As China’s immense power and influence in business and technology grows, understanding what makes China tick and the trends that have its consumers captivated is increasingly necessary for understanding the global tech and internet landscape – and even getting ahead of trends that are due to come to the west.
This was very literally true early in the Covid-19 pandemic, when regions that were impacted by the virus later on were able to look to China for a sense of what was to come, and to discover coping strategies that had already been implemented and proven. China’s mobile-first approach to digital, its seamless integration of ecommerce with things like social media and video, and the country’s wholehearted embrace of technological solutions are just a few of the traits that have made China a digital trendsetter.
However, globally relevant though China’s digital landscape might be, it is shaped by geographical and cultural factors that are largely unique to China – giving it traits and constraints that aren’t found elsewhere in the world. To understand digital marketing in China is to become familiar with a completely different slate of companies, different consumer concerns and purchasing habits, and different trends and practices.
To help with this, we’ve put together a broad overview of some of the biggest trends and developments in Chinese digital marketing over the past few years. While it doesn’t cover everything there is to know about digital marketing in China, it gets at some of the hottest topics currently dominating the conversation, and examines why they are so important and how brands (both Chinese and western) are taking advantage of them.
- 1. Key Opinion Leaders (Influencers)
- 2. Private domain traffic and ‘Key Opinion Consumers’
- 3. Short videos
- 4. Long-form and streaming video
- 5. Rural communities
1. Key Opinion Leaders (Influencers)
One of the keys to understanding the internet marketing landscape in China is understanding its Key Opinion Leaders (KOLs) – the Chinese term for influencers.
Unlike western influencers, who are largely concentrated on two or three platforms, Chinese KOLs are distributed across a range of platforms, from messaging app WeChat to microblogging platform Weibo; from short video app Douyin to review, discussion and blogging website Douban. Many ecommerce websites, like Alibaba’s Taobao and social commerce site Xiaohongshu, also serve as publishing platforms for KOLs.
Correspondingly, Chinese KOLs also publish a wider variety of content than their western counterparts: some are bloggers while others are microbloggers or publish photoblogs, create short videos, or broadcast livestreams.
Some KOLs are celebrities in their own right – actresses like Fan Bingbing or Yang Mi – while others are self-made influencers, like fashion blogger Becky Li, who left her job as a local newspaper reporter in 2014 to become a full-time blogger on WeChat, and has since launched her own fashion label.
China’s top Key Opinion Leaders are notorious for wielding phenomenal levels of commercial influence in their particular verticals, such as fashion or cosmetics – making them an incredibly lucrative investment for the brands who partner with them. China’s top livestreaming celebrity, Viya, once generated close to US $30 million in sales for New Zealand and Australian brands over a four-and-a-half-hour period; her record is US $66 million worth of product sold in a single day. Actress Fan Bingbing is known to regularly sell out the products that she recommends on social commerce platform Xiaohongshu, and in the past, her recommendations have generated so much traffic they have crashed servers.
KOLs, therefore, can be a valuable point of entry for western brands into the Chinese market: a recognisable figure to collaborate with, and one whose recommendations come with high levels of trust attached – even if the brand itself is new to Chinese consumers. In one notable example, Kim Kardashian had received a lukewarm reception when she initially tried to launch her beauty products in China – until she partnered with Viya in a joint livestream just ahead of Singles’ Day 2019, selling 15,000 bottles of her lip-shaped perfume in minutes.
Increasingly, these KOLs may not even need to be real people – as long as their following is real. Thanks to the rise and increasing sophistication of virtual KOLs, major brands can partner with or even create virtual characters to endorse their products.
1.1. Virtual KOLs: Connecting with a younger generation
While virtual KOLs are not unique to China, they have proven extremely popular with Chinese consumers, prompting some brands to create virtual KOLs specifically for the Chinese market, such as L’Oréal’s ‘Mr Ou’, a Chinese-French entrepreneur and activist, and McDonalds’ ‘Happy Sister’, who serves as the brand’s ambassador in China. According to a report by Chinese video platform iQiyi, by 2019, 390 million people in China were following or had an interest in following virtual idols (digital performers who were the forerunners of virtual KOLs). Among 15-24-year-olds, 64% are reportedly followers of virtual idols, making them uniquely suited to connecting with a younger audience.
One of the most well-known virtual idols is Luo Tianyi, a digitally-generated singer created by Shanghai-based music production software company Vsinger. Luo Tianyi has fronted promotions for major brands like KFC, Nestlé, L’Occitane and Huawei, and has also collaborated with flesh-and-blood KOLs: in April 2020, she co-hosted a shoppable livestreaming event on Taobao with Li Jiaqi, also known as the ‘Lipstick King’, one of China’s top KOLs. A subsequent session between the two in May drew in 3 million viewers.
