural difference that leads to them being overlooked or undervalued. The longer-term business effects of investment in brand building and positioning are often new concepts to the emerging rather than established Chinese brands moving west. To make the leap into traditional formats, the outcomes need to be proven and their effectiveness measurable in the same way digital campaigns are.
Chinese brands may be more likely to engage with offline campaigns when they see the evidence that these supercharge their online equivalents. For instance, brands often run digital campaigns in-house via Google or Facebook from their China HQ, yet TV’s halo effect on Facebook user acquisition campaigns can be profound. When you bear in mind that these brands spend a total of £5bn on Facebook every year (Pivotal Research), even marginal improvements can yield significant gains.
Chinese brands such as Alibaba are looking to expand in Europe by capitalising on OOH, creative and influencer marketing to complement its existing online services and these techniques have already allowed it to bring the 11:11 Global Shopping Festival beyond China to reach Poland, Spain, Russia, Saudi Arabia, and the UAE.
In the coming years, the west can expect to see many more Chinese brands becoming a part of daily life. China’s economy is quickly opening up to the world. With HSBC predicting that China will overtake the US to become the world’s largest economy by 2030, I’m certain we’ll see many a Chinese brand taking a bite out of the Faangs’ market share.
Matthew Pover is chief client officer at The Specialist Works.
Have your say
Do you have a strong opinion on a topical industry issue? To submit a comment piece, please send a short summary of your idea to email@example.com. Views of writers are not necessarily those of The Drum.