In the second part we are going to look at each of the remaining communication channels:

Email

Email communication is one of the preferred ways to communicate with your customers in China, also being the most convenient method to maintain contact with your existing clients. While many Chinese may feel embarrassed of the low level of their oral English communication abilities, they would feel quite comfortable discussing the same issues in the written communication.

In fact, most business people in China today have a very decent level of written English making it preferable to direct phone calls. Email is a great way to follow up on meetings and provide more details after initial contact. Make sure to write your emails in plain language and avoid long sentences to keep it more readable.

Websites

Having a localized website is essential for promoting your business in China, a country with the estimated 400 million email users. Localization of your website requires a well planned effort with the most important aspect of it, translation, discussed in our previous post.

 92% of Chinese internet users use some sort of social media platform making it essential to maintain your presence there as well.

Having professionally designed, modern looking website may also set you apart from most Chinese based competitors that tend to have messy and cluttered sites. Remember, that your website is probably the first place an interested client will go to after meeting your for the first time.

Social Media

92% of Chinese internet users use some sort of social media platform making it essential to maintain your presence there as well. Sina Weibo, Chinese micro blogging platform and WeChat, mobile network, are by far the most popular of those services. The great thing about Weibo and WeChat is the ability to spread your message instantly and directly to your followers’ mobile devices.

Once you’ve setup your Weibo account, make sure to put its URL and QR code on your printed and digital marketing material and encourage your customers to connect (WeChat is different from Weibo in that way).

LinkedIn is currently not as popular in China as the alternative professional networks, we will review those services in subsequent posts.

Face-to-face meetings

Personal connection still rules in Chinese business environment. Taking time to personally visit your customers is one of the best investments you can make.

Insist on accompanying your sales people, your agent or distributor on their visits even if you don’t speak any Chinese. If you make a presentation, make sure that someone from your company, who knows the material, provides proper translation.

Phone calls

While phone calls can be of limited use if your clients have a difficulty understanding your English (or your accent) they still can be an efficient way to keep in touch with those who do speak it well enough. However, with the proliferation of instant messaging, where one can control his/her availability, calling someone’s cell phone directly may seem less considerate.

Great mobile instant messaging services, such as WeChat, could be a great way not only to communicate but also to spread your marketing message as well.

Post (Regular Mail)

Mailing printed material is one of the least efficient ways to communicate in modern times and China is no exception. In B2B marketing settings, mailing information by post is quickly losing its value and I’d advise to avoid it;

Relationship and Networking

Chinese guanxi remains important in Chinese business environment, although the whole concept can be alien to many foreigners. Guanxi refers to one’s network of personal relationships in a business context. The concept of guanxi also implies that business relationships can often transform into personal friendships, and indeed many Chinese business people consciously spend a great deal of time and energy nurturing such relationships. This can take the form of banqueting, evening entertainment or gift-giving – activities that can seem onerous and unnecessary to many Westerners.

As Matthew Harrison and Mark Hedley of B2B International write in their white paper: “Although such networking and relationship-building is clearly important to the sales process in China, there is a tendency among some commentators to overemphasize its importance when trying to penetrate the Chinese market.

As in any market, building strong relationships is extremely important to achieving market success, although guanxi is no substitute for a strong product offering or a trustworthy supplier. What Western companies sometimes have difficulty coming to terms with is the way in which this trust is gained, and the time it often takes to convince the customer that yours is the product or service that meets their needs. The overriding piece of advice for Western companies would be to understand the importance of establishing relationships when targeting Chinese companies, and to be prepared for the patience required for this.”

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Eight years of Facebook’s absence in China gave more than enough time for local competitors to emerge and, ultimately, dominate the market. While some of the earlier Facebook Chinese clones fell into relative obscurity, WeChat and Weibo took the lead and have reached the position of almost unrivaled dominance.

Does that mean that Facebook marketing in China is doomed forever? Not necessarily.

First of all, there is still a significant Facebook audience who uses VPN to access the platform regularly. The exact number is unknown because Facebook doesn’t release statistics of users by country outside of US. Even if they did, VPN itself, by definition, makes it impossible to find out the actual traffic origin. It is however, safe to say that the vast majority of Chinese expat population still uses Facebook. The same is also true for a large proportion of sophisticated English speaking Chinese urbanities.

This means that if a company is looking to target this type of audience, Facebook marketing in China can still be an effective tool. Examples of common products and services advertised on Facebook in China include expat services (health insurance, visa services etc.), VPN services, local events and venues targeting foreigners and upscale Chinese and so on.

