What China’s Gen Z Really Thinks of the Fake Luxury Market

Not only are Chinese Gen Zers among the world’s best-informed consumers on intellectual property rights (IPR), their attitude towards buying fake goods are also more likely to be driven by morality rather than financial considerations.

These are two findings from a new report by the International Trademark Association (INTA), which researched consumer attitudes among Gen-Z consumers from 10 different countries. Titled “Gen Z Insights: Brands and Counterfeit Products,” the report surveyed young shoppers in China, Argentina, India, Indonesia, Italy, Japan, Mexico, Nigeria, Russia, and the United States. The researchers asked 4,500 respondents to complete a 25-minute online survey. A total of 403 Chinese Gen Zers participated: 202 males and 201 females between the ages of 18 and 23.

Most strikingly, the survey revealed a significantly higher-than-average awareness of intellectual property rights among Gen Zers in China. Of the Chinese respondents, 99 percent said they had some knowledge of IPR, compared with a global average of 85 percent. Among the other countries included in the study, Japanese Gen Zers were the only other group with more than 90 percent of respondents claiming awareness of IPR.

The results perhaps prove that the prevalence of counterfeit goods in the Chinese market in recent decades has helped shape the younger generation — one which is simultaneously keen on trading up for legitimate products. Chinese Gen Zers were the fifth-most-likely consumers to purchase fake products, with 84 percent saying they had done so “at least rarely” over the past year. This was still above the 79-percent average across the 10 countries. However, 70 percent of Chinese respondents said they expected to buy fewer counterfeits in the future. Only respondents from Indonesia and Nigeria echoed this position in greater numbers.

While only 62 percent of all respondents to the INTA survey said a brand name was “somewhat important” or “very important,” China’s Gen Zers tend to take brands more seriously. According to the report, 74 percent of Chinese Gen-Z consumers said that a brand name was at least somewhat important to them.

Brands are currently scrambling to adapt their messaging to target Gen-Z consumers, who are set to become the largest generational cohort of consumers worldwide by 2020. This generation has grown up in a world where international trade in counterfeits is booming and digital piracy is predicted to reach $2.81 trillion in 2022. “The door is open to change Gen Z’s mindset and buying habits,” said INTA President David Lossignol, Head of Trademarks, Domain Names and Copyrights at Novartis Pharma AG in Switzerland. “The study alerts brand owners that they need to pay attention and adapt marketing strategies.”

In April, the Standing Committee of the National People’s Congress announced amendments to the country’s Trademark Law that target bad-faith trademark registrations. The amendments will go into effect in November this year and are intended to prevent individuals from seeking to register and hold trademarks with no intention of using the trademark.

Here are a few additional takeaways from the report:

  • Nearly all of the Gen Zers surveyed in China have a “strong respect for the value of people’s ideas and creations”
  • About 80 percent of the Chinese Gen Zers in the study think “it’s important to buy genuine products,” while the global average is 74 percent
  • Approximately 61 percent of Gen Zers buy counterfeits because they’re easy to find — something China’s e-commerce giant Alibaba is trying to put a stop to
  • According to the report, “China is one of the few countries where morals beat income — by five percent — as the key influences on Gen Zers’ opinions about fakes. In contrast, globally, income outpaced morals by 10 percent”

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Versace’s New China Face Tops June Celebrity List: R3

The June list of the Jing Daily x R3 Celebrity Index — a monthly ranking of China’s most influential celebrities based on the country’s most important social media platforms, from Weibo and WeChat to Toutiao and Baidu – has the country’s A-list actress Yang Mi topping the popularity ranking of Chinese celebrities after climbing up from third place a month ago.


Jing Daily x R3 Celebrity List in June.

On May 24, the Italian luxury brand Versace, which is now under control of the American fashion corporation Capri Holdings, announced Yang as its first-ever Chinese brand ambassador, stirring a heated debate over the actress’ compatibility with Versace, a brand that was inspired by the mythological Greek figure Medusa who stands for power, beauty, and strength.


Madonna (left), Yang Mi (central), Lady Gaga (right)

Even though the announcement excited the actress’s more than 100 million followers on Weibo, there was a sizeable amount of discussion centered around Yang’s suitability for the role of Versace representative. One reason online users disagreed with the use of Yang is that the brand’s past muses were powerful Western pop idols like Madonna and Lady Gaga, and Yang appears to have nothing in common with them. The Chinese actress is primarily known for her youthful, teen-girl look, despite the fact that she has a five-year-old daughter. Yet Yang’s massive ability to sell is likely the main reason for the partnership. In China, she serves as a brand ambassador for a slew of fashion and beauty brands, including Michael Kors, Stuart Weitzman, and Estée Lauder, and all these brands have seen sales pick up thanks to her outsized commercial value.


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.

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Learning from Gucci’s Wild Success with Millennials and Gen Z

At a recent event, Gucci CEO, Marco Bizzarri, spoke about his brand’s success with young consumers. Their numbers are remarkable: 62 percent of Gucci’s $eight billion in sales last year came from consumers who were 35 and under (Millennials), and the brand’s fastest-growing segment is consumers 24 and under (Generation Z).

