February 17, 2023

China Marketing Insights Monthly Newsletter [February 2023]

Hello There,

Welcome to our latest newsletter. This month, we have some exciting topics to share with you, including the 2023 China Consumer Report and China Consumption Trends – 5 trends in China’s consumer market are identified as economic difficulties that force Chinese consumers to be pickier.

We have 2 insights reports – i) 2022 – 2023 China’s Pet Industry Marketing and Consumer Research: China’s pet industry is booming, with more pet owners willing to spend money on high-quality food and accessories for their furry friends, a new trend has emerged in the pet industry; ii) China’s Trendy Sports Advertising & Consumer Insight and Sports Marketing Analysis: trends sport are more fun and sociable, more diverse, easier to learn, more casual and flexible, with the increasing popularity of trends sport, we summarized the development status, consumer insights and trend prospects in this article.

Next, we look at an interesting Beauty trend in China – China’s Beauty Industry Marketing Hot Topics and Latest Trends. New trends and innovative marketing have emerged in the beauty industry, we have also highlighted the KOL strategy in this article.

This month, we feature the Tongcheng travel app, which makes it easy to plan your next trip. With features like flight and hotel booking, travel deals, and user reviews, it’s the perfect companion for any traveller.

Sincerely,

Mia C. Chen

CEO & Co-Founder of OctoPlus Media

2022 China’s Beauty Industry Marketing Hot Topics and Latest Trends

The consumer market in China’s beauty industry has always remained high, especially consumers’ enthusiasm for beauty and skincare products. We have summarized the KOL launch strategy, hot topics, trends and innovative marketing in the beauty industry in 2022 based on the “Miaokan · Beauty Industry Observation” released by Miaozhen in January 2023.

Targeting strategy – KOL

The data shows that both international brands and domestic brands use KOL delivery strategies such as Double 11 in the promotion are concentrated on Xiaohongshu and Douyin platforms, but the strategies for selecting KOLs are somewhat different.

International big brands:

Xiaohongshu – Mid-tier (T3) and KOC (T4) KOL (followers between 50,000 and 500,000)
Douyin – Macro (T2) KOL (followers between 2 and 5 million)

Domestic brands:

Xiaohongshu – Mid-tier (T3) and KOC (T4) KOL (followers between 50,000 and 500,000)
Douyin – Mid-tier (T3) KOL (followers between 500,000 – 2 million followers)

Beauty Hotspots – Potential Topics

Sustainable beauty concept

Sustainability mainly refers to the process of maintaining environmental balance and harmony in resource development, investment direction, technological development and institutional change while meeting human needs and future development. Consumer discussion about sustainable beauty increased by 56% YoY in 2022. Therefore, the concept of sustainable beauty has begun to rise with the improvement of environmental awareness, many international brands have begun to launch a series of promotions related to the concept of sustainable beauty. These include eco-friendly packaging cartons for products from Origins and P&G, Lancôme’s empty bottle recycling project for skin care products, and the use of refillable packaging for Chanel’s Red Camellia series, etc.

Light daily makeup

Pseudo-plain makeup and light makeup are popular makeup looks in 2022, because consumers prefer versatile light makeup, which can not only meet various needs of daily life but also have the effect of reducing age. Other makeup looks that have aroused trending discussion include light European and American makeup, Japanese makeup, Korean makeup and so on. Consumers choose low-saturation lipstick colours to match light makeup when choosing beauty products, such as bean paste colour or milk tea colour. In addition to daily life, consumers also draw appropriate makeup according to different seasons and festivals, especially lipstick colours. For example, choose bean paste colour in spring and summer, choose black tea brown in autumn and winter, use purple for Halloween, choose reddish brown for New Year’s Eve, and so on.

Trends – New scenes of outdoor activities, new consumption of cross-sector cooperation and Metaverse

New scene: outdoor sports

Outdoor activities such as camping, cycling, skateboarding, etc. have a high degree of discussion after the lifting of the lockdown in China, so some beauty brands combine sports scenes with product efficacy and increase the promotion of sports scenes. For example, Estee Lauder invited KOLs to promote and highlight the characteristics of DW’s long-lasting oil control, especially by combining popular outdoor sports manufacturers such as camping, frisbee, etc., and use the scene and effect as a selling point to attract consumers.

