SHANGHAI, China — It now sounds like the stuff of lore.
In the late ‘90s, the Chinese government began using software — later christened by outsiders as “The Great Firewall” — to prevent access to unwelcome sites and domains. Silicon Valley giants were eventually targeted, and Google, Facebook and Instagram were blocked for the first time in 2002, 2009 and 2014 respectively.
As users in the mainland inevitably have to fanqiang, or “climb over the firewall” to access contraband sites with the help of a virtual private network (VPN), Instagram never became the default social platform or sales driver for fashion brands in China. Instead, China’s online censorship regime effectively played into the hands of local competitors who are more amenable to playing by the government’s rules.
WeChat and Weibo more than filled the void, with the former reporting more than one billion daily active users, and the latter’s 211 million daily active users as of June. Said firms, alongside newcomer and social e-commerce app Xiaohongshu, became the holy trinity for brands and retailers marketing to China’s Millennial cohort. Meanwhile, a number of other social platforms like live streaming giants Meipai and Yizhibo, short video apps Douyin, Bilibili and YY have entered the fray as new contenders.
To make matters worse (for Instagram), Chinese social media platform Weibo launched Oasis, combining elements from Instagram and Xiaohongshu to create a lifestyle and fashion-oriented platform for the country’s younger tech users (the app was taken down days later after users found that its logo resembled that of a South Korean film festival).
Given such a crowded ecosystem of competitors and the Chinese government’s official ban on Instagram, it is understandable that the platform is often dismissed by global brands as irrelevant to their Chinese marketing strategy.
However, brands would be foolish to assume that just because Instagram can only be accessed via a VPN in China or by those travelling or residing abroad, the app plays no role in shaping their business in the mainland. While Instagram’s Chinese user count is almost certainly a drop in the ocean compared to WeChat and Weibo, the app provides a valuable, targeted channel to engage a coveted audience of tech-savvy, affluent Chinese shoppers — brands need only take note.
Small but Influential
If anything, Weibo’s (at least so far, unsuccessful) attempt to create an Instagram dupe attests to the latter’s special status in the mainland.
For further evidence, see the masses of Chinese Instagram accounts following the likes of Gucci, Burberry and Chanel, or the number of Chinese influencers amassing impressive followings on the app — Instagram posts by Dior ambassador Angelababy, for example, tend to draw over a thousand comments in Chinese. The same can be said for the likes of supermodel and Chanel muse Liu Wen and actress Fan Bingbing, who often publish different content on the app to keep their local followers interested. Instagram declined to comment for this article.
But it isn’t only bigger players for whom Instagram is a valuable asset in China. “It goes without saying that Instagram is important for small brands,” Erik Chiu told BoF. “For us, it’s about networking and putting our products in front of the right eyeballs.”
Five years ago, Chiu founded an independent shoe brand, Heng Shu. Minimalist, well-made and affordable, the brand has amassed a humble but loyal following on WeChat, Weibo and Instagram, where Chiu has curated — with the help of a VPN — an aesthetically pleasing, warm-toned mosaic of still lifes and sleek interiors.
Though Chiu mainly uses Instagram as a portfolio for consumers and buyers outside of China, the app’s insights reveal that the bulk of Heng Shu’s followers are actually based in Shanghai and Hong Kong. Though short-handed, Chiu continues to invest time into the brand’s Instagram feed in order to reach this group of “insiders.”
There aren’t that many Instagram users in the mainland, but users will generally be higher tier consumers who are more open minded and sophisticated.
“There aren’t that many Instagram users in the mainland, but users will generally be higher tier consumers who are more open-minded and sophisticated,” he said.
While the number of Instagram users in China remains unclear (VPNs allow users to mask or change their location), the app is used by only a small proportion of Millennials, said Ben Cavender, Shanghai-based principal at China Market Research Group. “However, there is a well-educated, well-travelled segment of the population who do use Instagram to follow overseas trends, brands and influencers as they emerge.”
Shanghai-based Creative Director Erica Zhu started her Instagram account in 2011 while studying in New York and has since amassed over 187,000 followers drawn to her style (a mixture of Western, Chinese and South Korean labels) and filter-free feed. For Zhu, the app went from “a platform with great filters and sharing capabilities” to a networking site; now, she said, “most of my friends use Instagram and that’s where they are getting inspiration daily.”