In the approximately four years since he joined Gucci, Bizzarri tripled the brand’s revenue and has made critical strategic decisions — like appointing Alessandro Michele as his creative director — while also giving the brand a more contemporary and category-breaking attitude. With its strong appeal to the world’s youngest luxury consumers, Gucci is on track to become the largest luxury fashion brand in the world if its growth trajectory continues at its current pace.

One of the key enablers of their success has been investments in technology, as seen in their ArtLab: a futuristic factory where artistic experimentation is blended with 21st-century production processes. As a result, the brand can transform ideas and concepts into products at a higher speed than many of their competitors, meeting the Gen-Z demand for quick and unique product drops while enabling creatives to implement their ideas much faster than ever before.

Bizzarri also smartly enlisted a “shadow committee” comprised of Gen-Z and Millennial members from around the world to meet with technology experts and discover new ideas and approaches. “These [young] people often know much more about certain things than you do,” says Bizzarri on the importance of involving younger consumers in the development process. But what exactly can other brands learn from Gucci’s uncommon methods?

Accelerated market speeds

We are living in one of the most exciting times for innovative luxury brands. Technological change and market disruption are both happening at a faster rate than ever before, and because information travels faster, consumers are better informed than ever. Therefore, the youngest consumers come equipped with the highest expectation’s brands have ever seen — a dramatic paradigm shift from just a decade ago.

Given this, permanent adaptation and reinvention are absolutely necessary now because consumers are less patient now. Thereby, technology becomes an enabler that optimizes processes, responds faster, and ultimately provides better and faster service. When consumers look for instant gratification, brands need to build preconditions so they can deliver against those expectations.

Brand equity and brand storytelling

Building up a strong brand story was one of the cornerstones of Gucci’s success, and with Bizzarri’s arrival, Gucci refocused sharply on creating brand equity. A brand’s storytelling is one of the critical drivers of extreme value creation — a concept the best and most relevant luxury brands have mastered. In the years between Tom Ford’s departure and Bizzarri’s arrival, Gucci’s positioning in the market became too vague and undifferentiated. This has changed. Now there’s a very distinct and consistent brand attitude expressed through artistic mastery, advertising, and in-store experiences. This helps create a cohesive brand message for customers all over the world, but especially among Chinese customers, who are much more brand-obsessed than customers from other regions. And the brand personality Gucci has created feels relevant to them.

Many brands focus too much on the product and underestimate the importance of rigorous and excellent brand definition and execution. This can make brands vulnerable and tends to lead to ‘one-hit-wonders’ instead of consistent success. Brands must combine great storytelling with excellent product execution to win over Millennials and Gen Zers these days. Given the quickly-evolving and highly-competitive landscape, a brand should undergo an audit to clarify its positioning at least every two years, if not more often. This is not to change a brand’s strategy permanently, but rather to ensure that the strategy is both differentiated and relevant enough in a market with ever-changing trends and competitors.

Listening to customers

In markets like China where consumers spend their daily lives on WeChat (doing a significant part of their brand interactions via digital channels) opinions change regularly. Therefore, listening to consumers is an indispensable part of brand research. Traditional market research methods aren’t working anymore because they’re too slow, imprecise, or don’t offer actionable insights in real-time. The infamous Dolce & Gabbana case in China demonstrated that perceptions can change within hours, and brands must be able to identify those changes as they happen. Social media listening is not sufficient for locating fast-paced shifts in consumer sentiment. Today’s best practices involve advanced data querying technologies (including AI and machine learning) that offer rapid pattern recognition and the generation of timely and relevant counteractions.

By making the target group part of the decision-making body, a brand ensures that the direction they take will resonate with those consumers. Too many brands still use “guessing and hoping” and then wonder why their marketing campaigns and product launches don’t achieve their objectives. Listening to young customers by implementing up-to-date technical infrastructures and integrating them into decision-making processes takes guessing out of the equation and lets a brand know for sure that their content will be relevant.

Gucci’s success in today’s market is unparalleled and stands as an example of how the correct combination of leadership, creativity, brand equity-focus, customer-centricity, and enabling technology can propel a brand to significant growth. Bizzarri and his team have done a good job at positioning their brand in a way that feels relevant to Millennials and Gen Zers, and since those demographics will only get more important with age, Gucci should have no problem prospering in the future.


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, serves as a regular keynote speaker, and holds management seminars in Europe, the USA, and Asia. Follow @drlanger

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Brands Must Deal with Counterfeits on Social Commerce

In recent years, the solution for luxury brands combating fake products on Chinese e-marketplaces has been something of a one-horse race – and that horse is Alibaba. With the evolution of different e-commerce models, however, the market for counterfeits is changing in a way that many in the West can’t even accurately gauge. A European browser search of the phrase “counterfeits on Alibaba” returns over 600 results, for instance, while “counterfeits on Pinduoduo” offers less than 200 — hardly an accurate reflection of the problems inherent to both platforms.