New tech experience: Metaverse

In addition, beauty brands have also begun to join the upsurge of the Metaverse, apart from cooperation with virtual digital humans, they also try to release NFT digital collections, create virtual flagship stores and other gameplay, with the help of meta-universe technology to bring consumers a new experience. Brands such as Lancôme create virtual flagship stores to bring users an immersive 3D reality-enhanced shopping experience.

Overall, the beauty market is expected to have more paths and developments in the future, and different marketing strategies and industry trends will have an impact. If you want to know more about advertising or KOLs on media platforms, please contact us with the form below to access the full report.

2022 – 2023 China’s Pet Industry Marketing and Consumer Research

The economic scale of the pet consumer market has been expanding in China in recent years, with the rise of the trend of exquisite pets breeding, pet owners buy pets New Year meal sales increased by 64% YoY, pet New Year clothing sales increased by 55% YoY, obviously, the new trend of pets raising is to celebrate the New Year for pets. According to the “iiMedia Research | 2022-2023 China Pet Industry Development and Consumer Research Report” released by iiMedia Research, the data shows that the pet economy will grow by 25.2% YoY in 2022, and the market size is expected to reach 811.4 billion yuan in 2025. A few of the reported data are summarized below.

Analysis of the development status of China’s pet industry

Social environment

The single economy and the silver-haired economy are important factors driving the development of the pet industry because single people have stronger spending power than married people, and pets can serve as companions; with the increase in the population over 60 years old, pet ownership for empty nesters in their later life can help improve the happiness of life and reduce one’s loneliness.

The scale and forecast of China’s pet food industry from 2015 to 2025

The high-growth nature of the pet industry has now become a blue ocean in the market, and the development of society and the concept of keeping pets are constantly popularizing. Since pet food is high consumption, attracting many start-ups such as local brands to join, the market share will gradually increase, so it is expected that the scale of China’s pet food market will reach 267 billion yuan in 2025.

Development overview and forecast of pet products in China

Among the market segment, pet daily necessities accounted for 38.8%, pet cleaning and care products accounted for 38.2%, pet clothing and travel products accounted for 16.9%, and other products accounted for 6.1%. Chinese consumers’ demand for pet products continues to increase, in addition to meeting the basic daily physiological needs of pets, they also pay more attention to entertainment, grooming and cleaning care, thus promoting the growth of pet consumption. Data shows that with the pet economy’s impel economy, it is estimated that the pet products market will reach 48.4 billion yuan in 2025.

In addition, from the consumption data, it can be seen that the purchase of many intelligent pet products has increased by more than 80% YoY, such as smart water dispensers, smart feeders, smart litter boxes, etc., while Xiaomi, Midea, Haier and other technology giants entering the pet product industry across the sector will bring new growth points to the smart products category.

Consumer Research

Consumer profile

The female group accounted for 62.3%; mainly concentrated 31-40 years old; 56.2% of the group are corporate personnel, and there are more corporate management and normal employees; they belong to the middle-to-high income group (income of about 5k-15k).

Consumer consumption frequency and access to information

The frequency of pet food consumption by pet owners in China is concentrated in 1-2 or 3-4 times per month, and comprehensive e-commerce platforms are the main way to obtain information, followed by short-video platforms, pet store platforms and content recommendation platforms. Consumers more intuitively and clearly understand the details of pet products such as the production date of pet food, food formula, etc., through the form presented by the e-commerce platforms, such as live broadcast or comment function, and it is easier to conclude transactions.

Analysis of pet food purchase needs and concerns

Currently, many functional foods have appeared in the pet food market, among which the purchase demand survey for consumers shows that the “digestion” function has the highest demand, followed by “calcium supplementation”, “tooth cleaning”, “skincare” and “joint function”, but consumers will consider whether these functions match their pets in the choice of pet food. Consumers are most concerned about the pet’s preferences, followed by the convenience and palatability of purchase, and other factors include formula, word of mouth, brand and so on.