Other well-known virtual KOLs in China include Ling, created by Shanghai-based startup Xmov, and Ayayi, created by Ranmai Technology, who has been dubbed China’s first “meta-human” due to her extremely realistic appearance. Noonoouri, a cartoonish-looking digital character and “fashionista” who was created by Munich-based agency Opium Effect, is not native to China but was quickly snapped up by Vogue China, which exclusively represents her in the region; she was also appointed as the ambassador for Tmall’s luxury platform, Tmall Luxury Pavilion. Tmall also has its own virtual influencers in the form of Aimee, a hyper-realistic influencer who has modelled collections from Prada and Miu Miu after both brands debuted on the platform; and the more overtly animated Maojiang (meaning “Miss Kitten”), who has black cat ears to match Tmall’s mascot.
Virtual KOLs come with both advantages and drawbacks: they’re always available, always appear perfect, and never make a mistake of the kind that could be potentially embarrassing for a partnering brand. However, they can also be expensive, and less intuitive to work with than a human Key Opinion Leader.
For more on the pros and cons of working with virtual KOLs, as well as how savvy brands have been employing them to best effect, read our deep dive: Virtual influencers are helping brands to succeed in China.
1.2. “Silver-haired” KOLs and China’s ageing population
Influencers are often thought of as the province of younger, highly digitally-connected generations: they often tend to be young people themselves, and brands partner with them in order to reach a similarly young audience.
However, brands in China are being forced to come to terms with the fact that they might need to mature their appeal. On top of being one of the most lucrative markets in the world, China is a rapidly aging country, due in part to the one-child policy that was only recently reversed; and although brands may feel as though they need to present a ‘young’ image in order to seem at the cutting edge, they are missing out on a huge revenue opportunity by ignoring older consumers.
Research has shown that while younger consumers may be perceived to be freer with their spending and older consumers thought of as more frugal, the opposite is actually true: a joint survey by KPMG and Mei.com, carried out in 2017, found that 45% of non-millennials in China spent 5,000 yuan or more per month, compared with only 38% of millennials. “Millennials in China are, in general, quite prudent spenders,” the report authors observed, “with their average monthly spending at less than half their income.”
This suggests that fears about China’s spending power dropping as its population ages are unfounded; additionally, the Covid-19 pandemic has brought increasing numbers of China’s older generations online, where they are becoming well-versed in shopping for goods and necessities. Statistical reports from the China Internet Network Information Centre show that the percentage of internet users aged 60 and over in China grew from 4% in December 2016 to 10.3% in June 2020, shooting up 3.6 percentage points between March and June 2020. The percentage of internet users aged 50 and over grew from 16.9% in March 2020 to 22.8% in June.
Some elderly models and KOLs have begun making a name for themselves online and transforming the way that older people are viewed: “Granny Sunshine”, a 71-year-old fashion model, has blazed a trail in helping fashion brands refine their products for older consumers and better cater to their tastes, while showing younger people that the elderly can be elegant and fashionable. On short video platform Douyin, a growing number of “silver-haired” KOLs have built up sizeable followings: 79-year-old Wang Biyun, known by her username ‘@GrandmaWangWhoOnlyWearsHighHeels’ (or ‘Granny Wang’ for short), has more than 20 million followers, and has held livestreams that sell more than 15 million yuan (US $2.32 million) worth of merchandise. ‘Auntie Han’, ‘Grandma Tian’ and ‘Grandpa Beihai’ are just a few more of the older KOLs challenging the notion that the elderly can’t be tech-savvy, entertaining or fashionable – and creating content that appeals to internet users of all generations.
But despite their obvious pull, major brand campaigns featuring elderly KOLs in China are still few and far between. One often-cited example of a successful campaign featuring older people is Gucci’s ‘Accidental Influencer’ campaign, carried out in July 2020, which featured consumers humorously co-ordinating with their surroundings. Gucci specifically invited people aged 61 to 87 to take part in the campaign, a move which was well-received. Neiwai, a major Chinese lingerie brand, also made headlines when it announced 51-year-old Faye Wong as its new global ambassador last August.
Yet many brands are reluctant to move away from a youthful image or buck the trend by partnering with a more mature influencer. Speaking to Jing Daily, Douyin creator Ellen Le summed up the challenge from a brand image perspective: “If a brand wants to publicise its heritage and perseverance as qualities, then elderly KOLs would be a perfect match. However, if not handled properly, you might risk being labeled conservative or outdated.” At the moment, more brands are worried about the latter than are willing to risk bucking the trend – even if it means unlocking an underserved and very wealthy segment of the market.
