“The solid double-digit rebound is commendable, but China’s luxury market has not fully recovered to its 2021 levels,” one Bain analyst noted. There are still uncertainties hovering in the air around the recovery of consumer sentiment, which took a big hit in the second half of 2023.

To find out more about how luxury brands are faring in this climate and what their priorities are for the next chapter, Dao Insights spoke to Laura Pan, a leading academic in business management and co-author of Resilience of Luxury Companies in Times of Change (De Gruyter, 2021).

Laura Pan is a lecturer and researcher at SDA Bocconi School of Management in Milan, Italy. Her area of teaching is predominantly in international business strategies with a particular focus on the luxury industry, sustainability, and new technologies. Over the years, she has had the opportunity to live and work in various cities, including Melbourne, Hong Kong, Shanghai, Beijing, and Seoul. She grew up as an overseas Chinese in a predominantly Shanghainese household, an experience that has moulded her into a lifelong observer of the East-West cultural divide.

What is your personal favourite China luxury campaign you have seen recently and why?

Loewe’s Chinese New Year capsule collection. Over the last few years, Loewe has grown to become one of China’s most loved luxury brands, with a huge focus on craftsmanship and a strong ability to be innovative and respectful. Their jade collection aligns with all those values. Loewe has been one of the first luxury brands to have a clear and holistic view of Chinese craftsmanship, arts and culture, all of which are very important to the new Chinese consumer group.

LV has also grappled well with Chinese tradition. The dragon sculptures placed outside LV stores in 3 top-tier cities were very tastefully done – not only did they use the correct Chinese dragon to be represented, but importantly they are not afraid of coming across as “too Chinese”. I think many brands are so afraid of losing their brand identity that they retain a lot of their brand’s own elements, but a brand like LV, which is so strong in itself, has the luxury to go all out with honouring Chinese tradition and actually hit the mark.

I think brands like Fendi have missed the mark on this – the use of Pokémon [in their recent three-way collaboration with Japanese streetwear label FRGMT and Pokémon’s Dragonite IP] is very childish and cute, something Gucci had done under the guidance of former creative director Alessandro Michele. But I think there is a bit of collaboration fatigue in the luxury market, so it is not good enough to just choose a trendy brand partner – it can come across as though not a lot of thought was put into it. By contrast, Loewe’s campaign showed that they immersed themselves in Chinese culture and understood what means a lot to Chinese consumers.

For luxury brands there was a big focus this year on brand heritage and immersive exhibitions. Do you expect to see this change or continue in 2024? What new experiences can luxury brands bring to Chinese consumers in 2024?

According to the luxury report from Bain, which I also agree with, the new focus for luxury brands in China and Asia Pacific will be luxury branded experiences. Louis Vuitton is always considered a first mover in bringing new experiences to Chinese consumers, e.g. opening its first branded restaurant in Chengdu in 2022. While LV was not the first brand to do this in Asia, the brand has doubled down on this market, realising that Chinese consumers, in the long term, are shifting away from luxury goods and toward luxury-related experiences like fine dining, entertainment and exploration.

Luxury brands emphasised themed travel in 2023, for example Dior’s ice domes in Songhua Lake and LV’s beach club in Xiamen. I think a lot more of these kinds of activations will happen inside of China as opposed to trying to attract Chinese tourists to destinations outside of China. We are witnessing Harbin enjoy an unprecedented degree of popularity right now as Chinese consumers’ appetite for domestic travel goes through the roof. I think we will see luxury brands supporting domestic Chinese tourism by creating more resort pop-ups in locations such as this.

Does the continuing trend of rational consumption pose a threat to the luxury market in China?

After the financial struggles that China suffered in 2023, I think there is a shift in spending mentality, but only for the middle and upper middle classes. Those are the ones who are most affected. As a result, we will see luxury brands place more emphasis on high-value customers and Ultra-High-Net-Worth Individuals, who will not change their consumption behaviour.

In most cases, luxury brands follow the Pareto Principle; 80% of revenue comes from 20% of customers. Or more realistically, we will see a ratio of about 85/15. In terms of the demographic, not much will change for the high-value customers, but rational consumption will definitely impact the high-volume, low-value segment of products, like sunglasses, wallets, earrings, and other accessories. Sales of these entry-level priced goods will decrease significantly.

We hear a lot about the fact that Chinese Gen Z consumers care a lot about brands’ social responsibility and sustainability. Is this reflected in their consumption patterns on the ground?

I want to clarify that there is a fine line between social responsibility and sustainability. In my opinion, Chinese Gen Z talk about their values very openly, but they do not practice those values themselves yet. Consumers are told sustainability is important, but they often don’t know enough to determine if a product is sustainable or not – this is not just a China issue, this is worldwide. Chinese consumers tend to feel that the responsibility to be sustainable falls on the company, rather than themselves. So I think there is still a lot of work needed for Chinese consumers to understand what sustainable behaviour would look like.

Social responsibility, on the other hand, IS really important to Chinese consumers. I think they care a lot about respect – they’re waking up to the fact that the West treats them differently and they don’t like that. Consumer attitudes closely mirror the geopolitical narrative. The tone of voice the Western media has towards China is very negative, which leads China to assume the role of the victim who needs to “retaliate” in defence. Similarly, consumers feel they should retaliate in some way if brands do not show respect for China. So if brands do not try to align with Chinese values or try to be supportive of China, they find themselves in a difficult situation.

What role does blockchain technology have in helping luxury become more sustainable?

The European Commission is gearing up to pass a law soon that would give every single product a digital product passport (DPP) that contains information about the lifecycle of the product, like the composition of raw materials, where it was manufactured, its point of sale, and any transfers of ownership. At every single point of interaction, information about the product lifecycle is entered into a ledger (the blockchain), and this data can’t be retroactively changed on the backend, making it incredibly reliable.

The biggest luxury conglomerates are also now part of the Aura Blockchain Consortium, which is trying to encourage luxury brands to convert all labelling into digital product passports. This would provide consumers with better transparency over product provenance (i.e. a product’s origin and movement through the supply chain). The other benefit of this is in ownership transference. When luxury products are resold on the second-hand luxury market, the current owner can prove the authenticity of the product to prospective buyers. This is something they’re trialling in the EU, but we don’t know yet whether they are going to execute this in China.

Finally, what are your key predictions for luxury in China in 2024?

1. I think luxury brands will double down on guochao. Brands will follow Loewe’s example and get smarter about catering to Chinese consumers by demonstrating deep cultural understanding.
2. More luxury brands will be venturing into luxury branded experiences e.g., restaurants and entertainment. This is what most of the upper middle class will be spending their money on. I am interested to see how brands incorporate entertainment, as we have seen restaurants and resorts, but not a lot of case studies for luxury branded entertainment yet.
3. We are going to see at least one luxury brand incorporate Northeastern floral print [东北大花, a pattern splashed across Chinese social media recently with the rise of Dongbei Renaissance]…I hope!

The post Unpacking post-pandemic trends in China’s luxury sector – an interview with Laura Pan appeared first on Dao Insights.

Data recorded by Retviews, a competitive intelligence platform for fashion brands and retailers that is owned by Lectra, shows that global luxury labels have “significantly higher price points in China for their men’s footwear offerings.”

Focusing on four of the top 10 luxury brands that have gained significant popularity among high-earning Chinese luxury footwear shoppers, the report found the Italian fashion house Bottega Veneta had the lowest price difference, making it 14% more expensive in China while its French peer Louis Vuitton had prices which were nearly double in the Chinese market compared to the European market. Prices of footwear produced by Ferragamo, another Italian luxury shoemaker and Prada, however, were even higher at 50%.

The reason there is a price differentiation is due partly to cross-national transportation costs. A luxury industry insider who requested not to be named said the pandemic coupled with the global inflation crisis only pushed the price up further. He also told Dao Insights that the increased demand for luxury men’s footwear seen in the market plays a role in this occurrence too.

Findings in the latest 2022 Douyin Luxury Industry Annual Report published by Trend Insight, a market research institute arm under ByteDance, are reflective of his views. The category of luxury shoes is seen to have been expanding its position as a whole within luxury consumption in China, especially in the digital landscape. In 2022, the Chinese version of TikTok saw a growth of 89.4% in views of content related to luxury shoes, closely followed by luxury clothing (126.6%).

Men are the leading force of consumption in this category. They make up 80% of online luxury footwear buyers, with the majority being the social media savvy age groups between 18 and 23 years old. In terms of styles, Derby shoes and heeled shoes are seen to be on the rise. Such a strong appetite for luxury shoes amongst this demographic could also lead to other luxury brands hiking up the price for the market. “There is definitely a tendency [amongst brands] to set a higher point in China because there is a stronger spending power,” added the market insider.

Despite consumer enthusiasm, the industry expert, however, doesn’t think having such a significant price differentiation for the lucrative market is a sustainable strategy for global luxury labels in the long run. “During the COVID years, Chinese people were not travelling. So brands were trying to make the best of the local market. But don’t forget, Chinese people like to travel, and Chinese tourists account for roughly 35% [as of 2019] of the world’s luxury purchases.”

