Low-Hanging Fruit: Engaging Chinese Consumers in the UK
The pull of the Chinese domestic market is strong for many foreign brands looking for the next international sales opportunity.
The following write-up summarises a discussion held at TONG’s monthly breakfast briefing in June. We welcomed a number of retail brands to our offices to hear cofounder Adam Knight present on the subject of Chinese consumers in the UK, followed by a lively discussion.
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The pull of the Chinese domestic market is strong for many foreign brands looking for the next international sales opportunity. But China remains a challenging place to do business — whether it be intellectual property rights, oversaturated distribution channels or the significant financial investment required to make a splash, countless brands have tried and faltered to really make a mark in this most competitive of markets.
For many British brands looking to engage a Chinese audience, one segment is often overlooked and underserved; consumers already here in the UK.
The Chinese population in the UK has grown substantially in recent years. Fuelled by a desire for a stable investment environment and world-class education, Chinese emigrants have settled across the world, with a particular focus on countries such as the US, Canada, Australia and the UK. Data from a Barclays Wealth report shows that 47% of China’s HNWIs (High Networth Individuals) plan to move abroad within the next five years, revealing a significant opportunity to target travelling and inbound Chinese consumers.
Foreign brands are picking up on just how valuable the Chinese population in the UK is. Higher incomes and an increasingly global outlook among Chinese tourists, and a desire to try new experiences all point towards positive growth for the Chinese market in the UK. More than almost any other group of people, they enjoy bespoke, unique products and experiences and value quality and brand reputation, and they are willing to invest their time and money into brands and experiences that interest them.
Chinese consumers are also incredibly connected via social media, and enjoy sharing personal stories related to new products they have tried, brands, travel experiences, and more — thus hold incredible potential from a sales and marketing perspective for brands looking to reach their Chinese audience in the UK.
Precise numbers from this year are not yet known, however between 2016 and 2017 saw the UK’s largest group of international students with 95,090 Chinese students overall, more than the total number of Welsh students at UK universities. Applications from China and Hong Kong rose from over 17,000 in 2018 to 21,000 this year. To top this off, there are over 100,000 postgraduate students from China and Hong Kong out of 350,000 full-time postgraduate students at UK universities. Chinese students increasingly choosing to live and study all over the UK, . They are magnets for travel, cultural institutions and shopping opportunities thanks to their spending power and relative wealth in comparison to other international students, which has turned them into a highly sought-after target group for many brands.
VisitBritain anticipates a whopping 483,000 visits in 2019, up 43% in 2017. Chinese visitors expected to spend more than £1 billion this year which is up 50% from last year. This year’s Chinese New Year period saw bookings from China to the UK up 24% from the previous year, and bookings from January to June this year were up 31% from last year. Aside from these key holiday dates, Chinese tourists are becoming less seasonal flyers and enjoy travelling all year round, particularly in Europe and the UK. They are also increasingly catered to as a group of people and are more influential than most groups of inbound tourists as the largest source of tourists, despite only 9% of China’s population (around 120 million people) owning a passport compared to 76% of Brits.
Chinese tourists have garnered ‘low hanging fruit’ status for brands: Chinese people in the UK are comparatively wealthy, have high spending power, and while they are being catered to more and more as a group, they are still underserved from a marketing perspective and create brand champions.
Chinese New Year is an opportune time as the peak travel season for Chinese tourists. The UK is already home to Chinatowns in Manchester and London, and festivities are celebrated across the country in Liverpool, Manchester, Birmingham, Leeds, Chinatown in London — and this year Edinburgh hosted its first ever Chinese New Year festival. This signals the growth that is still yet to come.
One example of a surprising favourite amongst Chinese tourists was a roadside fish and chip shop in Yorkshire. Scott’s Fish and Chips went viral purely as a symbol of quintessential British food and culture — as well as boasting a parking lot and being conveniently located on the motorway to Bicester VIllage, another favourite amongst Chinese consumers seeking luxury deals in the UK. The appeal of something that is stereotypically British stands out to Chinese consumers as a ‘quaintly compelling’ experience that is for those of them who have never experienced authentic British fish and chips.
Our top four tips
We have listed four key strategies for brands to engage with Chinese consumers in the UK and to get them to notice your brand.
Brick and mortar stores are still a popular marketing tool particularly among Chinese consumers, despite their affinity for ecommerce and mobile shopping platforms. Combining the online and offline experiences encourages higher customer engagement, initiates conversation on social media, and it helps to generate brand awareness. Creating hashtags and unique customer experiences, and products designed for your Chinese audience fosters a relationship between consumers and brand, whilst avoiding Chinese stereotypes that could backfire to offend. Pop-up stores, giveaways, influencer meet ups and other activities are all effective ways to appeal to Chinese consumers.
Being seen in all the right places
Using Chinese social media and Chinese platforms and the ‘nearby’ function/geo-tagging to attract consumers is a top way to get noticed. Chinese travellers reliance on social media means they have become more independent in their travels and seek out unique experiences that are off the beaten track . A number of social media apps including Little Red Book (RED), Ctrip, Mafengwo, Tuniu, Qiongyou, all carry the location feature. This additional feature means it is more worthwhile than developing a Chinese website, as optimises search results and prompts review writing.
This has traditionally proven difficult due to its limited ad formats and high minimum spends. Recent system upgrades and elimination of minimum spends for WeChat moments ads have made it more accessible, and now brands can now place ads on any budget, the one-week campaign timeframe restrictions have been removed, creative approval time has been expedited from 7 days to 2 days. The lower barriers to entry presents a significant opportunity to drive traffic to their accounts and to generate organic growth by running targeted campaigns.
WeChat marketing has significant potential for growing follower numbers. Engaging content builds brand loyalty and encourages consumers to make repeat purchases. The geo-tagging feature allows foreign brands to target customers who have logged in on WeChat in a country on a specific day. WeChat moment ads are priced based on CPM (cost per mille/cost per 1000 impressions), and the CPM for targeting Chinese travelers is between 150RMB to 180RMB (about £15 to £18), a relatively low cost for the potential return on investment.
Using local influencers
Harnessing the power and influence of KOLs (Key Opinion Leaders) as brand ambassadors helps build brand image and awareness. Choosing the right KOL to match your brands’ tone of voice and message is key, and this is where our services stand out. Some of the influencers in the UK that we have worked closely with are typically young, affluent females with a large following, some who may have attended British universities and their followings are usually fellow Chinese students in the UK. As well as influencers, social media platforms that cater to travelling Chinese audiences include Red Scarf, HereinUK and London Street Cupid are all relatively cheap and straightforward ways of connecting with the Chinese audience.
Targeting Chinese consumers in the UK is the most straightforward way of penetrating the Chinese market, without entering China. Understanding Chinese social media and how to build your target audience in the UK is the biggest challenge, but partnering with TONG means that we are able to help with filling the gaps and be with you every step of the way throughout your China journey. We pride ourselves in providing clients with end to end services which means you don’t get left behind in the dark, so reach out to us to find out more.
If you would like more information on how to bring your brand to China, please reach out at firstname.lastname@example.org