2. Private domain traffic and ‘Key Opinion Consumers’
Key Opinion Leaders aren’t the only figures in China whose opinions hold sway. As the cost of partnering with KOLs has risen over the years, brands have sought out more economical, and in may cases also more direct, ways to reach and communicate with their desired audiences.
Enter the Key Opinion Consumer (KOC). KOCs can roughly be considered the Chinese equivalent of western ‘micro-influencers’ (or perhaps nano-influencers): more akin to ordinary consumers than their famous KOL counterparts, their recommendations nevertheless carry weight within their social circles, and among groups of consumers with similar interests. The concept of the KOC has been around for some time, but didn’t always go by that name: brands have long carried out word of mouth marketing via fan groups or ‘power consumers’, who are more or less the same as KOCs.
While KOLs can be useful for high-profile, far-reaching awareness campaigns, not every brand needs or indeed has the budget to partner with them. KOCs can be effective in enabling brands to reach a specific, niche audience in a cost-effective way, often with a focused message. While KOLs are good for driving general interest in a product or brand and obtaining short-term growth, KOCs are more effective at building engagement, trust, and long-term growth and credibility.
2.1. What is ‘private domain traffic’?
‘Private domain traffic’, or simply private traffic, is a buzzword that has rapidly gained popularity over the past two years in Chinese marketing, although like the Key Opinion Consumer, the concept has been around for a while. Private domain traffic can be thought of as roughly equivalent to first-party data: a pool of users with whom a company has direct contact, and who interact with the business in a closed environment like an app or WeChat group.
Private domain traffic tends to be ‘stickier’ and more valuable than the public traffic of the open web, although it is also more work to cultivate. Businesses need to nurture this direct relationship with their customers via frequent interactions, initiating group discussions and giving them access to exclusive offers and promotions. KOLs and KOCs are often used to promote and host these groups, inviting their followers and social networks into the closed group environment and interacting with them there on behalf of the brand.
Social commerce app Pinduoduo is one company that is known for having perfected private domain traffic long before the tactic was even recognised by most other businesses. Pinduoduo was a ‘latecomer’ to an already mature ecommerce market when it launched in 2015, but succeeded in growing rapidly thanks to the discounts it offered to customers who purchased in groups: the more friends they could team up with to buy a product, the lower the price for each buyer would be. Friends invited each other to purchase on Pinduoduo through WeChat groups, and Pinduoduo soon opened a mini-program directly within WeChat to reduce friction even more and keep users within its owned ecosystem.
Beauty brand Perfect Diary is another name that is synonymous with private domain traffic, and has developed a highly sophisticated strategy for growing its user base using private traffic and virtual KOCs. The brand has hundreds of WeChat groups fronted by its virtual KOC, Xiao Wanzi (sometimes known by her English name, Abby), and encourages customers to join them after purchase with the promise of cash rewards. Once within these groups, customers get exclusive access to Perfect Diary’s WeChat mini-program, Abby’s Choice, which sells products at a much lower price compared to outlets like Tmall. Xiao Wanzi will also share special offers, new product launches, and beauty advice with group members, acting as friend, consultant and customer service agent all at once.
This strategy saw Perfect Diary rise to become one of China’s most well-known beauty brands in just a few years, ranking among the top three beauty brands on Tmall in 2019, less than three years after its launch. Perfect Diary boasts that it is one of the most popular brands among Generation Z consumers, along with Huawei and Lining. Nor is its success confined to the digital sphere: in September 2020, it had more than 200 brick and mortar stores across China, up from 40 at the end of 2019.
As well as being a demonstrably effective growth strategy for new companies like Perfect Diary, private domain traffic is being seen as the secret to future success for established companies in an increasingly saturated online environment. As competition intensifies between major players like Alibaba, Baidu, Tencent and Bytedance, private domain traffic allows them to convert casual users into dedicated, loyal fans, while also saving on the cost of acquiring and reacquiring customers through channels like digital advertising and paid search.
However, one key weakness of the way that many companies go about acquiring private domain traffic is that so much of it relies on WeChat: WeChat Groups, branded WeChat accounts, WeChat mini-programs. While it is a low-friction way to meet customers where they are, given how ubiquitous the WeChat app is, it is also not truly an owned environment, and businesses are ultimately at the mercy of WeChat’s parent company, Tencent. In the past, WeChat has been known to block apps belonging to rivals, as well as preventing link sharing from competing services, such as collaboration apps.