It is reported that mainland Chinese shoppers’ willingness to travel reached a record high at 76% following the reopening of its borders on 8 January, accelerating market recovery in regions like the Asia Pacific and Continental Europe. Whilst the subsequent COVID tests imposed by some European countries on inbound travellers from China potentially slowed down the reboot for the latter, the image of the market is expected to be brighter since member countries scrapped COVID tests for travellers from China in the middle of February.

Speaking from his base in Italy and seeing more Chinese tourists returning, the luxury observer continued, “You [brands] don’t want to penalise Chinese consumers who refrained to purchase in the local market by having their products be more expensive there than those in the European market for example. This is true considering the population is starting to travel and they have more choices now. That will bring down the price difference as a result.”

The post Luxury footwear found to be more expensive in China, is it sustainable? appeared first on Dao Insights.

Given that digitalised humans are at the core of China’s Metaverse ambition and the broader digital transformation, Dao Insights was joined by Nicky Yu, co-founder of RM GROUP – the emerging Chinese technology company who gave birth to China’s first hyper-realistic Meta human AYAYI – for a peek into the making of the hit virtual influencer and a deep dive into the country’s virtual human being industry.

Nicky Yu (Yu Xiao) is the co-founder of RM GROUP. Yu also holds the position of Deputy Director at the Animation Special Committee of the Shanghai Radio, Film, and Television Production Industry Association, a member of the Shanghai Film Association and China Youth Entrepreneurs Association, and a senior fashion manager.

With many years of experience in film and television investment and production, Yu’s film production has garnered an accumulated 360 million views at the box office and his animation works have drawn in more than 800 million views. In 2019, he successfully created the fashion IP ROBBi, setting foot in the field of hyper-realistic digital humans. In 2020, he proposed creating a digital human IP – AYAYI, China’s first Meta human.

Could you please provide an overview of China’s virtual being industry?

In general, there are two types of virtual human beings in China: IP (Intellectual Property) oriented, like AYAYI, and function-oriented, such as digital banking customer service staff members or virtual beings who can perform other tasks on a human’s behalf.

While under the IP-oriented umbrella, there are anime-based characters like Luo Tianyi and hyper-realistic Meta humans, like AYAYI. Both rely on regular content production and continuous interaction with users to enhance the value of the IPs they represent and further achieves monetisation through “2B” or “2C” (or brand/consumer-facing business collaborations). But the commercial model of IP-oriented virtual beings is rather unstable. Just like not every movie can be a hit at the box office, so the former could be more difficult in this sense.

The value of the second type, which is more service-oriented, however, will be evaluated upon capabilities such as AIGC (Artificial Intelligence Generated Content) and their affordability of carrying out comprehensive digital services, whereas the appearance of the creation is less relevant.

Using AYAYI as an example, please can you introduce the production process of virtual beings?

The exact making process can vary from one to the other. Because we are the first ones to develop a Meta human being, our approach at the time was similar to the production of a movie. We started with a script outlining the character’s persona and created a sketch based on those pre-set personalities and then modelled it.

Once we were satisfied with the modelling, we launched a market survey, collecting feedback from the general public to see if they think the appearance matches the persona we created. After that, we further polished and enriched the design of the character, which is more of a routine.

In terms of the production period, it differs too, depending on the expected quality of the creation. It could take a year or two to bring out a high-quality virtual human. With AYAYI, from initial design to finish it took us roughly half a year.

Although it’s hard to say how much exactly it cost us to develop a Meta human like AYAYI, the cost of creating a virtual being in China at present ranges from a rough 10,000 RMB ($1,476) to a couple of million RMB, again depending on the standards one sets.  

The Meta human 锘亚Noah, unlike AYAYI, is a co-created product by users. Could you please introduce the co-creation process, and how RM GROUP determined its final persona based on requirements from the audience?

We are a firm endorser of the concept of “idol”. In the fallout of celebrity scandals at home in recent years, there has been a sense of disappointment and betrayal arising amongst the fan base. As a result, some fans have stopped following stars, which has become the status quo.

Whereas the image of virtual influencers is more controllable and they are always free from scandals. Therefore, they are a much safer option compared to their human counterparts. This brought out the idea of inviting users to co-create a virtual influencer and have them curate a digital idol that they can build an attachment towards. The project was in partnership with Tmall (Alibaba’s e-commerce giant), and it was rather experimental.

We set up an online community and launched surveys, asking members to vote for what they wanted this idol to be, a singer, a dancer, or something else. This was beneficial in terms of emotional touch and maintaining a strong loyalty amongst fans because they partly gave birth to the character.

Meta human beings created by RM GROUP have been largely endorsed by people in China. Could you tell us how RM GROUP decides whether the appearance of a virtual being will be popular?

There’s no set beauty standard. For us, we just try to make the look align with the characteristics we portrayed in words, or the so-called “our standards”. It needs to be in line with the persona we imagined.

RM GROUP’s virtual beings are also sought after by brands. Could you please introduce the procedure of brands collaborating with RM GROUP’s digital humans?

In general, I think it’s similar to cooperations between brands and celebrities. We consider if the collaboration is compatible with the personality of our Meta human. The only difference is we would bring out some co-created works with brand partners, such as NFTs (Non-Fungible Tokens) or digital collectible exhibitions.

That’s to say, we offer not only the IP of a Meta human but also the execution of other Web3-related marketing strategies for partners. These are additions that celebrity endorsements may not be able to offer.

In terms of cost, depending on the complexity of features expected as well as contract period, it could range from hundreds of thousands of RMB to a few million RMB.

How do you think virtual beings can elaborate brands’ influence on Chinese consumers?

Virtual human beings are just a fraction of the practice of digital marketing. The actual impact a digital human being can generate is not determined by the characters themselves. It is hard to attract consumers using those fictional figures on their own as the audience knows they are imaginative products, and there is a dedicated team of humans behind managing them.

It is, however, the story and content curated around the digital characters that bring real impact on brands and enables influence on their target audience. And that is down to brands’ marketing goals and the way they want to tap into virtual influencers.

What do you think is the key that allows virtual beings to build a relationship with audiences emotionally?

Just like through a movie, the public may fall in love with a character but there needs to be some medium, through which it allows audience interaction, helping them to understand the personality of the virtual character and to feel as though it is ‘a person’.

For example, if a digital human being can create music, which is powered by AI (Artificial Intelligence) and is liked by audiences, then people are more likely to endorse the virtual being because of the work. Here, AI-generated music is the medium where digital characters can communicate with the public and further establish a relationship with them.

Apart from the three virtual beings (AYAYI, 锘亚Noah and 鹿晓希LUCY), there are two new assets under RM GROUP’s umbrella, which are RMLABS and MPDAO. Could you please introduce us to each of them and tell us how the new arms are going to facilitate RM GROUP’s overall growth?

It all started when we were creating AYAYI and wanted to raise awareness of the concept of digital human beings and the ever-growing importance of digital assets. While the success of AYAYI has partly accomplished the goal, RMLABs is focused more on offline engagement, such as physical exhibitions and collaborations with digital artists and brands to help them explore more opportunities in the Web3 landscape, like curating a Metaverse gallery.

Nevertheless, RMLABs still acts as a marketing platform to provide education on digital assets and to promote digitalised content, be it artistic or commercial. MPDAO is like an online community for anyone interested in these new technologies and to meet like-minded friends. There are also periodical online classes for members to share information and discuss opinions.

What are your big trend predictions in China’s digital human industry in the coming year?

My gut feeling is there will be fewer IP-oriented virtual human beings because it’s getting more difficult to bring out a hit character, which leaves less space for speculation. Whereas we can expect more function/service-oriented virtual beings employed in more diverse business scenarios. For example, we’ve seen more domestic TV channels introduce virtual presenters, so such use cases would be more universal.

What are RM GROUP’s plans of keeping its leading position amid those projections?

Having said that, I think more people at home have woken up to the importance of digital assets, and therefore, have been stepping up to pull off a transformation, as do we at RM. We are considering upgrading AYAYI’s image. In future she could be more than just the face of an individual Meta human, maybe a brand symbol or she could be the symbol of a digital twin of a human being.

We would also like to level up these digital assets to allow the integration of the physical world, strengthening the connection between the virtual and real spheres. By leveraging those practices related to their day-to-day life, it would also enable us to educate the public on these new provisions with the assistance of AR, VR and AIGC. This is the ‘virtual-real worlds’ product model we have been building. By doing so, we want to turn AYAYI into an icon while also reimagining RM as more than just a virtual human developer.

To fully achieve the Metaverse ecosystem, what needs to be done to enhance the capabilities of a virtual human being? 

The concept of Meta humans has only scratched the surface of digital human beings. With big data and algorithms increasingly employed to enable customised services, humans are being digitalised, which means digitality has always been part of our lives.

I believe a digital life will be a crucial component of virtual human beings in the future. When each of us has a digital twin who can understand us in cyberspace or a robotic likeness to conduct daily activities and socialise in the virtual realm, that’s when we can say the era of digital humans and the Metaverse has come.

The post Decoding China’s virtual human industry – an interview with Nicky Yu from RM GROUP, creator of China’s first Meta human AYAYI appeared first on Dao Insights.

