China isn’t out of the woods yet, but there have been a number of positive developments over the past couple of weeks reinforcing China as one of the most, if not the most, promising market this year, writes China Skinny managing director Mark Tanner.
Whilst China’s lowering export orders (outside of COVID-related personal protective equipment) and rising unemployment, hang over the country, the return to normalcy has picked up a gear.
China has reopened cinemas, hotels, sports venues and even Disneyland, albeit with social distancing rules and reduced capacity. Despite the pandemic, many companies have reported positive growth in China. In Q1, Nike grew 5% and L’Oreal was up 6%, and multinationals from BMW to KFC have announced expansion plans for the country. In April, car sales grew 4.4%, the first year-on-year growth since mid-2018. Even China’s economists are feeling their most upbeat in two years.
Brands hoping to capitalise on the opportunities from a reviving China should note that the consumers they are targeting have changed since 2019. There are the well-known trends such as the greater focus on health, fitness and personal wellbeing, and the homebody economy. Yet beyond the obvious, the psyche of many consumers has shifted.
Stuck in their homes, without the diversions of a busy everyday life, Chinese consumers have a lot of time to think and reflect on what is important to them. This isn’t good news for brands hoping to peddle frivolous stuff, as we have seen many consumers aim to simplify their lives. Alibaba’s platform for second-hand goods, Idle Fish, saw its biggest ever day of sales in March as consumers decluttered their apartments and others sought bargains. Brands that align with the less-is-more approach – from clean packaging, to beautifully simple product design, to less ingredients in food, are likely to benefit from this trend.
Despite the uncertainty brought on by the pandemic, 18-35 year-old Chinese are feeling happier than they were a year ago. This can be put down to a breather from their manic everyday lives, spending more time with families and a realisation of their importance, pride in being Chinese and how the country has contained the virus, and a sense of purpose that they have actively shouldered their responsibility during the outbreak fight. There is much to take from this, but playing to that sense of purpose that Chinese consumers will increasingly crave is a powerful route to connect emotionally with Chinese consumers.
Foreign brands should be aware that this sense of purpose is linked to the rising pride in China. Although the trend is not new, it has accelerated as a result of the pandemic, attributed to three main things:
1. How well China has contained the virus;
2. How poorly other countries have; and
3. The rising geopolitical tensions and anti-China sentiment abroad. In many cases, this sentiment will have an impact on how origin communications are received, how new product development should manifest and how brands choose partners and endorsers.
Over the past few years, Chinese consumers have become more responsive to emotional cues and less focused on just the function and feature claims of products. This has only become more relevant since the outbreak. Brands would be wise to better understand how these emotional triggers have changed to incorporate them into marketing strategies.
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