The importance of Chinese consumers on global sales can often be profound. In the case of some luxury brands, more than 50% or more of global sales can be attributed to Chinese nationals - when combining both Chinese and overseas purchases by travelers.
The challenge of marketing to China is now one that needs to be addressed at a global level, with increased attention from brand Headquarters. Brands must have China marketing plans at a global level and think about how to engage in China, and at multiple checkpoints around the World.
Not only that, but brands that do support China efforts at a global level must get it right. The dramatic gaff by Dolce & Gabbana in 2018 is likely to derail the brand in China and irreparably harm the brand at a global level.
Brands that want to support China effectively must do so with messaging and content which is respectful and authentic. They must also balance core brand identities with ‘localizing’ for China.
Finally, as China’s presence expands, so too will its global impact on media and marketing. For instance, China is Facebook’s second largest advertising market after the US ...and Facebook is blocked from operating inside of China.
According to the Word Tourism Organization , there were projected to be 154 million Chinese travelling to other parts of the world. This number is further confirmed by the Chinese Outbound Tourism Institute which reported 80 million outbound visits in the first half of 2018. Chinese overseas travelers also lead all other nations in tourist spending, accounting for one-fifth of all tourism spending Worldwide. At the same time, there is a massive and growing market for cross-border ecommerce, with Chinese ordering direct from overseas websites.
Chinese are quickly becoming more international and are not bound by commerce channels inside the Great Firewall. They will toggle with ease between the best possible channels, to find the best products at the best prices.
Daigou in Decline
A huge portion of spending by outbound travelers goes toward purchases which, in turn, will be resold when the traveler returns to China (a process known as “Daigou”).
At the same time, the volume of cross-border ecommerce transactions (purchases online by domestic Chinese from Websites overseas - known as “Haitao”) has also been swelling. Data from
iiMedia’s 2017 eCommerce report suggest that 74 million Chinese consumers will buy online, from overseas in 2018.
The total value of Chinese cross-border commerce was pegged at US$128 Billion in 2018.
The Government Is Getting Serious
The Chinese government is making serious efforts to control the volume of Daigou activity. In July, of 2017 a Taobao Daigou was sentenced to 10 years in prison and a RMB5.5 million fine for smuggling and tax evasion.
The government is implementing a group of initiatives, including;
(1)increasing the number of physical customs’ inspections at arrival terminals,
(2)imposing restrictions through social media channels (eg. blocking WeChat accounts sharing payment information), and
(3)raising the ceiling for “Haitao” (Online-overseas) purchases.
Starting from January 1, 2019, the tax-free ceiling for personal cross-border ecommerce purchases has been raised from RMB20,000 per year, to a limit of RMB26,000 per year.