A study by the American chemicals company DuPont in 2020 suggests China is one of the fastest-growing markets for plant-based proteins and the country’s vegan food market is projected to grow to $12 billion by 2023 from just under $10 billion in 2018, according to Euromonitor International. Dao Insights spoke to Kamil Gajewski, Head of Business Development at JOOMA 美仁– a brand striving to pivot the change in the lucrative territory.

Kamil Gajewski is a German-Polish citizen and holds an MBA from WHU Otto-Beisheim School of Management and an M.Sc. in Food Technology from Anhalt University of Applied Sciences. With passion and dedication, he has held different senior roles within the Food & Beverage industry in Europe and Asia for more than 13 years.

Kamil has been awarded several accolades, specialises in Lean Six Sigma (Green Belt), and has a proven track record of Business Optimisation and Development, Entrepreneurship as well as Innovation Management. His biggest passion is coffee and food and is deeply interested in the start-up environment with a focus on healthy and delicious cuisine.

Could you provide a brief introduction of JOOMA and some highlights of its journey in China so far?

JOOMA is a plant-based food brand embracing an active, healthy lifestyle philosophy and is dedicated to developing and producing innovative, high-end and sustainable products that combine high nutritional value with great taste.

The Chinese market for plant-based products was nascent when JOOMA was founded in 2019. JOOMA recognised the shift to plant-based nutrition early and was the first in China to set up a modern, fully plant-based dedicated factory in China. The proprietary technology was developed in Germany by the parent company with the support of the Fraunhofer Institute, a globally renowned scientific research institution.

Launched in January 2020, just after COVID kicked in, JOOMA pulled off partnerships in Beijing and Tianjin despite major challenges posed by the pandemic, with openings in several retail markets such as Jenny Lou’s, April Gourmet, and BHG. Soon after, the business won the Good Food Award in China the following year for its production facility and sustainability efforts.

To further strengthen the footprint in China, we opted for a product extension, by adding a line of coconut yogurts to the existing almond yogurt. And to make our innovative plant-based products more distinguishable from regular dairy products, we changed the product appearance using colours and a design that is atypical for dairy products: black and green with design elements reminiscent of the Bauhaus style, which has been well received in the target market.

85% of our consumers regard colour to be the motivation for purchasing a product, while 92% view visual appearance as the persuasive marketing reason. Shortly after we secured agreements with large retail and grocery chains such as Ole and 7eleven with further launches in China’s hyper stores planned for the end of the year.

Why did JOOMA choose yogurt as a starting point to tap into China’s plant-based market?

JOOMA’s focuses are on snacks, in-between meals, and desserts that are dairy-like and non-dairy based of which we have many products readily developed. This is a huge market in China and yogurt is the leader in this category, which was the first of several drivers for the choice.

The second reason is that China´s population is very experienced with regard to fermented products, with the population also being quite health conscious. Healthy nuts and almonds, fermented by probiotic bacteria, therefore fit well into the Chinese lifestyle.

While the US has 40-50 plant-based yogurt brands and Germany has about 30, the sector of plant-based yogurts remains untapped in China. JOOMA’s vision, therefore, was not only to be the initiator but also to differentiate itself in terms of quality. JOOMA, based on its technology, ferments the whole almond without additional steps in the process such as filtration. This makes it possible to retain all the important nutrients and to produce the yogurt without adding artificial ingredients and flavours. All these are strong arguments that allow us to make a difference in the market.

What are your observations of consumer demands for plant-based products in general in China since the brand’s entry? And what do you make of that occurrence?

In general, in China, the knowledge about the benefits of plant-based products is not as widespread as that in Western countries, therefore introducing this type of product requires a lot more explanation. But it wasn’t just consumers, retail chains were rather inexperienced too so initially showed little interest.

The appetite for plant-based foods in China, however, has been emerging since 2020 and is now about to take off, with many Chinese millennials and Gen-Z’s showing enthusiasm for consuming plant-based. More people are encountering plant-based products, accepting these novel products and starting to understand that yogurt does not necessarily need to be milk-based.

There are also synergies with the marketing of other plant-based brands. In particular, the sustainability and health benefits that are already understood by our customers, which give us more space to touch up on the emotional benefits of eating plant-based.

Retail chain buyers have also become more receptive to launching innovative products than they were 2 years ago. We at JOOMA are pleasantly surprised that more supermarket chains are calling us to discuss partnerships, including some who we have been in touch with since 2021, but did not believe in plant-based at the time. This is due partly to a growing number of distributors hopping on the bandwagon, which significantly increases our sales reach.

How would you describe your target audience in China?

The customer group for plant-based yogurt is more than 70% female in the 20-40 years old age group and children. Children love the taste while their parents appreciate that the products are healthy.

According to our data, the biggest markets are mainly Tier-1 cities: Beijing, Shanghai, Hangzhou, Shenzhen, Guangzhou, Wuhan, and Tianjin. But we also see that interest is picking up in Tier-2 cities. So far these cities are mainly covered by online delivery, but as we expand our distribution network more supermarkets will be added too in early 2023.

Looking at the personas of our buyers, they are mostly flexitarians, vegetarians, and vegans. [Approximately 14% of Chinese individuals followed a vegetarian diet, according to a survey by Kitchen Stories in 2019, and another 8.5% followed a flexitarian diet, while about 5% of China’s more than 1.4 billion population are vegans, as per Veganism Statistics China 2022.] With the coconut yogurt, however, we address the remaining two-thirds, who only buy because of taste and flavours, irrelevant of the fact that it’s plant-based.

Meanwhile, because plant-based yogurts are a little bit more expensive than milk-based products, typical buyers are white-collar workers who are health and environmentally conscious, as well as food enthusiasts and fitness fans.

The brand’s motto is to bring “Innovative food for an active life”, what’s the rationale for the positioning? How does the brand walk the walk?

Plant-based food is not new at all. What is exciting about Protein 2.0, however, is that modern technology allows us to create products that did not exist before e.g. almond-based yogurt. In our case, we use high-quality superfood ingredients, process them with innovative technology and thus turn them into a new eating experience. Without chemicals, artificial flavours, preservatives, etc., just natural.

Also, thanks to our own plant, whenever we develop something new, our know-how increases. Therefore, we can keep our innovative competitive advantage over competitors who only have OEMs (Original Equipment Manufacturers) producing for them.

There are more food brands tapping into the health trend in China. Considering the younger generations are more health-conscious, what do you think is the key to setting your brand apart from other market players?

In China today, healthy food is often (mis-) understood by consumers as “no sugar” or “no fat”. Knowledge, for example, of good and bad fats or saturated and unsaturated fatty acids, is by far not as widespread as that in Western countries.

Unlike other brands attempting to leverage those slogans as selling points, we, however, look at wider aspects of healthy food, and hopefully, with increasing knowledge, the consumers will recognise and honour the difference.

What do you think are key things that foreign food and drink brands should keep at the top of their minds when marketing to Chinese consumers?

China’s food market and marketing landscape is very diverse and rapidly changing. There is no right or wrong, as across industries or product categories, this may vary quite significantly, but speaking from experience I would like to mention the following:

• Be all in, social media is a must – Testing campaigns on a very small scale may easily lead to the wrong conclusion, therefore, the strategy and budget allocation should be done carefully.
• Different target audiences, different approaches – do social media, but choose the platforms wisely. WeChat, Weibo, Douyin, RED, BiliBili – it feels like the list is never-ending.
• Make your content interesting or entertaining – young consumers in particular have advertising overflow and only stop scrolling if they find something interesting or entertaining.
• Be flexible – use different tactics and figure out what works best. Then focus on that.
• Less ego, more data: China’s marketing landscape is driven by data, which allows you to figure out how well an approach performs. Whereas in the past, campaigns like TV spots required high upfront investment without knowing the outcome. The future of marketing is more predictable if performed well.
• Last but, not least – rely on experts, strong partnerships, and more importantly, the employees! Failure is more expensive than in Europe, the right people can prevent the wrong strategies.

As our workforce is made up of 95% Chinese employees, we are very glad to have experts in these fields on board. It is not unusual to see companies having marketing spend 5-8 times higher than revenue, especially in the start-up ecosystem.

What do you think are the main differences between marketing to western consumers and Chinese consumers?

Some key points I would like to summarise are as follows:

• They are very online-driven, and very active on social media.
• They like to be entertained and have a lot of choices, so getting their attention is a huge challenge, but also the key to success.
• Very often their knowledge about food and beverages is not that high, so the same key points (like “vegan products”) don’t always work in communication. More explanation is necessary, which is not easy to combine with being both entertaining and/or interesting.
• They like new things, and brand loyalty often is low, unless it is the “image brand”, which is difficult to create in the food industry. Product innovations, therefore, are needed a lot more often than in traditional western markets.
• Westerners have more trust in products and the specifications/claims, whereas the Chinese mostly put their faith in the appearances and opinions of influencers e.g. KOLs and KOCs.

What’s JOOMA vision for China’s plant-based market in particular in the yogurt/dairy segment? Why is that?

We believe that the plant-based food market in China will grow significantly because of the health value as well as for sustainability reasons. In this growing market, JOOMA wants to be the market leader in the healthy snacks, desserts, and in-between meals market not only in China, but also in Asia.

