Can Cha Ling, a Local Beauty Brand Backed by LVMH, Succeed in China and Beyond?

Beauty fanatics in the West probably haven’t heard of Cha Ling ‘Esprit du Thé, the secretive but highly-praised Chinese brand backed by French luxury conglomerate LVMH, but Chinese beauty connoisseurs have come to love the brand that’s “infusing beauty with the spirit of tea.”

According to an LVMH press release, the Cha Ling beauty line was born following an encounter between Laurent Boillot, Chairman and Chief Executive Officer of Guerlain, and two passionate environmentalists: German biologist Josef Margraf and his Chinese wife Li Ming Guo. The three gathered with the ambition of trying to protect the natural beauty of the beloved Yunnan province, the territory that produces some of China’s finest teas, including the cherished Pu’ Er tea.

LVMH states that Pu’Er tea is made thanks to the Bulang people “keeping ancestral traditions preserved,” and it takes decades for it to achieve perfection. The tea is a key component for this LVMH-backed cosmetic line because of its powerful anti-aging, moisturizing, and skin-healing attributes. But despite the promising combination of LVMH’s cosmetic expertise and Pu’Er tea’s competence, some beauty professionals are pessimistic that the domestic brand will ever become an international success story.

Despite their concerns, Cha Ling has evolved at the right time and in the right market. According to the Global Cosmetics Market — by Product, Type, Ingredient, Region — market Size, Demand Forecasts, Industry Trends, and Updates (2018-2025) report, the global cosmetic market was valued at $507.75 billion in 2018 and is expected to reach $758.45 billion by 2025, growing at a robust rate of 5.9 percent. Furthermore, Acumen Research and Consulting is projecting that the global skincare products market will reach $184 billion by 2026.

As reported by Acumen Research and Consulting, the Asia-Pacific market is expected to show its highest growth thanks to “the ease of availability of a wide range of skincare products, growing awareness towards health and beauty, and huge demand for various skincare products.” And according to Euromonitor, the total retail sales of skincare products in China accounted for $30 billion (212.2 billion RMB) in 2018, while the total volume of makeup products reached $6 billion (42.8 billion RMB), representing year-on-year growth of 13.2 percent and 24.3 percent, respectively.

As you can see, the cosmetic market is a highly lucrative segment in China, but one that was, for decades, completely conquered by international brands (L’Oréal S.A, The Estée Lauder Companies). Nevertheless, home-grown brands like Cha Ling starting gaining traction when Chinese consumers began seeing them as an appealing option. HKTDC Research emphasizes that the domestic, high-end cosmetic industry has performed impressively, reaching a market share of about 56 percent. That stellar growth is the result of the excellent use of domestic social media platforms, a strong online presence, and expansion into Tier 2 and Tier 3 cities. And the same research mentions that organic cosmeceuticals (Chinese herbal cosmetics) are gaining momentum. Yet, despite all of this, there’s still room for improvement.

“Cosmeceuticals only make up about 20% of the market in the mainland at present,” the HKTDC Research states, “whereas in Europe, the U.S., Japan, and South Korea, cosmeceuticals command a 50-60% share.” At first glance, the market conditions seem favorable for Cha Ling — a brand that merges French savoir-faire with Chinese values — but beauty experts have identified the four following challenges the brand will face in expanding in China and beyond:

1. The reign of international brands

Up until 2013, China was a playground for global brands, and they completely overshadowed the local players. Ubifrance states that international brands owned around 60 percent of a $15.5-billion market: “At the end of 2012, L’Oréal was marketing 20 brands in China, among which are Maybelline and L’Oréal Paris, whose growth was around 12.4 percent per year. Clarins’ online sales increased by 500% between September 2012 and 2013.” Today, the market is friendlier to home-grown brands, but smaller players still find it difficult to challenge the international status quo.

Global players have a variety of competitive advantages like access to financial resources, large talent pools, new technologies, long-term global marketing strategies, and flawless distribution channels. With these selling points, it’s easy to annihilate smaller, domestic players. Fortunately, Cha Ling benefits from LVMH’s help and can take full advantage of the French conglomerate’s distribution channels, know-how, and marketing acumen.

2. Brand image

Over the past decades, various consumer safety scandals tainted the “Made in China” label, therefore, Chinese beauty buyers, according to Jing Daily, “still find foreign beauty brands more appealing than their domestic counterparts, believing that Western cosmetics offer higher quality.” Generally speaking, the country’s safety standards have improved, and the government rolled out a marketing strategy aimed at building consumer trust. Meanwhile, younger consumers have enthusiastically received the country’s “buy local” policy, but, despite this new hype, trust isn’t built overnight, and Chinese luxury buyers remain cautious about homegrown brands.

3. Winning the innovation race

To remain competitive, today’s beauty players need to innovate — and not just in cutting-edge technologies but also avant-garde ideas and new approaches or processes. Global beauty brands are investing in R&D while aggressively promoting technology-backed cosmetics.

According to Jing Daily, “augmented reality, 3D printing, smart beauty devices, and high-tech makeup, are revolutionizing the skincare market” in China. And lastly, Cha Ling must find new ways to incorporate innovation into all their processes and systems. For now, it does a tremendous job at balancing innovation with tradition.

4. High cost

Early-stage businesses require higher funding. That’s because, from the very beginning, the expenses associated with designing a new product line, adjusting the design to market requirements, testing samples, and advertising the final product can kill many startups. Emerging brands allocate the biggest chunk of their budget to marketing and promotional campaigns. Likewise, training high-potential employees and efficient mentoring programs come with a hefty price tag. But startups need to invest in new equipment, software, and servers, too.

In conclusion, for emerging brands like Cha Ling, it will take money to make money.