Secondly, Facebook never abandoned hopes of reentering the market with Mark Zuckerberg embarking on a charm offensive with the goal to make that happen. He has visited China multiple times and had personally met with the Minister of Propaganda, China’s internet czar as well as Premier Xi Jingping himself. Mark Zuckerberg has even mastered a decent of level of Chinese surprising a lot of people by delivering speech in Mandarin in front of Chinese student audience followed by questions & answers session.

In this well publicized and mercilessly mocked photo, Zuckerberg was photographed running in Beijing despite Beijing’s Air Quality Index climbing past 300 on that day:

Most analysts believe that Facebook return is just a matter of time, although it is unlikely to threaten the current local market leaders.

In fact, if Facebook ever relaunches in China, it will be a much more sanitized version of the network, forced to play by local rules that regulate everything from the content to who can use it for advertising. Chinese Facebook will most likely be quite different compared to the type of platform we are familiar with today.

If that eventually happens, advertisers considering Facebook marketing in China will have to go through similar approval process as it is the case for local platforms like WeChat, Weibo or Baidu with locally registered business being favored compared to foreign ones. On top of Facebook’s own guidelines, advertisers will have to comply with much stricter Chinese regulations that, over time, tend to get tighter rather than relaxed.

It is also very likely that Facebook, rather than going to China alone, will have to partner with a local company, perhaps even with one of its current competitors. This is often the case of large western companies entering Chinese market and is even more common for business in the areas social media or messaging like LinkedIn or Line.

Two more factors make Facebook return to China ever more likely: first, bringing back a censored and government-friendly version of Facebook will constitute a big victory for Chinese internet authorities, second, Mark Zuckerberg indication of his willingness to compromise.

In any case, if Facebook is allowed back in China, it will most certainly become another effective marketing channel. Moreover, the competition for advertisers’ dollars (or rather yuan) is also bound to intensify, hopefully resulting in more options and features from the existing channels like Weibo, Baidu and WeChat.

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Most recently, Weibo has introduced the set of new rules on what KOLs can and can’t do on their platform. Some of those rules are designed to fight completion, others to maximize the ad revenue.

ParkLU, a digital advertising platform that connects China’s internet celebrities and brands, recently released a list of rules that are currently being enforced on Weibo.

Here are the new Weibo KOL posting rules:

Link blocking to all e-commerce sites except Alibaba properties

In light of fierce competition within BAT (Baidu-Alibaba-Tencent) this rule makes a lot of sense and is hardly a surprise. Since Alibaba is the largest shareholder of Sina Weibo, they want to make sure to benefit as much as possible their own ecommerce platforms such as Taobao and Tmall.

KOL accounts need to seek permission before promoting more than one brand in a single post

This new Weibo KOL rule is most likely aimed at improving quality of the posts. Promoting multiple brands in a single post typically benefits KOLs themselves (since they can charge more), however the marketing message gets diluted which probably isn’t what a brand is paying for.

All posts with external links will receive a 20% media exposure penalty

Clearly, Weibo would like to keep as much traffic as possible within the platform. For example, posts linking to other Weibo posts or pages would get better ranking vs. those linking to pages outside the platform.

Posts containing plagiarized content will receive a 50% page weight penalty

This new Weibo rule still doesn’t go as far as the equivalent one for WeChat where such posts are most likely to be taken down completely. Of course, in some cases, proving who copied whom can also be tricky.

Posts containing long form images will receive a 50% page weight penalty

According to ParkLU CMO Elijah Whaley, this rule is rather confusing. Such images have been quite popular with users and it is not immediately clear why Weibo doesn’t like them anymore.

Accounts that only repost will receive a page weight penalty

This rule once again is designed to improve the posts quality and encourage creating original content by KOLs rather than recycling and reposting content already existing elsewhere.

Post containing a QR code will receive a page weight penalty

The penalty for QR code is clearly targeting Weibo’s largest competitor WeChat. It isn’t anything new though – Weibo wasn’t allowing posting WeChat QR codes for a while now.

Posts that mention WeChat will receive max page weight penalty, limited to 10% total visibility

Here is another shot against WeChat. In fact, WeChat has been blocking all the links to Alibaba ecommerce stores (Taobao or Tmall) for years now, so it is only fair that Weibo would reciprocate.

Accounts that mention marketing, sales or advertising businesses could receive a page weight penalty

With this new Weibo KOL rule, the platform is trying to avoid promoting competition that may take some of Weibo’s advertising revenues. Posts should be focusing on promoting brands, products and services rather than potential Weibo’s competitors.