Within the yogurt segment we want to maintain our leading-market position for plant-based yogurt and add innovative products, like drinks and desserts to our product lines.

The post Pivoting into China’s up-and-coming plant-based food market – an interview with Kamil Gajewski appeared first on Dao Insights.

This was coupled with other national campaigns for safeguarding young Internet users, especially minors, resulting in stricter regulations on the live stream sector and video game restrictions for underage players have taken a further toll on the world’s largest video game vendor. With the country already suffering an economic downturn as a result of the COVID resurgence in China and the government’s stringent “zero COVID” policies, these regulatory hostilities further add to the business’ suffering.

The company saw domestic game revenues dip by 1% to 31.8 billion RMB ($4.66 billion), because of “a post-pandemic digestion period due to transitional issues including relatively fewer big game releases, the latest ban on issuing new gaming licenses, as well as lower user spending, and the implementation of minor protection measures.” Such restrictions have led to decreased revenue from Tencent’s hit games including Honour of Kings, Moonlight Blade Mobile, and League of Legends, and incremental revenues from recently launched games, such as League of Legends: Wild Rift, Return to Empire, and Fight of The Golden Spatula.

However, the Q2 earning results are not only being viewed as negative but has signalled a crucial transition in China’s tech industry, from the consumer market to the business-to-business (B2B) territory. Dao Insights joined a panel discussion hosted by Tech Tech China, an English website with a focus on China’s tech industry, deep diving into the market dynamics of China’s tech sector that are behind the declining figures.

Forces behind the transformation

Such transition is partly in response to Beijing’s efforts to align the technology sector with the development of “hard” or “core” technologies such as semiconductors, AI, and advanced enterprise software. As well as the Chinese government’s push for economic recovery from the global crisis and pulling up the growth of the real economy through industrial digitalisation.

This has also nudged businesses to invest in relevant directions such as agricultural technologies and smart new energies, in the hope that wider adoption of cutting-edge technologies in different industries will bring about higher productivity while also increasing China’s competitiveness in the hard tech sector race with their US counterparts.

“Many successful consumer-facing companies such as Amazon, Microsoft, and Apple have expanded their business offerings to include more B2B services, and Chinese firms are attempting similar transformations.”

Paul Triolo, SVP for China & Technology Policy Lead at Albright Stonebridge Group

“Amazon with AWS, Microsoft with Azure, and Apple with iTunes, and App store offerings have been able to grow beyond their business models in ways that made the firms less reliant on consumer tastes and economic downturns,” added Triolo.

The idea has been echoed by Guus Keder, a veteran investor and partner at Zhou & Masters Consultancy, “So far these tech companies have been mainly focused on consumer applications, which has become saturated in China…What we see happening is that there is an emerging appetite for deep tech, which is closely related to the industrial internet sector. That will be booming over the next decades. Although it may not affect consumers directly, it will impact consumers indirectly. And therefore, it is in the interests of the Chinese government to support this type of move,” said Keder.

“But to transit into deep tech companies, you need real innovations,” Keder cautioned, “I think that’s the big switch that needs to be made, not only in China but also in the rest of the world. From chucking out codes for video games and consumer software to very integrated high tech that can afford the whole economy to become fully digital and completely seamless, that’s something that still hasn’t started and a process that could go on for the following decades.”

Tencent’s latest report also shows potential in enterprise-oriented business services as the company recorded a year-on-year gross margin expansion of over 30% from services such as PaaS and TDSQL database, which represented over 5% of its cloud revenue in Q2 2022. In addition, cloud services are also one of the new drivers for business growth and have turned out to be another battleground for China’s Internet companies, with Alibaba, ByteDance, and Tencent naturally being some of the frontrunners in this aspect.

Challenges in the marathon

Although great investment interest has been shown and despite the consensus that cloud services would be a lucrative market, questions have been raised by Triolo, as to the sector’s ability to generate profit in the long run.

“I think the challenge here for some of the big tech platforms as their traditional commercial [models] – the consumer-focused businesses come under pressure from all regulatory issues, is how do they transition into arguably more difficult and competitive areas and create more stable revenues from these new avenues in the long term.”

“The success of Chinese tech companies in this transformation will depend to a large degree on their ability to appeal to customers outside of China. Western companies such as Google, Microsoft, and Amazon/AWS have made their mark in the concerned areas because they are able to operate globally, leverage their own infrastructure, and appeal to businesses who need global connectivity and advanced services in the cloud, for example. So, they [Chinese tech players] are tapping into an area where others have been successful but trying to gain a slice of the market is not easy to do,” added Triolo.

He also believes that the transformation means there will likely be less negative competition in the consumer sector which drew a significant volume of complaints and fuelled the technology regulatory rectification campaign. It is also tied to Xi’s Common Prosperity agenda which has benefitted consumers.

“As major tech players concentrate more on “core” technologies, Internet companies will continue to derive major revenue from consumer-facing operations but will now be much more focused on improving consumer services and less on competing with rivals in ways Beijing and regulators have found to be wasteful and not contributing to the “real” economy. So, this should be a net benefit for consumers,” Triolo continued.

In the meantime, it is worth noting that hard technology investments can take a much longer time to pay off and generate significant revenue, as a result, in the short term there will be less explosive revenue growth. However, one thing that is certain is that despite being caught off guard by authorities’ regulations, officials in Beijing will encourage this transformation, although it will be different for each specific sector, depending on levels of reliance on foreign technology and supply chains, and the pace of domestic innovation.  And it is in the interest of the Chinese government to keep these platforms alive and make them part of the country’s economy.

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To unlock this lucrative market segment, Qing Na spoke to Jake Xu, co-founder of the UK-made men’s skincare and makeup brand Shakeup Cosmetics, who has knocked out a three-fold year-on-year increase on China’s e-commerce giant Tmall.   

Born in Beijing, and emigrating to the UK in 1999, now a naturalised British citizen, Jake and his twin brother Shane started their career in media before setting up their own creative marketing business in 2006 which became a success in the following 12 years. The brothers then launched their men’s skincare and cosmetics brand, Shakeup Cosmetics in 2019. Today, their rapidly growing brand is distributed to four continents around the world. Since launching their Tmall cross-border flagship in 2020, their best-selling product, LET’S FACE IT BB tinted moisturiser, is selling at a rate of 1 every 5 minutes in China and is sitting at the No.3 spot in the men’s BB cream category, just after L’Oréal for men.

How would you describe your target audience in China?

The demographic in China seems to be, generally speaking, younger than that in the West. In the UK our key demographic will probably be like 28 to 30 years old plus. But in China, they tend to be younger, like between 18 and 30 years old. But because of our price points, we do tend to attract high disposable income professionals, higher educated, probably foreign educated customers in China. Or at least customers who will be following other influencers or celebrities in their social circle.

But I mean, we’re not premium. You know, we’re not on the Tom Ford or Chanel level of pricing but we’re also not mass pricing either so, it seems to fit in really nicely in a price bracket where there used to be a big gap when it comes to men’s beauty in China.

What do you think those demographics of consumers in China look for in men’s beauty products?

I think safety and quality are definitely at the forefront of their requirements. The made-in-China brands have been enjoying a fantastic ride recently, and actually, the quality of the products coming out of China is phenomenal, from packaging to formulations to innovations. There are really good domestic brands doing great things in the sector.

But I think there’s still a huge demand from Chinese consumers for imported products. I think when it comes to products that they put in their body as well as on their body, they tend to go for safety, security, and quality over anything else. Unfortunately, there is still a stigma or scepticism around homegrown products in certain categories such as baby formula and cosmetics, and skincare. That’s why there’s still a massive demand in China’s domestic market for imported products from Europe.

What has Shakeup Cosmetics been doing to cater to consumer needs in China?

With our products for Chinese consumers, I think, firstly, we do talk about the quality and the fact that the products do have to comply with very strict and stringent EU cosmetics regulations. So, it is safer from a customer’s point of view to use. We talk a lot about the products, how the formulations were created and developed for men because men’s skin is different from women’s. And of course, with some of our coloured products in the makeup range, we do need to think about whether a shade is going to work with Caucasians as well as Asians. So that probably requires a bit more localisation, which we’re still working on.

What do you think is the key to communicating and engaging with the younger generations as a foreign brand?

First of all, I think as a foreign brand you’ve got to forget everything you know about social media and how it works in the West because the social landscape is completely different in China. Also, don’t take consumers in China for fools. They’re so savvy and so switched on, they know exactly what they’re looking for. Yes, there are more people with more money to spend and consumerism is still very high, so you’ve got to convince them that your products really do speak volumes through the quality.

Back on the social front, you’ve got to understand the social landscape in China and what platform does what. There is that “seeding” [Zhongcao, or “planting grass”] process, there’s brand awareness and there’s peer recommendations. You’ve also got to strategically position yourself in the right place at the right time with the right content, in order to engage with consumers in China.

Then when it comes to customer service, here in the UK, it is acceptable to get back to someone within 24 to 48 hours, but in China, 24 minutes is already running too late. This is the kind of mindset that Western companies and brands need to be aware of; that bar and the standard you’re used to, otherwise, they have no chance of breaking it into the market.