For consumers, having an Instagram account signals a level of sophistication. According to Boston Consulting Group, Chinese students made up over 40 percent of international students in the UK this year. Current students make up only part of the equation: Chinese nationals living abroad, graduates who have moved back to China, frequent travellers and fashion insiders are also more likely to have an account. And with Chinese young high net-worth individuals estimated to possess an average wealth of $5.6 million as of 2018, the group is a goldmine for fashion and luxury brands.
“Many upper-class Chinese who have spent time abroad regularly use VPNs to access Instagram,” said Elena Gatti, a managing director at cross-border e-commerce solutions provider Azoya. “This demographic tends to be wealthy and many of them are spending their parents' money [and broadcasting] their lifestyles on social media.”
Trickling Down, Levelling Up
Personal spending aside, said influencers’ Instagram usage benefits both global and Chinese brands in unexpected ways.
For Chinese brands such as Heng Shu, managing an appealing Instagram can catch the attention of overseas buyers, but it can also be a sly shortcut to better brand positioning in the mainland. As Chinese tend to follow trends from abroad that reach the mainland via influencers or word of mouth — be it beauty looks from Japan and South Korea, or style trends from European fashion capitals — an Instagram presence has become the hallmark of brands-to-know.
“It implies overseas exposure...if [posts] get reposted, it can change the dialogue about a Chinese brand or product to suggest that it is more international than would otherwise be the case,” said Cavender.
For global brands, content from their Instagram accounts often organically finds its way into WeChat and Weibo feeds via Chinese Instagram users. Take Australian label By Far, which is known for its Instagram-friendly, influencer-beloved footwear (and more recently, bags). According to the brand’s Co-Founder and Chief Marketing Officer Valentina Ignatova, many of its Chinese followers on Weibo — set up last year — discovered By Far through reposted content derived from their Instagram.
“At the end of the day, all social medias are interconnected in some way,” Ignatova told BoF. “Recently we’ve been seeing [an] increase in sharing [from] our Instagram account on other Chinese social medias, because the followers appreciate our aesthetic.”
A well-rounded approach is key: market and drive sales on Weibo, WeChat and Xiaohongshu, but build the brand’s core visual strategy on Instagram and use the app to foster demand and amp up the ‘cool factor'.
“It’s very important for brands to have localised content on local platform for sure, but global content on Instagram is aspirational, and that’s what customers want as well.”
Just as they would on Weibo and WeChat, brands and retailers should keep Chinese consumers in mind when posting on Instagram. Including Chinese influencers and models is a good place to start; Zhu lists retailers Net-a-Porter and Moda Operandi as frontrunners in this space. “I have seen them using Asian, Chinese faces as brand ambassadors.”
Global content on Instagram is aspirational, and that’s what customers want as well.
This also means that Chinese festival-related content should not be restricted to Weibo and WeChat feed: posting targeted content with bilingual captions and responding to Chinese comments and direct messages in mandarin can also make followers feel valued, if resources allow.
Ultimately, brands need to push forward with China-centric efforts and maintain their luxury positioning — a priceless asset, which for mainland shoppers has long derived from brands’ (typically) European roots. Successful players will include Chinese consumers in the luxury conversation while preserving the veneer of exclusivity to generate desirability, and steering clear of offending shoppers and netizens. As brands’ various faux pas in recent years (from ‘horror movie-like’ Chinese New Year campaigns to geopolitical T-shirt furore), catering to China in a tone-deaf manner or a lack of research can have drastic consequences for a luxury house’s prestige, putting their efforts in the market to waste.
Logging On Has its Limits
Considering the increasingly seamless integration of Chinese e-commerce with the country’s social media platforms, using Instagram to connect with Chinese users can, for foreign brands, feel like a disjointed exercise, lacking the data and multi-channel harmonisation that Weibo and WeChat allow. The app’s impact on attracting Chinese consumers living or travelling overseas and those using VPNs can be difficult to gauge (and therefore expand).
Furthermore, accessing Instagram is becoming harder for China’s brands and trendsetters.