In order to prevent any unwelcome surprises, companies should ideally make sure they are directing private domain traffic onto truly owned platforms – rather than spaces where they don’t have total control.
3. Short videos
When TikTok took over the social media scene in the west in 2018, it was the first time a short video app had made such waves since the untimely demise of Vine in 2016. But in China, where TikTok’s parent company, ByteDance, hails from, the short video space is packed and highly competitive. According to a report by Research and Markets, released in May 2021, China’s short video market is expected to reach a value of US $134.30 billion by 2025, growing at a compound annual growth rate (CAGR) of 33.46% between 2021 and 2025.
The two biggest players in the space are Douyin, the Chinese equivalent of TikTok (and likewise owned by ByteDance), and Kuaishou, owned by Beijing Kuaishou Technology Co., Ltd. Despite Kuaishou having been founded five years earlier than Douyin (in 2011, making it China’s earliest short video platform), it trails its rival in terms of growth: in August 2020, Douyin had 600 million daily active users (DAUs), while Kuaishou reported more than 300 million in the same month.
However, this doesn’t mean that Kuaishou is no threat to Douyin: it is known to be more popular among users from China’s lower-tier cities, wheras Douyin’s userbase hails from major, metropolitan Tier 1 regions. This potentially gives Kuaishou more room for growth as users from lower-tier cities progressively come online. ByteDance owns another short video platform, Douyin Huoshan (previously just Huoshan, the app was recently rebranded) which is more popular with internet users from third- and fourth-tier cities, helping ByteDance to fend off the threat of Kuaishou; however, Douyin Huoshan is much smaller at just 50 million DAUs.
Another player in the short video space is Chinese search giant Baidu: it owns Haokan, launched in 2017, which hosts videos of between three and five minutes in length. With a reported 110 million DAUs in November 2019, Haokan is China’s third-most-popular short video platform, but it still trails behind rivals Kuaishou and Douyin. Baidu recently moved to internally merge Haokan with Quanmin, another short video platform that it launched in 2018, into a single business unit. It has also launched another app called Kankan (whose name translates to “take a look”), which allows users to search and browse videos and livestreams – perhaps hoping to play to its strengths in the realm of search.
One or two platforms have moved away from the short video space in the past year: another ByteDance-owned app, Xigua Video, has repositioned itself as a “middle video” platform. “Middle video” refers to videos that are 1 to 30 minutes in length, usually professional rather than user-generated, and shot in landscape. Ren Lifeng, President of Xigua Video, announced that Xigua would be investing at least two billion yuan (US $300 million) to support creators of these types of videos.
Meanwhile, Tencent-owned platform Weishi announced in June that it will be pivoting away from short video toward film and TV content, as well as distributing Tencent’s own licensed content. Tencent will continue to have a horse in the short video race thanks to its recently-launched product WeChat Channels, a short video platform within WeChat, although the product is currently still being tested.
These departures do not mean that there isn’t still plenty of competition in China’s short video space, of course – nor do they signal that short videos are falling out of favour. Somewhat predictably, Covid-19 contributed to an uptick in the adoption of short video apps by Chinese consumers: according to the China Internet Report 2020, in March 2020 there were 870 million MAUs of short video apps in China, a 16% increase compared with March 2019. Data from We Are Social China and App Annie, published in the Digital 2021 China report, also found that Kuaishou and Douyin were the two most-downloaded iOS apps in China in 2020.
3.1. Marketing on Douyin and Kuaishou
How well does all this usage translate into revenue, both for video platforms and for the brands marketing on them? Short videos are a lucrative advertising medium, as evidenced by the fact that in 2020, ByteDance took in an estimated 180 billion yuan (US $27 billion) in ad revenue, 60% of which came from Douyin. For Kuaishou, advertising income has helped mitigate a drop in revenue that it experienced in Q1 2021, with ad sales for the quarter more than doubling to 8.6 billion yuan.
Brands can also tap KOLs, launch challenges and create native content for these platforms to generate awareness among Chinese consumers. For example, American luxury fashion brand Michael Kors is known for having been the first luxury brand to partner with Douyin. It hired three fashion influencers to appear at an event with the brand’s ambassadors, and enlisted Douyin’s ‘in-house’ KOLs to promote a “city catwalk” hashtag challenge, in which they walked down a catwalk wearing Michael Kors-branded products in a 15-second video. The hashtag reportedly attracted some 30,000 submissions from users who rushed to take part in the challenge, and sales for Michael Kors products in China spiked as a result.