What has the brand’s e-commerce journey been like in China?

Tmall was the first foyer. We opened our flagship store on Tmall Global in July 2020 after we launched the brand in November 2019. There was a really great response from the market when we first launched and then COVID hit. As a new business that had literally launched for a few months, we had to pivot, so that accelerated our strategy in China.

The BB cream very quickly became our bestseller on the platform. And then it was a hero product and has been our hero product ever since. I think in China, we’re adopting this kind of hero strategy. You need to put your effort behind one product, really blow it up, and then hopefully there’ll be cross-selling opportunities there. So that’s what we did for the first few months.

What’s your brand’s approach to Chinese social media?

We are pretty much on all of the major platforms you know, Douyin, Xiaohongshu, and Bilibili as well as WeChat. But there’s so much going on so you have to pick what to focus on. You have to try different platforms with different KOLs to see what kind of content works on what platform and what kind of messaging works. You’ve got to do a lot of trialling. I think it probably took us about a year if not longer to get that formula right. Even when you get that right, regulations in China change frequently too so you’ve got to keep up with that as well.

I would say it’s very important to have someone on the ground to render for you because China is not a market you can run effectively, remotely. You need to have someone who has local knowledge in order to deploy your marketing strategy and be agile on the ground, make changes or change tactics as they go rather than you doing it from eight hours behind. I mean, you know that that will be a lot more difficult.

What is the brand’s approach to engaging KOLs?

I think peer-to-peer recommendations are always important. When it comes to products and e-commerce, people do check reviews and when they see recommendations by someone they trust, or they follow this always carries a lot more weight than seeing an ad from the brand directly. So, I do think that’s very necessary.

It is expensive to get KOLs and the campaigns themselves are really expensive, especially in China. But once you strike gold, getting that one viral video, the momentum the connection drives is just phenomenal. That’s one of those calculated risks that I was talking about earlier. You’ve got to have faith when you commit to that kind of thing because you are talking about thousands of pounds for one post so you have to be prepared in case it doesn’t work.

In the West, influencer marketing works quite differently. You know, in the UK for example, we tend to work with a lot of real people with real skin issues and that carries a lot of authenticity in my opinion. It has worked better for us as a brand than a big celebrity following or an internet-famous influencer. I think for me the micro-influencers and the people who actually have a story to tell are much more convincing and authentic, and more impactful with our demographic here in the UK.

But in China, it’s quite different. Again, there needs to be localisation of the marketing in China. You’ve got to cover the entire spectrum: the bigger influencers, middle ones as well as lower-tier KOCs. And then you’ve got to divide it into different pillars: are they in beauty, skincare, or in other areas? Our customers don’t just live in the beauty and skincare category. Where else do they live? And then you’ve got to look at KOLs probably in those areas and then try to get an influencer to jump on some brand awareness in that category as well. So, we’ve got to work with an ever-changing landscape.

How do foreign brands set themselves apart from others on China’s e-commerce platform?

The brand needs to have a story and it has to have a soul. I feel like Chinese consumers nowadays especially the savvy ones are actually buying into a story, they buy into a lifestyle and buy into something that the brand stands for rather than just the product itself.

I would probably say just stay authentic and true to the core of your brand. Because like our brand, it is very difficult at times to push through because the ceiling for this category is still not as high as women’s cosmetics. And for men’s cosmetics and skincare, education is still very much needed for guys to first realise that they need the products, how to use these products, and then buy them.

We believe in offering this choice to guys just like ourselves so they can have a quality skin care product that is designed for men. And you have to just keep pushing which is how you stay true to your own ethos and quality.

Otherwise, you just start diluting and become just like all the other brands that are saturated in the market and you end up getting lost in the noise. So just stay true to why you’re doing it in the first place.

In recent years, we have seen a rise in domestic brands in China, and there is no exception in the cosmetics industry. Do you think foreign market players should be worried about that? What do you think is the key to competing with local challengers?

I don’t think we need to worry about that. We’re mindful of all of our competitors. One brand doesn’t make a category. It’s great to see more brands, especially Western brands in the market because it means this category is going to get more attention and there will be more choices. And this is good for us because we want to make sure this category remains lively.

On the other hand, I don’t necessarily see that we are competing for the same audience. Domestic brands have products that are produced locally, and can potentially offer much cheaper prices and much lower thresholds for customers who are just starting out, offering skincare cosmetics for those who don’t have the same spending power as some of the customers buying our products.

So, we are targeting different demographics: their demographics might not be buying our products and vice versa. Collectively though, we are educating men as a whole that skincare is necessary and looking after yourself whilst feeling great is good for mental health too.

The post Unwrapping China’s men’s beauty market – an interview with Jake Xu appeared first on Dao Insights.

Qing Na spoke to Edison Xiong from Xpeng, one of China’s leading EV builders and deep dives into China’s EV space, unveiling opportunities and challenges for market players amid the changeover in the thriving market.

Edison Xiong is currently the product lead at Xpeng Motors. His product portfolio works to solve customer problems but prioritises initiatives that drive the most significant business outcomes. He joined Xpeng after receiving a Bachelor’s and Master’s degree in management science from the School of Management at UCL. Prior to Xpeng, Xiong also had work experience with NIO, another emerging Chinese EV maker, responsible for analysing overseas consumer preferences. 

Could you please provide an overview of the EV industry in China at the moment?

I think right now the Chinese EV industry has a really positive image if you compare the Chinese market with others. You can see monthly sales volumes are always reaching new highs and have been surpassing total revenues year on year between the period of 2017 and 2021.

If we compare the monthly sales revenue, we have seen doubled growth over the past few years. For example, if we look at sales for March 2021 [figure 1], there is a 261% year-on-year increase compared to 2020. What’s also really important about last year was that at the end of 2021, in particular, November and December, we actually saw for the first time, China achieving a monthly penetration rate of 20% for EVs, a breakthrough in the EV industry.

This is because the EV market has progressed from the stage when a couple of years ago, most Chinese consumers still believed that combustion engine cars were much better than EVs. With the industry in its infancy, only people who were willing to take risks would try EVs and it wasn’t until about 5 years ago that native carmakers started selling them.

This was much later down the line compared with foreign player Tesla who actually helped with the introduction of EVs in China and drew in some early adopters who were willing to choose the new option thanks to the brand’s existing audience base. From that point onwards, the country has seen a wider adoption of EVs by the public and even a growing appetite for these products in recent years.

The Chinese government’s push to honour its climate pledge has somehow contributed to the EV market growth, could you bring into context one or two of the government’s policies and explain how they would benefit EV makers and their influence on consumer decisions?

When talking about policy incentives, we can break it down into four major parts. There are monetary rewards, tax exemptions, license privileges, and carbon credits. The money policies are straightforward as the government will reward consumers with a one-off payment when they buy an EV. In fact, the financial incentives have been around since 2010. But right now, with the electric vehicle penetration rate rising, the government is actually spending more and more money on the implementation of its policies, as a result of more consumers opting for EVs.

However, the country has now confirmed that financial incentives will be fully removed by the end of this year at the latest. This means that in 2023, consumers who buy an EV will not be rewarded with any money. What this also means is that the market will evolve from being policy-driven to being market-driven. From then onwards, people will buy electric cars because they want to not because of monetary incentives.

As well as financial gain, buying an EV vehicle means there are tax exemptions. When you buy a car, you normally need to pay lots of different taxes such as congestion tax. And in China, we have a purchase tax, which is the tax that you have to pay when you buy a car, and it is a certain percentage of the overall car price. But if you buy an EV, you will be fully exempt from the purchase tax which makes the cost of buying one much lower.

Additionally, there are license privileges. This was introduced specifically to metropolitan cities like Beijing and Shanghai to relieve congestion. Under the system, there are license limitations, which means only vehicles whose license plates end in a particular number are allowed to access certain areas within the city on specific days. But cars with an EV license plate could be free from such limitations.

The final thing about the policy incentives is around carbon credits. This is the only scheme relevant to car manufacturers. The carbon credit is coupled with EV credit – a credit that carmakers will get when they sell more EV models. So basically, the greener you make your cars, the more EV credits you can earn. For carmakers, they will be incentivised to collect more EV credits because they can be traded in their secondary markets based on the market price.

And if you look at the chart [figure 2], Tesla has the most EV points in China as of 2020. Firstly, this is because Tesla’s vehicles are all battery operated so they do not produce any carbon emissions. Secondly, Tesla is one of the top EV sellers in China. Therefore, they have a large volume of EV sales every year and their cars are powered by electricity which makes their EV credits much higher than any other carmaker.

Companies can leverage these two credits to generate extra income. For example with Tesla, based on the market price released in January, which was between 500 and 800 RMB ($74.54 and $119.27) per carbon point on the secondary market, if you multiple that price and Tesla’s total points, it would contribute approximately 413 million RMB ($61.57 million) to the brand’s income, which is huge. And there would be no additional cost for Tesla, which is a great benefit to the brand for producing such large units of electric-powered models.

What are the opportunities and challenges facing EV manufacturers in China, and what are the potential solutions to those challenges?

