China's Potent Marketing Channel: Online Video
Glance across any Chinese park, restaurant or subway and it becomes quite clear that online video is one of the most popular channels in China. It is also one of the most dynamic. This is reflected by user numbers which has seen former market leader Youku-Tudou's 325 million active monthly mobile users fall far behind market leaders Tencent Video and iQiyi with 457 million and 442 million respectively.
One of the interesting trends in online video is the paid subscribers. Whilst Chinese consumers have traditionally been used to getting much for free online (either by well-funded startups trying to acquire users or through pirated means), the masses are becoming increasingly prepared to pay for video content. A recent survey by China Netcasting Services Association found nearly 43% of online video users were paid subscribers to some form of video service - over a fifth more than last year. The main reasons are to get exclusive content and to skip advertisements. This represents the overall trend of a much-freer spending Chinese consumer who is prepared to pay a premium for things that will make their lives better.
For brands hoping to reach Chinese consumers, developing video content can be one of the richest and most engaging channels. There are a number of other possibilities for online video too - particularly for those who are prepared to spend. Advertising has long been an option, but it is about to get a lot more interesting on Tencent Video following the company's announcement to bring together the wealth of data from its seven main business units. This will allow much deeper insights and targeted marketing - not just on Tencent Video, but WeChat and Tencent's other apps.
As powerful as video advertising can be, KOLs can provide a more persuasive and seemingly authentic way to spread and amplify a message if done well. Although brands can drop significant budgets on KOLs, the return can be questionable on many campaigns as they don't utilise KOLs' channels as well as they could. Video blogging and related live streaming can be some of the most powerful channels where online influencers can bring your brand, products and services to life.
Some 470 million internet users in China follow these online influencers - 20.6% more than last year. 65.7% sought out videos with humorous and fun content from them. Videos through online 'celebs' can also help brands get to otherwise difficult-to-reach consumers, with 54.1% (257 million) of those followers living in third- or fourth-tier cities. Although those big name vloggers are mainly Chinese, there are a handful of Mandarin-speaking foreigners who are gathering quite a following.
A look at the formats for popular vlogs provides an insight into the overall psyche of Chinese consumers. Whereas vlogs in the West can be quite long, they are usually less than 2 minutes in China; representative of local consumers' love of instant gratification and shorter attention spans for content. Many of these rules apply for other video formats that can be valuable in China's market place, such as internal and B2B comms where video can be used to train staff, agents and retailers in an engaging format. Agencies such as China Skinny can ensure you maximise the online video opportunity.
On a slightly different topic, China Skinny is working with Westpac and the Australian Chamber of Commerce in Shanghai on the 2018 Westpac Australia-China Business Sentiment Survey. We'd encourage all of our readers who are Australian businesses working in, or with, China to participate in the Survey. The survey aims to provide a valuable insight into the health of the Australia-China economic relationship and provide you with a useful benchmarking tool to inform your business strategy. The collective view of Australian businesses will also help identifying areas that can be built upon and improved to assist Australian businesses in China. Click/tap here to participate in the 15-20 minute survey. We appreciate you taking the time to complete it!
Here are this week's news and highlights for China:
Digital China
Tencent Video, iQiyi in Race to Lead China’s Online Video Market: Tencent Video and Baidu-backed iQiyi are pulling away as leaders in China's red-hot video market with 457 million and 442 million mobile monthly active users in August respectively. Former market leader, Alibaba-backed Youku Tudou had 325 million mobile monthly active users.
Netizens Increasingly Willing to Pay for Video Content: Nearly 43% of online video users were paid subscribers to some form of video service by the end of this year — 7.4 percentage points higher than the proportion last year. Among paid users, nearly 60% were male, and 89% were younger than 40. A robust 70% said they plan to renew their subscription once it expires. 95% watch videos on their smartphones.
Great Call of China: How Foreign Video Bloggers are Becoming the Ones to Watch: Some 470 million Chinese internet users were following online video blogging celebrities - 20.6% more than last year, with a handful of fluent Mandarin speaking foreigners clocking up millions of viewers and fans.