Lucky draw campaigns must use Weibo’s official lucky draw function or receive a page weight penalty

Since lucky draws are quite popular in Chinese social media, Weibo prefers to use their own tools rather than third party service for this type of campaigns. This way, the traffic stays in Weibo rather than goes elsewhere.

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In fact, every QQ user is also a Qzone member making this platform the biggest in China by the number of subscribers. Unfortunately, despite being an enormous network, Tencent hasn’t been able to capitalize on QQ and Qzone marketing. The main sources of network’s revenue are games, sales of digital items and paid membership. Also, arguably, they are in the process of being cannibalized by WeChat, a more innovative service from Tencent.

For advertisers, QQ offers banner placement in the app as well as pop ups but those are quite expensive and, nowadays, largely considered ineffective. The social media outlet connected to QQ messenger, Qzone is divided into different functions. It includes homepage, status, blog, background music, albums, personal information, shared documents, friend visits, friend show, video show, and games. It also allows a high degree of profile customization and connectivity to 3rd party applications. Its overall profile design approach is more similar to MySpace rather than Facebook.

Qzone marketing basically come in 2 varieties: sponsored posts in the user feed and banner ads. After series of page redesigns over the past few years, banners now show up on either left or right side from the feed.

Currently, Qzone for mobile doesn’t show any ads and the stress is made on integrating it with QQ messenger while enhancing user experience by adding more options to the core messaging function.

Other methods of Qzone marketing include posting directly in the relevant group discussions as well as commenting. Obviously, this requires maintaining an active presence on the network and making sure that the profile is updated frequently. Luckily, some 3rd party solutions offer cross posting on a number of different platforms, unfortunately, except the most popular – WeChat.

Since Qzone is mostly used by younger audience with limited spending potential it makes it less suitable for promoting large number of categories of products and services. Also, compared to other networks like Sina Weibo, it is more popular in 3rd and 4th tier cities. On the other hand, it still could be an effective route to reach a particular segment such as current or prospective students for example. Companies in educational space, foreign universities looking to attract new students, sellers of hot items popular with teenagers – all can find Qzone marketing an interesting channel to explore.

In the past, Qzone was the venue of choice for a number successful marketing campaigns like XiaoMi, a maker of popular cellphones, or Oreo cookies. Large number of celebrities still maintain active presence on the network, although it is unlikely to be their exclusive channel.

QQ messenger is often used as a direct communication option such as for customer or tech support. This is why it is often included in websites along with other communication options.

In addition, QQ messenger allows creation of groups (limited to 200 members for basic users and up to 1000 for VIP paid accounts) that can also be leveraged as an effective marketing channel. This feature allows for similar users can be grouped together and engaged all at once.

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Obviously, no country can sustain a breakneck economic growth, like the one that China experienced for over two decades. Current figures indicate that the growth has dropped below 7% for the first time in many years, which is still a pretty impressive figure.

The strongest argument in favor of Chinese economy continuing to grow and develop is the enormous potential of local consumption. This, in turn, is driven by the rise of Chinese middle class that is becoming both larger and more sophisticated. This, of course, presents some unmatched opportunities for foreign companies to sell their products and services to the increasing pool of potential buyers.

Throughput the history, foreign traders were often frustrated with China because the majority was just too poor to afford Western products. This is no longer the case.

This chart from the Economist shows that the Chinese middle class is predicted to increase tenfold in 10 years from 2010 to 2020:

The Rise of Chinese Middle Class

The middle class is defined here as a household with enough money to buy a car, a TV, a fridge and a smartphone. Smartphones, of course, have been selling like hot cakes in China – Apple reported 112% Q/Q growth for this year Q2: six of its ten busiest stores across the globe are in China. This is what Tim Cook, Apple’s boss, had to say about his view of Chinese market: “I continue to believe China represents an unprecedented opportunity over the long term.”

Chinese consumer is also becoming more sophisticated and discerning which leads to intensified competition. Investment in proper marketing in China is becoming increasingly important as it also differs quite a bit from what foreign companies could expect in their home markets.

The following map from the Economist’s Intelligence Unit (EUI) represents income distribution across China:

Predictably, first tier cities and coastal provinces are the ones with most income, however, from the viewpoint of entrepreneurs, they are often considered as fairly saturated markets. EUI’s report argues that, based on the long term forecast of population growth and increase in disposable income, inland cities present more lucrative opportunities. Some less known cities within reasonable distance of the coast (for example Suqian and Xuzhou) could soon develop into attractive markets to target.

China’s ecommerce has been an important element in developing the consumer market and it will continue to play an increasingly important role. Chinese ecommerce market is now larger than that of American and is predicted to pass $1 trillion mark in 2019. Incidentally, online shopping makes it even easier for people living in lower tier cities to shop which further stimulates local economies.