There has been a shift in the Chinese automotive industry, where almost all carmakers are now planning to either increase their EV output or switch to producing EV models only. But what I’m seeing right now is the amount of EV credits in the market exceeding the demand. With there being more EV credits produced as a result of carmakers ramping up the sales of electric vehicles, this results in inflation just like when the government prints too much money. This leads to the decreasing value of those EV credits. If you look at the stats, the price of EV credits in the secondary market was as high as 3,000 RMB ($447.18) per point in 2020, six times the value of the market price today. 

Also, charging is a major issue for the industry in China. There are specific problems that make chargers difficult for consumers to access. Firstly, they are built by different companies, such as Qingdao TGood Electric Co. Ltd, State Grid, and Star Charge, so charging speeds are inconsistent.

Secondly, right now in China, although there are so many chargers, they are unevenly distributed. Most are installed in tier 1 cities, like Beijing and Shanghai, as well as new tier-1 cities such as Chengdu, Chongqing, and Wuhan. This graph [figure 3] says a lot because if you look at the amount of charging stations, you can see there are several charging stands available at each station.

If you look at the data for March 2022 in the province of Guangdong where I live, the city has the most charging stations compared to the rest of the country. This is almost double compared to the second-ranked province of Jiangsu, even though Jiangsu has a big economy. You sort of see the comparison here and it is significant. If you look at areas like Tibet, charging facilities are limited. Then what happens if you want to go to that area? The answer is you won’t be driving an electric car because you won’t be able to charge it.

The final issue is with the maintenance of charging stations. The development of the maintenance system cannot keep pace with the development of the car itself. Installations and maintenance not only require large monetary investment but also involve the cooperation of multiple departments, resulting in low efficiency of those facilities. 

At present, there are three common approaches that car manufacturers in China take. The first one is related to battery technology aka battery swapping. It was adopted by NIO, where they strategically collaborated with Sinopec, who has a monopoly when we talk about things like gas refuelling in the Chinese market.

The idea is that they build a station, usually next to a gas station, where an automatic system will replace an exhausted battery with a fully charged one. It acts like a gas-filling experience so it doesn’t change people’s habits of fuelling combustion engine vehicles, which has become a big selling point for NIO. There are also home chargers normally offered by carmakers as part of a package, such as BYD. This goes for public chargers too with some being offered by authorities whilst others are installed by carmakers as an exclusive offer.

In terms of similar opportunities, we see a trend where local brands have become consumers’ first choice. If you look at this chart [figure 4], BYD is actually the brand who saw the biggest purchase intent (22.84%) in 2021, as shown below. It means that one out of five potential consumers intends to buy a BYD EV.

Another reason why Chinese brands have become the preferred choice by consumers is because brands including NIO, Xpeng, and Li Auto have realised the market potential of EVs much earlier than their native counterparts. As a result, they have the early entry benefit, which means people are much more familiar with them than emerging brands.

Should local EV makers worry about challenges posed by Tesla?

I think for most companies there will be lots of pressure from Tesla. We are going to see Tesla boost its capacity with a second Gigafactory in China, which shows an increasing demand for its products. But at the same time, I think this may not be a completely bad sign for other manufacturers and could potentially benefit the EV market in China as a whole.

Firstly, Tesla’s strategy of production in China has really boosted consumer awareness of EVs. Almost everyone in China knows Tesla. If Tesla ramps up its EV production, then there will be more electric vehicles on the road. This allows the product to be more visible to the public, therefore, resulting in an increased awareness which will benefit the penetration of the EV industry as a whole in return.

Also, with Tesla speeding up the development of its EV supply chain, it has pushed up demand for automotive components. As a result, original equipment manufacturers in China will also have to double down their efforts in development and research to not only meet the demand but also the standards required for electric-powered vehicles to suit Tesla’s overall needs. This market-driven approach would certainly push the entire Chinese supply chain to upgrade.

What do you think is the key to winning over Chinese consumers interested in buying EVs or drawing them to EVs?

I think there are three winning factors:  range, after-service, and charging networks. There is still room for improvement around reliable mileage. At present, the range marked by many auto manufacturers is basically the maximum theoretical value, but the actual driving process can be affected by weather, road conditions, congestion, and other aspects, so the range of new energy vehicles is lower than the official range. Therefore, consumers, especially those who live in areas with extreme weather conditions, worry about the capability of an EV. If we are driving in the North, when it is cold in winter, the mileage is even lower, and the capable distance for an EV to run may be halved in such conditions.

Secondly, good after-service provides a solid guarantee for consumers especially when EV technology has not yet fully matured. The history of EV carmakers is short compared to that of say Mercedes-Benz, which has been in the automotive industry for nearly 100 years. They have a well-established after-sales network, and their after-sales package is very complete and sophisticated, which makes consumers feel comfortable in the knowledge that they won’t need to worry even after purchase.

What I’ve been seeing in today’s Chinese EV market is that because the technology is still new, it’s easy to find issues. However, at the moment, carmakers are so focused on delivering new models in order to compete with competitors and fulfill market expectations, that somehow they overlook the after-sales care which is why we’ve seen many complaints about such services from EV buyers in China. Consumers are definitely aware that the cost of owning an EV is very affordable, but they would prefer an EV maker who cares about their consumers from the beginning.

Last but not least, having a well-established charging network is also very important. At present, many of the larger cities in China are well equipped with more charging facilities. But in some remote places, especially in third and fourth-tier cities, EV charging facilities need to be improved. In the future, a more sophisticated charging ecosystem will be expected to enable customers to travel freely, therefore, achieving the true goal of a low-carbon journey. 

The post China’s EVs at full throttle – an interview with Edison Xiong at Xpeng appeared first on Dao Insights.

Dao Insights spoke to the head of Huawei’s Intellectual Property Rights department and three challengers of this year’s “Top 10 Innovations”. They break down the latest cutting-edge technologies of Huawei and how they facilitate digitalisation in a wide range of industries in China.  

Alan Fan – Head of Huawei’s Intellectual Property Rights Department

What industries are benefiting from the commercial use of Huawei’s innovations such as 5G technology, could you provide a couple of examples?

Beyond the telecom industry, many industries benefit from communication technologies jointly invented by Huawei and other information and communications technology (ICT) companies. The automotive industry is drawing a lot of attention now because connectivity is becoming a default feature for cars.

But other industries, including transportation, manufacturing, energy, mining, and more, would all benefit from ICT technologies such as 5G. We are delighted that our technologies are behind these vertical industries’ digital transformations. For example, our cellular technologies are helping licensees build IoT (Internet of Things) devices for use in cars and other industries. About eight million connected vehicles licensed with Huawei patents are being delivered to consumers every year.

How would Huawei’s innovations and licensing strategies benefit more industry players?

Some of the top 10 inventions we are celebrating are patents that bring ground-breaking features to products and bring value to consumers and industries. Industry players can benefit by using the products with our latest technologies and work together with us to build thriving ecosystems such as HarmonyOS, openEuler, and MindSpore ecosystems to create greater value for customers.

To give easy access to our patents, Huawei works with patent license administration companies to offer “one-stop” licenses for mainstream use, so that industry participants, especially small and medium-sized businesses, are able to access our innovations efficiently.

Smaller licensees typically don’t have the ability to assess the technical merits of a large number of patents, so the patent pool companies would need to do it for them. We expect our high-quality patents that are backed by our strong standard contribution will bolster licensees’ success, and these licensing programs will bring our technology to consumers and industries more economically by increasing licensing efficiency.

What is the story behind the Top 10 Inventions? How can programs like this generate value now and in the future?

Since 2015, to honour the remarkable achievements of our innovators, Huawei started giving out the “Top Ten Inventions” Awards every other year to the patents that demonstrate the commercial, industrial and social value of our innovations. Each R&D department nominates their patent portfolio candidates for the program.

After rounds of screening, a corporate-level patent board finally votes for the winners.  These inventions are recognised as the top ones to come out over the past two years and are considered the most valuable ones from the company. The “Top Ten Inventions” Awards is also one of many programs to show our appreciation for inventions and inventors at Huawei.

And as you can see, the inventors receiving this year’s “Top Ten Inventions” Awards are very young (post-90s). We hope to see more young talent support our sustained innovation because they are the key. The award sends a message to our R&D employees of which we have over 100,000, to motivate them to pursue innovation. We want to have more innovation so that we can continue to deliver the best products and solutions to users.

Yunhe Wang – Senior Researcher, Huawei’s 2012 Labs

Yunhe Wang is one of the lead inventors behind Huawei’s energy-efficient basic computing patent portfolio, a winner of the “Top 10 Inventions”

Could you please provide a brief introduction about the invention that earned you Huawei’s Top 10 Innovations Awards?

We have been working to replace multiplication with addition in neutral networks creating what are called adder neural networks. Taking a step back, neural networks are a computational model inspired by the structure and function of neurons in the human brain. The model can learn what we want them to do by training based on data from the world around us.

Traditional neural networks execute a large number of multiplication and addition functions. Since multiplication is much more complex than addition, for the user, too much multiplication means that their smart devices – mobile phones, headphones, watches, TVs, and other devices that now come equipped with intelligence – will consume more power and have shorter battery life. Adder-neutral networks can reduce power consumption and circuit area by more than 70% while ensuring precision.

