RedFern Digital’s Sandra Weiss highlights five marketing trends that brands should watch out for in China in 2023.
As we near the middle of 2023, retail sales in China are seeing marked improvements during the first few months following the complete removal of COVID-19 regulations. In the first quarter of the year, retail sales rose steadily at 5.8%, and in March, there was a notable uptick, with a 10.6% increase in retail sales compared to last year. This represented the highest growth rate since June 2021.
Let’s go over the five trends that brands should watch out for in 2023.
- E-commerce Continues to Rise
As the world’s largest E-commerce market, China had over 1 billion consumers shop through e-commerce channels in 2022, making up 45.3% of all online retail sales in the world. Within China, online sales channels saw 51% of all sales in the country.
Throughout the COVID-19 pandemic, E-commerce growth has continued, and this trend is unlikely to stop even with COVID-19 restrictions removed in China. This is especially true as Gen-Z consumers, who grew up with technology and are the most digitally savvy generation, are continuing to increase their purchasing power.
Brands who want to succeed in China must consider online sales channels in their market entry or expansion plans and reach customers where they are shopping for products.
- The Metaverse: China Edition
Over the past year, the Metaverse has become increasingly substantial in China, with more brands testing the waters and expanding into this segment. The metaverse can be explained as a virtual world that allows for greater integration of the digital and physical, in areas ranging from socialization and shopping to work. Technologies include those within the fields of virtual and augmented reality.
The metaverse presents uncountable new opportunities for brands, businesses, and developers, as shown by the over 16,000 metaverse related trademark applications among Chinese players. Many of the big tech companies in China such as Alibaba, Baidu, Tencent, and ByteDance, have released their own metaverse ecosystems, wherein users can create avatars and interact in a virtual environment. In fact, since the second half of 2021, over 37 digital collections have been released by brands on Alibaba’s Tmall Luxury Pavilion, purchased by thousands of customers.
Compared to other countries such as the US and the UK, Chinese consumers are showing greater interest in the metaverse, especially as it relates to gaming. In fact, among Chinese consumers who are interested in the metaverse, over 82% are optimistic about its future benefits, which is also much greater than among Western countries.
- Virtual Influencers: The New Celebrities
AI-generated virtual influencers are amassing huge followers and becoming celebrities in China, with the industry expected to increase from $870 million in 2021 to $6.7 billion in 2025. This comes at a time when China is cracking down on human celebrities and influencers, with virtual influencers appearing as safer alternatives who are scandal free.
Technological advances have allowed these virtual influencers to hold livestreams, walk down virtual runways, or pose alongside products, just as a real influencer can. Especially among fashion brands, working with virtual influencers in China has become increasingly common.
Although at the moment, the fanbase for human influencers continues to remain much larger than the growing fanbase of virtual influencers, they are certainly a trend to keep an eye on.
- Our Furry Companions
Over the past ten years, the pet industry in China has seen a 2,000% growth rate that is only accelerating. Chinese pet owners are increasingly treating their furry companions as beloved family members or children and are more willing to spend on them. The younger generations in China are moving away from the traditional family unit, many preferring to live alone and looking to pets to fulfil their emotional needs.
As a result, all categories within the pet market are seeing surges, from pet food and pet toys to pet tech devices and clothing. The entire pet industry is expected to reach US$113.9 billion in 2025. With over 76% of pet owners in China under the age of 30, online purchase channels are at the forefront of the pet market.
Healthy, premium, and natural pet foods and treats are hugely popular among pet owners, who are mostly young, highly educated consumers living in higher tier cities. These consumers are not only interested in their own health but also the health of their animal companions.
Other trends include pet tech devices such as automated feeders, smart cameras, or smart litter boxes, many of which can connect to Wi-Fi and be controlled by apps on mobile devices.
- Adventure & The Outdoors
Another trend that has seen a surge over the past year is a fascination with the outdoors. From skiing to camping, Chinese consumers are more willing than ever to try out new hobbies and activities, especially after the end of COVID-19 restrictions.
The Winter Olympics in Beijing helped to drive interest in winter sports, leading to a growth in sales of winter sports equipment among Chinese consumers. Moreover, the popularity of Team China’s Eileen Gu, who won the gold medal in the Freeski Big Air event during the Winter Olympics, has also added to the excitement and hype around winter sports. Many of these new enthusiasts are first-time skiers and require an entirely new set of clothes and gear, making China a budding and still not fully tapped market for brands within this category.
Aside from winter sports, Chinese consumers are also showing greater interest in hiking and camping as summertime activities, which is a market that is expected to increase to above $100 billion by 2025.
As we continue into 2023, brands need to be aware of the changes happening and the shift toward a digital lifestyle. More than ever, Chinese consumers are living a significant portion of their lives online, even as they continue to expand their interests offline. Brands who want to engage and connect with potential customers in China must understand their positioning in the market and have a grasp on both Chinese consumer offline behaviour and how to reach them online.
RedFern Digital is an award-winning independent brand management agency that develops, manages, and distributes brands across Asia. We are responsible for the strategic direction, growth, and performance of some of the largest and most successful brands across a dynamic range of categories in the market, covering Research, Branding, Strategy, Social Media marketing, E-commerce & Technical Integration.
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