Although Alibaba and JD continue to dominate China’s e-commerce landscape, it may surprise many to know that third place (second in some accounts) has been taken by the social commerce platform Pinduoduo. For those paying closer attention to Chinese markets, they will know that over the past three years, the Tencent-backed shopping app for discounted goods has seen incredible growth, but it also had a checkered history with counterfeit listings.

When Pinduoduo debuted on the Nasdaq in July 2018, it was touted as China’s fastest-growing business. But by August, it faced an investigation from the State Administration for Market Regulation (SAMR) over its failure to challenge intellectual property infringements, and the company’s stock had fallen. Pinduoduo had to act quickly. It claimed to have removed 1,128 stores and taken down 4.3 million listings from its site. But this one week of action was a band-aid for a much bigger problem, and in April 2019, the company was blacklisted for the first time as part of the U.S. Trade Representative’s annual report into “notorious markets.” While Alibaba’s Taobao website was also condemned for the third year running in the same USTR paper, the report did at least acknowledge that their group “has taken some steps to curb the offer and sale of infringing products.”

The threat to brands’ profits and reputations because of social shopping apps such as Pinduoduo, Little Red Book, WeChat’s Weidian, and Taobao’s Xianyu is real, but it’s also just one part of a complex and evolving situation for luxury brands. Pinduoduo is well known as a platform for cheap goods and group discounts, and its growth has been fuelled by the mobile engagement and gamification technologies that are aimed at its reported 77.5 million daily users from the poorer regions of provincial China. Therefore, while it might seem as if the company, known as “China’s Groupon,” poses a lesser threat for high-end fashion and lifestyle brands, there are actually several reasons why it deserves closer scrutiny.

China cares about social commerce

Regardless of its current consumer demographics, China’s embrace of social shopping is growing. Apps like Pinduoduo encourage users to create profiles and then generate their own content in order to influence their networks into group buying and sharing for discounts. Its market has been projected to be worth roughly $150 billion by 2020, meaning that it will possess a noticeable part of the overall e-commerce environment. China appears to care deeply about social shopping, so luxury brands who hope to continue capitalizing on the 33 percent of the revenue that Chinese consumers contribute to the $1.2 trillion trade in luxury products simply must pay attention.

One of the appeals of social shopping is that it offers the safety and mutual reinforcement of a communal experience. Users can create networks and then share and promote Pinduoduo-listed products through WeChat, resulting in group discounts, competitions, and other incentivized purchases. This disruptive “team purchasing” idea has resonated particularly well in a culture where online commerce had previously been centralized by the Alibaba/JD duopoly. Shaun Rein, the author of “The War for China’s Wallet: Profiting from the New World Order,” states, “The potential of social commerce is huge because people like to buy what their friends recommend. Increasingly, in China’s e-commerce landscape, people don’t know what sales channel to trust, but if they see their friends purchasing things on social commerce sites, they are more likely to buy.” For cautious Chinese consumers approaching expensive branded purchases for the first time, this kind of peer endorsement is vital. Therefore, the social commerce model seems like a natural fit with luxury goods — but also a possible future home for fake listings.

The days of trading down may be limited

Pinduoduo is acknowledged as a place for lower-income shoppers to buy everyday goods rather than high-end brands, but that doesn’t mean the market might not have the capacity to support luxury items. Although many social commerce shoppers currently have the desire to purchase luxury goods, their limited financial circumstances mean that cheap “shanzhai” mass copies are more common purchases.

However, younger and wealthier Chinese shoppers in the current climate expect unique luxury items and are increasingly willing to pay for them. As these Millennial and Gen-Z consumers represent an influential segment on social media, the energy that they devote to promoting themselves and their purchases will likely drive purchase mimicry throughout the country. With continued economic growth and increased purchasing power — even in the provincial cities — the desire for genuine luxury products will become more prevalent, but so too will the appearance of counterfeits that are closer to the real thing; so-called “super fakes.”

As brands become more common and less exclusive in rural locations, the drive for more expensive products and higher-end brands may also increase. This process already started in August 2018 when Pinduoduo committed to an escalation of branded goods through a “Pavilion” that would push global brands out to the provinces (a big part of the platform’s buyer base). And further subsidies for farmers, poverty alleviation initiatives, and e-commerce training sessions suggest that the social commerce market will likely reach new heights in the future.

The West has been here before

When the first wave of e-commerce appeared in the ‘90s, it was a revolutionary new way for all brands to bring goods directly to customers. This was particularly important for the luxury sector because sales could suddenly be increased in untapped Asian markets. Distance and cost had made establishing brick-and-mortar retail units prohibitively expensive, but e-commerce presented a real solution. Many marketplaces were initially unregulated, though, and this led to waves of listings for counterfeit products, which destabilized profits. When brand protection initiatives like eBay’s VeRO program began later in the decade, it set in motion the marketplace-centric brand protection strategies that still exist to this day.

