Engaging the Traveling Chinese Consumer

An Interview with Renee Hartmann, Co-Founder of China Luxury Advisors. Click here to listen to the podcast.

James Eron: We're talking today with Renee Hartmann, co-founder at China Luxury Advisors. Renee, thanks for being with us.

Renee Hartmann: Thanks for having me today, happy to do so.

James Eron: Renee, you and I have been talking a lot about Chinese travelers and how big of an impact on e-commerce that they're having. Can you tell us why should brands care about Chinese travelers?

Renee Hartmann: When brands are looking at the consumer, everybody talks about how important the Chinese consumer is. And they are, especially when you look at the luxury sector really becoming a major contributor of the overall global luxury sales. When you look at that contribution, 70% of China's luxury sales actually occur outside of China. So even when you're looking at the impact of global luxury sales, you really have to look globally - not just inside of China, but what that consumer is spending outside of China.

The other thing that we see is that Chinese tourism is just booming right now. It's by far the largest market in the world. There were almost 6 billion trips taken inside of China domestically, and there was 163 million outbound trips. We're seeing huge numbers of Chinese tourists traveling the world, both inside of China and outside of China. As far as spending goes, those consumers are the largest vendors globally by far.

They are the number one spender, spending $277 billion US dollars globally. For reference, the second biggest spender is the United States who spends $144 billion dollars globally. So China is already spending almost double what Americans do when they travel. And Germans, who are always kind of seen as one of the biggest spenders while they travel from Germany are number three spending $94 billion. China (tourists) is almost triple of with Germany spends overseas.

When you look at the impact, the amount of money that they're spending, both on luxury goods outside of China as well as in the travel industry, there's really a huge impact that brands can no longer ignore.

James Eron: That is huge. That all sounds good, but from a brand perspective, how can brands capture these Chinese travelers and capture those sales?

Renee Hartmann: We get that question all the time. I think it's obviously a huge opportunity and I think everyone can agree that this is the right place to be going after the (Chinese travel) consumer. The question becomes how. So we really break it down into two different types of approaches.

Well Known Brands

The first approach is for brands that already have a big China presence. Ones like Chanel, Prada, Michael Kors, and L'Oreal who have a huge presence in China (already) have great brand awareness. They've got a huge China team. They've really been in the market for a long time so they have already established the demand with the Chinese consumer, and they have ubiquitous brand awareness.

So then it becomes, how are you driving that consumer who, maybe they're a consumer who loves the brand, they're traveling overseas, how do you get them to the right sales locations and make sure that you're capitalizing on their traveling time, making sure that you're driving awareness of collections, while they're overseas? So for that consumer group, we'll work with the brands to drive targeted advertising and targeted outreach to those consumers. There are a couple different ways we do that.

1) Chinese Overseas Media. We work with a lot of Chinese media overseas. The Chinese media is really getting a lot more adept at geotargeting. We're finding there's certain media who can geotarget that consumer once they're on the ground in the country. You can pinpoint that customer by their mobile (phone) and their location, serve them targeted ads that are promoting relevant collections, promote things that they know from China, and then drive them specifically to the store.

Sometimes you have an offer, sometimes it's just awareness of limitation collections or something they can only get in that that country. That's really a great targeted way to reach them and then drive them with a call to action in the different location in certain different countries. I can give you some examples about that later.

 2) Chinese Travel Media Platforms. The other one we see is a lot of Chinese travel media platforms. These are the Qunar and the Mafengwo that are travel specific media. That's great because you can target somebody once they've already booked their trip, and you're really sort of narrowing into a specific target versus the entire Chinese population.

3) Overseas KOLs. The third way we see working with brands is working with overseas KOLs (Key Opinion Leaders). One of the things that's interesting - KOL marketing is huge in China. There's quite a lot of KOLs who live outside of China who are Chinese. And they will be on Weibo, WeChat, Duoyin, Little Red Book, and they're very influential. You can work within their home markets. We do quite a lot of work working with these local KOLs, and that can help reach their target audiences living outside of China as well as the frequent traveler.

4) Local Organizations. The fourth thing we recommend is partnering with local organizations. There's lots of interesting local organizations that are in the United States, Canada, UK, France, etc. Those are everything from Chinese student groups to local Chinese tour operators, community groups, and Chinese businesses that have located overseas. There's a lot of great partnerships you can do to target that customer group.

Lessor Known Brands

There are also brands that don't have great awareness. We hear from brands that say, "I haven't started targeting China yet. But why not target these overseas consumers before I go and enter the China market?" And we think that's a great idea too, it's just a different approach. With this approach, it's more about building your brand awareness for the Chinese consumers. That's when we talk with people about setting up their social channels like WeChat and the Weibo, making sure they're working with lots of KOLs to do product feeding. They need to make sure they're being talked about on Little Red Book and Duoyin and all the popular social channels.

