Why WeChat is the Perfect Platform for Luxury Brands
China is the world’s most lucrative market for luxury products: the projected total value of Chinese luxury spending is estimated to reach 1.2 trillion RMB by 2025 (over $170 billion) and Chinese shoppers are set to account for 46% of luxury spend by 2025. British luxury brands should take advantage of the UK’s heritage and reputation for quality and craftsmanship to capitalise on a maturing and dynamic Chinese consumer base.
We’ve identified 5 key trends in Chinese luxury consumers:
Firstly, consumers are getting younger: the average age of a Chinese luxury consumer is 28, and 58% are aged under 30. These young consumers consider luxury brands a form of social capital that distinguishes them as a member of an exclusive community. Generally new to luxury, they are less brand-loyal than their parent’s generation and as such smaller and up-and-coming brands have an excellent opportunity to connect with consumers seeking to display their individuality. As they’re constantly engaging with online content, establishing an up-to-date, comprehensive online presence is vital for brands hoping to reach young Chinese consumer.
Secondly, luxury spending in China is increasingly female. 40% of Maserati & Porsche sales in China were made to female customers, four times higher than sales made to women in the West. This trend goes hand in hand with the increased education level of Chinese luxury consumers, the vast majority of whom are now college-educated.
The third trend is a clear increase in luxury consumers from lower-tier cities. 36% of luxury consumers come from tier 3 cities and below, compared to 22% coming from tier 1 cities. Lower costs of living and more free time mean residents of lower-tier cities have both the expendable income and time to research products. Many of these cities are underserved by physical stores, meaning e-commerce is vital for reaching this growing consumer base. Localised campaigns on popular regional platforms offer an exciting way to reach and inspire consumers.
Fourth, Chinese luxury consumers are highly nationalistic. Culturally insensitive campaigns, such as this one by Dolce & Gabbana, receive huge backlash on social media and can have a long-lasting damaging effect on a brand’s presence in China. Conversely, brands that show respect for and connection with Chinese culture are likely to be received well. Wedgewood does an excellent job at this on WeChat, despite being in the challenging position of selling china to China.
The fifth and final trend is that Chinese luxury consumers are the most digitally active in the world: 50% of luxury consumer attention is online, mostly on mobile. Luxury online spend grew by 27% in 2018, and brands are racing to keep up. According to a report by Bain & Company, since 2015, the top 40 luxury brands in China have nearly doubled the portion of their marketing budget devoted to digital.
WeChat: Exciting but Frustrating
So, how can luxury brands boost their digital presence to reach Chinese consumers? One word: WeChat. Of the increased digital marketing spend mentioned above, between 40% and 70% is spent on WeChat.
Launched in 2011 as a simple messaging app, WeChat’s userbase and functionalities have expanded at a pace that even by Chinese standards can only be described as meteoric. From social media channel to payments method, work tool to booking engine, WeChat has become the indispensable operating system for life in a connected China.
For brands, it is the platform that is simultaneously most exciting and most frustrating to use; on the one hand fundamental to any marketing and sales strategy, on the other eye-wateringly competitive and therefore expensive to do business on.
WeChat offers an unrivalled opportunity to reach and engage new audiences for luxury in China. The user experience offered, as well as the possibility for additional functionality in the form of Mini Programs is unmatched anywhere in the world. No wonder that in a recent survey, the top 40 luxury foreign brands in China all reported dedicating between 40-70% of their digital budget solely to this one channel.
So how can WeChat’s many features be optimised for luxury brands?
Brand Storytelling: the possibility for rich media content and H5 page design allows for strong branding.
A departure from the brand’s typical monotone packaging, this campaign launching a new range of fragrances gave Jo Malone the chance to get creative with its WeChat posts. Beyond beautiful imagery, the brand employed sterling copywriting to evoke certain scenes in the minds of their readers in true poetic format. This article was read 44,000+ times.
Brand Brochure: WeChat’s microsite function allows for static brand content to be hosted within the app; a rich media digital brochure in the palm of your followers’ hands.
This ever-green content from Malone Souliers is easily accessible from the brand’s WeChat Official account. Articles showcasing the brand’s history and craftsmanship are easily accessible, and there are plenty of links to the brand’s online store.
VIP Services: customer service messaging and exclusive VIP zones make your followers feel loved and helps with retargeting.
Leica uses this VIP platform to engage with customers and boost O2O.
Influencer Collaborations: working with KOLs has become the surest route to WeChat success, opening new audiences to your brand.
JoE x Avo campaign in December 2019 saw Chinese influencer Avo come to Scotland and meet with the brand. Followers were then directed to a selection of new products curated in classic Chinese colours.
Retail: WeChat Mini Programs have blurred the distinction between marketing and sales, offering a unique opportunity for social commerce.
Many brands use a Mini Program store as a sales channel. L’Oreal Paris uses its store to highlight best-sellers, provide an O2O booking system for makeup services, live-stream fashion shows, and offer tester and sample giveaways in exchange for customer data.
WeChat offers an unprecedented way to produce beautiful content for Chinese consumers and to streamline the customer service journey from initial interest to the sale. If you'd like to book a consultation with one of our China market specialists to understand how you can develop your brand’s WeChat presence, please reach out.
Our recently published Walpole WeChat Report 2020 provides key insights into the digital presence of 197 British luxury brands on China’s most important social media channel. By ranking brands within luxury sectors, our research offers unprecedented potential for competitor benchmarking. Download the report to access the full data set, including a sector-by-sector breakdown, and to read our recommendations for brands new to WeChat and those looking to develop their WeChat presence.
This article is part of a series highlighting the key findings of the TONG Walpole WeChat Report 2020. Watch this space for our next posts and upcoming events, which will cover Mini Programs and sector-specific insights.