The speed at which China’s economy has rebounded from Covid has been startling, and it provides a timely reminder of just how powerful this rapidly-growing market is. But what can Western brands learn from Chinese businesses that have already bounced back – either recovering ground lost during the pandemic or even managing to exceed their earlier position with rapid growth and accelerated success? Let’s take a closer look.
The bounce-back cycle
Economists have noted that the epidemic created three main phases for the economy – peak, recovery and bounceback. China experienced its Covid peak from mid-January to mid-February. But by March, consumer confidence was rising once again and so was e-commerce sales. Chinese firms were able to identify each of the three stages of the pandemic cycle and respond to them with tailored, targeted strategies that expertly met customers’ changing needs. Let’s look into this in further detail and see what lessons Western brands can take from the Chinese e-commerce case study:
The three cycles that businesses in China quickly identified fell into:
1. The peak of the crisis – where disruption to livelihoods peaked and customers felt heavily anxious about the future.
2. A swift period of recovery, where business disruption remained common but consumer confidence was high.
3. The ‘business as usual’ bounceback, where consumers have been heavily buying to make up for lost time!
How Chinese businesses responded to each peak
The peak of the crisis
In the first phase of the epidemic, Chinese businesses adjusted their marketing strategies to show support, understanding and empathy as far as possible. Their message to all stakeholders was designed to emphasise this degree of care, rather than simply focusing on profits. To do this, Chinese brands looked for ways to show that everyone was in it together and to add meaningful value.
For example, UNIQLO provided health advice and built a supportive digital community, offering detailed guidance on staying safe, rather than sending the usual promotional and marketing messages. This won the hearts and minds of customers and built their loyalty and trust.
Lululemon was another brand that focused on empathy, engaging with their followers on a topic that was of key concern – how to stay fit and active whilst being locked down at home. To respond to this new need the brand used its in-house trainers to offer online yoga classes for free. The classes were offered via Douyin and WeChat Live Streaming, and again, the strategy built fantastic brand capital in the market and showed that the business meant more than just making profits.
Some brands focused quickly on providing their services in Covid-safe ways. For example, Starbucks rapidly installed a new zero-touch system of delivery that offered online orders with safe delivery. Detailed and caring instructions were also offered to help walk customers through the unfamiliar system.
Other brands offered their employees ways to earn more during the challenging period, with Only, Vero Modo and Jack & Jones (all owned by BESTSELLER, the Danish firm) offering their salespeople bonuses and commissions for any promotions made on WeChat, via a commission-based mini program. The new incentive caused sales via the WeChat mini program to boom.
Other brands were less savvy though. DangDang, the e-commerce platform, called its employees back to the office in February and leading to a negative PR crisis when an employee contracted the virus and forced 82 colleagues to enter quarantine. This shows how easy it was to make a bad PR move during the pandemic; and one that was difficult to overcome in the increasingly online world.
The recovery phase
At this point, and as the economy began to rebound, brands switched to making a more traditional sales-driven approach. Prada took the opportunity to build its online stores, creating Tmall flagship stores for Prada and MiuMiu and garnering thousands of followers within a fortnight. Other brands such as BMW and IKEA also launched Tmall stores at this time, with a vast influx of Chinese customers keen to engage and buy online.
The increase in online advertising costs was offset against the extra time that target customers were spending online and the lower cost of user acquisition – allowing many savvy brands to use the recovery period as a time to grow their follower base. Smart brands directed their marketing budgets to online marketing and other digital activities, recognising the lower cost to acquire at a time when more customers were online than usual. Overall, the cost of online advertising decreased dramatically after the COVID-19 epidemic, allowing fast-thinking brands to do more, and better.
Daily life is returning to a new kind of normal, and customers are spending again. Shopping festivals are on the horizon, including Christmas, and influencers are heavily booked for forthcoming promotions. Brands are working hard in China to:
– invest in the acquisition of followers (making use of the lower acquisition costs)
– book influencer campaigns as far ahead as possible
– work with micro-influencers and promote product gifting campaigns to boost reviews and mentions
– develop new content-driven campaigns that meet the changing attitudes and optimism of customers post-Covid
– continue their socially responsible, supportive and values-led messaging wherever possible
– further investing in their digital ecosystem, recognising that it really is the future for Chinese customers.
The net result
Chinese firms have been incredibly creative to keep their businesses afloat and their customer base happy during the Coronavirus epidemic and subsequent recovery.
Many have invested heavily in market research and taken a step back to really review their strategies and to try new things – viewing the challenges they faced as an opportunity to try new digital strategies (such as Prada moving online after having a largely offline and retail-based presence before the epidemic.)
Chinese brands have also been investing in their digital channels, working hard to produce quality content and ensuring that they continue to leverage the early gains they achieved when building their follower base more rapidly than usual during the pandemic, when more people were online, for longer, each day.
What this means for Western brands
We all hope that we have seen the back of Covid, but the fact remains that challenges will always be around the corner for businesses and the most resilient brands will always have an attitude of flexibility, resilience and creativity in order to survive. Perhaps this is the most important message of all – to combine an evolving digital marketing strategy during times of change, with a mindset that says you can adjust, you can learn from what customers want, and you can find creative new ways of meeting t these new needs – and showing your customers that you really are all in it together!