China Marketing Insights Monthly Newsletter [May 2021]

Why Do Young Chinese Consumers Enjoy Brand Collaborations?

• In China, the Gen Z and Millennial consumers are looking for exclusive products that stand out from the crowd. Thus, fuelling a rapidly evolving culture of innovative “mega-collaborations” between brands to surprise consumers.
• The concept of branding is still a relatively new phenomenon in China as compared to the West, and young consumers have shown an openness to the role of brands in daily life. For example, television in China, where sponsor logos are displayed prominently on the reality shows and brands are written into storylines of dramas.
• The report highlights – “The emergence of direct-to-consumer (DTC) domestic brands such as Perfect Diary has sparked competition to stand out via innovative collaborations that propel newcomers to “internet-famous” (wanghong) status with the ability to iterate signature products through creative derivatives.”
• Brands leverage collaborations in order to deliver digital and physical interactions, as well as content, for broader reach and greater impact. Consumers can connect and engage with brands through special events, gaming features and other opportunities.
• Several popular and successful mega-collaborations have leveraged the current taste for “national trend” goods, “cultural creations” and nostalgia to tap into China’s distinct heritage.
• International brands may find that collaborating with local partners is a good way to interact with the young audiences in China as more young consumers are showing a preference for “Made in China”.
• The challenge for brands is to go beyond to ensure that the collaborations represent brand values rather than merely generating buzz.

How Do Luxury Brands Help China’s Creative Communities?

• Brands that can reflect their personalities, creative cultures and hobbies are welcomed by the young consumers in China. Hence, focus on younger consumers and their desire for belonging will be critical in the future.
• Many global brands see community-building as a quick way to win the hearts of young consumers.
• When it comes to Luxury Brand’s target audience, it is likely that fashionable young women are the first to come to mind. Luxury brands have started to concentrate on the untapped potential of younger males in recent years as gaming has rapidly established itself as the most effective platform to deliver targeted brand awareness and exposure.
• China has the world’s largest video game industry, which attracts brands due to the high volume of traffic. Brands like Gucci, Balenciaga and Burberry have been eager to incorporate gamification into their seasonal campaigns.
• However, the ROI is still difficult to estimate since it takes courage and experimentation to tap into previously underserved demographics. But brands may need to get started first to avoid having to wait in the line later.
• Brands need to build immersive scenarios for their potential customers, whether by offline events or online events (live streaming), to reach consumers and encourage them to try the products within the immersive scenarios.
• Local brands, on the other hand, have become more daring to embrace historically underserved communities, such as the LGBTQ+ community, which has tremendous creative capacity and purchasing power. Domestic brands will shine when customers need to express their personalities, by demonstrating their knowledge of these scenes.
• By 2021, domestic brands may outperform their global counterparts in some regions, such as the culturally sensitive issues of sexual orientation and gender identity.