Reaching out to China’s lower-tier cities

The debate around global vs local messaging is possibly as old as the Silk Road, but when it comes to reaching consumers across China’s lower-tier cities, how can brands strike the right balance?

While there are 15 tier-1 cities and 30 tier-2 cities, there are 70 tier-3 cities and some 90 tier-4 cities – all with populations who have very different needs and desires.

During a roundtable at the recent Brand Summit China event in Shanghai, Campaign Asia in partnership with Tag gathered 13 of the region’s top marketing execs from the likes of Rimowa, Kraft Heinz, Budweiser and Nike, to explore these new opportunities – and where the challenges lie.

Jing Lien, head of strategy and brand planning at Nike thinks that when it comes to China, there’s balance that needs to be struck between global and local. “It’s a pendulum. When it was more centrally controlled, it was just ‘Slap a Chinese label on and go with it’. Now it has swung the other way. [The global team] are more open, perhaps not as much as we would like them to be, but over time they have given us a lot more freedom.”

For luxury brands, highly defined positioning can limit localised initiatives according to Mellisa Lim, head of marketing at Paris-based luggage maker, Rimowa. “We need to work within a structure, but we also need agility and flexibility to find that balance in these new opportunities whether it’s media partnerships or co-branded events. What seems like luxury to Parisians may not seem like luxury to Chinese consumers and vice versa.”

FMCG flexibility

Dolly Huang, head of marketing capabilities at Belgium-headquartered AB InBev, a global beer company whose brand stable includes Corona, Stella Artois, Becks and Budweiser, says in-market exposure for global execs is key.

“Our global team gives us a lot of freedom and space,” she says. “A major reason is that we are one of the biggest volume contributors (tier-4 Putian in Fujian province consumes the most volume of Budweiser of any city globally), but we also try other ways to help our global team to understand what is happening in China and why we are doing what we are doing.

“We organise a trip for senior management to China every year, including board members, and we arrange for them to talk to companies handling live stream sales events and ask them to participate. They are astonished at how many products they can sell during one live stream event. We immerse them in it, let them see it with their own eyes.”

But when it comes to consumer campaigns, how does a brand like Budweiser communicate its brand proposition in China’s lower-tier cities?

“Budweiser has been in China for more than 20 years. Globally we do big sponsorships around sports and electronic dance music (EDM), but recently we have found those may not work for tier-3 and 4 consumers,” says Huang. “We are sponsoring big EDM festivals like Tomorrowland, and premium people like DJ Krafty Kuts. But even when our promotions are willing to fly consumers to join the festivals, people don’t feel relevant. They say ‘You select 100 people from China, I’m not going to get a chance.’

“So for all the EDM campaigns we run in China, we collaborate with local singers to bring more relevant Chinese elements. In first-tier cities you might see global DJ faces appearing in the TV commercial, even our social communications, that people feel is really cool, but in tier-4 cities like Putian we just show local faces. This is something they feel is relevant to them and we’re trying to find a balance to the global/local dilemma in all tier cities.”

At Nike, Lien says brand purpose has become part of its global mandate.

“We’re in the foundation stages of building that out in China,” she says. “Globally we have three strategic pillars of what purpose means in the Nike world. How do those pillars come to life in China? What are the most relevant and important to Chinese consumers? And how do they show up? It’s extremely important. We know that Chinese consumers are calling for and supporting brands that stand for something beyond corporate numbers.”

Multichannel mayhem?

Xulu Wang, managing director at Tag, says: “For different tier cities, fragmented media channels can sometimes see brands lose focus, but it expands opportunities for marketers. Although the brand proposition is the same across all consumers, each consumer segment is where marketers can be more focused on the specific benefits for that segment.”

Vanessa Yuan, is general manager at Elizabeth Arden, where over 60% of its business is online via platforms like Tmall, JD and Vip.com. “Even for us, our consumer is mostly from tier-1 and tier-2 cities,” she says. “Consumers in tier-3 cities have the purchasing power and we want to target them, but how? We sit in tier-1 cities and we don’t know what is their lifestyle. What are they looking for? What is the most effective way to target them?”

Liana Yu, digital marketing director at pharmaceutical company, Abbott, keeps the focus by limiting the number of channels. “Consumers might download 400 apps to their mobile phone, but in their daily routine go through maybe 5-10,” she says. “If we try to target all those apps we will lose a lot of investment focus so we try to manage the big platforms and win consumers’ top of mind.”
Despite of all the heat around online channels, brick-and-mortar stores still offer unique in-person experiences. Many multinationals are building giant brand experience centres in cities like Beijing (Volkswagen), Shenzhen (Vivo Lab) and Shanghai, which is home to the largest Starbucks in the world at 30,000 square feet.

How more brands can reimagine their retail experiences to meet new consumer needs and desires remains a challenge, especially outside the major cities.