The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
SHANGHAI, China — Tech Buzz China Podcast co-host Rui Ma is used to non-Chinese tech users misunderstanding Bilibili. Even experienced investors have written to her, perplexed.
“There’s no real analogue here,” says San Francisco-based Rui. “It’s so different from anything in the States,” although high-profile celebrities including Dwayne "The Rock" Johnson, Justin Bieber and YouTuber NikkieTutorials have all joined the platform. When she visited the social media platform’s investor relations department last year (it listed on Nasdaq in 2018), an employee described it as "the YouTube of China" (a label the company has not adopted for itself).
“Out of the Chinese social media platforms, it’s probably the closest thing you can get to YouTube,” said Lauren Hallanan, the head of marketing at WeChat management firm Chatly. But beyond the online video sharing element, the comparison doesn’t feel quite right. And in a market crowded with fast-growing video-centric apps, Bilibili has attracted investors and partners in Alibaba, Tencent, Louis Vuitton and Tesla, while growing at a relatively modest but steady pace.
What sets it apart from the competition, and what do brands and marketers need to know before signing up?
Tuning Into Generation B
Bilibili has roots in China’s ACG (Anime, Comics, Games) industries but has grown into categories like fitness, beauty, lifestyle, fashion and music. Its origins laid foundations for a quirky, loyal user base that differentiate it from other players in the video space. “The community-feel on there is much stronger than most Chinese social media platforms,” said Hallanan.
The digital sphere provides brands with a lucrative opportunity to target soon-to-be big spenders.
Where YouTube generates the bulk of its revenues through advertising, Bilibili generates around 50 percent of its money from game licensing; live streaming and 'value-added services' (such as its premium membership program), advertising and e-commerce make up the remaining 25 percent, 13 percent and 12 percent respectively.
While China's fast-moving tech landscape is littered with user-generated video platforms, Bilibili is the most popular app among the country's "Post-'90s" cohort by data intelligence service Questmobile's estimates. The site's 128 million monthly active users (as of 2019's Q3) do pale in comparison to YouTube's 2 billion as of last May, but the platform's core demographic (78 percent "Post-'90s") and average daily screen time (83 mins) reveal that audiences are very young and very engaged.
With global management consultancy Bain predicting that China’s Generation Z (often cited as being born between 1997-2012) will account for more than 55 percent of the mainland’s luxury consumption by 2025, the digital sphere provides brands with a lucrative opportunity to target soon-to-be big spenders. A year after Bilibili inked a partnership with Alibaba to help streamline its content-commerce operations in 2018, the retail giant bought an 8 percent stake in the platform — the company remains one of the few to count both Tencent and Alibaba as investors as the mainland's tech giants work to woo younger users.
"All the other platforms don’t have a Gen Z focus," said Ma. "Bilibili users are the most creative, engaged and trendsetting audience in China."
From ACG to Fashion and Beauty
Last November, Louis Vuitton partnered with Bilibili to develop an AR filter for users to transform themselves into a character from hit Tencent-owned fantasy video game League of Legends (LoL). The following month, the brand launched its capsule collection in collaboration with LoL, and Bilibili signed a £113.1 million, three-year-long deal to exclusively broadcast the game's Superbowl-sized world championship events.
The deal was Bilibili's bid to draw Chinese LoL players to its space (as opposed to local rivals like eSports-focused Huya and Douyu), but Louis Vuitton, which has previously sponsored the championship event, isn't the first fashion or beauty brand to tap into the big business of gaming (the brand did not respond to BoF's request for comment). Last year's successful M.A.C. crossover with the mobile game Honour of Kings is a prime case study for brands hoping to enter the gaming space. "Brands who are looking to do something similar really have to leverage Bilibili," added Hallanan.
Bilibili has emerged as an alternative for homegrown beauty brands in particular.