Other innovative Douyin campaigns have included Pizza Hut designing custom stickers for users to accessorise their clips, and Haidilao Hotpot implementing a special ‘DIY Douyin recipe’ that customers could request that allowed them to create their own hotpot dish and broadcast the result on Douyin – thus driving footfall to the restaurant, and awareness and engagement on Douyin.
While there have been comparatively fewer big brand campaigns on Kuaishou, Louis Vuitton made waves in June by broadcasting its spring 2022 menswear show on Kuaishou as well as Douyin, Weibo and WeChat. According to Glossy, the show livestream brought in 131 million total views across the various social platforms, of which 39 million – close to a third – were from Kuaishou. Douyin was only just responsible for more views, at 41 million.
Although Louis Vuitton’s decision to broadcast on a platform whose viewers primarily hail from lower-tier cities, meaning that they have much less spending power, may have seemed unusual, it was in many ways a smart strategic choice. Speaking to Glossy, Jonathan Travers-Smith, CEO of UK-based marketing agency Hot Pot China, pointed out that many viewers from top-tier cities are suffering from “LV fatigue”, and aspire to wear more niche designer brands. Meanwhile, consumers in lower-tier cities “have high aspirations and rapidly increasing incomes”, making them much more receptive to marketing from a brand like LV. The media coverage of Louis Vuitton’s decision to broadcast the show on Kuaishou also helped to boost reach.
3.2. Shoppable short video and Douyin’s “interest ecommerce”
One of the defining hallmarks of China’s internet is the ease with which all things social are blended with ecommerce, and short videos are no exception to that.
Since March 2018, when Douyin first introduced a feature that allowed followers of creators with more than 100 million fans to buy products from Alibaba’s Taobao and Tmall shopping platforms, ByteDance has progressively built up the app’s ecommerce offering. Douyin stores are now available to any user who uploads more than 10 videos; to shop within a Douyin video, viewers can either tap an ecommerce link within the video, or tap a product banner that appears when the video loops for a second time. Douyin stores can also be linked to other ByteDance-owned apps like Douyin Huoshan, Xigua Video, and news aggregator Toutiao.
Business publication LatePost reported that in 2020, Douyin brought a total of 500 billion yuan in gross merchandise value (GMV) through ecommerce, far surpassing its initial goal of 120-150 billion yuan from the beginning of the year. However, according to LatePost, only 20% of this came from Douyin’s own ecommerce platform, with the remaining transactions taking place on third-party ecommerce sites like JD.com and Taobao – making Douyin, in the words of LatePost, “more of an ecommerce advertising channel than an ecommerce platform”.
Douyin denied that the figures from LatePost were accurate, but it is unquestionably finding ways to ensure that more ecommerce transactions are completed through its owned channels; in October, Douyin withdrew support for third-party ecommerce platforms in its livestreams, although short video was unaffected. In January, it also launched a payments arm, Douyin Pay, to support its ecommerce business.
Douyin is building out something it calls “interest ecommerce”, which combines its notoriously advanced content recommendation algorithm with shoppable video to target users with products they are likely to be interested in. Speaking at Douyin’s first ‘Ecosystem Conference’ in Guangzhou in April, Douyin’s President of Ecommerce Kang Zeyu claimed that the GMV of “interest ecommerce” will exceed 9.5 trillion yuan (US $1.46 trillion) by 2023, with an increasing number of industry players switching to interest ecommerce.
With 600 million daily active users and what Douyin calls the “largest group of domestic content creators”, Douyin has the potential to develop into a force to be reckoned with in ecommerce. Kuaishou is pushing in a similar direction, perhaps with a heavier emphasis on shoppable livestreams (more on these in our section on live commerce), but its short videos are also shoppable.
In some ways, Kuaishou has a head start on Douyin where ecommerce is concerned; it is more known for ecommerce than Douyin, and even has an annual shopping festival, the ‘116 Double Shopping Carnival’, which takes place just before Alibaba’s massive Singles Day blowout. Its ecommerce conversion is reportedly higher than that of Douyin (some sources say three to five times higher, although a report by venture capital firm Frees Fund cited by WalktheChat put Kuaishou’s conversion rate at five to 10 times higher), which has been attributed to the platform’s “stickiness”.
However, it lacks Douyin’s volume: according to Emarketer, Kuaishou’s GMV for the first 11 months of 2020 was 332.68 billion yuan (US $48.15 billion), a nearly eightfold increase on the same period in 2019 – but falling short of Douyin’s 500 billion yuan. Both platforms are still distant competitors to the likes of Alibaba and JD.com – but given that they already surpass smaller ecommerce players like Gome, Suning and vip.com and are growing fast, they should not be discounted either.