But if anything serves as a template for how social media will pose a future threat to brands in China, it’s what’s currently happening across the U.S. and Europe. Sellers of luxury brands such as Michael Kors, Rolex, and Gucci have migrated in droves to Facebook, Instagram, and Twitter, leading to record seizures and regular headlines. Sellers establish interpersonal relationships within private groups and then communicate via encrypted Whatsapp messages with buyers. It’s an approach that’s also found its feet with Chinese counterfeiters who use channels like WeChat, Instagram, YuPoo and TikTok as additional arms to reach both Chinese and international customers.

Managing disruption

Pinduoduo and other social commerce disruptors have shown that the conventional marketplace model of buying and selling counterfeit goods is changing. For luxury brands who want to capitalize on the Chinese appetite for expensive products while limiting the number of fake products sold online, developing social shopping awareness is crucial. Marketplaces and website domains enforcing against counterfeit listings remain vital, but the mobile, fluid, and engaging nature of these new platforms may give some indication as to why luxury brands need to also consider counterfeiting solutions that are culturally relevant and forward-thinking.


Fiona Gao is Head of Business Development at Pointer Brand Protection.

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Can China’s Waste Sorting Law Lead to Sustainable Luxury?

Despite global millennial calls for greener products, sustainable luxury has been a difficult topic in China. Most Chinese consumers hold a pragmatic attitude towards luxury and see luxury products as the badge rewards of a Capitalist ideology. And even when green marketing does infiltrate the Chinese luxury landscape, the word “sustainability” usually carries more bark than bite.

Despite these attitudes, China’s first waste sorting law was implemented in Shanghai on July 1st, and it might have the power to change the country’s “green” inertia. Having been the “world’s wastebasket” for decades, China is now enforcing waste sorting policies across its most economically advanced states — like Shanghai — to tackle its enormous garbage problem.

The policy has quickly taken Chinese social media by storm. In the first week of July, three of the five top-searched topics on Weibo were related to Shanghai’s trash policy: #wastesortingbagssoldout, #wastesortingrulesdriveShanghaicrazy, and #touristchargedwiththrowingtrashincorrectly. This lifestyle change in Shanghai is just a glimpse of the issues that will soon take over other Chinese cities. Now, for the first time in modern Chinese history, sustainability has the potential to turn into a real consumer movement. There are two reasons for this. First, the new waste sorting law should encourage people to choose “enough” over “more,” and second, this lifestyle change should inspire consumers to become more conscious of the materiality of the things they buy, which is a crucial step toward understanding the value of sustainable luxury.

Before the waste sorting law was implemented, the mainstream Chinese attitude towards consumption had largely been “more is better,” but now that’s changing. By July 4th, the food-delivery app “Ele.me” had seen a 149 percent increase in orders with the note “no plastic cutlery needed” within Shanghai as compared to June. A rival app “Meituan takeout” had also reported a sharp increase of “no tableware please” orders since the policy started.

The extra step to think about waste has reshaped how people consume in the first place. Kenny Zhang, a 26-year-old financial analyst in Shanghai, told Jing Daily, “Before [the policy], I always ordered an appetizer and dessert with takeout without blinking an eye. Now I order just one dish, no water, and no appetizer, so I don’t have to deal with the complicated food waste.” In China, waste sorting is a relatively new practice, and most Chinese are not very well informed about waste management or recycling rules.

Confusion, coupled with the consequence of paying a fine for missorting, has forced Shanghai dwellers to buy just enough so there is less waste. “In the past, I would place many orders from e-commerce sites without any second thought,” said Kenny. “Now, just thinking about the packaging, the box, the tape, it is already too much work.” In fact, the waste sorting policy had even changed how people consume bubble tea — one of the country’s most beloved rituals. In a poll of over 40,000 Shanghai residents, 54 percent said they had stopped drinking bubble tea because sorting the different parts of a packaged drink is too complicated.

As a result, people have started to become more aware of the materiality of their purchases. All of a sudden, the waste, the overpacking, and the other forms of material excess that were overlooked during the mass consumption era have become visible. “I recently bought a piece of jewelry online, and when I took it out from an enormous paper box with countless plastic wraps inside, I felt a sense of guilt,” said Amy Zhao, a 27-year-old Ph.D. student in Shanghai. “But just a few months ago, I left a bad review for an online seller because the packaging was too simple. I used to think the more packaging, the better,” she said. Contrary to the utilitarian packaging in most Western countries, most Chinese online sellers tended to use fancy-looking packaging as a reassurance of quality, which then became expected. Now it is seen as wasteful. Consciousness is the first step toward thoughtful consumption. Only when Chinese consumers have shifted their mindsets from “more is more” to “less is more” will sustainable luxury brands make a real connection with them.

Similarly, Chinese consumers need to cultivate an understanding of sustainable materials before brands can communicate their true differences to them. Today, the lexicon of sustainability in China is very limited. The lack of a clear, well-defined vocabulary in Chinese has thus caused a lot of misunderstanding among mainstream consumers. For instance, most Chinese consumers equate the concept “natural (天然)” with “organic (有机),” as if a cotton shirt made from plants in “nature” is automatically organic. But as more Chinese consumers — especially the hyper-informed millennials — learn to read product labels and investigate the production processes, they will be able to cultivate a more thoughtful approach towards buying things, unlike previous generations.