Analysis of the development trend of China’s pet industry in 2022 – 2023

Diversification and refinement will become a new trend in pet food consumption

Pet food is no longer limited to simple satiety but also has protective and repairing effects on a pet’s nervous system, immune system, bones and joints, etc., functional pet food is becoming more and more refined and diversified.

The synergy between online and offline channels becomes the optimal sales model

The data shows that 72.1% of consumers purchase pet products from offline pet stores, and 64.4% from e-commerce channels. From the perspective of the long-term development trend of the pet industry, an omnichannel operation is the foundation of the development of the pet industry. Brands can establish a good brand image through offline channels, build the foundation of brand effect, and then amplify revenue scale through online channels.

Nutritious and healthy pet food, the rise of domestic brands

Consumers pay more attention to the healthy growth of pets, and the increase in per capita disposable income has also increased consumers’ willingness to pay for the health of pets. Thus, balanced nutrition and well-known brands will become new consumption trends for pet food. In addition, with the rapid development of domestic e-commerce channels and the increase in demand for pet products, many domestic brands have shifted from the foundry model to the development of domestic independent brands and accelerated the omnichannel layout to seize the domestic market share.

In the long run, the pet industry will continue to reshuffle in the future, domestic brands must make great efforts in quality, research and development, channels and marketing to have a chance to successfully break through the stiff competition in the pet industry.

If you are interested in online channel development or marketing, please contact us with the form below for more details!

2022 China's Trendy Sports Advertising & Consumer Insight and Sports Marketing Analysis

In recent years, trendy sports have gradually emerged in China, sports include cycling, surfing, rock climbing, frisbee, e-sports, etc. Among these various niche sports segments, hip-hop, skateboarding and skiing are more mature. Trendy sports are more fun and socially, diverse, easy to learn, more casual and flexible, so many enthusiasts are willing to try them. According to the “2022 China Trendy Sports Consumption Development White Paper” published by Analysys and Migu Data Research Institute, we have summarized the development status, consumer insights and trend outlook of trendy sports.

Development status

The main driving factors for the continuous development of the trend movement and the continuous expansion of the audience range include:

The guidance and support of national policies have created a good environment for the development of trendy sports, such as strengthening the construction of venues, increasing people’s willingness to participate, and cultivating professional talents.
Residents’ awareness and participation in sports are higher, and they are willing to try more diverse sports, and actively explore interesting or novel projects. TOP5’s trendy sports are hiking, cycling, e-sports, frisbee and hip-hop.

Trendy sports can show the self-personality and independence of young people, and through the extension of internet communication channels, it is more extensive, which promotes the popularization of trend sports. Douyin, Migu Video and Weibo are the TOP3 content platform communication channels, and multi-form cross-sector cooperation has accelerated the popularization of trendy sports.

With the increased attention and participation in trendy sports, advertising and marketing, education and training, sports events and sporting goods have become the main business models at present. For example, title sponsorship in advertising and marketing, event suppliers, and derivative economies such as ice and snow tourism, blind box peripherals, etc.

Consumer insights

The survey shows that there are more followers than participants in trendy sports, but participants are higher than followers in the 18-24 age group, and the audience portraits prefer cool tricks and sports star content, pay more attention to the content and the frequency of watch is higher. They also pay more attention to sports and social networking and like to invite friends to participate, of which men accounted for about 55%. As high as 88.4% have purchased trend sports-related products, while 46.6% focused on brand values and young trends when purchasing.

37.9% of Migu video users follow at least 1-2 times a week, and 19.9% follow almost every day
TOP 5 content attention types: live broadcast, on-demand or highlights, sports star related information, trend sports variety show, sports teaching/follow-up/sports courses, character interviews
TOP5 reasons to follow trend sports: love trendy sports, be influenced by online communication activities, follow a player, follow a club/team, and follow local events

The TOP 3 ways to watch content are mobile phone (74.8%), desktop (37.8%), and tablet (28.7%)
Most followed platforms: Douyin (36.5%), Migu Video (25.1%), Huya Live (21.1%)

As trendy sports become more standardized and people are more accepting, many young parents are more inclined to support children to participate in trendy sports. In addition, trendy sports consumers are basically willing to pay for their hobbies and the annual consumption is concentrated in about 1,000 – 5,000 yuan, while the types of purchased goods are concentrated in sportswear and sports venues. The main consideration for consumers when purchasing related products is the quality of the product, followed by the brand’s youthful trend value.