4. Long-form and streaming video
In the second week of August 2021, long-form video platform Bilibili announced that it had surpassed 65 million DAUs, overtaking Alibaba-owned Youku to become China’s third-largest long-form video platform.
While third place might not seem all that much to write home about, Bilibili is currently the talk of the digital Chinese town for a number of reasons. First is its recent surge in growth: although it has been around since 2009, Bilibili was originally focused on anime, comics and gaming (or ACG), and only recently began to grab mainstream attention as it has diversified its offerings and expanded its userbase.
In the second quarter of 2019, Bilibili reported having 33.2 million DAUs, a number that has almost doubled in the two and a bit years since, while MAUs rose from 110.4 million in Q2 2019 to 237.1 million in Q2 2021, an increase of 215%. And while traffic isn’t everything, Bilibili also commands duration, with its average daily usage time of 87 minutes outstripping both iQiyi (71 minutes) and Tencent Video (67 minutes), its main competitors. Bilibili’s newfound clout has earned it the nickname of “China’s YouTube”, a title once used to refer to Youku, which has since pivoted away from user-uploaded content towards licensed material.
Second is Bilibili’s popularity with the eternally sought-after Gen Z demographic, with whom it is almost synonymous. Bilibili reported during its IPO in 2018 that it had 20% penetration among China’s Generation Z, who made up 81.7% of the site’s userbase at the time – although Bilibili’s definition of ‘Generation Z’ was slightly more broad than the traditional definition, encompassing users born between 1990 and 2009 instead of the traditional 1995-2009. More recently, Bilibili has begun to define its core demographic as “Gen Z+”, a cohort of users born between 1985 and 2009, which encompasses much of the Millennial generation as well.
This is not to say that China’s other major long-form video platforms don’t have attractive offerings for brands and marketers. Baidu-owned iQiYi, known as “the Netflix of China”, boasts well over 500 million MAUs (one source says 538 million, while other estimates say 560 million), more than double that of Bilibili. Seeking to broaden its demographic appeal, iQiYi has also developed iQiYi Lite, an app specifically formulated to run on lower-quality smartphones, in order to attract users from China’s lower-tier cities. The app also targets a younger user demographic, namely users aged between 25 and 39. According to KrAsia, iQiYi Lite reached one million DAUs in Q2 2021, with only a 7% overlap with users of iQiYi’s main app.
Tencent Video, meanwhile, has 528.11 million MAUs as of November 2020, according to Gab China, with users spending an average of eight hours in the app per month. A Tencent report released in 2019 identified the “average” Tencent Video user as 29 years old and living in a third-tier Chinese city.
Both iQiYi and Tencent Video have a heavier focus on licensed content than Bilibili which, although it originated as a site for anime content, has moved to court professional uploaders, or “up zhu” (up主), who are followed by tight-knit communities of loyal fans. For Bilibili, this is a key point of differentiation from its two major rivals, who vie with one another for the rights to license streaming content – although Bilibili also has its own content partnerships, such as with state broadcaster CCTV to stream national news, and the rights to stream imported content like Discovery Channel documentaries.
Of course, China’s long-form video sites aren’t just competing with each other for eyeballs and engagement, but with wildly popular short video platforms like Kuaishou and Douyin. This has led to Tencent Video and iQiYi, along with fourth-largest long-form video platform Youku, to double down on investing in original shows, which have proven successful in boosting their viewer numbers and their percentage of paid subscribers.
4.1. How can brands market on China’s long-form video platforms?
What opportunities do these platforms have to offer to brands? Bilibili’s up zhu culture allows brands to gain exposure through partnerships with KOLs who already have a strong, engaged following. Some brands have also seen success by creating their own KOLs and uploading native content: premium ice cream brand Chicecream, for example, attracted more than 300,000 followers to its Bilibili channel “I am Chicecream”, fronted by a cartoonish cube-headed character whose life ambition is to become a top food KOL.
Beauty brands have also found fertile ground on Bilibili, with unboxing videos and makeup tutorials proving popular on the platform. According to Bilibili’s annual performance report, 2020 saw a surge in beauty content as vlogger fanbases grew by 120%; by June 2021, the number of beauty brands on Bilibili had increased by 2,050% year-over-year, making it the most populous official account category on Bilibili.
Brands can also use Bilibili’s integrated ecommerce functionality to sell products directly on the site, with cosmetics being one of the most popular product types sold through Bilibili. Ecommerce has been relatively slow to gain traction on Bilibili, due to the opposition from Bilibili’s core userbase towards commercialising the site, but it makes up a growing share of revenue. In Q2 2021, ‘ecommerce and others’ brought in 578 million yuan in revenue for Bilibili, representing nearly 13% of the company’s overall net revenue, and representing an increase of 195% from the same period in the previous year.