Source link

Why Expensive Luxury Brands are Often Priced Too Low

Recently, an associate in Shanghai bought a Hermès handbag for about $15,000. She said she fell in love with the brand and that specific bag, and her dream was to own it (and she would have done anything to get it). Luxury is like love, and once consumers fall, prices no longer matter to some extent.

Today, most luxury brands price benchmark their products with the products of their competitors, or else they use production costs as their pricing measure. This is the wrong idea, and I’ll explain why. Many people think “luxury” is the equivalent of “an expensive price point,” and many brands price that way. They use the price as a marker of luxury, which may work in the short-term but won’t in the long term. That’s because a high price point is a result of luxury; it isn’t the driver. This is an important distinction. To sell luxury means to create extreme value. Once that value is created, a brand can price for it, but if the brand prices high without creating underlying value, it will not succeed over time.

Normal to premium brands have two value drivers: functions and basic emotions. Both create the value that people pay prices for. If you think about Starbucks, a cup of coffee may cost between $3 and $5. You pay a bit more for the larger size and less for the smaller size. Hence, the price is — to some degree — the result of a logical, linear pricing structure. The more you get, the more you pay. On top of that, a more premium brand will charge a few percentage points more than a less premium brand. Everything makes logical sense. There are no surprises. This is the world of normal to premium brands.

Luxury is different. Suddenly we are in a world where prices are detached from features or emotions. Think about a Lamborghini: It has a small cabin, isn’t overly comfortable, only seats two, doesn’t have a trunk, and is very loud inside. While it may be fast, a 7-seating Tesla Model X will outperform it in a sprint. In terms of functional features, the car should be priced at the lower end, However, at price points of $300,000 and up, the brand has a non-linear value jump, especially compared to the value-heavy Mercedes S Class or a BMW 5 Series. This is why: When we measure the value of a luxury brand, we find an added value component that normal or premium products don’t have that I call Added Luxury Value (ALV).

Added Luxury Value is comprised of some more obvious dimensions: social dominance, being an ultimate treat, adding self-esteem, and more, but it also has hidden dimensions like adding attractiveness, giving the aura of expertise, and signaling high-quality decision-making. Extensive research studies show that these are the real drivers of luxuriousness, and that produced ALV is also typically a multiplier of other value components. In other words: Added Luxury Value, is worth dramatically more than the functional or basic emotional value of a brand when it comes to luxury product, and this value is, ironically, created by the brand (branding) and not by the product itself.

This is a remarkable insight. If you take a Lamborghini, the value of the car — excluding ALV — would be maybe around $50-100,000. But with ALV, it sells for $300,000 or above. Take a handbag: Without ALV, people may pay $50-100. Adding ALV makes a brand like Louis Vuitton sell for $2,000 and above, while Hermès achieves price points of $10,000 or higher. Most of that value is due to ALV.

If ALV is detached from the product (for instance, the design or the features), but connected to the brand and its story, then comparing one product to the other across brands makes no sense. However, most managers do exactly that. When they create prices, they look at what the competition is doing with the product and ignore the ALV they create. But it’s important to estimate the ALV for both for the category and the brand, so a company can make pricing decisions in a data-driven way instead of simply “doing what everyone else is doing.”

Why is this important? What if, in the case of the Lamborghini, every company in a category is using gut feeling (in other words, benchmarking prices without factoring in ALV)? In this instance, there’s a high likelihood that the pricing will be wrong. This is called a ‘category bias,’ and many brands fall in its trap.

As an example, despite what experts and the media thought, all of the most expensive cars were too cheap ten years ago. In fact, I was considered crazy to suggest that a million-dollar car was too cheap. But today, Bugatti just sold their first new car for over $10 million, and new cars with price points between $2 and $5 million have become more “normal.” They may still even be too cheap! Back then, the problem was that every competitor was too low at its highest price tier. Because every company observed each other and priced their products in line with the others, all the top luxury brands were too cheap. The difference in results after a price hike is dramatic. If a car company that sells 10,000 units per year could have sold their cars for an average of 100,000 U.S. dollars more than they did, the profit impact is $1 billion per year. That’s a lot of money left on the table.

It is remarkable how in many categories, limited editions sell out in no time: in fashion, jewelry, watches, handbags, and cars. Hermès just sold out a limited-edition “China” Birkin bag for more than $200,000 — practically the moment the bag was presented. If consumers pay this price without any hesitation, it’s a sign that the price was far too low, and that a profit opportunity wasn’t realized.

Millennials and Gen Zers are the most active and avid luxury consumers ever. Together, they are also the most important consumer group today, accounting for over 40 percent of luxury sales worldwide and more than 80 percent in China. They love luxury and their sociographic and psychographic profiles make them long for luxury like no other group before them. Different from older target groups, they want instant gratification and will pay almost anything to get the “must-have” item others don’t have as a way of using the most desired product of the time as “social currency.” Hong Kong and Shanghai are among the top-ten cities in billionaire density and own the highest concentration of golden Audemars Piguets, Bugattis, and Birkin bags. Pricing a luxury brand by gut feeling is a cardinal mistake. Our research shows that many of the most iconic brands are priced too low.

While you may not be charging enough for your luxury, the precondition to charging more is creating more Added Luxury Value. One path toward extreme value creation is telling the brand story more coherently and straightforwardly. A brand audit will help validate competitive brand positioning and storytelling and is advisable at least every two years. This brand story needs to be reflected along each customer journey touchpoint, and digital tools that generate real-time insights from around the world are needed to monitor and adjust that content. When ALV is created, companies should be ready to price for it.

Premiumization is a major revenue and profit driver but still isn’t utilized enough. Applying a different pricing approach to luxury is not only a major opportunity for luxury managers, but it’s also one of the most important tools for differentiating and accelerating growth and securing a leadership position for luxury brands.

Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger

Source link

How Politics in China Will Shape Luxury’s Future

Despite some semi-rosy forecasts that have seen companies like LVMH remain cautiously optimistic about their near-future prospects in the Greater China region, recent political events have proven that luxury brands will likely have a tough road ahead in mainland China (as well as Hong Kong) for quite some time.

Brands and luxury groups shouldn’t expect things to get significantly better soon, not just in terms of spending by shoppers in China, but also in previously reliable markets like Western Europe or North America. According to Forbes, Hong Kong accounts for 11 percent of Richemont’s total global sales, while the city accounts for 9 percent of Burberry’s sales, 8 percent of Kering’s, and 6 percent of LVMH’s. It also provides around 6 percent of total sales for brands like Moncler, Tod’s, and Prada, driven primarily by purchases from mainland Chinese day-trippers or tourist shoppers.

One of the biggest question marks for major brands is what the long-term effects of the ongoing Hong Kong protests will be. While Hong Kong will always be a major market for luxury brands, they are undoubtedly feeling the sting of store closures due to mainland Chinese shoppers opting to do their high-end shopping in other cities. And the lingering sense of uncertainty about how long the protests will last certainly isn’t helping matters.

L’Occitane Vice-Chairman Andre Hoffmann recently summarized the situation by saying, “Hong Kong has been challenging… We lost several trading days in the quarter due to the protests. Chinese tourists spending in our shops has declined. All these are a bad cocktail for our business.” But some brands have made their prospects in the city even murkier thanks to badly timed scandals that have forced them to make very public apologies in mainland China (these include Versace, Coach, Givenchy, and Swarovski, which all recently produced luxury items or marketing campaigns that “hurt the feelings” of Chinese authorities.) For Hong Kong natives who sympathize with the protests, the perception that brands are actively groveling to Beijing at this time could also leave a mark that lasts long past the current protests.

But Hong Kong is just one area where brands are in the dark right now. Luxury brands face big questions in mainland China caused by a slowing economy and a recent currency devaluation — both primarily caused by the ongoing U.S.-China trade war. Most brands will likely need to raise prices in mainland China to account for a devalued yuan, and with no sense of certainty that the yuan won’t continue to lose value, brands will be less likely to invest in store renovations and cosmetics brands will likely think twice before investing in new products aimed at the China market.

Meanwhile, the future of the outbound Chinese tourist shopper — whose high-end hauls have arguably powered the luxury market over the last decade — is another question mark during this year of uncertainty. Although Chinese shoppers continue to travel and spend, where they’re doing it is changing quickly. While Japan expects a solid year of Chinese tourist arrivals and purchases, the outlook is less than stellar in Thailand, and the U.S. is expecting a particularly large decline in Chinese arrivals and shopping that could stretch on for months to come. So the question for brands wanting to cater to this demographic becomes: Where should they focus their efforts?

Brands must also reckon with a general decline in Western brand dominance in China, particularly among the country’s younger shoppers. Although it is far too early to say whether or not local high-end brands can fully supplant the entrenched luxury players in China, competition is increasing in this market. As the New York Times noted in its overview of Alibaba’s recent financial results, “Analysts say the trade war with the United States has prompted shoppers to become more selective, and many have switched to buying domestic brands that they feel are of high quality.” Particularly in the cosmetics and skincare market, Western brands in China face stiff competition from agile, digitally savvy brands from South Korea, Japan and — increasingly — even China itself.

Now the open question for most major brands is how to approach the Greater China market — Hong Kong in particular — over the rest of 2019 and 2020. As many luxury commentators see it, regardless of how long the protests last, the status of Hong Kong as a financial, hospitality, luxury, and fashion epicenter has been altered; but the degree to which it’s been altered remains to be seen. While some say this summer’s protests mean that it’s time for corporate businesses to “stick a fork” in Hong Kong, others are more cautious, pointing out that Hong Kong is a large city and the protests, while hugely significant and sizeable, are still limited to specific parts of the city and are limited in their disruption.

The type of sentiment that says Hong Kong is finished as a major business center and will lose ground to Singapore likely takes too short a view of the city’s history. While this summer’s protests have perhaps been the longest and most violent in the recent past (as compared to the “Umbrella Revolution” of 2014), major brands will likely face some short-term pain but a long-term outlook that ultimately settles back to where it was at the beginning of the year (in other words, a less prosperous yet still significant ‘normal’).

A long-term decline in sales in Hong Kong would be less due to mainland Chinese tourists’ fear of protests than it would factors like how well the Chinese economy is doing overall, including the general appetite for luxury travel and shopping. As such, brands shouldn’t — and likely won’t — make immediate plans to pull back their Hong Kong investments or presence. Some businesses, particularly those in the hospitality market, are historically too invested in the market to ever cut back there anyway. The most likely course ahead is that brands will try and stay under the radar and limit their revenue damage as much as possible while they wait for things to settle into the new normal. In essence, the luxury market in Hong Kong is not “done” by any means, even if it looks poised for a weak 2019 that could bleed into 2020.

Source link

The Top 5 Ways WeChat Pros Grow their Comments Sections

While a WeChat Official Account is a must-have for any brand in China, it’s also no secret that, as the number of Official Accounts on the platform has grown, open rates and user engagement for articles have gone down. The first solution most brands propose is to create better content. And while creating high-quality article content is indeed crucial, that alone may not be enough to generate user stickiness and keep readers returning.

So, what else can brands do? One good trick is to simply start making better use of your broadcast articles’ comments section. Many brand account managers tend to overlook the power of interacting with readers in the comments section, yet such a seemingly minor thing can make a big difference. A recent study conducted by Newrank of 500 popular WeChat Accounts and over 87,000 articles found that, on average, article views were 50 percent higher on accounts that regularly interacted with readers in their comments sections.