Last year, Beijing started cracking down on VPNs following its adoption of a new cybersecurity law in 2017 requiring individuals and companies to use only government-approved private networks, rendering them useless for those looking to access the ever-growing list of blocked domains. As of now, the government’s attack on VPNs remains a cat and mouse game. Users have become accustomed to hunting for new VPN apps when reliable networks are shut down, though they might pop up under a new guise in weeks.
Even with VPNs, Instagram’s user experience isn’t ideal. “It is quite hard,” echoed Zhu, who notes that users can seldom access domestic platforms like Weibo while using VPNs, making publishing content more time-consuming.
According to Cavender, VPNs slow down apps and can be a test of patience. “Without a good working VPN it’s too much of a hassle for all but the most motivated consumer to get on Instagram.”
For now, at least, the content is worth the wait. “If one can gain access, it gives consumers fresh information about new brands they would not have otherwise hear of.”
FASHION & BEAUTY
Labelhood Platform Works to Keep Newness
Looking ahead to Shanghai Fashion Week, which kicks off October 9, the popular Labelhood platform, which features some of the best independent Chinese designer talent in co-operation with the official schedule, has announced this season’s line-up. The presentations will be held in the imposing river-side industrial complex known as Minsheng Wharf, inside 80,000 tonne silos. New brands on the schedule include RoaringWild, SuperR and Lucency, as well as Song Ta, the fashion brainchild of artist Song Tuo, alongside more established womenswear brands, such as Yirantian, Ming Ma and Shuting Qiu (a finalist in this year’s edition of the BoF China Prize). (BoF China)
Alibaba Spreads Love Around Fashion Month
Following from its high-profile appearances at New York Fashion Week in recent years, Chinese tech giant Alibaba has expanded its fashion month reach this year to also include major events in Milan and Paris. This week in Milan, AliExpress, the global retail online marketplace of Alibaba Group, will hold a catwalk event and an exhibition to present the collections of “several designer brands”, including Chinese brand Mishow to a global audience. In Paris, meanwhile, the first edition of Tmall’s “China Cool” PFW event will bow, with presentations of collections from Peacebird and Eifini. The return on investment for Alibaba of this international outreach is far from certain, but the efforts have certainly garnered attention. (Alibaba)
Icicle Opens Paris Flagship
China-based ready-to-wear brand Icicle launched its first international flagship in Paris this week. The popular label (known as Zhi He in China) gained global traction when it fought off other luxury bidders to buy Parisian label Carven last October. Carven had filed for Chapter 11 bankruptcy in May of 2018 and has since been strategically used by its new parent brand as a gateway into the European luxury market. Icicle has had a design studio in the French capital for several years and its design team includes alum from European houses such as Celine and Chloe. This flagship is another step toward Icicle becoming an international fashion name, rather than a Chinese one with some international connections. (Monocle)
TECH & INNOVATION
Tencent Integrates Live-Streaming E-Commerce into Mini-Programs
Recently, China’s internet giant Tencent has started to select e-commerce players to test a live streaming function on mini-programs, previously this function was only available for content marketing. This brings the company’s aim of allowing a smooth transition between watching a live-streamed video and shopping directly through its own eco-system closer than ever. WeChat, which has 1.1 billion monthly users has given vendors an option outside marketplaces such as JD.com and Tmall to directly sell their goods through mini-programs. Live-streaming on e-commerce giant Taobao has proven to be a lucrative play, with a reported 100 billion yuan ($14.9 billion) generated via it’s live-streams in 2018. (KRAsia)
TikTok’s Chinese Heritage Draws Censorship Suspicion
Thoughts of censorship from Beijing have obviously not been front of mind for the young Americans who have made TikTok one of the US' favourite apps, with a total of 110 million downloads, but that doesn’t mean China’s draconian information controls don’t apply to international versions of its home-grown apps. American researchers are worried TikTok, known as Douyin in China, could prove to be an effective weapon in a global information war, bringing Chinese-style censorship to mainstream US audiences without them even realising its effect in shaping their social media content. (Washington Post)
Xi Emphasizes Security in Cyberspace