This means linking arms with the platform’s scores of well-regarded key opinion leaders (KOLs), who are known on it as uploaders, or Upzhu. Though WeChat and Xiaohongshu have become the default Chinese social media platforms for fashion and beauty brands and KOLs, Bilibili has emerged as an alternative for homegrown beauty brands in particular. The likes of Marie Dalger and Girlcult Cosmetics have tapped Bilibili’s content creators for product seedings and sponsored posts, and the platform has become home to a host of quirky, creative fashion and beauty personalities who often deviate from China’s wanghong norms.
Take plus-sized beauty influencer Hannah, Benny Dong (the face of his own beauty brand Croxx), up-and-coming singer Lexie Liu and hanfu-clad creator Shiyin, whose hit videos include one of her visiting the European Commission in the traditional dress. While Western audiences may take the likes of Hannah for granted, plus-sized KOLs are few and far between in the mainland, noted Hallanan. "I think [Bilibili creators] conform a bit less to the latest content trends," she said.
The Bigger Picture
Bilibili has grown slowly compared to its peers, but this seems to be paying off. “In general, they’ve done better in terms of stock performance than most of the other companies that went public in the same year,” said Tech Buzz China’s Ma. Though the platform only kicked off monetisation efforts in 2015 and “[was] thinking very little about revenue,” its Chief Executive Rui Chen has publicly announced intentions to propel growth by expanding into other verticals that would appeal to its core audience.
When Bilibili published its latest round of earnings in November 2019, net revenues hit 1,859.0 million yuan (around $265.2 million), a 72 percent increase from the same period the year prior. Live-streaming and ‘value-added services’ including a premium membership program saw revenue growth of 167 percent from 2018, which the company attributed to its amped-up monetisation efforts. When Bilibili releases its fourth-quarter earnings on March 17, investors expect to see a further surge in traffic as users stay home to avoid contracting the coronavirus.
Even so, the company is unlikely to become a video platform for the masses. “[It] could have already become very mainstream a long time ago, but their growth has deliberately been a lot slower than other Chinese social media platforms,” Hallanan said. She noted that the approach will help retain Bilibili's valuable community identity and loyalty, even if unpopular with investors (particularly as rival Bytedance racked up $7 billion in revenues for the first half of 2019).
Bilibili has grown slowly compared to its peers, but this seems to be paying off.
“My feeling is [that] no matter what, they’ll try to keep the community more engaged and not have it become overrun with all types of content,” Hallanan said. And though a company spokesperson did not rejected the idea of expanding beyond China, Bilibili has yet to announce plans to do so.
For global brands considering it as a marketing tool, metrics may appear underwhelming — follower and view counts are lower on the site compared to other social media platforms Weibo, Douyin and Xiaohongshu, but it also doesn’t have as much of a problem when it comes to fake followers and bot accounts.
Like Louis Vuitton's eSports ties, it is important for brands to establish a strong connection with Bilibili's user community before investing in campaigns and sponsored posts. Campaigns should adopt the vocabulary and mindset of "Post-'90s" users within the Bilibili ecosystem, which Ma calls "the birthplace of Chinese memes." This means that relying on the celebrity-centric rulebook adopted for platforms like Weibo, WeChat and Xiaohongshu won't cut it.
A brand-platform mismatch (Chanel's lukewarm Douyin campaign from July 2018 is a case in point) could waste time and dilute brand equity. Mature heritage luxury brands should ensure that their "Post-'90s" angle (ACG-related or otherwise) is believable. "It makes a lot of sense for international fashion and beauty brands to use Bilibili, but the brand has to fit this playful, quirky style," said Ma.
Though trite, content needs to be authentic. “Audiences expect more from vloggers and creators and content tends to be long-form, so brands really have to try and understand the demographic,” said Hallanan. “Because it’s a stronger community, you don’t want to anger them.”
