When it comes to mobile marketing, China is drawing together the potential of data, social marketing, and mobile devices, and evolving so that more and more people are realising the potential of the virtual world.

In China, this coming together of popular trends is known as “Internet Plus”, a reference to the manner in which traditional industries have been, and continue to be, directly affected by newly developed business models, including mobile marketing. According to a CNNIC Statistical Survey on Internet Development in China, by December 2016, China boasts 731 million internet users, 695 million of whom are mobile internet users. This accounts for a staggering 95.1% of the total internet users population.

The impact of mobile marketing on the consumption of content

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The final quarter of 2015 saw the Chinese smartphone market grow by 8%, the equivalent of over 117 million devices. So what does the market growth tell us about mobile market in China?

A rapidly evolving market

It’s not just that the mobile market in China is growing; also of interest is how it is changing to respond to consumer demand. Just two years ago the top market players were Samsung, Coolpad and Lenovo. Now, Xiaomi, Huawei and Apple take the top spots. Xiaomi and Huawei have been able to gain popularity thanks to their understanding of the market. Where large multinational companies such as Apple are selling expensive premium handsets, these domestic manufacturers have been able to undercut their prices with low-cost devices, allowing them to gain a share in developing markets (source: Mobile Marketing Watch).

The change in the top three shows just how effective it can be to identify the core needs of your consumer and address them with your product offering. Xiaomi have also benefited from their famous mobile marketing strategy, which involves using Chinese social media to turn their fans into avid brand ambassadors, allowing them to promote themselves without the need of paid-for advertising.

Domestic manufacturers are recognising the value of rural markets

When many overseas businesses think about China, they automatically think of the large Tier 1 cities, such as Shanghai, Beijing and Guangzhou. However, those markets are becoming saturated. While the large established brands continue to throw large amounts of money and resources into battling over the major cities, other domestic manufacturers have been able to evolve into major players in telecommunications thanks to the way they target their business.

It would be a mistake to think that lower tiered cities in China are not a valuable or worthwhile market. Tier 4 and 5 cities, the two lowest ranks in the classification system, are home to a combined 250 million households, a market nearly 16 times the size of Tier 1. These two tiers also have a combined income value of 7 trillion (source: Nexus Pacific).

Brands such as OPPO and Vivo have identified the fact that consumers in these parts of the country cannot afford, and do not desire, expensive smartphones. However, these consumers are responsible for 56% of Chinese consumption, and by creating low-cost devices to suit their needs, OPPO was able to rise to claim the fifth spot on China’s list of the biggest smartphone manufacturers, while Vivo took fourth place (source: Reuters).

Their success demonstrates the vast and complex nature of the China internet market, and the need to understand that the most lucrative opportunities may not necessarily be in China’s wealthiest regions.

(Image source: Image created by scottchan | www.freedigitalphotos.net)

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Chinese marketers are not ignoring the potential that mobile phones give them to access over half of the entire population of China. As an indicator of how you should be approaching mobile marketing in China, here is a look at how other companies use mobile marketing.

Chinese companies are big spenders on mobile

The average Chinese company is now investing heavily in mobile marketing, with over 70% believing that mobile marketing will be a fundamental part of their strategy by the end of 2015. As it stands the average company spends around 28% of their marketing budget on mobile, with 41% spending over a quarter. And it seems they have no intention of curtailing their spending any time soon: 77% of companies are planning to increase their mobile spending, some by up to 30%.

The investment is clearly paying off, with 39% of web traffic to company sites coming from mobile devices. It’s not just visits that mobiles can generate either: 27% of e-commerce revenue is generated by mobile transactions (source: eConsultancy).

Mobile Chinese websites the most popular form of mobile marketing

According to a study by the Mobile Marketing Association, the most common mobile marketing method in China is to use a Chinese website optimised for mobile experience (58% of respondents). Having a mobile optimised Chinese website allows users to easily find and access important content and navigate to key areas. Considering more people in China access the internet via a mobile device than do a desktop PC, making sure you have a Chinese mobile website to cater to their requirements is no longer an option, but a must have.