Overall, Migu Video users often pay more attention to sponsored brands and the acceptable advertising forms are also diversified, including APP open screen ads, studio title/implantation, video pre-roll ads, short videos, interactive ads and more. Clothing and accessories are the main types of daily consumption focus, while 3C digital and automobiles can have better marketing effects when watching trendy sports content.

Trend outlook

Sports direction: Accelerate the standardized layout, establish the norms of the organization of sports events, competition rules, referees and athletes related to trendy sports, and build a professional development system.
Trend direction: Trendy sports have become one of the manifestations of trendy lifestyles, which can promote the interaction and prosperity of trendy sports and cultural formats through diversified lifestyles, such as trendy sports + content, trendy sports + tourism, trendy sports + new technology or trendy sports + community activities.
Industry direction: The existing business model will gradually develop and improve, and industry innovation will bring more new models, such as digital collections, trendy sports theme experience space, and the superposition of multiple models, etc. so that this industry has greater potential for development.

The above is an excerpt of the content from the data report. If you are interested in advertising marketing or content operation, please contact us with the form below for more information.

2023 Latest China Consumer Report and Key China Consumption Trends

Recent macroeconomic challenges have dampened Chinese consumer morale after years of exuberant economic expansion and growing consumer spending. Consumers’ expectations were obscured by stock market declines, a drop in real estate transactions, and mobility limitations meant to contain the COVID-19 virus. We have extracted the below excerpt from the report “2023 McKinsey China Consumer Report” released by McKinsey.

Overview

China’s economy nevertheless shows some resilience despite the economic challenges and the drop in consumer confidence. According to China’s National Bureau of Statistics (NBS), the first nine months of 2022 saw a nominal increase in disposable income per person of 5.3%. When compared to pre-pandemic levels, urban employment remained stable in September at 5.5%, and in the first nine months of 2020, consumer price inflation had increased by an average of 2%.

58% of urban households said they wanted to “save money for a rainy day” and reiterated their intention to save money rather than spend it, consider the highest level since 2014. The quick growth in savings deposits, which climbed by RMB14 trillion in the first nine months of 2022, demonstrates Chinese consumers’ greater desire to save rather than spend their money.

The Ministry of Commerce reports that inbound foreign direct investment (FDI) in China has been running at record highs, reaching a record $181 billion in 2021, a 21% increase over the previous year, despite media reports of impending downsizing or even withdrawal of multinational companies from China. Despite the pressure of slow economic growth, FDI increased quickly once more in the first half of 2022, jumping 24% YoY.

5 trends in China’s consumer market

Trend 1: The expansion of the middle class

The fact that China’s base of upper-middle and high-income consumers, who made up 55% of urban household consumption last year, is still expanding quickly is one major cause for optimism. China continues to be the only nation that creates as many middle-class earners as possible each year. With yearly incomes above RMB160,000, these households are gradually joining the upper-middle class and the high-income group. Between 2019 and 2021, the population increased by 18%, from 99 million to 138 million. China is anticipated to generate an additional 71 million upper-middle and high-income households over the following three years. According to the McKinsey global consumer survey, 49% of respondents in China agreed that “within 2-3 months, the economy will rebound and become just as strong as pre-COVID-19 or even more so”, as opposed to 11% – 26% of consumers in mature markets. This supports the overall optimism expressed by consumers in the China survey.

Trend 2: Premiumization keeps going

Despite increased concerns about the economy and personal incomes during difficult times, luxury brands continue to outperform mass brands as consumers prefer premium brands when they want to reward themselves. High-income consumers are increasing their expenditure across nearly all fast-moving consumer goods (FMCG) categories. High-income consumers plan to spend their cash; 26% of respondents spend more in 2022 than they did the previous year, while only 14% limit their expenditure. With the arrival of trendy and inventive local companies, many multinational brands that once held a dominant position in the mass or mainstream category are being buffeted by competition and experiencing dramatic sales reductions.