Top KOLs and WeMedia on WeChat are very strategic about utilizing their comments sections. By dedicating time to respond to readers’ comments every time they publish an article, those accounts train their readers to show up and interact — both with the Official Account and with each other — and that is the key. The goal isn’t simply to encourage more comments from readers but to create a dialogue with readers in the comments section and to do it consistently. This creates an interactive experience and a sense of community around your WeChat articles, as well as a sense of anticipation for your next published article.

A lively comments section will not only help maintain current open rates but could also help bring in new followers, as readers are more likely to share an article if their comment is featured.  Comments are also an excellent way to learn more about your customers, which will inform the types of content or products you will want to focus on in the future. That being said, merely turning on the comments function isn’t going to cause a flood of reader comments to come rushing in. As mentioned above, accounts must train their readers to make leaving a comment (ideally, a thoughtful and interesting one) a habit.

Below are the top five methods WeChat KOLs and WeMedia use to grow their comment sections:

Have a personality

Make people feel like they are talking to a real person (not a company) and an intriguing person at that. One of the best examples of this is GQ’s Official Account @GQ实验室 which is famous for its snarky, sarcastic responses that leave their readers laughing.

But even if your brand is on the conservative side, you can still interact with a personality. At the very least, your responses should be sincere. Make users feel as if their thoughts are being valued and heard and steer clear of generic brand-speak – that’s as bad as not responding at all.

Give incentives

One of the best ways to develop commenting habits among your readership is by giving away prizes like coupons, limited edition products, or product samples for the best comments or the comments with the most likes.

For example, WeChat fashion influencer @葱爷Fay used a coupon giveaway as part of her collaboration with Lululemon. By sharing their favorite Lululemon product in the comments section, followers were eligible to win a coupon worth $42.50 (300 RMB). This tactic not only encouraged follower engagement but also got her followers to endorse the brand and give valuable feedback about their preferred products.

Create a “Clock-In” culture

“Clocking-in” (or 打卡) is an internet term meaning the way users in China leave a comment on an article to show that they’ve read an article first. Seeing comments appear below an article and getting responses from that account then becomes a badge of honor. You can make leaving a comment a habit for your readers by recognizing and rewarding their consistent behavior.

Set selection criteria

With WeChat Official Accounts, reader comments only appear underneath the story once they have been approved by the account’s backend. This means brands can select which comments they feel are interesting and worth sharing. Many WeMedia and KOL account editors usually have loose selection criteria, with guidelines like: Does the comment tell a story? Does it show that the reader fully read the article? Is it positive?

“Sister Thirteen,” who manages the popular WeChat account @格十三, shared that she will sometimes choose comments that have a negative or opposing viewpoint because it gives her a chance to publicly address that viewpoint, responding not only to the commenter but also to other readers who might share that same opinion.

Respond quickly and reply to every comment

Editors should set aside time right after the article is published to answer comments. According to Newrank, 47 percent of all comments are made within one hour after publication, and top accounts typically respond to over half the comments they select within ten minutes of a reader submitting a comment. It’s also important to note that the account loses the ability to respond to comments 48 hours after it is submitted.

Source link

Will the Trade War Offer a Turning Point for Chinese Luxury Brands?

After being banned from trading with American companies, the initial forecasts for China’s sixth most valuable company, Huawei, were that it would be devastated by the U.S.-China trade war. But now, that outlook has changed thanks to the idea that greater Chinese self-reliance may make it possible for the tech giant to grow on its own terms — trade war or not.

That same theory equally applies to China’s luxury market. Despite early gloomy predictions, the repercussions for many segments of the Chinese economy after two years of a U.S.-China trade war are much more nuanced than most expected them to be, and the situation is highlighting the changing nature of Chinese manufacture and consumption, particularly in the luxury goods sector. Aside from earnings, these circumstances could also have a direct impact on the development of domestic innovation, as well as the availability of counterfeit goods in the future.

Will Economic Restrictions Lead to Chinese Growth in the Luxury Market?

At the root of China’s potential scope for opportunity is the country’s growth since 1979, which has also resulted in it having a more robust and diversified fiscal system. While it is still heavily involved in the manufacture of goods for global markets, China’s growth is no longer simply pinned to the income it earns from exports. According to the World Bank, the percentage of China’s GDP generated by international exports in 2018 was 19.5%, which means that its economy has grown despite shrinking exports by almost half since 2006. That means there is a growing level of independence in the Chinese economy, and its companies are not nearly as reliant on international buyers as they once were.

The growth of the luxury goods market is one significant indicator of China’s commercial changes. Deloitte’s most recent “Global Powers of Luxury Goods” report in 2019 suggested that although 2018 saw a general slowdown in the economy, luxury goods sales continued to grow, with Chinese consumers now leading consumption for high-end products and experiences. As domestic luxury brands grow within the country this will mean a bigger market for them, resulting in less reliance on money earned through exports.

The same Deloitte report also highlighted that China now ranks second globally for the proportion of its GDP generated by international travel and tourism. Considering the increased alignment between luxury businesses and tourism (as with the LVMH acquisition of Belmond’s hotels, trains, and cruise experiences), this is an area that looks set to further drive the connection between Chinese consumers and luxury brands.

Outside of pure economics, however, there are additional issues around what an independent-minded China that’s forced to develop its consumer markets, technologies, and luxury products might look like. One indicator of China’s future relationship with the luxury goods market is how some of its domestic brands are protecting themselves in terms of intellectual property and anti-counterfeiting measures.