What inspired you to come up with the idea (and why do you think it’s necessary to have this innovation)?

In the third grade in 1999, I was obsessed with the old black and white Prince of Persia game on a 286 DOS computer. At the time, I thought computer science was all about how to manipulate a game character on a black and white screen. Now, at Huawei, I am working with the team to push the boundaries of computing.

Adder neural networks can be used by a wide array of devices, intelligent vehicles, and communications products. They are just one of the many energy-efficient technologies we are currently working on. These technologies allow us to design simplified AI algorithms and hardware architectures, greatly reducing circuit area and power consumption for AI computing.

How could your invention(s) contribute to the commercial application? Could you provide a couple of examples?

In simple terms, users now want electronic products that deliver extremely high quality and superior experience. However, prolonged periods of use make phones run hot and shorten the standby time for watches and headphones. That’s where our energy-efficient basic computing technologies can help. They can greatly reduce power consumption and improve user experience.

Siyuan Cheng – Senior Engineer, Huawei 2012 Labs

Siyuan Cheng is one of the lead inventors behind the multi-object interaction patent portfolio, a winner of the Top Inventions

Could you please provide a brief introduction about the invention that earned you Huawei’s Top 10 Innovations Awards?

My team’s invention concerns autonomous vehicles. There are three key modules behind autonomous vehicles: positioning, perception, and decision making. These three modules address three questions for a vehicle: Where am I? What’s around me? And what’s my strategy?

First, our vector positioning method only defines a handful of key, finite features, such as light poles and traffic signs, while preventing invalid matches by calculating the relative position and joint error of different elements. This cuts CPU usage by 85% and reduces storage overhead by 200 times.

Secondly, our approach to perception uses a single large network that can handle multiple tasks at the same time. This can improve network performance 8-fold and make new tasks more pluggable and scalable. Finally, the unified framework we developed allows us to consider how interactive objects affect each other, informing decision-making in complex environments where multi-object interactions are involved. With this framework, autonomous vehicles strike a balance – they won’t be too conservative to move, or rampage around ignoring everything around them.

What inspired you to come up with the idea (and why do you think it’s necessary to have this innovation)?

When we think about the AlphaGo AI that plays Go against human players, one of the primary reasons it managed to dominate its matches is because it could predict all the possibilities after each move. In contrast, a good human Go player can predict 10 and someone who just learned Go can’t even predict one.

Before our multi-object interaction decision method was developed, autonomous driving systems could only evaluate such situations one step at a time, and the vehicle could only respond reactively in most cases. Now we are working on predicting the next five moves of other objects. In the future, we hope these vehicles can better interact with other objects and be able to infer even more moves ahead.

How could your invention(s) contribute to the commercial application? Could you provide a couple of examples?

Autonomous vehicles are an important use case for artificial intelligence, involving multiple AI disciplines and enormous technical challenges. Although there’s still a long way to go before, we achieve fully autonomous vehicles. We believe the ever-growing data from autonomous vehicles will bring us a step closer.

Xi Zheng – Researcher, Networking and User Experience Lab of Huawei’s Global Technical Services Department

Xi Zheng is one of the lead inventors of the SRCON (Simulated Reality of Communication Networks) patent portfolio. This patent portfolio is a “Top 10 Inventions” award nominee.

Could you please provide a brief introduction about the invention that earned you a Huawei’s Top 10 Innovations Awards nomination?

SRCON is short for Simulated Reality of Communication Networks. It’s about creating a digital twin of a real-world mobile communication network. SRCON is built based on large amounts of data collected from real-world networks, using theories and technologies from artificial intelligence, mathematics, and communications.

With SRCON, we can accurately simulate user experience (such as maximum data rate), and potential network adjustments can be efficiently assessed before implementation. We can also use algorithms to quickly come up with the optimal structure for any large-scale network, make adjustments accordingly and provide the best possible user experience with the lowest possible carbon footprint.

What inspired you to come up with the idea (and why do you think it’s necessary to have this innovation)? 

Our phones are connected to telecom operators’ networks via wireless signals. The structure and resources of operators’ networks determine our online experience. Existing methods of adjusting network structure and resource allocation are mostly time-consuming, labour-intensive, and actually quite challenging even for the best experts as networks are becoming much bigger and more complex these days. Therefore, we need an efficient way to model network behavior with high accuracy, to effectively adjust network structure and improve user experience.

How could your invention(s) contribute to the commercial application? Could you provide a couple of examples?

Network optimisation has always been difficult for multiple reasons. Firstly, networks involve tens of thousands of base stations, millions of subscribers, and different types of radio propagation environments.

Secondly, the scale of the networks is huge. There are more than 46,000 5G base stations in Shenzhen alone, creating a network log of more than 1TB per hour. Thirdly, network components are so deeply coupled with each other, that any single adjustment will have an impact on the entire system. Therefore, without an accurate simulation of the network, any attempt to optimise it will be in vain.

SRCON helps to understand the behaviour and performance of existing networks as well as predict their performance after the network structure has been adjusted. So far, we have applied SRCON in 4 countries and helped 5 telecom operators optimise networks that serve more than 3 million subscribers with over 12 thousand base stations.

The post How innovations are levelling up China’s tech industry – an interview with innovators at Huawei appeared first on Dao Insights.

However, with more users rushing into short video platforms from Chinese Tik Tok Douyin to its rival Kuaishou, standing out from the crowd and maintaining appeal to followers has become a real test for anyone wanting to capitalise on the digital craving.

To get the lowdown on creating viral short video content and insights into China’s digital realm, Dao Insights spoke to three founding members of Douyin’s No.1 fashion account OneTea Media, including Feiyang Xue, Ying Qian, and Raye Li, who have knocked out one million followers in less than one and half years and whose output across China’s popular video-sharing platforms continue to garner average views of 80 million every month.

Feiyang Xue – Senior Content Strategist / OneTea Lead

Why is it OneTea? Could you tell us the story behind the name of OneTea Media, and its sister accounts World Microphone and OneTea Food?

What does OneTea sound like in Chinese? …Well, actually no one has ever answered this question correctly. It sounds like 问(wèn)题(tí)！We want to build a platform where everyone’s 问(wèn)题(tí) about China can be answered by our captivating and inspiring content. As a cultural bridge between China and the West, World Microphone and OneTea Food were created to bring the most fun and updated information from one side to the other.

World Microphone focuses on the expression of fashion and lifestyle represented by London’s unique personalities. Different from other street interview accounts, our unique touch is the witty interview questions and localised translation style, which bring life to individual stories, values, and opinions.

This account is now registered on 4 major Chinese platforms and 3 Western platforms attracting over 1.7M followers who are interested in London Fashion. Moreover, World Microphone has been officially ranked as the No. 1 fashion channel on Douyin (Chinese TikTok).

OneTea Food is an Asian food channel on TikTok that shows authentic Chinese food culture to audiences all around the world. This channel focuses on Chinese recipes, snack reviews and creative dishes, sharing modern Chinese culture with Western Gen-Z and Gen-X. ​

This channel is now developing its e-commerce platform, Asia Eats, with the goal of enabling more people to enjoy our hand-picked products from Asia.

How did it start and how is it now: content-wise, which platform was chosen for the first post, and why?

For World Microphone, we were doing all kinds of street interviews in London from the very start. From English slang, and relationship questions, to celebrity ratings… We were trying every format we could think of to find the “right one”.

Finally, in July 2021, we launched our fashion interviews, which we had been wanting to do for months. We doubled our follower count from 250k to 500k within two months. Then we gained 1M followers as more and more videos went viral on every platform we were on: Douyin, Xiaohongshu (RED), Kuaishou, Bilibili, TikTok, Instagram, and YouTube.

OneTea Food, following a similar path, also found the “right one” earlier this year when we shifted the focus onto Asian food instead of generic Asian culture. By reviewing different snacks and cooking easy Chinese recipes, we are now at 335k+ followers with 428k weekly reach. Some of our snack reviews went mad and got millions of views in a couple of days.

Now World Microphone has 1.5M followers across 7 platforms with 15M weekly reach. Apart from Chinese platforms, we also expanded to TikTok and Instagram earlier this year, which again was a wise move and a huge success — We are now at 114k on TikTok and 18k on IG, completely organic through our consistent effort. Our followers are literally all over the world now.

Content wise, we have interviewed 150+ people and posted 300+ episodes. We have covered two London Fashion Weeks and some other fashion shows around London. One single good-performing video can sometimes reach 10M views organically, and this happens every month.

I will never forget the time when we got 150k followers in just ONE WEEK from ONE INTERVIEW, which actually happened recently in April. This proves to us once again, that it is not quantity but the quality that matters the most on social media nowadays.

How long did it take for the account to grow into a certain threshold (Say one million followers in total)?

From 0 to 1M, it took us under one and half years to reach the threshold for two OneTea Media accounts. For World Microphone specifically, it only took us 10 months to reach 1M followers across all platforms.

I also have to mention our RED World Microphone channel here. It took us a whole year to reach 100k followers, but only 6 months to triple the amount. When we found our niche and format, it was only a matter of consistent effort to upkeep the stable or sometimes crazy growth.