Following closely behind Chinese websites (at 56%) are mobile applications (source: MMA). Marketing on mobile apps is important, with 25% of respondents to a survey by Forrester claiming to use their mobile phone to shop on a weekly basis, and a further 15% doing so daily (source: Tech Crunch). In total 71% of smartphone users have made a purchase from a website using their device (source: Go-Globe).

Chinese consumers are more open to mobile advertising

78% of Chinese mobile users are happy to view an ad that contains content relevant to them. In the UK, where mobile advertising is often seen as intrusive, only 33% of mobile users would click a relevant advert. Only 7% of Chinese smartphone users do not want to be targeted by mobile ads, and nearly half are happy to be targeted daily. The most popular formats for mobile advertising currently used are video (used by 36% of companies) and mobile coupons (33%). 29% of companies believe that the best time to advertise to smartphone users is during the morning commute, while 24% schedule their adverts for the weekend (source: go-globe).

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As of July this year China had 632million mobile internet users – more than double the entire population of the USA. While growing at a rate of 14million new users each year, figures are suggesting a slow down in smartphone growth with Q1 figures of 2014 being around 25% lower than the same period in 2013. This is not bad news, however, as with 83% of Chinese netizens accessing the internet through their phone, the slowdown simply means the number of non-smartphone users is naturally getting smaller and smaller (source: Market Watch).

There are plenty of Chinese mobile internet users, and here’s what they like doing during New Year and what you need to consider mobile marketing in China.

Advertisment clicks and App Downloads

During Chinese New Year, many people travel home to be with their families, or abroad to take advantage of the time off work. As well as being able to check train, bus, and flight times and keep up to date with the traffic, Chinese smartphone users are also looking for ways to alleviate the boredom of long journeys on public transport, or waiting in airport terminals.

The highest number of app downloads took place before the New Year holiday period, with smartphone users preparing for their trips. The number of smartphone users clicking on advertisements increased by 51.6% during the January 16^th – February 6^th period. After the initial surge in app downloads, the rate steadily declined over the actual Lunar Festival period, ending up 28.7% lower at the end of the Spring Festival than at the start. This is likely down to poor internet speeds or lack of WiFi whilst travelling or at home in rural areas. WeChat was the most popular app by far in terms of advertising clicks, with the other most popular types of app in terms of advertising clicks being arcade style games, productivity, and entertainment apps (source: The Next Web).

Gifting

A well established tradition for Chinese New Year is to give hongbao to friends, relatives, and business partners. These red envelopes contain money. For this year’s celebration, the number one instant messenger app in China, WeChat, introduced a new service which made hongbaos (red envelope) digital. App users could send up to €12 in a digital red envelope to their contacts. It proved very popular, with five million people sending out 20million cyber hongbao in the first two days of Chinese New Year (source: Mercis). Envelopes, particularly red ones (red being the colour of prosperity and fortune in China) are a powerful and tradition symbol; worth bearing in mind when planning your marketing to China during the Spring Festival.

(Image source: “Cropped Image Of Man Displaying Smart Phone” | www.freedigitalphotos.net)

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Flash forward three years, and a lot has changed. Chinese consumers can buy almost anything they want using their mobile phone, and mCommerce is growing at an astounding rate. What could another three years do for the marketplace? What will mobile eCommerce in China look like in a few years’ time?

Worldwide mCommerce forecast

The fact that tablets and phones are more popular than PCs is one of the driving forces between the rise of mCommerce. Across the globe mCommerce markets are growing, with global sales expected to increase nearly five-fold in the next four years. This is up from $133billion in 2013 to $626billion by 2018. In the US alone, 2017 mCommerce sales will total more than eCommerce sales across the globe in 2013 (source: Evigo).

Mobile China online shopping forecast

China’s mCommerce market is showing strong signs of growth, partly thanks to the monetisation of popular social app WeChat. mCommerce revenue in China is anticipated to reach $51.62billion; an increase of almost double the figure from the previous year, and representing a fifth of the anticipated total eCommerce in China sales for the entire year (source: Tech in Asia).

