The end of the year is always a time we enjoy at the Skinny. On top of the medley of cheesy carols, online gift deliveries and general festive cheer, it is also a time to take stock of the past 12 months and look to the year ahead. We like to ensure that we continue to be on the cutting edge of the exciting and dynamic Chinese market for our clients.

With that in mind, here is a snapshot of what China Skinny thinks are important things to watch in the China market in 2017:

1. Package Customisation by Channel

It’s nothing new to have different packaging in large-format retail versus a convenience store, but tailoring packaging to other important sales channels such as ecommerce is often overlooked in China. Understanding key motivations and purchase habits for different channels and ensuring portion sizes, multi-packs and even the look and feel of packaging is tailored to that channel will keep brands competitive and relevant to consumers. Optimal packaging for the all-important daigou channel in some categories should also be considered.

For many categories, the packaging and sizes for sale online are quite different to brick & mortar stores, which can also differ by format as illustrated in ecommerce versus retail stores.

2. Ecommerce as a Marketing Tool

Measuring the success of ecommerce purely by tactical sales promotions is missing the bigger picture. Ecommerce has become a vital touch point in many Chinese consumers’ customer journey to learn about products and brands. This is often long before they make purchases - both online and offline. Marketing opportunities on ecommerce platforms are becoming richer and more sophisticated with innovations such as streaming video. Done well, ecommerce stores can be optimised to build awareness, engagement, loyalty and advocacy.

Comvita’s Tmall Live stream is a great example of how to strengthen brand positioning and take consumers to the source of products through an engaging and interactive platform.

3. Flourishing Niche Online Platforms

Whilst there has been much consolidation from China’s online giants recently, ambitious new businesses focusing on targeted niches are proving to be effective complements or even alternatives to the big boys such as Tmall and JD. We only need to look at the cross-border category which is much more fragmented than domestic ecommerce. A number of platforms supplying verticals such as mum & baby, fashion, beauty, and premium food and beverage can reach 5, 10 or 20 million active users who are less price sensitive and more targeted than the big platforms. These platforms are often easier to get listed on to boot.

Niche online platforms covering certain categories or verticals are often targeted ways to reach consumers.

4. Product Categorisation by Occasion and Customer Segment

The ever-more discerning Chinese consumers want to feel a little love when they buy your products and services, so smart brands are tailoring offerings, formulations, packaging and even sub-branding to specific occasions or customer niches. We all know in a market the size of China, niches can be bigger than countries, so it can be fruitful and less contested catering to them.

Niche categories in China can be larger than many country’s entire market, so it can be worth tailoring products, positioning and channels to them. Fitness is one of many niches worth targeting positioning.

5. Lower Tier Cities

China’s ‘smaller’ cities have been talked about for years, but they have never been so relevant for so many products. When monitoring interest and purchase habits online China Skinny has seen an increasing cluster of consumers from lesser known cities seeking more sophisticated and higher value products and brands. Brick & mortar retailers in these cities are following online stores offering higher valued products, building an awareness and preference, which is causing a spiral-effect for demand offline and online. Consumers in lower tier cities are not only becoming wealthier, but also more aware of foreign lifestyles, products and trends. They have easier access to foreign visas and flight connections and are travelling further afield. Note that what works in Shanghai, may not even work in Beijing due to different consumer preferences, tastes, climates, lifestyles and emotional cues. It’s the same in lower tier cities, so best to tailor the marketing mix to specific cities or clusters and show them a little love, just like in 4 above.

Tongling in Anhui province is a comparatively small and not overly prosperous lower tier city of 1.7 million, but it has shops selling many imported products. There are hundreds of cities like this in China presenting opportunities for exporters.

6. Better Use of Big Data

Big data has been a buzz word for years now, but it is no longer about just ticking the box. Big data should be analysed intelligently, intuitively and in context with other considerations. China’s hyper-connected consumers do countless activities online and offline providing some of the richest data on the planet for analysing behaviour and preferences. There are now a plethora of ways to use big data from determining which lower tier cities to focus on, to tweaking product development and promotions, to understanding which emotional strings to pull to connect with your target market.

Chinese consumers use their smartphones for more activities than any other consumers in the world, providing a far reaching digital foot print that can be analysed to develop smarter marketing initiatives and targeting.

7. o2o2VR&AR

There is a very blurred line between online and offline touchpoints in China. With new innovations monthly such as Amazon Go (which is likely to be mimicked in China in no time) online and offline will cross over even more. Now Virtual and Augmented Reality are adding a whole new dimension to the mix - Virtual Reality was the most-searched for tech term on Baidu in 2016. With companies like Alibaba selling VR goggles for a fraction of a cent and the explosion of games such as Pokemon Go, VR and AR have become accessible and adopted by mainstream consumers. Uses for VR and AR will span beyond marketing and sales functions and will be increasingly used for training and engagement for customer care, sales and other staff across China.

Virtual Reality has become accessible to mainstream Chinese consumers thanks to low-cost accessories. These cardboard goggles were available as part of Single’s Day this year for less than 1c, where users just insert their smartphone and shop in virtual stores.

8. Truly Social Commerce

One of the most exciting innovations in China where it is leading the world is social commerce – the ability to buy and sell from a platform such as WeChat. There are now more than 5 times more social commerce than ecommerce stores. Smart brands will leverage the enormous potential of social fans by turning them into sales people and incentivising and rewarding them to sell your wares to their trusted networks of friends, family and colleagues.

Here is an example of a WeChat massage and booking page from beautician Xiaomeidaojia, which utilises location-based services to allow users to book and pay for an appointment from a masseuse close by.

There it is! In such a dynamic market as China, it was always going to be difficult to keep it to eight. One important thing to note is how closely interrelated the eight trends are, and how they should be viewed as part of a bigger picture with everything else that you are doing. At China Skinny, we often get requests for projects like digital strategies, but will often tie in relevant offline considerations when delivering such recommendations.

Although we haven’t included it in the eight, we hope the biggest trend for 2017 will be more awareness from brands of just how integrated everything is, with more willingness to strategise with a view that everything is connected. Wishing you a prosperous and happy 2017 – China Skinny hopes to be able to assist with you in achieving that! Contact us to discuss how.

China Skinny’s 8 Trends for Selling to Chinese Consumers in 2017