Chinese consumer is also becoming more sophisticated and discerning which leads to intensified competition. Investment in proper marketing in China is becoming increasingly important as it also differs quite a bit from what foreign companies could expect in their home markets.

Marketing in Chinese social media has become a must for anyone trying to reach and connect with the Chinese. Considering the fact that main Western social media outlets are blocked in the Mainland, adapting to the local equivalent often becomes the stumbling block for outsiders.

Another change that is taking place in China now is the gradual shift from supplying goods to providing services. This can also be directly attributed to the rising Chinese middle class which demands better services in everything from healthcare to finance and entertainment.

Good quality services in China are often still behind accepted western standards presenting lucrative opportunities for energetic entrepreneurs. Recent explosion of various IT services is a testament to this growing trend. For example, e-learning is one of the hottest markets in China with companies raising hundreds of millions dollars in this space.

Often, a successful model from abroad would be copied and adapted to China. Such was the case of Didi Kuaidi, a mobile based taxi operator that shares a lot of similarities with Uber and Lyft.

There are even some extreme cases such as of Helijia, a firm valued at $300 million that provides pedicures in people’s homes…

In short, China has solid economic fundamentals to be able to continue attracting capital and talent for the foreseeable future. The growing Chinese middle class will be the primarily driver of the local consumption to much larger extend than the effects of external economic conditions.

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First interesting fact is that approximately 9 out of 10 China’s online users have a social media account.

Qzone remains the largest social media platform and QQ the most popular messenger. No platform, however, can challenge WeChat‘s dominance in mobile. 

Although, Weibo has some luster, it is still a very effective advertising platform as it has the ability to target users much more accurately than other services.

Chinese social media marketing is even more important when is comes to ecommerce. As the infographic shows, Chinese are very active online shoppers, spending a lot of time researching products online and commenting on the experience. 75% of online shoppers would provide feedback at least once a month as opposed to only 25% of US users.

Finally, 77% of Chinese expect a brand to have a social media presence – a clear sign to marketers that it is one of channels in the marketing strategy mix that can’t be ignored.

Here is the full infographic:

Chinese Social Media Marketing for Business

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Although the digital landscape in China continues changing, it is safe to assume that the main elements, such as current dominant platforms and leading services, will remain more or less the same for the next 2-3 years. In any case, the following infographic by Sampi Marketing, reflects the present state as of mid 2015.

Primary online platforms, such as Baidu for  SEO and SEM, Youku for video, WeChat for mobile and Sina Weibo for social media, are still the main elements in digital marketing in China. Additional platforms as well as other various ways of reaching people online are also covered in this infographic which is presented in a form of sequential process.

Depending on the nature of your business and marketing objectives in China, not all of the elements may be applicable or equally effective. So, the readers should take the information as an ideal and most complete set of tools to choose from:

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Unfortunately, Renren didn’t live up to high expectations, quickly losing the top spot to more popular platforms which were launched later, such as Sina Weibo and then, most recently, WeChat.

Despite its similarities with the world largest social media site, Renren failed to take advantage of the Facebook ban in China, letting other, more dynamic networks, to fill the vacuum. Also, unlike Facebook, it has never been profitable. In fact, there has been significant decrease in revenues across all of its services in 2014, compared to 2013.

According to the company filing, total revenues decreased by over 40% on YoY basis, primarily due to drop in income from advertising and social games.

In terms of size, in September 2014, the company reported 219 million activated users and 44 million monthly unique log-in users. This is still a respectable figure, although it represents a decrease from 50 million monthly users a year earlier.

Renren is blaming fierce competition for its disappointing performance and is trying to address one of the underlying reasons – failure to capture mobile audience.

Renren’s efforts to capitalize on online videos by buying 56.com back in 2011 was ultimately a failure and the company has begun divesting from this project last year. Social gaming, another potentially lucrative niche with the young audience,  failed to gain enough traction and is not contributing enough revenue.

Also, the company is refocusing their efforts on 2nd and 3rd tier cities where it still remains quite popular among students. The majority of Renren users are between 16 and 30 years old which is attributed to the fact that it grew around universities and colleges, much like Facebook at its very start. By various estimates, it covers about 1/3rd of China’s middle school students, not a particularly exiting sector from marketers’ standpoint.

So, is Renren becoming irrelevant for marketing in China?

It certainly seems that it has lost and continue losing a lot of its value. Although, there were some success stories in the past, such as often mentioned condom promotions, brands are increasingly investing their marketing budget into faster growing and more popular social media networks. There are very few big brand newcomers on Renren, although the old ones are still there.