By 2018, China is set to be the world’s second biggest mCommerce market, behind the USA. In the next four years, its mCommerce market is expected to triple in size, having seen year-on-year growth of 165.4% in 2013 and an expected 91.1% growth by the end of 2014 (sources: Euromonitor, Go-Globe).

Currently the Alibaba Group dominates mCommerce, with a 76.1% market share. Its closest rival – JD.com – has a 5.2% share. Alibaba’s Taobao platform has more than 4 times the number of active accounts of JD.com (at 119.09million), and is used more than twice as frequently each month. On Singles Day, mobile devices were used to purchase $877million worth of goods on Alibaba (source: Go-Globe).

The popularity of smartphones in China, which has more phone subscribers and smartphone users than any other country in the world, is fuelling the demand for mCommerce. Factor in the fashion for flash sales, which see everything from beauty products to limited edition phones selling out in huge numbers. Then consider that mobile purchases are over a minute quicker than on a PC, and it is not hard to see why China is the perfect place for mCommerce to flourish and thrive

(Image source: ‘Online Shopping Concept’ | www.freedigitalphotos.net)

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Marketing in China: Smartphone overview

Most of the popular smartphone makers in China are domestic brands such as Xiaomi. This is because Chinese smartphone producers have focussed on producing low-cost devices that do one thing particularly well. Rather than trying to compete with products such as the iPhone 5s or Nokia Lumia, which boast a wide range of different features, smartphone brands in China are offering cheaper models that are brilliant at taking pictures, or great for watching video, and little else (source: China Daily). This could explain why so many of the brands featured below are domestic companies. (All market share statistics and rankings are from China.org)

5. Apple

Apple probably aren’t used to seeing themselves at the bottom of lists, but their position as the fifth most popular smartphone brand is actually an improvement. Until the second quarter of 2013, Apple were the 7^th most popular brand. It is only recently they have overtaken Xiaomi, with their market share growing to 6%.

4. Huawei

China provides a third of Huawei’s total revenue, with profits growing from 15.6billion yuan in 2012 to 21billion yuan in 2013. According to Huawei, in 2012 they became the 3^rd biggest smartphone manufacturer globally, in terms of number of smartphones shipped (source: BBC News). As of the end of last year, they held 9% of the market.

3. Yulong

Heightened privacy features make Yulong Coolpad phones one of the most popular choices with businesspeople and government officials. Sticking to the strategy of developing low cost, single feature phones, Yulong’s heavy focus on R&D has made it a serious contender in the Chinese smartphone market. Stock price doubled between 2012 and 2013, arriving at a figure ten times higher than when the company was originally listed (source: Forbes). Yulong has a market share of 11%.

2. Lenovo

Having already beat HP in the global market for desktop PCs, Lenovo have turned their ambitions to the smartphone market. Considering they are the second most popular smartphone brand, with a 13% share, they are clearly doing well. Last year, Lenovo’s yearly revenue was $38.7billion (source: The Economist).

1. Samsung

With 21% of the market share, it is Korean manufacturer Samsung that still tops the tables. Samsung are keen to continue to focus on China and increase their market share as the market in developed countries becomes more crowded. Despite stiff competition from domestic brands, China is still ripe with potential for the company to continue to thrive (source: Engadget). (Image source: ‘Smartphone And Function Icons’ | www.freedigitalphotos.net)

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WeChat overview

WeChat is a social chat app that combines a huge array of functions. It allows users to connect with each other and share a wide range of content, from text messages to photos and videos. The app can be used for individual and group chats, sharing photos, locating friends nearby, sending videos and broadcasting messages (source: WeChat).

The app has enjoyed widespread popularity, with its user base across the world reaching more than 355million as of 2013 Q4. This represents a jump from Q3 of over 30 per cent, equating to almost 85 million new users (source: Tech in Asia).