Reinventing ‘Made in China’ for the Luxury Market

China’s reputation for low-quality fakes and cheap, IP hijacking replicas is well deserved, and there’s no doubt that the global black market is filled with products originating in Chinese factories. One recent Europol and EUIPO report suggested that 73% of counterfeits seized by EU Customs authorities came from China. This is a situation that will undoubtedly continue for many years. However, increased Chinese prosperity and independence do raise the possibility of some change.

With Chinese companies seeking to establish themselves as alternatives to their Western counterparts rather than additional actors, the government’s Made in China 2025 plan for technological and creative self-reliance may become more than a pipe dream. One recent figure suggested that in 2018, China filed 53,345 patent applications, not far behind the 56,142 of the United States. Similarly, the World Intellectual Property Office (WIPO) Global Innovation Index has seen improved positions in China’s rating for the past three years.

It’s a situation that’s also reinforced within the realm of domestic IP registrations, which have seen staggering growth in recent years. According to WIPO, between 2006 and 2015, registrations with the Chinese Trademark Office jumped from 766,319 to 2,876,048. On July 8, 2019, it was reported by the state news agency, Xinhua, that numbers for 2019 had increased once again, meaning that China now has more registrations than any other nation. All this is suggestive of a long-term trend where the place of IP and the respect for innovation is changing — brought to a head recently by the situation with trade war talks and the ban on Huawei. Full-scale change, if it is to come, will certainly take decades, but the shoots are showing.

For luxury brands, too, there are numerous examples where strong Chinese companies are proving that they can compete with world leaders. In World Brand Lab’s 2018 report on the 500 Most Influential Brands, Chinese brands’ place on the world stage has seen slow but steady progress since 2016. One of the best recent examples of this has been the luxury baijiu maker, Kweichow Moutai, which has grown into one of the world’s most valuable liquor companies, with even more growth in the future looking certain.

Perhaps the most telling sign that domestic luxury goods are on the increase in China, however, is the investment many firms are making in packaging. This trend is particularly prevalent among high-end alcohol manufacturers like Kweichow Moutai, who not only have a bottle which cannot be refilled, but who also protect their product through unique serial numbers and radiofrequency methods. It’s a strategy that has also been taken up by baijiu rivals Wuliangye Yibin and premium spirits distributor Oranco, who have developed a blockchain solution to protect the authenticity of their products.

Most recently this was seen in the Baoshen Packaging Group’s public commitment to the ConnectIC line of anti-counterfeiting packaging technologies made by the PragmatIC company. The investment in anti-counterfeiting technologies on the outside of a product only becomes necessary when there’s something good enough to protect on the inside — something you’ve invested time and money in producing. For the sake of brands who have had their IP infringed upon and consumers who have received substandard products, this may represent a turn towards fairer competition for all and something which the luxury goods sector in China must depend upon.

Source link

The New Perfume Market for Chinese Millennial Men — A User’s Guide

Millennial men’s obsession with beauty in China is no longer a secret. Influenced by the extremely popular K-pop aesthetic and its increasingly androgynous fashions, this generation cares about their appearance in a way older Chinese would’ve surely defined as “sissy” or “unmanly.” These days, blemish balm cream and facial masks have become commonplace in the Chinese man’s beauty routine, yet perfume has remained a relatively silent category. Just two years ago, in 2017, Chinese consumers accounted for a mere 1% of the global perfume market, according to Forward, a local research institute. But now, things are starting to change.

This July, male perfume was one of the highest trending topics on the lifestyle platform XiaoHongShu (a.k.a. Little Red Book). Hot community hashtags about what smells sexy on a man like “Bad boy scents (渣男香)” and “Girl-slaying scents (斩女香)” spawned over 50k posts last month, and although male perfume has never been a part of traditional Chinese culture, the post-90 generation’s growing interest in perfume making speaks to their desire for more scents. In today’s China, trendy fragrance brands like Diptyque and Jo Malone are the new status symbols for millennial women who want to affirm and refine their lifestyles.

But it’s time for brands to also look at Chinese men, a demographic that has untapped growth potential and is often-overlooked by scent makers. Yet before doing so, brands need to understand two fundamental concepts about those men and the way they want to smell.

A hot but relatively new concept

Perfume culture is still at a nascent stage in China, especially among men. The consensus is that consumers still see perfume as more of a luxury gift rather than a daily necessity. “In the West, perfume is considered a very personal item — an expression of one’s individuality and tastes — and it may take years to find the perfect scent for oneself,” says Amber Cheng, a researcher at Cherry Blossoms Market Research & Consulting. “In China, however, perfume is most often a gift that’s chosen for the recipient predominantly because of its branding,”

That ‘gift’ connotation is especially pronounced with male perfumes. Cheng tells Jing Daily to “bear in mind that, in China, men’s perfume is very likely to be a gift from the girlfriend, and not a man actively choosing a perfume for himself. Perfume is very commonly a gift for love-related festivals in China such as Valentine’s Day, White Valentines, Qixi, etc.” As a matter of fact, most posts on Xiaohongshu with the hashtag “Girl-slaying scents” were written by women.

Industry voices corroborate the fact that for most Chinese men, fragrances are a hot but relatively new concept. Since fragrances are widely perceived as something intrinsically “Western” and “elite,” Chinese men generally buy their first perfumes after they’ve become full-grown adults. A lack of exposure to perfume culture during childhood and adolescence has resulted in Chinese men being less knowledgeable about what fragrance suits them compared to their Western peers.

Shibin Yang, an export manager at 3D TRADE, a French company distributing perfume in China, tells Jing Daily that perfume is not yet part of Chinese men’s dress-up routine. “For many European men, perfume is more like a layer of clothing to wear before going out,” Yang says. “This is the way they are educated. Chinese men largely ignore this step.”