On iQiYi and Tencent Video, advertising is the most common way for brands to connect with users, with surging ad income helping iQiYi to grow its revenues in the second quarter of 2021. Both OTT (over the top) video and SVOD (subscription video on demand) are thriving in Asia, with research firm Media Partners Asia forecasting that the Chinese video industry will reach $70 billion in revenues by 2026, although stringent new government regulations requiring a focus on “socialist values” and crackdowns on celebrity culture have given cause for concern about the future of China’s streaming market.
However, iQiYi’s prospects are not confined to its home market of China. Over the past several years it has steadily expanded into international markets, aiming to become “the home of beloved pan-Asian content globally”. It has pushed particularly hard into Southeast Asia, opening a new international headquarters in Singapore in December 2020, and producing programming in local languages. According to a September 2020 report by The Trade Desk, 180 million viewers in Southeast Asia consume eight billion hours of OTT content every month. Kuek Yu-Chuang, iQiYi’s vice president of international business, told The Trade Desk newsletter The Current that iQiYi is “innovating ad formats that aren’t included in the standard Western playbook”, and “can help global brands penetrate this complex marketplace with tailored campaigns.”
4.2. Live commerce
An October 2020 survey by AlixPartners of 2,000 consumers across China found that in the past year, two thirds (67%) of consumers had bought products via livestreams, a trend known as live commerce, also called live shopping or ‘shoppertainment’.
This blend of live video and online shopping has become an increasingly key part of ecommerce in China since its advent in 2015, with major ecommerce sites like Taobao, Tmall and JD.com directly integrating livestreaming functionality into their platforms. Video websites like Youku, Kuaishou, and Bilibili also offer both livestreaming and ecommerce functionality, allowing KOLs to promote products during a broadcast that can be purchased directly from the livestream. A number of social networks like the fashion-oriented Xiaohongshu (Little Red Book, or RED in English) and Weibo, which acquired top livestreaming platform Yizhibo in 2018, also offer live commerce.
In particular, live commerce is a major focal point of Alibaba’s annual Single’s Day, or 11.11, shopping festival, the world’s largest shopping event. According to a report by Taobao Live (Chinese-language source), during Singles Day 2020, 33 livestreaming channels brought in more than 100 million yuan in transactions, with nearly 500 livestreaming channels reaching 10 million yuan in transactions. Taobao Live also reported that the number of merchants participating in livestreaming increased by more than 220% in the 12 months to November 2020.
Already popular in China before the Covid-19 pandemic, live commerce received even more of a boost during the pandemic-induced lockdown as brick and mortar retail stores were forced to close. During China’s 2020 May Day holiday period, online sales of physical goods surged 36.3% year-on-year, according to a briefing from China’s Ministry of Commerce, and the number of livestreamed online sales campaigns doubled, with some events recording sales of up to 140 million yuan.
Some of the traits that make live commerce so appealing, particularly as a substitute for in-person shopping, include its interactivity – viewers can ask questions about products in real-time and have them answered by the host – and the ability to get “up close” with a product, with livestream hosts often highlighting the details of goods (e.g. the stitching on garments) and demonstrating them on camera. This also gives live commerce a veneer of transparency which is sorely needed in a market where consumers often feel wary about trusting brands due to a number of high-profile scandals – although counterfeit goods are becoming increasingly common in live commerce.
Livestreams can also expose consumers to products that they wouldn’t ordinarily have encountered, not unlike browsing in-store, with the added benefit of these being accompanied by a recommendation from a trusted KOL. Live commerce is also frequently accompanied by deep discounts or “flash sales”, in which products are available to buy cheaply for the duration of the broadcast, providing an incentive for consumers to tune into livestreams and buy products on the spot. China’s top livestreaming hosts are notorious for how much product they can sell over a short period of time, with Li Jiaqi, known as the “Lipstick King”, once reportedly selling 15,000 lipsticks in the space of 15 minutes.
The growth of live commerce in China doesn’t look to be slowing down any time soon. According to analysis by McKinsey, the value of China’s live commerce market grew at a compound annual growth rate of more than 280% between 2017 and 2020, reaching an estimated US $171 billion in 2020, and sales in China are expected to reach US $423 billion by 2022.