Why Tencent Could Become an Advertising Powerhouse Like Facebook: Tencent will bring together its seven main business units to synchronize data and study a billion plus users to deliver precision and predictive ads for social advertising. Just 17% of Tencent's revenue comes from advertising versus 97% at Facebook signalling plenty of scope for growth.
Chinese Consumers
China’s Imported Consumer Goods Tariff Cuts: The Full Details: The full list of imported consumer goods impacted by this month's tariff reductions - providing some interesting insights into how Beijing sees some categories. How does your product fare?
How To Profit From China's Rising Nationalism: China’s rising nationalism and Beijing initiatives such as the Belt and Road are driving investment decisions for China, with categorizing countries into "hot", "warm" and "cold" providing a good indicator of who to back with regards to their short-medium term China success.
Through Technology, China Works Towards Global Domination: China's political system can set and implement long-term strategic goals and invests in developing world changing tech, whereas the US system has faith in the efficiency of market mechanisms. China also has significant capital to acquire technology. In 2016, Chinese entities invested an estimated $200-250 billion in new technology start-ups and established hi-tech companies - half of that amount was invested in the United States, many using different investment fundamentals than Western investors. China now has 202 of the world's top-500 supercomputers versus 143 in the US.
Don’t be Fooled by China’s Grand Plan to Rule the World: The “China is taking over the world” meme is a perennial one. As usual, this argument overlooks what’s happening within China’s borders. That includes: a credit-driven growth model that has left debt growing faster than the economy, the continued dominance of inefficient state-owned enterprises (SOEs) at the expense of dynamic private firms, and a fiscal system that depends on a housing bubble to sustain it, not to mention the pollution crisis - all of which are very high on Beijing's priority list to address.
Food & Beverage
From Lab to Farmland, Technology Revolutionizes Agriculture in China: The hi-tech agricultural industrial demonstration zone in Yangling, Shaanxi province covers an area of 135 square kilometres with more than 7,000 researchers who have developed more than 1,000 new crop varieties and agricultural technologies over the past 20 years. Other Chinese innovations include DJI's drone which can more efficiently and environmentally spray pesticides and liquid chemical fertilizers, and a remote-controlled mower that can mow hillsides and forests at a rate of 0.3 hectares an hour - the equivalent of 10 workers.
Buying Infant Milk Powder is Still a Really Scary Thing in China: With the exception of 2015, around 40% of Chinese consumers considered food safety a "very big problem" between 2012 to 2016.
Counterfeit Whiskey Poisons 22 at Guangdong Bar: 22 drinkers of fake Flylions and Faliya whiskey experienced vomiting, visual impairment, and dizziness, with some falling into a coma, and four people requiring treatment in the intensive care unit. Four suspects — including the bar’s manager and the liquor supplier have been detained by police.
Chinese Tourists
Peppa Pig Theme Park Coming to Beijing and Shanghai: Merlin Entertainment will open Peppa Pig World in both Shanghai and Beijing next year, hoping to capitalise on the importance and popularity of intellectual property like Disney has found. Peppa Pig is hugely popular with Chinese parents who use it as a way to teach their kids English, despite online controversy from parents about kids mimicking some questionable Peppa behaviour. The announcement follows a police sting last month of counterfeit ring in Yangzhou producing hundreds of thousands of fake Peppa toothpaste, toothbrushes and shampoo following a complaint from the British copyright owners.
Health
China to Roll Back Regulations for Traditional Medicine Despite Safety Concerns: Even President Xi Jinping has called TCM a “gem” of the country’s scientific heritage and promised to give alternative therapies and Western drugs equal government support, driven by a draft regulation that states manufacturers can skip such costly and time-consuming trials as long as manufacturers prepare ingredients using essentially the same method as in classic Chinese formulations from early next year.
Fashion
Why the Victoria’s Secret Shanghai Fashion Show Was a Big Deal for China: Attendees to Victoria Secret's Shanghai show were reported to pay as much as ¥350,000 ($53,000) for the privilege of attending, with some of Greater China's biggest names there. For those less fortunate, watching it on their smartphones, 43% were born in the 90s and 40% in the 80s - different to the US where millennials don't hold as much interest in the brand.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