As the initial leg of China’s larger overall trash reform plan, Shanghai’s waste sorting law should necessarily be seen as the very beginning of a wider lifestyle change. The broader implications of this law could end up being crucial to luxury’s future. As the policy unfolds, Chinese consumers will soon be aware of the environmental consequences that come from shopaholic lifestyles and will adjust their buying accordingly. In China, now could be the time for sustainable luxury, which had been moving at a relatively slow pace, to gain real momentum for the first time.

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A Daigou Arrested for Smuggling $400K Patek Philippe Watch

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 Shenzhen Customs arrests a Chinese daigou carrying a Patek Philippe watch
  • Hermès to host an art exhibition in Shanghai
  • JD.com to close down its luxury portal TopLife

1. China’s Shenzhen Customs arrests a daigou carrying a Patek Philippe watch – JRJ

On July 9, China’s Shenzhen customs officials announced that they arrested a Chinese passenger a week ago for attempting to smuggle a Patek Philippe Minute Repeater watch (ref. 5078), which is valued at roughly $400,000 (2.75 million RMB), into China. To avoid paying customs tax, the passenger wore the watch when passing through customs, but the empty watch box was discovered in his suitcase.

The case garnered tons of discussion about the government crackdown on Chinese daigou (a.k.a. overseas purchasing agents) on the social media platform Weibo. Some netizens estimated that this passenger would likely have to pay a fine of up to $200,000 (1.37 million RMB), according to the latest regulations. Some media outlets in China like China Daily reported that the passenger could face as much as a 10-year prison sentence.

2. Hermès collaborates with a Chinese artist for a summer exhibition  – Fashion Network

French luxury powerhouse Hermès will open an art exhibition by the Chinese artist Yan Xiaojing at the brand’s flagship Shanghai store Hermès Home on July 12 that will run until August 4. The installation will blend Eastern and Western perspectives within an immersive experience for the store’s Chinese shoppers.

3. China’s second-largest e-commerce platform JD.com to close down its luxury business  – Jiemian

China’s second-biggest e-commerce company JD.com will shut down its dedicated luxury portal, TopLife, which it launched nearly two years ago, on July 21. The platform was acquired in its entirety by Farfetch’s China entity back in February of this year. TopLife has sent out push notifications to users regarding the closure and worked on directing them to Farfetch’s website and app.

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Video is the Next Frontier for China E-Commerce

Video-driven e-commerce has been around since 2016 when e-commerce platforms Mogujie and Taobao began hosting livestreaming sessions on their platforms.

But only recently has this trend taken off, with Taobao generating a whopping US$15.1 billion (100 billion RMB) in livestreaming transactions in 2018.

Now, video platforms such as Douyin and Kuaishou are selling Taobao products, and other social media platforms such as WeChat, Weibo, and Little Red Book are getting into the mix by testing e-commerce functions as well.

We discuss what’s going on and what brands should keep in mind going forward.

China’s E-Commerce Market is Maturing, and Brands Need to Shift Their Focus

In the world of e-commerce, there are three types of customers to target:

  1. users who know what they’re looking for
  2. users who don’t know what they’re looking for but are browsing online
  3. users who don’t have plans to buy anything at all

E-commerce platforms have figured out how to serve the first two groups of customers. They possess massive amounts of customer search & purchasing data, and brands can leverage a combination of AI-powered recommendation technology and advertising tools to reach their target customers.

China e-commerce growth is slowing.

China e-commerce growth is slowing.

But now growth is slowing, the platforms in China are getting crowded, and bidding prices for search keywords and ads are getting more and more expensive as the number of brands multiply. There are already 20,000 international brands on Tmall Global alone, and the customer acquisition costs are rumored to be in the 200-300 RMB range.

The next stage of e-commerce will focus on the third group of customers – those who aren’t active on the big platforms and have no immediate plans to make a purchase. To target this group, brands must work increasingly with third-party social platforms and create great content to grab their attention. This is where video comes in.

Not only is video content eye-catching, but it also provides a channel for customers to see how a product looks and feels in real life.

This shortens the customer journey, and customers are more likely to make impulse buys. According to Taobao Live, the conversion rate for livestreaming can reach as high as 32 percent, an astronomical figure in today’s competitive e-commerce environment.

A survey by iResearch shows that video is playing a larger role in influencing purchasing decisions in China.

A survey by iResearch shows that video is playing a larger role in influencing purchasing decisions in China.

Short Video vs Livestreaming for China E-Commerce

Should brands use short videos or livestreaming sessions to market and sell their products?

The short answer is, it depends.

There are a few key differences between short videos (Douyin, Kuaishou) and livestreaming (Mogujie, Taobao, Shopshops) video sessions.

Short videos are 10-20 second videos. They are static pieces of content that can be quickly digested, and the user can quickly decide whether or not to dig deeper or move onto the new video. For example, the Douyin interface requires the user to slide the screen up and down to access different videos recommended by the platform.