While live commerce is less well-established outside of China, other regions are also catching onto its potential: in Germany, a recently-founded startup called Livebuy (German-language source) is aiming to bring the live commerce trend to Germany, and has already signed up two major brands. In the US, fashion brands Levi’s and Tommy Hilfiger have both begun experimenting with shoppable livestreams, the latter after seeing success with live commerce in China. In Singapore, merchants can live stream via Shopee, one of the main ecommerce platforms in Southeast Asia, and the platform has noticed a 40-fold increase in the number of livestreams from brands and merchants in Singapore since the beginning of the pandemic. Major platforms like Amazon (with Amazon Live) and Instagram (with Instagram Live Shopping) that are already well-established with retailers and influencers all over the world have also introduced live commerce.
Although other parts of the world may not have the unique combination of a highly mature ecommerce infrastructure and a mobile-first internet population used to blending shopping with social that has made live commerce such a big hit in China, Covid-19 has accelerated the development of trends such as these – meaning that live commerce could become a global phenomenon before too long.
5. Rural communities
After years of businesses and marketers primarily targeting affluent consumers in China’s major metropolitan areas – known as ‘Tier 1’ and ‘Tier 2’ cities – rural communities are increasingly in the spotlight. A new class of ‘down to earth’ content creators from China’s rural cities and towns has been making waves in recent years, capitalising on the nostalgia that many residents of China’s big cities have for their rural homelands, as well as their desire to vicariously experience a very different life.
This has been particularly true since the onset of the Covid-19 pandemic, which caused demand for fresh groceries to skyrocket – a demand which numerous small-scale farmers were well-placed to fill, with the help of tools like social commerce and live commerce. Taobao Live is a popular platform for agricultural content creators, and has actively courted them with its Rural Support Program, launched on 6th February 2020, in the midst of massive supply chain disruption brought about by Covid-19.
The Rural Support Program allowed farmers to register for free on Taobao Live and also offered them supply chain support, which helped to prevent immense amounts of fresh goods from going to waste and provided farmers with a new source of income. Taobao also opened up its Foodie Livestream channel to farmers across China, allowing them to broadcast to its 41 million followers; JD.com offered similar support, and also deployed a drone delivery network that ensured that goods could reach rural consumers as well.
Alibaba Group reported in April that more than 100,000 farmers carried out a collective 2.52 million Taobao Live sessions in the 12 months to 31st March, 2021. Douyin is another platform that has helped rural entrepreneurs to reach an audience, and Bytedance announced in June (Chinese-language source) that rural creators’ incomes on Douyin had increased fifteenfold over the past year.
Popular rural KOLs include Jin Guowei, better known by his alias Brother Pomegranate, who made 300 million yuan in sales in 2020, and reportedly once sold six million yuan worth of pomegranates in 20 minutes. Another fruit seller, Guo Chengcheng, has 2.5 million fans on Douyin, and takes in as many as 50,000 orders per livestream, according to Bloomberg. Although not every farmer selling online achieves this level of exposure or success, it is becoming an increasingly normalised way to make a living. As it celebrates 100 years since its founding, the Chinese Communist Party has championed the revitalisation of san nong, or the “three rural issues” – agriculture, rural areas, and farmers – and has called for the expansion of ecommerce coverage of villages to boost farmers’ incomes.
Platforms like Douyin and Kuaishou, as well as major ecommerce players like Alibaba, JD.com and Pinduoduo – the original platform that catered to rural buyers and sellers – are more than happy to echo this call, with a Douyin spokesperson saying that the short video app “will further support the creation of ‘san nong’ content,” adding that farmers are able to earn higher margins when they sell directly to customers. Taobao, JD.com, and Pinduoduo are all promoting training programmes aimed at equipping rural entrepreneurs with the skills to sell online, with Pinduoduo in particular going to lengths to cultivate new ecommerce talent.
A June 2020 article (Chinese-language source) on farmer.com.cn noted that more than 70% of active merchants on Pinduoduo had received training through Duoduo University, Pinduoduo’s educational arm, which also offers classes to rural students in partnership with China Agricultural University (CAU). A report released in 2020 by the CAU’s Smart Ecommerce Research Institute, the ‘2020 China Rural E-commerce Talent Status and Development Report’, also said that Pinduoduo has caused more than 100,000 new farmers across China to return to their hometowns and start businesses thanks to the upsurge of agricultural products.
Opportunities are plentiful: the same report found that between 2020 and 2025, the talent gap for agricultural ecommerce will rise to 3.5 million people. As a consumer market, rural China also has considerable potential for growth, with only just over half (55.9%) of the population connected to the internet as of December 2020, compared with almost 80% of urban consumers. In the coming years, we are sure to see much more by the way of innovation and development in the region.
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