FASHION & BEAUTY
SHANGHAI, CHINA - OCTOBER 17: Designer Mr. Cabbeen and models showcase designs on runway of Cabbeen collection show on day nine of Shanghai Fashion Week Spring/Summer 2020 on October 17, 2019 in Shanghai, China. (Photo by VCG/VCG via Getty Images)
Shanghai Fashion Week Goes Digital
Shanghai Fashion Week, which initially postponed its March iteration due to coronavirus concerns, has now teamed with Alibaba's Tmall platform and plans to present a large-scale live-broadcasting event featuring more than 100 brands from March 24 to April 3. "From the proposal to the go-ahead for this operation, it took less than a month. It is the perfect interpretation of China's speed and the vitality of our fashion week," Lu Xiaolei, Deputy Secretary General of the Shanghai Fashion Week organising committee, told BoF: "This is a special presentation in a special period. We hope that through this attempt, designers will try different displays, and sales channels will also reflect the future direction of fashion week. It should be said that we have not wasted a crisis." The news of this bold experiment comes days after Seoul Fashion Week announced its cancellation due to the spread of the coronavirus internationally. (BoF China)
JNBY Owner Reports Slowing Growth
In the six months ended December 31, 2019, domestic apparel group Jiangnan Buyi saw sales increase 5.3 percent from the previous year to 2.14 billion yuan ($304 million). But that's far less than 22.6 percent growth seen in the same period the year prior. Net profit was up 12.9 percent, but that was also lower than 2018's 22.1 percent gain. JNBY accounts for 57 percent of the group's total revenue. (Lady Max)
TECH & INNOVATION
WeChat payment | Source: Shutterstock
Live Streaming Gains Momentum as China Stays Home
Traditional live streaming e-commerce powerhouses including Taobao, JD.com, Kuaishou, Douyin and Mogu have been more recently joined by entrants from Pinduoduo, Xiaohongshu, and perhaps, most significantly, WeChat. China's super-app has seen a strong embrace of its WeChat Live function since launching late last year, and even more companies are now using the function within mini-programs since the imposition of coronavirus-related quarantine in the past month. (Chistina Yao for BoF China)
Coronavirus Exposes Divides Between China Tech Giants
The differing fortunes of China's tech giants boils down to the old analogue versus digital dichotomy. Alibaba Group and Meituan-Dianping have shed $28 billion in market value since the virus erupted because they depend on millions of people and trucks to ferry packages and meals through a tangled nationwide transport network. In comparison, WeChat operator Tencent flogs virtual goods like costumes and armour in mobile games or online advertising, and has gained about $18 billion. Its market value now hovers around half a trillion dollars. (Bloomberg)
CONSUMER & RETAIL
Protesters march on a street on August 3, 2019 in Hong Kong, China. | Source: Getty Images
Hong Kong Retailers Stage Unprecedented Strike
Fifty Hong Kong retailers with a combined 200 stores have declared a strike against 14 shopping centres in the territory, demanding rental cuts to weather the current recession precipitated first by ongoing political unrest, then the coronavirus outbreak. Participating retailers include French sportswear brand Lacoste and fashion retailer Club 21. Some retailers have shut their stores for 24 hours, while others have announced temporary closures. (Inside Retail Asia)
Will Coronavirus Change Chinese Consumers’ Luxury Appetite?
Luxury brands reliant on free-spending Chinese consumers should prepare for a new era of more considered consumption. While middle-class shoppers (especially in second- and third-tier cities) will still want fancy wallets and handbags, an increasing number of educated, wealthy Chinese may start prioritising health, fitness, and well-being, as well as experiences that they can share with each other in real life and online. (South China Morning Post)
POLITICS, ECONOMY, SOCIETY
Customers wearing face masks at a luxury mall in Shanghai | Source: Casey Hall
Chinese Government Unveils First Wave of Economic Assistance
There has been plenty of speculation as to the measure China's central government may take in order to prop up its economy, which is expected to suffer a serious short to medium-term hit due to the coronavirus outbreak. The State Council has unveiled its first measure, deferring loan and interest payments for small and medium-sized businesses, which are thought to be hardest hit by the slow return to work following the Chinese New Year holiday. (Xinhua)
A Courier’s Life in Wuhan in the Time of Coronavirus
This touching narrative relates courier Lao Ji's daily schedule as he delivers food, medicines and other essentials to the housebound residents of Wuhan. Normally considered a position with little prestige, in today's environment, couriers are treated with respect, an essential cog in the life of cities under lockdown. (SixthTone)
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