Trend 3: Making wiser decisions without downgrading

The shift in market dynamics enables customers to retain their standard of living by making more stringent trade-offs; some are even able to buy more while spending less by actively pursuing discounts and promotions. Rather than compromising by switching to cheaper brands or products, high-income consumers limit their buying frequency or adjust their preferences in specific areas, whereas choosing cheaper products line within the same brand or cheaper channels is the alternative for lower-income consumers. Consumers are getting smarter about the products and channels they buy instead of downgrading. 60% of Chinese consumers interact at least once per day with over-the-top (OTT) music and video streaming platforms, spending an average of roughly two hours per day watching short-video platforms. Due to less marketing, and more on offering content-based product information and a highly interactive user experience that assists consumers in making more informed selections has to make Douyin gain popularity among Chinese consumers.

Trend 4: The focus is on the product

Functionality increased its lead as the most significant factor affecting Chinese consumers of fast-moving consumer products in 2022, having regained ground lost to emotional considerations between 2015 and 2019. Chinese consumers are quite informed about the characteristics and specifics of the things they purchase, from the substances in cosmetics and skincare to the type and quality of the jacket. While consumer confidence and spending may continue to fluctuate with the changing socioeconomic situation, one trend is Chinese consumers’ focus on researching and purchasing products that suit their more stringent needs.

Trend 5: Local businesses are succeeding

Customers no longer pay a premium for foreign brands; Chinese companies now produce outstanding products that are competitive or, in certain cases, “higher quality” than overseas peers, as supported by 49% of Chinese consumers. Local brands are being chosen by Chinese consumers for their quality and innovation, rather than for low pricing or a sense of national pride. Nowadays, domestic companies can offer high-quality products with a distinct value proposition that appeals to Chinese consumers and is reacting to trends faster with bolder investments. As such, the demand for local brands has increased in recent years.

As economic difficulties force Chinese customers to be pickier, they are increasingly opting for high-quality and functional products. Companies that can respond swiftly to changes will beat their competitors as China’s consumer market is expanding.

If you’re interested to find out more about advertising marketing in China or to access the full report, please contact us with the form below.

Tongcheng Travel – China’s leading travel service OTA APP Advertising to Chinese Travellers

Tongcheng-eLong is a leading travel service platform formed through the merger of Tongcheng Network and eLong Travel Network, a subsidiary of Tongcheng Travel. Tongcheng-eLong officially changed its name to Tongcheng Travel in 2021, providing customers with a one-stop platform for transportation, accommodation and round-the-clock services. Tongcheng Travel will focus on young, individual and fashionable consumer groups and provide smart, safe and convenient travel services.

Currently, Tongcheng Travel has launched a number of one-stop travel services, including travel protection, 7*24-hour protection, warm escort protection, rapid response to complaints, advance compensation protection and many other measures. Tongcheng Travel successfully moved away from the previous model of the initial stage of OTA development and began to transform into an ITA (Intelligent Travel Assistant). Tongcheng Travel provides online booking services for up to 790,000 overseas hotels and homestays and covers 1.1 million international flight tickets. Tongcheng Travel has 90% of registered member activity, and the highest app open rate, up to 90% after downloading the Tongcheng Travel app.

User Profile Analysis

Covers 42.5% of the OTA market, holds the largest share
64.7% repeat purchase order ratio
205 million MAU, 30 million DAU, 250 million+ average daily impressions
The proportion of male users is prominent, as high as 52%, and 48% are female users

Advertising Inventory

Precise locate user travel scenarios

Preparation before travel

APP/PC international hotel
APP/PC international air tickets
APP/PC outbound travel resources
APP/PC visa banner
Tongcheng checker/KOL: accumulated 1,000 + top quality checkers, held 550 + global tourism events, cooperate with 100 + government tourism bureaus, and experienced 3000 + tourist attractions. Provide celebrity effect, unique perspectives and massive exposure

2. Confirmed travelling

APP international hotel order completion page
APP/Mini-program travel assistant
APP push
Tongcheng & Tencent ecosystem
Destination chat groups: Invite users to join a group chat after placing an order, and up to 85% of invitations are accepted