Renren’s efforts to capitalize on online videos by buying 56.com back in 2011 was ultimately a failure and the company has begun divesting from this project last year. Social gaming, another potentially lucrative niche with the young audience,  failed to gain enough traction and is not contributing enough revenue.

Another venture, an online dating app called  TongXueShuo (同学说) launched in 2013 is up for a tough competition against WeChat and Momo (see my earlier post about Momo).

In conclusion, things are definitely looking bleak for Renren, it failed to capitalize on first mover advantage early on and has been slow to exploit new market opportunities.

On the other hand, the user base of over 200 million is still too large to ignore. One niche where it could be worth having brand presence on this network would be for companies selling products and services to college students, such as courses, offers from domestic and overseas educational institutions etc. In fact, one of the promising directions that Renren is trying to develop is facilitating students loans through its new college financing section on its site.

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Another monster, Qzone, is still the largest network in terms of registered users, although it is largely considered of limited value to marketers.

The main demographic group of social media users are those between 26 and 30, they account for almost one third of all the users.

Astonishingly, social media penetration in China is estimated to be at around 91% of the total online population vs. 67% for US. At the same time, each Chinese social media user is following on average 8 brands.

Another figure that underscores the importance of marketing on social media in China is the fact that 43% of Chinese netizens are interested in products shared by their friends on social networks. In addition, 38% of them base their shopping decisions on recommendations from friends online.

Here is the full infographic from Go-Globe.com:

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Although, not every brand has to be on WeChat, this platform is certainly one to be considered by companies seeking to engage with Chinese consumers directly. It has its strength as well as its weaknesses which I’m going to discuss next.

First of all, a company considering marketing on WeChat should have a clear idea about its limitations as a marketing tool. Those can be summarized as follows:

• While Weibo is more about discovery of new companies, brands or services to follow, WeChat is not geared for that at all. As of this moment, searching capabilities for companies or brands are very limited, unless you happen to know exactly the name it is registered with which could be something like xmsj816 (popular Xiaomi cell phone maker).
  The only sure way to connect is via scanning QR code, which would take you straight to the company’s account with an option to follow it. This basically means that you have to induce and encourage your potential followers to scan your QR code with their phones by placing it everywhere you possibly can: from posters and brochures to delivery vans and even receipts.
• Currently there are two types of accounts associated with businesses: subscription and service accounts. Both come with limitation on the number of messages that can be sent to users. Service account allows custom menu with advanced functionality and can serve as a mobile web version of company’s official site. Through additional customization it can provide more advanced functionality by connecting to the back end database of the main service behind the app. On the other hand service account only allows one message per month to users, limiting potential of engaging with users on a frequent basis.
  Subscription account allows maximum two messages per day but doesn’t have the advanced functionality or customization. Also, subscription accounts are grouped together and the user has to go inside the subfolder to see new messages.
• Measuring the engagement with WeChat is still fairly rudimentary, although this seems to be changing. By the end of 2013, Tencent announced the release of new APIs that are available to verified accounts for annual subscription fee of RMB 300. They allow more advanced tracking of followers, however those capabilities are still very basic. As more marketers embrace WeChat, it’s reasonable to assume that Tencent could be working on embedding more metrics into the back end of the platform;

What type of account should you choose in order to take full advantage of WeChat capabilities? Here are a few tips:

Functionality vs. engagement

Since service accounts are mainly about functionality they are, in effect, serve as a mini-app within WeChat. If you can think of some type of functional service that you can offer, than the service account is for you. For example, you could direct your users to the nearest store or outlet based on their current location or you could integrate membership or points based system with such account. Some customer service functions can also be built-in within the customized menu.

Ecommerce integration

If your company is considering integrating ecommerce or payment system within WeChat, than, again, service account should be your choice. Currently, the system allows linking only Chinese issued credit and bank cards but this may change in the future as well since WeChat is aggressively expanding globally.

Direct messaging and broadcasting

On the other hand, service accounts allow only one message to users per month. So, if your business is more concerned with keeping your customers informed on new promotions, sending out coupons or announcing events, subscription account could be a better choice.

Ease of setup

Subscription accounts are much easier to setup and run and they don’t require advanced customization as service accounts do.  The level of engagement is higher but it is true only if you provide an interesting and engaging content. Don’t forget that deleting an annoying or useless account only takes a swipe of a user’s finger.

Switching

Another aspect to keep in mind is that switching between service and subscription accounts will not be possible once one is chosen. Of course, one potential strategy could be to have both – service account for functionality and subscription one for broadcasting messages frequently enough to keep your followers interested and informed.

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