The Chinese market is potentially highly lucrative, but is nuanced and challenging. Here, the UK heads of China’s etail giant Alibaba share tips on how to crack it.
When entering China, the world’s largest ecommerce market, UK brands can often be blinded by the potential of colossal financial return, and rush their strategy – failing to grasp the nuanced approach needed.
David Lloyd, Alibaba Group’s managing director for UK and Nordics, and Mei Chen, head of fashion for UK and Nordics, sat down with Drapers to discuss how to make a success of entering the market by having patience, understanding cultural nuance and capitalising on customer engagement. Here are their essential tips:
Understand what parts of your brand resonate with the Chinese consumer
Mei Chen For Alibaba, it’s not about what brands we select as a company to launch in China. Instead, it’s about which brands the Chinese consumer is selecting and what categories from that brand they like.
If you want to cater to a consumer base of more than 630 million active customers, you need a diverse set of designs. You need to be flexible in your product offerings as, often, adjacent categories to that which are popular in the UK will perform better in China. However, you also need to be careful to keep your DNA.
David Lloyd Chinese consumers have access to websites here when they travel, and they want the authentic brand – it’s why they’re looking for international brands. It’s not about changing your brand – it’s about understanding that you require different tactics.
Have a dedicated Chinese strategy
MC It may seem obvious, but it’s important to have a specific strategy for China to start with. Many executives’ first thoughts when going into the market are to simply translate the website into Chinese. However, Chinese customers shop very differently from Western consumers.
They would never go to a brand’s own website to shop – it will either be through Tmall or an offline store. UK brands have to understand this consumer behaviour first, and not just try to apply what they have done in the US or Australia with a Chinese stamp on it.
Maximise on Chinese consumers in the UK
DL Increasingly when we talk to brands, we say it’s not really worth just having a China strategy – the more important thing to do is have a Chinese consumer strategy. A very significant proportion of our 636 million active buyers on Tmall are travelling Chinese.
About 500,000 come to the UK on holiday every year, and spend quite a lot of money. If they are able to pay with Alipay, you can attract them to your store. I would say the big priority for the UK is to connect British brands to Chinese consumers.
MC A lot of Chinese consumers discover niche brands from the UK and Europe when travelling thanks to AliPay. As soon as you land in Heathrow, you get app notifications with suggestions of brands you may like and therefore you get driven to that store when you come into the city or the shopping centres.
Invest in the capabilities to understand cultural nuance
MC We have come across a few examples of brands that tend to hire someone that looks Asian but potentially may not have any Chinese or Asian background at all.
There are also cultural nuances that it is important to understand when approaching the Chinese market. For example, on Tmall, we have a DSR [detailed seller rating] score, which measures the quality of your product description, your logistics and your customer service levels. This is displayed publicly via arrows. On the site, the arrow going up is actually displayed in red. In the West, the first thing a CEO sees is that this is [red for danger], and thinks it needs to be looked into. However, in China it is a good sign.
Be patient in the face of opportunity
DL Most of the brands we want to introduce are quite famous in the UK already, and they struggle with the fact that despite being very successful in the UK, they don’t have that same sort of muscle to compete in a market where they have not yet been heard of. They effectively have to relaunch the brand.
It’s important to be proud of your brand, but you need to have a lot of humility about the market and consumer, because you probably don’t know them as well as you think you do.
Businesses look at the numbers and see the opportunity. They see a platform that has 700 million users a month, and the world’s biggest ecommerce market by a massive factor, and they think, “I’ve got a good brand, I’ve got a good product, I’ll do some keyword marketing and people will get to know me, and they’ll buy enough stuff that I’ll have some success”. But it’s about having patience and long-term vision.
Capitalise on engagement levels
MC One of the big things about the consumer in China is that it is a very young customer base. They are extremely engaged, so the shopping platform is really a discovery platform for them. A majority of customers spend 27 minutes a day with us, every day.
The level of engagement through the platform is very high, so the way you do your marketing and social media in the UK is key. In China the use of live streaming, influencers and key opinion leaders is 10 or 20 times more than here, and that is something that fashion brands need to leverage on.
When selecting celebrities for exclusive collections, fashion brands should understand the nuance that a Western celebrity may well not be well known in China. You may want to check with your China team and ask if they can give you some guidance to make sure you invest the money in the right places.