Momo Xie, a Shenzhen-based fragrance evaluator, adds that perfume in China doesn’t have the personal touch it often does in the West. “Compared to Chinese men, European millennial men purchase perfume at a much younger age,” Xie states. “In countries where there’s a deep tradition with perfume such as France and Italy, most men have their first perfume memory from their father or grandfather. This family influence enables them to have a more thorough understanding of what they like and what suits their identities.”

The same statement would never apply to Chinese millennials. But being China’s first generation to grow up with relative wealth and social stability, they represent a new market for luxury fragrance brands.

A different idea of what’s sexy

In the Chinese market, “sexy” smells differently than it does the West.

For Westerners, a classic lady-killer perfume might use spicy or woodsy scents to convey passion, sexuality, and power. But in China, a “bad boy” fragrance smells aquatic and citrusy to accentuate “freshness.” This difference is due to the particular assumptions about sex appeal in each culture. On one hand, Westerners might habitually presume a classic lady-killer to be overtly seductive and often seemingly “dangerous,” while Chinese ladies have conjured up an image of a seductive “bad boy” as someone who cares a great deal about his appearance but is also unusually gentle and sophisticated. In other words, simply being style-conscious is already “bad and sexy” in a Chinese context since that’s what traditional Chinese men are not.

These conceptual differences explain why male Chinese fragrances smell relatively conservative or “tame” compared to Western scents. The consensus in the fragrance industry is that East Asians generally prefer lighter, fresher scents, and this trend is particularly accurate when it comes to the perfume preferences of Chinese men. Xie tells Jing Daily that “both Chinese women and men prefer men to smell clean and fresh. Richer scents are acceptable in fall and winter, but Chinese women usually stay away from overwhelmingly sweet and intense smells on a man.”

That “lighter is better” taste can be found in all sales levels across Chinese boutiques. According to Xie, the most commonly used phrase from sales assistants to Chinese men is “this makes you smell soapy and fresh out of the shower.” A “soapy” impression might seem a far cry from the Western standard for smelling sexy, but it fits the contemporary Chinese expectation of an attractive male. After all, it is the popularity of the “little fresh meat” culture that helped equate prettiness with sexiness in the minds of Chinese women.

Key takeaways:

  1. Perfume is still a relatively new concept for Chinese millennial men, despite its surging popularity on Chinese social media
  2. Male perfume is more likely to be purchased as a gift item from girlfriends during China’s many love-related holidays
  3. Due to the lack of cultural upbringing with perfume, Chinese millennial men trend to be conservative and stick to popular brands when choosing perfume
  4. Contemporary China’s “Little Fresh Meat” male ideal results in both men and women prefering lighter, fresher scents

Source link

Rimowa Taps Chinese Pianist Yuja Wang for Latest Campaign

Chinese concert pianist Yuja Wang is the latest globe-trotting celebrity to team up with the iconic German luggage brand Rimowa for one of three short films celebrating the company’s 120th anniversary. In a reprise of its global Never Still campaign, Wang joins basketball star LeBron James and Dior Men’s artistic director Kim Jones for intimate glimpses into the challenges of high-level lives on the road.

Wang, a musical prodigy who left her hometown of Beijing at the age of 14 to attend a conservatory in Canada, literally lives out of her suitcase thanks to a nearly non-stop touring schedule that has her performing in six European cities this August alone. Aside from her formidable talent, Wang is also known for bringing her bold sense of style to staid concert halls around the world, favoring body-conscious dresses by Hervé Léger and heels by Christian Louboutin.

In her film, Wang describes how the hardships of life on the road helped her forge a resilient and forward-looking character. “We’re not defined by what we’ve done, but by what we have yet to do,” she states stoically, “by those we haven’t met, by notes we haven’t played.” The short film intersperses archival footage of Wang playing piano as a child on the road in Toronto with recent clips of her on stage. “The relentless pursuit of her dreams through constant travel and new experiences makes her an ideal figure to feature for the campaign,” said Rimowa in a statement.

The series of short films follows up on the success of last year’s Never Still campaign, the first global campaign by Rimowa. That campaign was a joint creation between Anomaly in Berlin and Rimowa’s internal creative team. The first set of subjects featured tennis champion Roger Federer, chef Nobu Matsuhisa, model/activist Adwoa Aboah, Louis Vuitton artistic director Virgil Abloh, and jewelry designer Yoon Ahn.

The title of the series refers to a “fundamental belief that mastery is a never-ending journey and that no one builds a legacy by standing still,” according to Rimowa. “While last year’s campaign framed travel as a facilitator, this year’s films explore how the challenges of being on the road can help strengthen you.”

Wang’s short film is the first in the series spoken in Mandarin. The campaign targets China as one of seven key markets and comes amid a broad effort by the German luggage firm to consolidate its presence in the country (the company was acquired by LVMH in 2016.) Rimowa said it will make a move to control its distribution in tier-one cities and even launched a Tmall store last October. The brand recently saw a healthy sales boost after naming one of China’s most popular young stars, 18-year-old Jackson Yee, as its brand ambassador.

In China, the “Never Still” campaign will be seen in airports, on social media, and through other forms of digital and traditional media, as well as on in-flight entertainment on Cathay Pacific, Air France, and British Airways. Thanks to the rapid development of mobile-first social media in China, branded content in the form of short films — or “mini-movies” as they’re known locally (品牌微电影 ) — has become a well-established vehicle for merging content with commerce.

And although Chinese brand investment in short films peaked between 2010 to 2013, the trend towards using cinematic storytelling in marketing has remained popular with Western brands. This is especially true in the luxury goods sector, where the higher quality medium of film, when paired with the creative talents of acclaimed directors and celebrities, lends itself well to promoting top-quality products.

