26 May 2022
That being said, it is definitely a challenging time for both foreign and domestic brands operating in China.
For the past two months, China has been battling an outbreak of the omicron variant. Lockdowns and travel restrictions were put in place and have still been ongoing. Everything from manufacturing to travel to retail and services has taken a hard hit. From Estee Lauder to Apple, businesses left and right are feeling the burn of China’s covid controls.
For example, Starbucks has suspended its guidance for the rest of the fiscal year, with interim CEO Howard Schultz saying that “conditions in China are such that we have virtually no ability to predict our performance in China in the back half of the year”. Apple has predicted that the lockdowns were likely to impact sales in Q2 2022 by $4 billion to $8 billion, with consumer demand in China significantly affected. Even Estee Lauder cut its full-year outlook due to the current situation, with a company release noting that “distribution facilities in Shanghai operated with limited capacity to fulfil brick-and-mortar and online orders beginning in mid-March 2022”. As a result, Estee Lauder’s growth forecast was adjusted to 7%-9%, down from its earlier 14.5% expectation. Domestic brands aren’t faring any better, either. Approximately half of Morgan Stanley Capital International’s China mainland stocks missed first-quarter earnings expectations, amidst a notable GDP contraction.
It’s definitely not a sunny picture, but it’s not the end of the world for brands in China, in particular foreign brands. In unusual times like these, the best way through is to go with the flow. In particular, “soft power” is a strategic way to maintain a positive brand image while also bolstering awareness of your brand.
Donate (when and where appropriate)
Generating goodwill is a great way to build a positive brand image and increase share of voice. For example, Uniqulo donated clothing to healthcare staff at hospitals, while Pepsi has donated products and supplies, encouraging employees to help out at their districts.
In times like these, it is more important than before for brands to be seen as “human”. Local brands, naturally, have taken the initiative to step up, with Cainiao, Eleme and Hema sending 3000 frontline staff to help in locked-down areas. Stubborn Mouth, the pet foods brand of Chaoyun Group, donated pet food and supplies to stray animals in Shanghai, winning the hearts of many online.
Adjust Brand Messaging
This is a time when people are stressed with trying to get their hands on the most basic necessities. Brands should avoid pushing an overly commercial message. Simply put, consumers don’t care if you just released the newest flavour or unveiled the newest collection in your series of watches. As a brand, it is imperative to understand the key priorities of consumers in the market at every point in time, and adjust communication angles accordingly.
For example, Fendi launched online courses hosted by specialists from various fields such as meditation, yoga and cooking for its clients. Prada organised its “Prada April List” e-club on Xiaohongshu and WeChat. This open club was received by netizens as a means of emotional support and was highly appreciated across the market.
Go Digital: Get on the Metaverse, Social Media and Live-Stream Train
“The metaverse and NFTs can be powerful tools for gaining visibility and catching Chinese Gen-Z’s attention,” says analyst Antonello Germano from Daxue Consulting. With the astronomically increased screen time, digital marketing is a must. For example, instead of postponing or cancelling its events, Shanghai Fashion Week collaborated with Xiaohongshu, creating digital collectibles with designers from 9 brands including Mashama and zi ii ci ien. Considering how much more time consumers are spending on social media, now it is more important than ever for your brand to build its presence and share of voice on major social media platforms in China. With a solid KOLC marketing strategy, your brand will be able to engage with internet users and create lasting, positive impressions and relationships.
Leverage Group Buying
Many e-commerce platforms and brands are taking advantage of the current situation to capitalise through group buying. As logistics have been severely impacted by travel restrictions, shipping rates have gone up and brands and retailers are using group buying as a means of achieving profit while minimising costs as much as possible. With these group purchases, a minimum number of orders must be placed before a product can be shipped in bulk to the residential estate. This started out with groceries, but eventually grew to include cigarettes, alcohol and skincare products with brands such as La Mer, Sulwhasoo and L’occitane participating in community group purchases.
Explore the China Beyond Shanghai and Beijing
There’s so much more to China than just Shanghai and Beijing. Take this opportunity to consider expanding your official brand presence and target market to other locations in China, such as Tier 2 and Tier 3 cities. Most of them are functioning properly (for the most part), your products will help change more lives, and your brand will have emerged from this situation with an even larger, more diverse market than before. A win-win!
For more information on navigating China during and after covid, reach out to our team! We’ve got the answers.
Learn more about:
- Building Brand Equity in China
- An Intro to In-Home User Testing
- How to Recruit the Right Content Creators for your Brand
- An In-Depth IHUT Case Study
- Why Your Brand Needs KOLs and KOCs
About 评价达人 – PJdaren:
Since 2016, PJdaren has helped some of the world’s largest brands build trust, collect insights and drive sales in China by engaging Key Opinion Consumers (KOCs) and Key Opinion Leaders (KOLs) through our state-of-the-art influencer marketing solutions.
Our full-service solutions connect brands with our over 4 million-strong KOC and KOL community. We facilitate targeted, authentic conversations and content, enabling brands to capture the market with measurable results.