Digital & luxury in China: how are Made in Italy brands doing?
Emerging countries currently represent the most important markets for Made in Italy, one of the finest and most appreciated brands in the world, particularly for its luxury goods. In fact, it is the BRIC (Brazil, Russia, India, China) consumers who will constitute the biggest part of the global luxury market.
This is the first of a series of post to discuss how Italian luxury brands are approaching digital marketing in China, India, Russia and Brazil. Here’s a projection on the global luxury market in the BRIC countries (source: L2 Think Tank, 2013):
Internet and the luxury market in China
China became the first luxury market: it is estimated that nearly 20% of global activity in this sector is influenced by Chinese demand, and growth prospectives are high. It is indeed expected that Chinese middle-class, currently constituting between 6% and 10% of the population, will grow to 50% within the next 10 years, significantly affecting the purchase of high range products, icon of such status upgrade (source: Observer solutions, 2013).
Chinese buyers’ characteristics include average young age (with 80% being under 45), an attraction to western brands and high internet consumption. Therefore it is the Internet itself the ground on which the challenge for Chinese consumers’ conquest it to be played. With a 45.8 % of internet penetration, China is in fact the online biggest population: 618 millions of people, with a 10 million per month increase (source: China Internet Network Information Center, 2013).
Amongst them, 91% has a social network account, and in fact Chinese users’ habits have changed when compared to past years: they now spend much longer in community oriented activities such as blogging (+128%), particularly on Sina Weibo (+376%) and e-commerce (+152%) (source: Boston Consulting Group, 2013).
Another relevant point is that on-line shoppers’ number is 302 millions, obviously likely to increase in conjunction with web users. Expecting 701 millions internet users by 2015, 363 millions Chinese will shop on-line, 51.8% of the whole population.
Particularly, the Chinese e-luxury market grew by 71% in 2013 for on-line transactions when compared to 2012. And these are the numbers of China’s Internet users and on-line shoppers, since 2009 to 2015 (source: Observer solutions, 2013).
Made in Italy in China: the state of the art
Thanks to this, luxury brands have a large array of opportunities in China, as long as they are able to understand its peculiarities and can combine e-commerce to a strategy aimed at social media marketing.
An example of the importance of localising contents is found in Versace’s Sina Weibo account, where are mainly shown products rather than any particular initiative. When comparing photos of stars in Versace, the most appreciated pictures are those inherent to Asian celebrities.
Some brands experiment with alternative strategies, for instance Gucci can be found on Douban, a feedback website where it publishes articles and multimedia contents (more info on Douban can be found on this report). Here it promoted “Cut&Craft”, a contest that challenged its most creative fans to create home-made bags with the help of tips and a small handbook, and rewarded the best creations with original Gucci handbags.
Fendi is also very proactive, creating contests that require Sina Weibo followers to express the meaning of some particular items and allowing them to become involved with theme photographs. By doing so Fendi receives a lot of response, proving that Chinese users do read and follow blogs, but only interact when directly involved. Unfortunately users never receive a reply, even when asking information on how to purchase said goods.
Fendi’s contest for the brand anniversary, on the official Sina Weib page (Sina Weibo, 2013):
Salvatore Ferragamo is the only one to offer privileges, discounts and gifts for owners of Sina Weibo VIP accounts.
These are interesting initiatives that show a certain (limited) degree of experimentation, but they do lose value when it comes to completing the purchase: for a lot of italian brands e-commerce in China is not actually available (e.g. Gucci, Bottega Veneta, Zegna, Fendi, Versace, Prada).
Prada, on top of having a disorganised and slow Chinese website, is totally absent from any Chinese social network. Explanation of this can be found in Miuccia Prada’s statement, who declared herself to be against e-commerce and not convinced by other competitors’ trials, although she admits it is fundamental to be present on the web.
In fact, the fact that there was no official social media channel for China allowed the creation of a fake Prada profile with a quite large fan base, posing a risk of creating misinformation and a distorted brand image, besides that of losing potential customers.
Although it must be noted that the same thing may happen even for those brands that have well-established presences on Chinese social media, such as Dolce&Gabbana.