Source link

Top Richest Chinese Apparel Moguls in 2019 And More

In “Chinese Whispers,” we share the biggest news stories about the luxury industry in China that have yet to make it into the English language. In this week’s edition, we discuss:

  • China’s Top richest apparel moguls for 2019,
  • Gogoboi’s takeover of Louis Vuitton’s WeChat account, and
  • Lin Ning “Chinese Nike” 2019 revenue rose 33% in the first half of the year

Here, the apparel moguls who made China’s richest 2,000 list for 2019 – Winshang
Although the retail industry in China has continued to reshuffle in the past year, 51 apparel moguls made it to China’s Richest 2,000 Individuals and Family Report for 2019, with a staggering wealth of 364.8 billion yuan, according to the latest report released by the China Investment Bank Club.

Among them, Zhou Jianping, the owner of the Chinese fast-fashion menswear brand Heilan Home, was ranked No.1 in the apparel retail industry with 40 billion yuan. Established in 2002, the brand has quickly dominated the menswear market in China. With more than 5,000 stores, the brand tops the 2016 Hurun Brand List in clothing with an 11 billion yuan of brand value. Ranked second is Ma Jianrong, owner to Shenzhou International Group, and supplier to many sports giants like Nike, Adidas, Uniqlo, and more. It’s nicknamed “Tencent in apparel” is due to its advanced technology capability and innovation.

Rank third richest are the owners of the woman’s fashion brand Ochirly, Xu Yu and Li Shan, with 23.5 billion yuan, followed by the owner of Semir, Qiu Guanghe. Ranked 5th and 6th are Ding Shizhong and Ding Shijia from Anta Sports, with a wealth of 16.5 billion and 16 billion yuan respectively. A few that’s more noteworthy in recent years, Li Ning, the founder of Li Ning Group, was listed with a wealth of 4.7 billion. Meanwhile, the cashmere company Erdos has produced the most billionaires with five. As more Chinese consumers embrace homegrown brands, it’s undoubtful that the apparel moguls will only accumulate more wealth.

Gogoboi became the first fashion blogger in China to take over a luxury brand’s WeChat account – Fashion Business News
Luxury brand’s social media accounts are no longer safeguarded by staffers, at the headquarter office. The ever-innovative French luxury house Louis Vuitton asked Chinese fashion blogger gogoboi to take over the brand’s WeChat channel, publishing three posts on the chain bag collection, 2019 Autumn and Winter Men’s Collection and Qixi campaign. Pageviews of all three articles exceeded 100,000.

The brand first worked with the blogger in 2015. His Weibo takeover, however, stirred controversy in the industry, causing a debate over the power dynamic between fashion bloggers and traditional media editors. Nevertheless, at a time when Chinese consumers are on edge about Western brands’ lack of understanding to the home culture, Louis Vuitton’s continuous effort to produce interesting local content is a smart strategy to resonate with the local Chinese consumers.

Li Ning 2019 revenue rose 33% in the first half of the year – China Times 
On August 14, Li Ning, commonly referred to as “Chinese Nike,” released its 2019 interim results. According to the financial report, the company’s revenue was 6.255 billion yuan, with an increase of about 33% year-on-year.

Li Ning attributed the increase mostly to their new branding and design strategy integrating the Chinese elements with their own ‘sports genes.’ Recognition of the Li Ning brand has significantly increased. It’s becoming far more visible — walk down a Beijing street and you can spot many hip young Chinese sporting Li Ning’s red logo shirt instead of one from Supreme. Besides, e-commerce channels have developed rapidly in recent years, and revenues have also continued to rise. The growth rate was strong and recorded a 30% high mark.

Source link

R3’s July List Reveals the New Brand Ambassadors to Look Out For

Ever since Versace’s t-shirt gaffe earlier this week, several top ambassadors have cut ties with brands that seem unclear about where they stand on the issue of Hong Kong’s autonomy. It began with singer and actress Yang Mi’s departure from Versace, but then, supermodel Liu Wen announced that she stopped working with Coach. Shortly after Wen’s announcement, the face of Givenchy beauty in China, Jason Lee, also quit his role. Since then, both Swarovski and Calvin Klein lost their China ambassadors because they listed Hong Kong as a separate country on their respective websites, and the list of Chinese ambassador defections seems to grow daily.

While this issue has left a black mark on these brands’ images, it also puts them in a difficult spot in the market since celebrity exposure is the undisputed best way to take the ‘fast lane’ to success in mainstream China. It may take some time before the above brands can make peace with angry Chinese consumers, but it would behoove them to start looking for fresh names to collaborate with. Below, R3’s June list sheds a little light on some strong newcomers:

Jing Daily x R3 Celebrity List in July.

Jing Daily x R3 Celebrity List in July.

The top-two stars on this month’s list are both cast members from the new hit TV show Go Go Squid: Yang Zi and Li Xian. The romantic sitcom, which dominated Weibo’s July trend list, features an upbeat love story between a programmer and a professional online gamer and has become a sweet escape for viewers from the monotony of their real-life workloads.

Playing the pretty computer programmer, lead actress Yang Zi started her acting career at the age of 12 and is already a household name to many in China. But it wasn’t until 2018 that her career peaked thanks to the comedically simple-minded characters she played on a range of popular TV shows. Now she has many loyal fans, and her name has already been associated with several lower-priced brands. As the global spokesperson for Fossil and the ambassador for the cosmetics brand Benefit, Yang Zi is just starting to find her way onto luxury brands’ maps: she was recently invited to Marc Jacobs’ pop-up shop in Beijing in July.

