How has Digital Changed Business Environment in China?

| April 25th, 2019

China ranks third among the largest digital and technology investments and is also the largest e-commerce market in the world with nearly 40% of total e-commerce transactions worldwide. China is home to one-third of the world’s unicorns.

The rapid adaptation of Chinese netizens has enabled e-commerce to grow significantly over the last fifteen years. This is also due to the appearance of mobile payment applications from Tencent’s “Wechat” and Alibaba’s “Alipay”.

This ability to adapt is also at the origin of the strong competition on the Chinese digital market. The core of the Web users is the native digital, which represents nearly 280 million people in China, which represents almost the total number of web users in the United States. These digital natives were born in the digital age and grew up with these developments, but are especially passionate about the digital world and contribute to its active evolution in China.

One of the characteristics of the Chinese Internet population is that one in five Internet users use the Internet only via their smartphone. In addition, 68% of Internet users use mobile payment. A unique figure when we see the difficulties faced by the US and European markets to set up this type of payment system.

In 2016, BAT represented a total of 42% of venture capital investments for China; while the US group Facebook, Amazon, Netflix and Google (FANG) represent only 5% of venture capital investments in the United States.

How has this digital ecosystem influenced China’s business environment? This is the question we will answer in this article.

WECHAT: the king of the digital ecosystem

WeChat or “Weixin” (micro message in Chinese) was first introduced to the Chinese market as an application offering messaging services (sending text messages and voice recording) and calling. Today, it has become the most used application in China. It has created its own ecosystem, Chinese users can do almost everything with WeChat: SMS, calls, video calls, surf the Internet, shop, buy clothes, book a plane or train ticket, book a hotel, order dinner, and many more! Companies need to leverage these features to gain visibility, have a good reputation, communicate with their users, and so on. WeChat is essential to a good digital strategy in China.

Companies can create a business account. This gives access to specific WeChat features that will communicate with Chinese users. Among these features: publish on Wechat Moments (which looks like Facebook newsfeed), use ads Wechat, use a QR code to share on other social networks to gain subscribers and visibility. Companies can also create a mini e-commerce platform (via WeChat html5 or via mini-programs), etc.

WeChat allows you to create an e-shop, but also an e-brochure, presentation of the services / products of the company, as well as its history, users learn more about the brand and are more likely to recognize it later or think about it when wanting to purchase this type of products. These pages are a boon for businesses because they are accessible without the Chinese users needing to download an independent application.

Thanks to all the functionalities that it offers to companies, WeChat is their ideal tool to communicate with their customers, but also within the teams of the company. Nowadays, WeChat has replaced emails, in Chinese companies or established in China, each employee uses WeChat to communicate with his colleague, client or manager.

BAIDU RANKING: The influence of the Chinese search engine on companies

Baidu is the second largest search engine in China with a market share of 82.2%.

It is an essential tool for companies in China since it is mainly via this search engine that the Chinese will look for products, services and information. And in a competitive market like China, companies had to start considering the notion of e-reputation.

Chinese users are very attentive to the image of the brand they use mainly because of the concept of “mianzi” which means the “face”, it is a very deep concept in Chinese culture, but in a word, it represents the image / reputation of a person. So, the concept of reputation is very important to the Chinese people. And because users value what their peers, friends and colleagues think about a product or brand, it can be very difficult for a brand to enter the Chinese market with a bad reputation. It is for this reason that companies must learn how to manage their e-reputation to succeed in this market.

To do so, creating relevant and creative content around the brand’s spirit and values ​​was a first step. Then the diffusion of this content on different social networks like Weibo, WeChat, in order to reach several targets. User engagement and customer potential was very important, companies learn to invite their followers to comment, give their opinion, like and share the content.

Online press publications are also a great way to have a good reputation online. Publish quality content on specialized press sites in its business, or on sites with more general content to gain more confidence with the Chinese.

SOCIAL MEDIA: The sinews of war

Chinese netizens are the most connected web users in the world. In 2018, they reached the threshold of 800 million users (of which 788 million use smartphones).

They have a particular approach to social media, they attach great importance to feedback from other users, they love new methods of communication (especially live streaming). They swear by WeChat, the main application to manage all aspects of their daily lives. The landscape of Chinese social networks is very different and complex compared to the Western ones. If companies want to succeed, they must benefit from the features offered by this platform to make the most of it.

WeChat remains an important social network with its “Moments”, but the platform is relatively closed compared to its competitors. Thus, if it is convenient for customer service and communication, however the app is less interesting in terms of implementation of marketing campaign.

Weibo, the microblogging social network similar to our Twitter (which actually offers many more services than Twitter) is one of the leading social networks in China. It is also full of opportunities for businesses. Like all Chinese social platforms, campaign opportunities on the site are very important. Among others:

-Weibo ads (however the ads are not effective in China)

-User engagement through marketing campaigns

-KOL Campaigns (Key Opinion Leader) which allow to put in place a marketing campaign, but also an e-reputation campaign since these personalities develop large communities who trust them.

Zhihu is not part of the leading social networks of the Chinese digital sphere, however it is a platform in full swing and promising many opportunities to companies. The site is similar to the Chinese version of the American site Quora (a forum Q & A). Thus, the intimate atmosphere of the platform is ideal for dialogue with potential customers. Besides, the educated community gives the company the opportunity to share its expertise on its industry / company and thus give users trust regarding the brand. This is a great way to give a good image of the company.

B2B: Forgetting Trade Shows, Say Hello to Alibaba and Tmall B2D

Nowaadays, trade shows remain the most common means of meeting other businesses to collaborate with, but in China, digital platforms have been developed to replace these salons which are very expensive, time consuming and requires a big organization.

Launched in 1998, Alibaba decided to launch its B2B platform to connect foreign business with Chinese wholesalers and vice versa.

Similarly, Tmall offers a slightly different service by launching the Tmall B2D platform (business to distributors) allowing international companies to find Chinese distributors for their product in the largest market in the world.

In a decade, China has gained a considerable advantage over other world economies by developing its own digital ecosystem. An environment that has pushed companies into a transition and digitization that is beneficial to them today and represents a significant number of opportunities for companies that will set up in the future in the Chinese market.

61 Comments | Leave a comment | Comment feed

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    Not only in China that businesses has changed due to digital but the whole world.

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  29. Rod says:

    It is sure that digital & internet Change the business in China, change everything actually.
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