Chinese President Xi Jinping this week announced a series of directives relating to the online space in China in conjunction with a weeklong cybersecurity awareness campaign. In his directives, Xi emphasised the necessity for an online environment that is safe and manageable as well as open and innovative and vowed the government would continue to work to protect the personal information and legal rights of Chinese citizens in cyberspace, even as new technologies, such as artificial intelligence, the Internet of Things and the new generation of communication networks are developed and promoted, he said. (Xinhua)
CONSUMER & RETAIL
Mixed Results for Retail Sales
It’s now considered unlikely that China will see GDP growth higher than 6 percent in the third quarter following worse than expected industrial output in July and August. Retail sales, which include spending by governments, businesses and households, grew 7.5 percent year-on-year in August, down from 7.6 percent the month before. This is the second-lowest retail sales growth rate in 16 years, but is disproportionately influenced by car sales, which dropped 8.1 percent from a year earlier. Retail sales ex-cars actually grew 9.3 percent on the year, up from 8.8 percent growth in July, China’s National Bureau of Statistics data showed. (Caixin)
Suning to Open 200 Stores Inside Carrefour China Hypermarkets
The store rollout follows Suning.com’s acquisition of an 80-per-cent controlling interest in the Carrefour China business in June, a deal formally approved by Chinese regulatory authorities last month. Analysts say the store openings represent a strategic push by Suning.com to ramp up the loss-making Carrefour business by giving consumers more reason to visit the store – and hoping they will shop at Carrefour while they are there. Earlier this year, Carrefour China had revealed plans to partner with Chinese retail group Gome to open 200 stores-in-stores by July. Given the new state of affairs, stores that had opened under the Gome banner will now be converted to Suning.com stores selling smartphones and consumer appliances. (Inside Retail)
Juul Enters China Market, Is Almost Immediately Removed from Marketplaces
Only three days after a much-buzzed-about launch into the China market – home to 300 million smokers – which included a rollout of virtual storefronts on e-commerce giants Tmall and JD.com, US e-cigarette maker Juul Labs Inc saw its products removed from the marketplaces without immediate public explanation. Searching for the brand name yields a listing for Juul’s official store on Tmall, which cannot be loaded, while the company’s store is no longer searchable on JD.com. The company said in a statement that it hopes to make products available online again soon, though gave no reason for the secession of sales. (Reuters)
POLITICS, ECONOMY, SOCIETY
Pork Prices Send Chinese Government to Panic Stations
With millions pouring onto Hong Kong’s streets in protest, further talks with the US aimed at progressing a seemingly intractable trade war and an inevitable but potentially painful slowing economy on the horizon, China’s government has gone all on solving the problem of pork prices, and fast. China’s most consumed meat jumped 47 percent in August following the slaughter of millions of pigs suffering African Swine Flu and pork prices have become the topic de jour around water coolers all over China. In response, high level officials have announced subsidies for new farms, removed tolls for the transport of live pigs and frozen pork until June next year, and urged lenders to finance pig farming endeavours. (Quartz)
Shenzhen and Shanghai Compete to Lead China’s Economic Reforms
In a competition between economic development and technological know-how, the Chinese mega-tropolises of Shanghai and Shenzhen are set to battle it out to be the model for the country’s economic growth model of the future. Plans released about the long-term future of each city this week by government officials show both being allowed leeway to experiment with liberalisation policies – giving them a leg up on hundreds of special economic zones and free-trade zones around the country. These liberalisations will be particularly important in allowing China’s economy to continue to grow at a pace its government and people are comfortable with in the face of outward challenges. (SCMP)
Hong Kong Government’s PR Plan Suffers Setback
Although the Hong Kong government has reportedly invited global PR agencies to take on the task of rebuilding its reputation in the face of ongoing political unrest, the effort so far has been in vain. In a recording heard by new agency Reuters, Carrie Lam, chief executive of Hong Kong, admitted that eight global PR firms were approached, with four immediately turning the proposal down. The Information Services Department (ISD) of the Hong Kong government has carried out a quotation exercise, but received no bids by the close of the quotation period. Resetting Hong Kong’s image while it burns is a job too hot to handle for even the biggest global PR firms, it seems. (Marketing Interactive)
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