Meanwhile, Li Xian, who plays the cold-blooded gamer with strong feelings for his programmer girlfriend, has won the hearts of throngs of female fans who call themselves “Xian Girlfriends.” His name has been associated with a range of lifestyle brands including Puma, Airbnb, and Avène, but he has yet to work with many luxury brands in an official capacity. But on his personal social media account, his clean, minimalist taste in fashion has earned him a lot of attention from luxury fans.

The third name on July’s list is actor Bai Yu (a.k.a. Jonny Bai), who first became known to the public from his role in the 2018 web series “Guardian.” Bai has the same management company as Li Xian and has appeared on multiple reality TV shows. His most recent sci-fi film, “Looking Up,” scored $38.6 million in its opening frame, according to Variety, and this ‘little fresh meat’ has already captured the attention of the luxury industry, finding his way into Tiffany, Cartier, and Lancôme campaigns.


The following ranking of the 20 top celebrity influencers in June is calculated by using data from Weibo’s Fan Base (calculating Activity, Adorable, and Social Influence Indexes), Toutiao, Baidu, and WeChat.

Weibo assumes the most weight, as it’s the platform where fan engagement can be traced. The Baidu, Toutiao, and Wechat indexes are more based on search behavior. The data from Weibo helps indicate the commercial value of each celebrity, especially for the Adorable Index where fans actually use a pay function to express their admiration for a celebrity.

  • Activity Index: The Activity Index counts the number of interactions on Weibo, which is a statistical indicator of interactions (including forwarding, commenting, likes, replying to comments, and comment likes on Weibo) generated by the content posted by the star over the past 30 days (including posts and comments).
  • Adorable Index: This refers to the fans’ contribution to the celebrity. Weibo has a mechanism where fans can contribute their admiration to the celebrity by giving virtual flowers which aren’t free. The adorable index is generated from the number of flowers the celebrity receives monthly.
  • Social Influence Index: There’s a large number of users publishing microblogs daily that mention celebrities. These microblogs are read by other users, and the number of readings reflects the recent popularity of a celebrity. In addition, a large number of users search for celebrities on Weibo every day, and the search volume generated also reflects the recent popularity of those celebrities. This data adds up to the social influence index of the celebrity.

Source link

Newrank China Social Media Content Report 2019

This post originally appeared on Walkthechat Blog, our content partner site.

Newrank, one of the largest social data analytics company in China, recently released a report regarding online content. Let’s dig into some of its central insights.

Spending on WeChat Official Account Key Opinion Leaders
One of the main trends pointed out by the Newrank report is the increasing amounts of large WeChat KOL campaigns.

Between 2017 and 2018, the amount spent on WeChat KOL campaigns of more than 100k RMB jumped from 40% to 58% of the total KOL investment.

This trend reflects the fact that larger influencers tend to yield a better return on investment for brands. It also reflects the fact that as the WeChat KOL market is maturing, the view traffic is also consolidating into fewer larger accounts.

The top KOLs are most likely overpriced, but at least brands can see a real return. When it comes to which companies are investing the most in influencers, large Internet companies and FMCG brands are leading the way. This is mostly because these groups tend to have deeper pockets and can invest in more significant campaigns.

Actually, beauty products and clothing are the top categories of product that sell the best with KOL recommendations. Cosmetics and fashion companies tend to be smaller in scale than FMCG companies, but they are seeing higher returns from KOL campaigns.

Influencer campaigns can be incredibly efficient. Among people who purchase a product following a KOL campaign, 48% of them buy directly from the links provided by the influencer. The other half will head to e-commerce platforms to benchmark prices before buying. This means nearly half of the consumers are willing to purchase a product merely based on reading one article, without doing research or comparing price in other channels. That’s why KOL marketing is maybe the most effective way to promote a new brand.

When it comes to promotion format, videos are twice are likely to convert than articles. With the rise of live streaming and short video platforms, it is a strong hint for brands to diversify their content format.

Online advertising
Online advertising has also seen significant transformations over recent years. One of the most significant changes has been the shift from search advertising to display advertising.

Brands are now much more likely to put money into WeChat Moment advertising or Douyin advertising than on Baidu search. This trend is simply linked to higher returns from social ads. Search engine platforms are also losing traffic to social media platforms.

Search advertising is expected to plummet from 31% to 15% of online advertising in China between 2013 to 2020, while display ads will have grown from 2% to 35%

Brands are more likely to invest in online ads as the Chinese population is overall very accepting of them. 58.4% of Chinese Internet users have a positive outlook on online advertising.

The primary industry in terms of WeChat ads investment is Internet companies (as you might have guessed given the significant amount of or Pinduoduo advertising on your WeChat feed).

WeChat Official Accounts
One of the main insights from the Newrank report is the extreme concentration of views into a small number of accounts and articles.

Articles with more than 10k views make up for only 3% of articles but account for around half of the views on WeChat.

WeChat Official Accounts remain the main channel through which users want to hear from brands.

The overwhelming reason for which users unfollow WeChat accounts has to do with the content published. Either the amount is too frequent, not frequent enough, or quality is too low.

Publishing the right content at the right time takes careful calibration to keep users engaged.

The last category of content covered by the Newrank report is Live Streaming.

Overall, users from smaller cities are much more likely to follow live streaming. They are also much more likely to make a purchase after watching a live stream.

The best marketing method for sales conversion is product characteristics comparison. By demonstrating the product’s top characteristic comparing to the competitor’s, viewers will more likely to make an impulse purchase.

Users are not very faithful to one specific presenter. More than 80% of users mention they are happy to see different live streamers and are more likely to follow a platform than a person.

The Newrank report highlights some significant trends. Influencer marketing is getting increasingly important, with a focus on larger influencers, video, and live streaming.

The report also highlights the differences between China and the West, with a clear drop in interest in search engine marketing.

Source link