WeChat’s mobile commerce platform potential

When developing the app, Tencent wanted to focus on creating close and valuable interactions between genuine friends. Unlike Weibo, to which the app was often compared, WeChat is a platform for which users who already know each other can share content and socialise. It is this close connection between users that has made WeChat the perfect platform for m-commerce.

Most other applications have opted for display advertising to make their platforms profitable. Banner adverts can be displayed to huge groups of people in order to create a far-reaching message across a target market. WeChat makes this difficult, but the way its users are connected gives it great potential as a mobile commerce platform. Word of mouth is, as we’re sure you know, still the most effective form of marketing, and with Chinese consumers in particular valuing social recommendation, Tencent has an m-commerce platform with huge potential (source: Clickz).

WeChat – interesting facts

Mobile commerce spending in Q1 of 2014 totalled $10.3billion, representing a 140.8% year-on-year increase (source: Observer Solutions). WeChat works both for online sales, where the retailer takes money and goods or services are delivered; or offline, where retailers scan a QR code in store that has been generated by the app during the transaction. By teaming up with other apps WeChat has made it easy for users to pay for all kinds of services. This is perfectly illustrated by their partnership with a taxi app that resulted in 2million people using WeChat to pay for taxi rides in just one day in February this year (source: Tech in Asia). All kinds of companies have since teamed up with WeChat to offer in-app payments, with McDonalds being the first major company to do so (source: DMR).

From coffee to smartphones, WeChat users have already shown their willingness to purchase a range of goods and services via the app.

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1. China Travel Market Size

Compared to 2000, the travel market in China has grown by more than 800%. In 2012, 83 million people from China travelled overseas (source: The Next Web). That means you have a market bigger than the entire population of the UK eager for new experiences. In much the same way that Asia holds a mythical and magical appeal to people in the West, Chinese tourists are equally enamoured with Western countries.

2. China Travel Market Spend

As we said in our blog post overview of the China travel market, Chinese tourists are big spenders. Where once American tourists were at the top of the league table in terms of overseas spending, they have now been surpassed by Chinese tourists. In 2012 alone, Chinese visitors to other countries spent $102 billion (source: qz.com)

3. China Travel Market Potential Growth

If the information on the current size of the market, and the amount of money it is willing to spend, still hasn’t got you excited, we’ve got plenty more good news to come. The freshly affluent middle classes in China are driving the boom in the travel market. As China’s economic success continues to grow, so will the number of rich middle-class consumers with the taste for travel. And with a population swiftly approaching 1.5 billion, there is plenty of room for this market to expand.

4. Accessibility

As the world’s largest smart phone market, it is hardly surprising that China is embracing new technology and ways of accessing, researching, and purchasing holidays. If you read our last post on the major players in the China tourism market, you might not be surprised to learn that Ctrip’s travel app has been downloaded more than 50 million times (source: Ctrip), with a fifth of customers using it to book hotels.

You have the knowledge – Now act upon it!

The China travel market is a lucrative and promising resource of potential customers for enterprising and digitally savvy companies. As the market expands, large companies are already doing their best to establish a strong foothold in the market. But with such a large base of potential customers, there is still plenty of room for new players to enter the market. If you act fast, and have the right strategy in place, you can gain a lucrative and awarding portion of this thriving new customer base.

Get in touch with us today to find out how.

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Here are the key facts and figures:

1. Smartphone sales account for 73.2% of all mobile phones sold in China.

2. Samsung is the market leader in China, having the highest market share at 24.5%, followed by Nokia and Apple.

3. 74% of male mobile phone users own a smartphone, while only 54% of female mobile phone users own one.

4. Android, accounting for 71.0%, is the top operating system in China.

5. Top smartphone apps in China by number of installs are QQ, WeChat, Sina Weibo, Taobao, QQ spaces, therefore don’t miss the opportunity to promote your products and services via these social media platforms or e-commerce platform.

Infographic by- GO-Globe.cn

(Image source: “Hand Holding Smartphone With World” | www.freedigitalphotos.net)

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