Because of their short nature, these videos have to quickly capture the attention of the viewer. Common themes will involve people dancing, working out, or even walking on the street, etc. Some even stage videos in which the models walking in public behave as if they’re being discovered by a street photographer for the first time.

In the Douyin snapshot below, KOL Zhang Dayi prances along a street in Japan with her friends while wearing a polka dotted yellow dress, which can be purchased through a Taobao link.

Zhan Dayi's Douyin page. Source: Official Douyin App

Zhan Dayi’s Douyin page. Source: Official Douyin App

During last year’s Double 12 Festival (December 12), Douyin short videos drove over 200 Million RMB in sales for Taobao.

Livestreaming, on the other hand, is a much more involved and interactive phenomenon that is part of the shopping discovery experience. Livestreaming hosts will try on and discuss 4-5 products over a 40-60 minute period, and viewers can comment and ask questions in real time. They can ask questions about the fit, color, material, etc. and even ask the host to try items on with different outfits or in different colors.

Below, a host from cross-border livestreaming platform Shopshops shows off a pair of earrings. The right picture displays top-ranked products sold on the platform.

Source: Shopshops WeChat Mini-Program

In a sense, livestreaming is like QVC on steroids. The interactive nature of livestreaming builds a much stronger sense of trust with viewers, which is important for new or complicated products where it takes longer to get the customer to make a purchase.

This could include apparel, where the items are non-standardized SKUs and could look and feel drastically different in real life, or it could include multi-step makeup routines where customers go through elaborate procedures to apply their products.

Skincare products that have special chemicals solve a functional need are also another example.

However, because of their length, livestreaming sessions require much more time and work to plan and execute. Fixing up hair and makeup, and coming up with topics and questions to talk about can take hours. Many livestreaming hosts work over 12 hours a day, and sometimes even go through plastic surgery to keep their youth appeal.

The Road Ahead

Video will be a major driver of e-commerce in the coming years as e-commerce platforms, brands, and retailers alike look for more channels to reel in customers. Taobao executives say that livestreaming could potentially drive 500 million RMB in sales over the next three years.

What else is on the horizon? This year, WeChat, Weibo, and Xiaohongshu have each tested the incorporation of livestreaming- and short video-driven e-commerce on their respective platforms. Given their large user bases, this could open up many opportunities for brands and retailers.

The challenge for social media platforms is 1. – maintaining the quality of the content and the user experience, and 2. – ensuring that their e-commerce partners’ supply chain and logistics operations are on par with the expectations of their users.

For brands and retailers, they have to consider whether each platform and their respective user base is a good fit for their products, as well as how effective the targeting technology is at driving ROI.

While video-driven e-commerce is still in the early stages, brands and retailers should keep these considerations in mind for the road ahead.


This post by Ker Zhang was originally published on Azoya Consulting’s corporate blog, our content partner.

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A Look Ahead: Luxury Marketing Trends for 2020

China has become an important global growth engine for many luxury brands but an over-dependence on this market could have catastrophic effects if the predicted consumption slowdown and modest economic growth forecasts for 2020 take hold. Given this, heritage brands should prepare for fluctuations.

Investors and market watchers have already identified some troublesome warning signs, including the distressful news that Deutsche Bank plans to eliminate some 18,000 positions, but this isn’t the only alarming episode as China’s debt-to-GDP ratio has reached new heights.

Furthermore, the world’s largest economy (U.S.) is also showing signs of slowing, and according to the Duke University/CFO Global Business Outlook survey, 48.1 percent of US CFOs predicts that the country will enter in recession before the 2020 presidential elections, while 69 percent of the interviewees are expecting a recession by the end of the year.

These alarming economic indicators show that putting all your eggs in one basket is, at best, a cautionary tale, but few luxury brands have prepared contingency plans for the possibility of an economic slowdown in both China and the U.S. It’s expected, however, that the luxury brands that have to reexamine their identity and shape their marketing and business strategies accordingly will have a much greater chance not only to survive but more importantly to thrive even during this period of economic decline. Here, some luxury trends to keep focus on for 2020.

1. Strategic digital storytelling

According to McKinsey, almost 80 percent of luxury sales are influenced by online, thus the importance for luxury brands to look at their digital strategy from a different angle, prioritizing innovative distribution channels. Furthermore, classic storytelling techniques need to be modernized so that brands can communicate their message through various agents. As luxury purchases are driven by pleasure and excitement — and not logic — the digital realm will design content that instantly captivates the audience.

Thanks to ingenious communication channels such as Douyin, WeChat, and Weibo, brands can immediately broadcast their message, reaching the consumer through stories, Mini Programs, and live-streaming features, all popular formats to reach a younger consumer base.

2. A shift to the human side of digital disruption

Most luxury brands are trying to keep up with the tech-savvy, young consumers but this hunt for implementing the newest technologies and using advanced communication platforms has created an ecosystem where the human aspect is neglected. Most luxury employees only have a basic understanding of technology, leaving this aspect in the hands of a few highly skilled workers. This talent scarcity creates a concerning scenario where coding experts and developers have the power to translate the essence of a brand into a computer code. The shortage of employees with software development skills, social media, and analytics knowledge, and creative digital re-design skills will become a persistent issue. The importance for luxury brands to invest in employee development, creating a generation of workers who understand the digital side but are also sensible to sales and marketing strategy.