We also can see opportunities from cross-border e-commerce in those areas where they don't have a China team. (Brands) can work to target the consumer; maybe they get to know them when they're traveling and then they target them once they go back to China with cross-border e-commerce.

That's more about brand awareness and engagement whereas for big brands, it's really about channeling traffic.

James Eron: It's great to talk with an expert in this (China travel commerce) area and get your thoughts, understand what really happens, and what are the best ways to go about this. What do brands do wrong in the market?

Renee Hartmann: The biggest area we see brands going wrong has to do with the internal organization and internal alignment between the China team and the rest of the world. The traditional way that brands looked at the consumer is on a country by country basis. They looked at country P&L.

The biggest area we see brands going wrong has to do with the internal organization and internal alignment between the China team and the rest of the world. 

The China team is responsible for the China P&L. They invest in brand-building for the (Chinese) consumer. They're the ones who are putting the effort into social media, KOLs, celebrity ambassadors, and then they're expecting to reap those awards inside the China market and then get credit for the revenue.

What ends up happening though is that the consumer is really shopping from a global perspective. So when they like brands, they're shopping across countries. They're looking at different prices, they're looking at different availabilities. If they love a brand, they'd be happy to buy it anywhere. From that consumer's perspective, most of the time it's going to be cheaper to buy the product overseas, and so they are looking to shop overseas.

What we see often is that the brand is looking at them from a country standpoint versus the demographic. We really encourage brands to work together (with their China teams). We've seen situations where a brand doesn't want their overseas teams to be using Chinese platforms. They don't want to have any confusion, but the consumer is a global consumer.

The (Chinese consumer is) using WeChat 100% of the time while they're traveling. We have some stats on this, but I believe it's over 90% of the time they're using WeChat while they travel. They're looking at destinations. They're doing research. They're sharing things with their friends. So that consumer, whether they're in France, the UK, or Japan, it doesn't matter where they're located. Whether they're in mainland China, they're on WeChat all the time. Regardless of what country they're in or regardless of where they are. So they are really a global consumer.

James Eron: You've been working on this since 2012. Can you tell me some of the success cases that you've had in the industry?

Renee Hartmann: We have a really interesting case that we did with Michael Kors. There's a case study on our website at www.chinaluxuryadvisors.com . Michael Kors was a great case. We worked with their US team and targeted using the WeChat oversees targeting function.

 The way that it worked for that ad campaign was that we ran a specific campaign for Yang Mi. They have Yang Mi, who's one of their Chinese celebrities inside of China. They use that imagery to target consumers once they were overseas. We ran three different ads on WeChat. One was an inbound ad, which was inside of China to people who are intending to travel. We seeded the concept with them prior to leaving China.

Once they arrived in the US market, WeChat has a targeting function that is for people who have been in the country for less than 30 days. We were able to target that consumer with specific product campaigns that are relevant to them, that they knew with the Chinese ambassador. We then linked to store locators so that we could give them very specific instructions on where to go. Then we gave them a special offer, so that way they had a special offer with a bar code and they were able to go into the store and scan the bar code to get their special offer. It was a great way of looking at end-to-end, using WeChat as that key connection so that we served them with ads that were relevant to them. We did it on the platforms that they use and we also were able to pinpoint their locations and drive them with a specific call to action to a retail store.

It is a great example of an online to offline campaign that was really able to work across countries. So there's a great case study. We have quotes both from Michael Kors and from Tencent. The return on ad sales was really big. It was a great campaign and goes to show how, by working across countries and using some of the great work that's been done in the China market overseas, that something can have a big impact with the Chinese consumer while they're traveling.

James Eron: Renee, that's fascinating. I will make sure I take a look at that case study. Just to wrap up, how can we get in contact with you?

Renee Hartmann: So you can go to our website, www.chinaluxuryadvisors.com. I look forward to getting in touch.

James Eron: Renee, thank you so much.

About James Eron

James Eron has over 20 years of consulting and industry experience in China, Japan, and the US. As a Partner at Kung Fu Data, James is a China market entry expert bringing quality brands into China and executing strategic turnarounds for brands struggling in the world's most competitive eCommerce market. His work makes extensive use of China eCommerce data to identify and capture market opportunities. Clients include a wide range of B2C brands from apparel, cosmetics, and luxury to pet food and consumables. James is a frequent writer on China eCommerce topics and is regularly invited to speak at events surrounding China’s e-commerce sector.

About Kung Fu Data

With offices in Beijing, Shanghai, Hong Kong, San Francisco, New York, and Rome, Kung Fu Data is an independent data firm and market maker possessing a rare combination of authentic understanding of the West and China in-depth local know-how. Since 2010, we have used proprietary data and optimization technology to help foreign brands enter and thrive in China’s largest e-marketplaces. Our sole mission is to bring brand owners a level of strategy and data transparency they never thought possible.