Ying Qian – Content Strategist

Are there any growth bottlenecks? (If so, at what stage, and what strategies are used to deal with them?)

It is almost certain that the growth of each account will inevitably experience a bottleneck period or even many. As the account continues to mature, the arrival of each bottleneck period seems to be predictable, almost once every quarter.

Looking back at the content exploration process for World Microphone, the solution for the bottleneck period can be divided into two stages: before and after the establishment of the theme of “fashion street interview”.

Before July 2021, the World Microphone Channel had not yet found a clear positioning, it was still in the stage of exploring different forms of video content: from “star ratings, English slang to relationship questions”… When the bottleneck period comes, it is often reflected by low video views, fewer likes, and a decrease in the comment interaction rate, which for daily social media, indicates that the life cycle of the video format is coming to an end.

To break through the bottleneck period: 1. Summarise audiences’ interests and hobbies according to their comments, then review the interview questions while keeping the theme unchanged; 2. Change the video’s quality by adjusting music, editing rhythm, adding emojis, and changing the narrative order; 3. In case neither of the former two methods are feasible, change the theme (such as switching from an emotional topic to a fashion interview).

At the beginning of July 2021, after establishing “Fashion interview” as the final theme, the format could no longer be easily changed following the arrival of the bottleneck period. At this time, what we will do: 1. Collecting the number of views, likes, and followers to analyse and evaluate the performance of the video, so as to determine whether the cause is the video itself or the platform’s restrictions due to trending events related to some social topics; 2. If the reason is the video itself, we will adjust content strategies based on the comments, and adjust the presentation through editing methods.

We always believe that the bottleneck period is only temporary, and our team is encouraged not to give up on content updates; 4. Analyse audience psychology and strive to create high-quality content, because the upload of content is not about the quantity.

Are there any changes in content/tone of style, if yes, what are they and why?

After we decided on the format of the “fashion street interview”, where our visitors are the world media, we don’t change our format often. Luckily, because the content is based on different interviewees, this brings us varied content as every day there is a new story.

Therefore, we think that the proper adjustment is by way of music and empathy so that we can tell the story in a different way, putting the audience in a pleasant mood and enhancing the emotion.

The theme of World Microphone has always been to dive into people from a fashion interview lens, which is participated by the same interviewee. Through their personal stories, it draws in more people to share and learn from each other’s experiences, while encouraging the audience to have courage themselves, so more societal aspects of the discipline are also proposed.

What are the thinking/criteria for judging if a topic/content is working on a certain platform or not?

I think, there is no specific standard to measure whether a topic is feasible on a certain platform, because the so-called standard is just a rule summarised by a lot of research and investigation, but this rule does help us to avoid detours. However, of all the rules, “innovation” is the foundation of an account’s success, and only if your account creates something that no other account does, even if it’s just a little different, that uniqueness will attract fans to you.

According to the operating experience of World Microphone, we collected many relevant content accounts before determining the content for the fashion street interviews and learned and summarised the advantages and disadvantages of these accounts to make them complementary to each other. But more importantly, we combined the personality and characteristics of the creative team. For example, authentic and lively Chinese translation is the biggest difference between our content and other similar accounts.

But also before this characteristic form, after quite a long time of accumulation and exploration, we realised that success is not measured by time, but by the audiences’ feedback, so I cannot determine the specific period, because sometimes in a moment of change, the audience can have a renewed moment of keenness.

In conclusion, the stage of judging the success of a content form is to see whether the audiences’ feedback fully understands the intention of the creator in the comments. If the direction is right, we are willing to spend much more time exploring deeply.

Raye Li – Video Editor

What do you think are the most important thing(s) that anyone who is thinking about starting an account from scratch on social media like Douyin, RED, TikTok or Instagram should pay attention to?

Positioning. Figuring out what you want to do and how you show it on social platforms is very important. And also, execution. 100%. Have the passion to be a creator and just do it. The biggest stumbling block for many people is the action. Try and learn. Review and study.

What are the key skills and characteristics that a Content Creator should have?

Insight. Creator, audience, and platforms are equally important. Having the insight means you need to know yourself, the audience, and the platforms. To learn, observe, and study. Know what you have/what your personality is, know what the audience wants and follow the steps of different platforms, then there is a chance you can make it!

Persistence. Keep trying and doing the right thing.

What would be your advice for creators who are facing a growth bottleneck on Chinese social media?

Change the way you show your content. For example, collaborate with other creators… upgrade your content to higher quality…copy the success you have had already. When we are afraid that our audience is sick of the normal street interviews, we try our best to go to premiere fashion events to bring more professional content. Or when we look back at our viral videos, we think it’s a good way to find the same kind of interviewees to reproduce wonderful videos. What the audience likes is always a huge motivation for us.

By far, brands the team has collaborated with include

World Microphone: Missoma, Loop, Cariuma, FancyCube, Pinduoduo, Zelens, Agelocer, Xinshang app.

OneTea Food: Deliveroo, Hakkasan, Yauatcha, Alipay, Tencent.

The post How to make a splash on Chinese Tik Tok? – An interview with Douyin’s No.1 fashion account appeared first on Dao Insights.

• Born in 2017, 8ON8 combines traditionally tailor-made men’s clothing with contemporary sportswear to produce a semi-luxury style peppered with the athleisure cue.

• The brand’s ‘retro futurism’ aesthetic has won over not only male consumers but also “cool urban girls” who find the style caters to their pursuit of uniqueness and individuality.  

• The brand has so far drawn collaborations with global labels as well as been eyed by Chinese fashion giant Peacebird, who recently acquired a 20% stake in the emerging fashion retailer.

From collaborations with global sportswear brands such as ASICS, as well as the Italian luxury menswear label Canali, to a frequent visitor of London Fashion Week that is backed by GQ China (a Chinese high-end men’s fashion magazine), 8ON8, a Chinese new generation brand, has been leading the reimagination of China’s menswear with the brand’s ‘retro futurism’ aesthetic.

A brand where nostalgia meets futurism

As an independent designer brand, the brand’s name draws inspiration from the surname of the founder Li Gong, with the accidentally compressed version of “gong” giving the birth of ‘8ON8’. The brand started its life in 2017, combining traditionally tailor-made men’s clothing with contemporary sportswear to produce a semi-luxury style peppered with an athleisure cue – a nod to Gong’s nostalgic view and the belief that everyday life is a reference to his artistic vision.

Intentionally or not, such a contemporary city wear style seems to have decoded the dressing tastes of young Chinese. “The younger generations have a clearer mind about their personality and identity. The contemporary city sports style responds to those needs and, therefore, becomes the main choice of today’s Chinese consumers,” Li Gong told Dao Insights.

“[Today’s Chinese] people are consistently looking for passion and better imagination about their lives,”, [That’s why] we make clothes based on daily life but develop something above it to refresh things that are commonplace in our daily routines and present them in a surreal retro filter,” Gong added.

Fashion is not defined by gender

The focus on the concept of urban lifestyle has turned to be an appeal to not only men but also women, pushing the brand with an original target of male consumers to broaden its product line with a range of casual womenswear that become the go-to for those “cool girls” in the city who have developed a preference for gender-inclusive or even man-looking clothing out of the pursuit of uniqueness and individuality. “Most of them [our female customers] started with buying men’s clothing from us,” Gong continued.

“Actually, the boundary between men and womenswear could be quite blurry these days, if anything different, maybe it’s the size.”

Li Gong

Whereas public discussions on Xiaohongshu indicate not even size would be a problem. While 8ON8’s T-shirts endorsed by one of China’s male pop singers Jackson Wang have become sought-after among young women, several other designs of the brand that tend to be gender-neutral have also flooded the platform, with the majority being female users sharing posts of themselves in these retro-futuristic garments normally in size that doesn’t look to suit a girl, generating a total view of over 132,000 under the hashtag #8ON8 and more than 48,000 relevant notes on China’s largest lifestyle-sharing community.

A key to China’s new demographics of consumers

The successful practice of the brand’s aesthetic has not only drawn in foreign labels mentioned earlier to collaborate with 8ON8 in order to leverage the brand’s popularity to penetrate their target audience in China, but the strategy also appears to be convincing to investors.

The brand became the first Chinese independent brand that Peacebird, a Chinese fast-fashion giant, has formed an official partnership with. The latter acquired a 20% stake in the Ningbo-based fashion retailer recently for 10 million RMB ($1.57 million), as revealed in the Peacebird annual report. The move has been regarded as the first step for the investor to capitalise on 8ON8’s youthful DNA to refashion its decade-old brand.

While for 8ON8, rather than a financial tool to keep the business afloat, the partnership is more about “creating long-term value for the brand and ultimately elevating the Chinese fashion industry” by working with the major market player, as Gong told WWD in an earlier interview.

With the brand smooth sailing so far, to continue to gain a foothold in the market is a race with, not others, but the brand itself, as Gong said, “This is the core value for any designer brands to improve themselves. There is only one way to keep a designer brand growing, which is to understand what your brand is, and what the brand is talking about. If you don’t understand your brand, no one does.”

The post 8ON8: Up-and-coming Chinese designer brand that decodes China’s menswear and beyond appeared first on Dao Insights.