3. Influencer marketing

The luxury industry is changing beneath our feet, but the perception of influencer marketing remains positive.

According to a report by Influencer Marketing Hub, Google searches for Influencer marketing grew 1,500 percent from 2016 to today. Furthermore, the industry has experienced robust growth from $1.7 billion in 2016 to $4.6 billion in 2018. In a world that craves authenticity, KOLs are a dynamic marketing and communication tool because they engage directly with their followers. This one-to-one communication appears more honest and dependable than traditional advertising campaigns. Research shows that peer-to-peer marketing is seen by consumers as more trustworthy and genuine than celebrity endorsements. As many of the influencers often have a large audience and high engagement rate, brands can tap the KOL resource to communicate with users and come up with curated offers that respects the needs and wants of the consumer base.

4. Personalization

According to McKinsey, Chinese consumers are becoming “more global, more demanding” and this implies that the one-size-fits-all approach to reach them doesn’t work anymore. Personalization responds to the desire for individualism and authenticity. And younger consumers especially like unique, custom made products. Heritage brands like Louis Vuitton, Goyard, and Dior (with the Oblique line) have come up with product personalization tools that don’t contaminate the brand’s DNA. These luxury houses let buyers express their personality through monogramming, customized embroidery services, hot stamping, and appliques. We expect this trend to have a fundamental impact on luxury consumption even in 2020.

5. Data is king

In 2020 premium brands will go beyond statistics and demographics, offering personalized content based on behavioral data. We will witness how brands will create experience-driven content marketing through customer data integration. Furthermore, luxury brands will take further steps to understand and analyze unstructured data coming from social media, weblogs, and emails, while creating marketing strategies that leverage the power of both structured and unstructured data.

It’s safe to say that even in 2020 data analytics will continue to optimize the customer’s experiences and deliver personalization at a larger scale.

6. User-generated content

Authenticity has become a buzz word in luxury marketing, but the overuse of the term hasn’t brought a full-blown embracement of the concept. Foremost, authenticity needs to become the commanding standard when creating content, but all too often luxury brands struggle to do this correctly. The legitimacy issue can be solved by emboldening the dialogue with consumers and co-creating a system that prioritizes customer advocacy. New advancements in technology and communication have empowered the audience, transforming the public into a storyteller, and user-generated content has become a successful way to reach new luxury buyers and drive loyalty.

7. Identity- based consumer behavior

In this globalized world, building on the concept of local identity and sustaining local communities is a method that generates healthy growth. On the other hand, a consonant approach that doesn’t respect cultural differences will have negative side effects for the brand’s reputation. Think about Western beauty companies that use white female models to promote their products and imagine the consumer’s lackluster response. Evidently, Asian buyers will feel that these companies don’t understand either the market or the consumer’s situation, disrespecting and abusing the local context.

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Demystifying The Hot Social Commerce Platform Little Red Book

There are a lot of digital channels in China today for brands to choose from, so deciding which to focus on can become a primary task for marketing departments. One that popped up on the radar fairly recently is the social commerce platform Little Red Book.

Founded in 2013, the shopping app combines the obsessive visual layout of Instagram with the in-depth and authentic user reviews of Amazon. It has quickly amassed a sizable amount of followers — 80 million monthly active users now. And even though this number is relatively small compared to other social platforms, Little Red Book’s users have much more power to influence purchasing decisions, which is why it has convinced major luxury brands like Louis Vuitton to launch official accounts.

On July 10, luxury brand and digital agency executives gathered in New York City for an early morning discussion about the platform. Leading the panel was moderator Yiling Pan, senior editor of Jing Daily; Kim Leitzes, CEO of China’s premier influencer marketing platform Parklu; and Kristina Li a.k.a. Liwaner, a KOL with over 1 million followers on Red who shared her content strategy and how to spot fake fans.

Below we’ve summarized all the burning questions about Little Red Book that brands want to know:

What’s the cost of working with a Red KOL?

“A year ago, to work with a micro KOL of less than 10K followers, was about 1000 RMB [$150],” Parklu’s Leitzes recalled, “but that’s rapidly gone over 10,000 [$1500].” Red KOL Kristina divulged that she charges 40-55K RMB ($5,825 – $8,000) for a post, however, it’s not uncommon for a KOL to send different prices to different brands, as they often charge less to work with a brand they love.

The drastic increase in pricing partially has to do with the soaring popularity of the platform. Kristina started blogging on Red in 2017 and got a sponsored opportunity from Estée Lauder within a year. But as the platform grew, more KOLs joined and the competition for ads got more intense. Wanting to keep content trustworthy and organic, Red became strict about controlling the platform’s overall environment and rolled out a set of rules.

