In China, the Physical and Digital Worlds are Increasingly One and the Same

Andy Gilroy, Peach’s VP for APAC, explores China’s rapid shift to digital and ecommerce platforms, and the challenges this presents for advertisers

20 September 2022

China’s commercial market is unlike any other in the world. The sheer speed at which new capabilities are developed and implemented is near impossible to keep up with. It really is a case of ‘blink and you’ll miss it’; anyone who says they’re keeping up with it are fibbing at least a little bit. Together with speed, the scale of the consumer base and content produced is astounding, especially when compared to a market like the UK. That’s what makes China such an interesting and exciting place to both observe and work with - my role, and the wider company, is having to evolve in real time to keep up with the tempo of the Chinese market’s transformation. 


A life lived digitally 

The first thing to understand about the Chinese market is just how different the attitude towards social media and a life lived digitally is. In 2020, there were an estimated 670 million smartphones in China and this number is set to rise to 1.3 billion by 2026. Social media use is widespread in personal and professional contexts; it’s not unusual to receive briefs over WeChat, the most popular social media platform, instead of email. In that way, we can start to see how integrated social media is into the everyday. In many ways, it’s indistinct from ‘real’ life for consumers, with seamless touchpoints blending work, leisure, and shopping together into one. 

Chinese consumers have absolutely no qualms about storing their banking details on their phones and social media, and using it to make immediate purchases on social media platforms. About 80 to 85% of media revenue in China goes straight to pure play digital, most of which is on mobile. China is also an increasingly cashless society, with many banks announcing that they’re ceasing their cash services. There’s also currently an e-currency push by the Chinese government, with 250 million already signed up. 

The contrast between western markets and China aren’t in the kinds of technology available - it’s the same in both markets - but in its application. The smartphone is the medium which allows people to connect different spheres of their life without having to switch between devices. QR codes have always been in use here too, unlike the revival they underwent elsewhere over the pandemic. 

Live stream shopping is one of the fairly new additions to the market, currently accounting for about 10% of the e-commerce ecosystem, which is rather considerable. Getting customers’ attention is a challenge for brands everywhere but doubly so in a country with a population as large as China. Live streams featuring celebrities or influencers is one way of doing just that, a combination of a shopping channel and seamless ecommerce experience with customers able to purchase products effortlessly. 

The other way advertisers are challenged to find and engage customers is through apps and social media platforms. I’ve seen it termed as ‘social phishing’ - using technology to drive campaigns viral. The best recent example of this is the campaign by KFC, called ‘Pocket Stores’. The problem KFC faced was to do with store visitation. There are 5800 KFC stores in China, working out to only one store per quarter of a million people. To drive visitation and usage, KFC gave people the ability to design their own store through an app and invite friends to buy KFC products in this custom digital space. The physical/digital divide was seamless - a user would walk into a store, hit a button to collect an order they placed at a friend's pocket store, and their order would start getting prepared. The digital store’s owner would earn credits and rewards too. 

On paper, the idea sounds quite bonkers. In practice, KFC saw 540,000 people design their own stores in one day and 2.4 million pocket stores were created overall. As you can see, the technology isn’t new but it is being used in an original and imaginative way to engage the consumer.


The challenge of speed, volume, and scale

Every client, advertiser, and production agency is facing similar challenges. They’re coming to us at Peach and asking how they can keep up with the new formats of ads as the platforms are constantly evolving and bringing new ad formats along. To stay relevant, everyone needs to keep up with the evolution, and the sheer volume of this is exciting for us from the angle of content explosion that we’re seeing in the region. Due to the size of the population, our abilities to target and fragment are constantly challenged (in a good way!) as dynamic content optimisation continues to make up a huge part of our offering. We often see upwards of 70 different variations for one item; we test each content variation and feed data back to the client to make the best decisions. 

What we’re seeing is that, due to the scale of content, clients are more than ever in need of trusted partners who can guide them through the ecosystem. They want support in keeping up with how platforms and formats are changing, and in getting their content live on time. More content in varying and new formats means more support from us to get it to the right place on time and with the right specs. 

China has been, and continues to be, a very exciting market for consumers and advertisers alike. While the technology is exactly the same, I’m really impressed with how seamless the connection between physical and digital is, underpinned by a different relationship to mobile transactions; the market also has the infrastructure that then delivers orders as effortlessly as they were placed. Will the west follow? Only time will tell, but there's a lot we can start learning from China's rapid digital shift today. 

Categorised as:

  • Opinion

By Andy Gilroy