Why Western brands are lagging in China

Caption: 
Image credit: iStockphoto by Getty Images

China online shoppers buy and engage differently, and retail CMOs need to understand this from the onset.

Indeed, a new report claimed that Chinese are "the most digitally advanced consumer population”. Titled “The Online Purchase Experience in China: Local Champions Dominate,” the research was conducted by Exane BNP Paribas Research in collaboration with Contactlab.

According to the authors, the conclusion is obvious when one considers the demise of hypermarkets in China, the surge in uptake of online payment solutions and high e-commerce penetration in FMCG. The expectations of the China shopper are also sky high.

Moreover, the huge reliance on mobile and not email, delivery expectations of only one and two days and an "idiosyncratic" social media pose challenges to Western brands trying to break into the lucrative China luxury market.

Although not unexpected, the report highlighted how Western luxury retailers and brands lag behind the local e-commerce giants. Leaders include Tmall, WeChat, JD, and Secoo, with YNAP and Mr. Porter trailing, while local player Mei is also leading Western counterparts in off-price channels.

And Western brands have a lot of catch up to do, going by FMCG as a guide for luxury market trends, says the report.

One key reason for Western brands not going digital in China is authenticity, with many fake and authentic “foreign-sourced” products being placed together on a single platform. The same concern is increasingly shared by China shoppers.

As concerns rise, it will be inevitable that China online shopping platforms will take measures to ensure authenticity to address consumer concerns. Western brands will do well to be ready on the digital front when this happens, or risk losing out to competitors.

Further reading:

Chinese customers set the pace for global e-commerce – can you keep up?

Singles’ Day becomes blueprint for successful tech-driven promotions

How brands can achieve cut through to reach Asia’s millennials

 

RELATED ARTICLES

RELATED WHITEPAPERS

RELATED VIDEOS