Monthly Archives: April 2013

Mobile Strategy: Rising Alibaba and Google in China

We talked several times about Alibaba, Chinese e-Commerce Giant, competing with Chinese and American firms. Their accounts are not public because the firm is still private even though an IPO is coming (maybe Q4 2013).

They announced buying a stake into SinaWeibo (other previous investments in social services were Xiami and Momo)

The Wall Street Journal investigated on their mobile strategy:

inside-alibaba-office

Alibaba is looking for partners but objections of Google controlling Android. Handset makers would like to join Alibaba but doesn’t want to harm their existing relationship with Google.

The Economist talked also about the firm 

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Interests about WeChat outside China: Malaysia and the United States of America (Q1 2013)

According to “All About WeChat“, a blog on marketing and usage of WeChat, top viewers are coming from Malaysia and the United States.

top10views

We can explain Malaysia for the growing usage: over than 1 million people are using the application.

The United States position is mainly explained by business interests. Followers of social media are numerous and are looking carefully at the Chinese market. In 2012, WeChat was growing faster than Facebook.

 

Source of image: All About WeChat

As a reminder, Whatsapp is still the #1 messaging app in the United States (if we consider Facebook is not only a messaging app).

competitions-wechat

More on WeChat in the world

Strategies for Economic Development in China

Classification of Cities

This classification splits the Chinese market in different levels of developments. It is useful for strategies of business development and market analysis.

The tier 1 cities are Beijing, Shanghai, Guangzhou, and Shenzhen.These were the first to be opened up to competitive economic development by the Chinese government, and so are the most populous, affluent and competitive cities in the country.

The tier 2 cities are around 60 cities. Tianjin and Chengdu are growing faster than other cities of this category. These two cities are considered rapidly developing economic centers. Nanjing and Xi’an are growing but less quickly. Wuhan and Hefei were behind but now are developping faster.

The New Consumer

The new consumer class is more likely to consider emotional benefits of the product or service she/he buys and prefer certain brands. She/he will typically be of the younger generation and live in the more developed eastern coastal provinces.

new-mainstrzeam

Younger consumers are more likely to imitate the spending habits of consumers in developed countries.

younger older consumers

About 41% of younger consumers in this new class are inclined to pay a premium for the best products, compared to 31% of older consumers.

mckinsey

According to McKinsey, the proportion of urban households able to afford cars and small luxuries will rise six-fold in the next decade and account for 57% of the total population by 2020.

It also estimated that the largest 225 cities in China will contribute 27% to global economic growth between 2013 and 2025.

new-vs-mass-consumers

The consumer trend in China’s first-tier cities is quite different from other cities in the country. People in the country’s largest cities typically spend more. For example, they are spending 35% more on dining out than people in second-tier cities, and 50% more than residents of third-tier cities.

Sources:

VALUE2020

McKinsey, URL: http://www.mckinseychina.com/wp-content/uploads/2012/09/McKinsey-2012-Annual-Chinese-Consumer-Report.pdf

Loyalty Management in China – Internet & Luxury Industries

In a crowded marketplace where firms compete for the same customers, it’s become hard to stand out. Consumer definitions of value and loyalty are different according to the location and period. Strategists ask marketers to develop loyalty management building profitable relationships with all customers and a higher attention towards best customers.

Loyalty Management in China is not a mature market contrary to the United States and Europe.

China, the country in the middle of the world, is a potentially lucrative and so far largely untapped resource of consumer data, one of the most valuable commodities in the marketing world.

The market is not very developed but it’s evolving rapidly. First, consumers are testing products and services. Next, a firm should be active to retain the new clients. Loyalty is going to be something that will rapidly become very visible.

Loyalty Management in China – Internet Industry

The strategy of the Internet industry is to take advantage of a high-growth area with a potential huge user base.

Once it has access to a base of consumer data, a company like Tencent, Baidu, Amazon China can use it anonymously to sell analytics about purchasing behaviour to other businesses.

Loyalty Management in China – Luxury Industry

The strategy of the Luxury industry is to establish a footprint before competitors. After developing very quickly in Tiers 1, and Tier 2 cities, luxury brands are running to smaller cities.

In the luxury industry, brand customers who use social networks like WeChat can be targeted for private sales – events that are made for them based on purchasing behaviour. If a customer receives an offer from Hermès for example, and then uses the invitation, that Hermès store pays a commission on sales to Tencent (WeChat owner)  and also covers the special arrangements on the offer, for the privilege of getting that consumer into its store. For this kind of customer, offer another luxury experience like a free glass of Champagne or testing other luxury products are a must.

Conclusion

Data is the new oil. As the Chinese market develops, the data accumulation and analytical insights that you collect can be very useful for your strategy of loyalty management and value creation in the long term.

Do you know YY.com?

YY.com is a social media launched back in 2005 in China. It was mainly a gaming portal similar to QQ Games (Tencent).

yyteam

Today the portal became an entertainment portal offering between other services, games, video streaming, chat, and karaoke services. Some users are even using the chat feature for business.

The Internet company claims over 300 million users. As of today, the firm doesn’t have any service targeting foreigners. We will see if the firm decides to compete with Ustream, Google Hangout and Airtime.

Like Tencent, YY.com obtains revenue mainly from gaming sharing with developers the revenue generated from virtual goods purchased on the game.

yy portal screenshot

Tencent, Baidu and Netease are local competitors. WeChat could take user time from YY.com because the service is likely to offer games, video streaming and much more on WeChat in the coming months.

Sources:

Forbes, URL: http://www.forbes.com/sites/tomiogeron/2012/06/11/yy-com-chinas-unique-real-time-voice-and-video-service-with-a-virtual-goods-twist/2/

YY.com, URL: http://www.yy.com/

Working with WeChat, One to One Communication Tool

To start, click on the picture below:

wechat

Potential CRM database for brands

e-Payment and e-Commerce tool

Still an unanswered question: how does Tencent manage the database?

More about Marketing potential of WeChat

E-commerce in China: The Alibaba phenomenon

Click on the picture:

alibaba

Alibaba Financials

E-Commerce in China

Source: The Economist

http://www.economist.com/blogs/schumpeter/2013/03/e-commerce-china?bclid=0&bctid=2253859350001