Some brands invite users to follow their official accounts on WeChat via a QR code, where they personally thank new followers for the subscription, but then post very few updates. Yet the trend is changing: many brands are getting more and more active on their official WeChat handles (such as Gucci), that are sometimes directly managed by local distributors, as in the case of Max Mara.
Armani in China: a case study
With regards to Made in Italy brands, Armani was one of the firsts to understand Chinese market potentialities, which it reached in 1998. Despite its distribution to sales points, it could not adequately reach second and third-tier areas.
For this reason it integrated a Mandarin Chinese e-commerce to its website in 2010, providing a size converter, prices in yuan, a store locator and payment methods consistent with to Chinese habits (Alipay or cash on delivery).
Analysing social media marketing strategies used by Italian luxury brands highlighted that – in order to significantly involve Chinese consumers and to produce successful advertising campaigns – it is fundamental to mix the brand’s essence with local relevance. For Armani this was “One night only in Beijing 2012″, an international and highly spectacular fashion event set in Beijing, to show the new collections and 15 looks especially created for the Chinese market (watch the full show on Sohu TV).
In order to create buzz and expectations around this event, Armani dedicated the first on-line chat of the Armani Tweet Talks to China some months before, naming it “China, the new fashion superpower”. The Armani Tweet Talks is a project involving experts, fans and interested people in a fashion debate.
A downside to this was Twitter being on the list of websites blocked by the Great Firewall, with only the most important updates being reported on the Sina Weibo page, the Chinese public was prevented from actively participating despite the effort. Management for the Sina Weibo account is however quite good, as it publishes posts at least once or twice per day and reaches ten or more posts during particular events or special occasions. Armani is active in reading comments and users’ questions, always answering adequately and professionally.
Contents are focused, when possible, on the local relevance of topics: for instance, a campaign has been launched in collaboration with GQ style magazine to find a Chinese model from the Sina Weibo fans base; moreover photographs of the fashion shows are highlighted when including asian men and women to engage in a fashion vision from their point of view.
Any missed opportunity?
Sadly the lack of communication of italian brands with China is still large, starting from a website that is often only a window shop referring back to actual shops when it should instead be informative, create curiosity and particularly be of quick consultation, with a complete translation, conversion in local currency and sizes, and linked to the brand’s other social media pages.
Experimenting with other platforms beside Sina Weibo – for example to tell the brand’s history on light-blog DianDian, or to share images on Taobao-powered content curation platform Meilishuo – are just a few of the ways a brand can differentiate itself. It is fundamental for editorial planning to involve local celebrities and fashion bloggers, who significantly influence this type of audience far more than in the Western culture.
Omitting mobile e-commerce is another frequent mistake, unforgivable in a society that mostly connects to the web by mobile (81%), with IM being in first place for online activities. Chat apps like WeChat represent the a chance to personally interact with a single user, offering unique personalisation and a sense of exclusivity, precisely adapting to what is expected by a luxury purchaser (source: China Internet Network Information Center, 2014).
It is unthinkable in fact to rely on the same communicative strategies for realities that differentiate to ours. As it has been done for China, a deep study both of the different platforms and the audience, which is usually passive and observing, is required, as there are far more visits, registrations and shares than actual interactions. Despite this, they expect frequent updates and when directly involved they reveal to be very active and enthusiastic.
“Moreover, as luxury market becomes more mature, like in main Chinese metropolis, consumers are less interested in the ‘bling’ effect, or the flaunt of luxury itself, and become discerned, consciously assessing the quality and added value of a product” (Andrea Fenn, 2013).
For this reason it is of uttermost importance to base user targeting on the city they are from, as they will have different desires. To exploit social commerce, updating official profiles and making it simpler for the user to move from purely informative and entertaining contents to an actual purchase, does not mean to denaturalise luxury’s communicative essence, which can easily posses a detached and prestigious register, but to take advantage of products going viral by digital word of mouth.
The key is to therefore relate with the Chinese audience with new eyes, and to export Made in Italy socially and digitally in order to conquer this important emerging market.