For example, KOLs now have to hit a certain amount of followers and monthly traffic to be able to accept ads. And for every post that’s sponsored, a KOL has to create 4 organic posts. This pushes them into choosing the highest-priced sponsored deals they can get. Content preferences on the app have changed as well. Quality short videos and posts that mention more than one brand get greater visibility. Those changes are making sponsored posts much more expensive but also make them higher in quality.

From left to right: Yiling Pan, senior editor of Jing Daily; Kim Leitzes, CEO of China’s premier influencer marketing platform Parklu; and Kristina Li a.k.a. Liwaner, a KOL with over 1 million followers on Red. Photo: Jing Daily

From left to right: Yiling Pan, senior editor of Jing Daily; Kim Leitzes, CEO of China’s premier influencer marketing platform Parklu; and Kristina Li a.k.a. Liwaner, a KOL with over 1 million followers on Red. Photo: Jing Daily

What’s the ROI (return on investment) for working with KOLs on Red?

In terms of actual sales, brands can link their Red page to Tmall (Tmall’s parent company, Alibaba, invested in Little Red Book in 2018). But since sales happen at a number of places — whether on Tmall or via overseas Daigous — it’s hard to track the exact sales journey back to Red. A lot of marketing budget is split between “branding” and “performance,” so a good way to measure overall awareness is to look at the brand’s share of voice on Red against their main competitors as well as the number of followers from sponsored content vs. organic content that’s earned.

How to spot fake fans?

Spotting faking fans can be easy, according to Kristina. There are three metrics on Red: likes, collects, and comments. If a post has few comments but a lot of likes, it’s problematic and is likely a fake account. The same goes for accounts where likes only come from other KOLs. And just like any other social platform, there are also group chats on Red that do “likes for likes” among fans and KOLs, helping to create fake engagement numbers.

Kim Leitzes on the typical lifestyle of a KOL and when it's the best timing for brands to engage with them. Photo: Jing Daily

Kim Leitzes on the typical lifestyle of a KOL and when it’s the best timing for brands to engage with them. Photo: Jing Daily

User-generated video is king, but what takes?

On almost all social media platforms in China, short-video is perhaps the most popular format for grabbing oversaturated user attention — and Red is no exception. Kristina revealed that 70 percent of her content is now video-based, and she’s seen a visible traffic boost because of it. But for luxury brands used to posting high-production-value videos, properly controlling user-generated video content can be hard. “At the end of the day, if it’s user-generated content that’s in the brand’s favor, it’s not something you are going to police,” said Leitzes. “But as a brand, you always have to ask what’s the content opportunity you can create for the KOL?”

On Red, there are a lot of opportunities for luxury brands to create content. According to data from Parklu, the top 20 luxury brands in 2018 focused a lot of their content on offline events such as fashion week, pop-up events, and special product launches. In the end, it’s up for a brand to decide what kind of content they want to engage their fans with on Red and if it fits as part of their larger digital strategy.

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How Rimowa Boosts Ecommerce Sales with a Chinese Star

The LVMH-owned German luxury suitcase brand Rimowa is experiencing a sales surge on its official flagship store on Alibaba’s B2C marketplace Tmall in China thanks to the new brand ambassador Jackson Yee, who is arguably one of the most popular Gen-Z pop stars among the country’s Millennial and Gen-Z generations.


Jackson Yee’s post to announce his brand ambassadorship with Rimowa China. Photo: a screenshot of Jackson Yee’s Weibo account

As a member of the Chinese boyband TFBoys, Jackson Yee currently has over 75 million followers on Weibo. On June 28, he wrote a post to announce his brand ambassadorship with Rimowa, calling for his fans to keep an eye out for his ad campaign featuring the brand’s new collection of Rimowa Essential seasonal colors – Sage, Saffron, Coral, and Slate –  that launched in stores in June 2019. By the time of this publication, the post has been commented by more than 760,000 users, shared by over one million times, and liked by almost 810,000 people.

Yee’s massive popularity not only helped enhance Rimowa’s brand awareness among younger customers,  but also increased sales for it. Rimowa’s official Weibo account re-tweeted Yee’s original post by adding a Tmall store link, facilitating his fans to land on the mobile version of the sales page.


Rimowa’s Tmall flagship store sales picked up after Yee’s post.

Though the brand is not authorized to reveal the exact sales figures, the public data on Tmall indicates the strategy is working fairly well. The monthly transaction volume of new products (as highlighted) is far more than that of other previous models (see image above). In addition, the brand has seen customers on its Tmall shopping store — within the age group of 18-25 — doubled since Yee’s partnership.

The collaboration between Yee and Rimowa once again shows that celebrity endorsements in China, when done right, can serve as a powerful tool for luxury brands on different dimensions from increasing online awareness to driving sales. Yee has long been a darling to luxury brands owing to his wide popularity and commercial value. He is ambassadors for a slew of high-end labels including Bottega Veneta, Givenchy Beauty, and Huawei. Working with someone like him is vital for luxury brands to reach the next-generation Chinese shoppers, who, according to Boston Consulting Group, is going to account for more than two-thirds of Chinese luxury shoppers by 2023.

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