Brand Communications in China's New Business Environment

Brand Communications in China's New Business Environment

Kass Sells Kass Sells

Kass Sells

Global Executive leading Integrated Communications, Public Relations, Marketing, Advertising and Media teams to positive impacts and strong business results.

Published Mar 18, 2024
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1. Business Outlook for 2024

Q: In light of the slower-than-expected post-COVID recovery in 2023, what can Chinese businesses and multinational corporations (MNCs) investing in China anticipate for 2024? Are there specific sectors or trends that will shape the business landscape?

A: MNCs investing in China should anticipate a nuanced landscape in 2024, balancing opportunities with risks. Although challenges persist, most MNCs still recognize China’s economic significance and are proactively adjusting their strategies to navigate the complexity of this market.

China, too, is adjusting its policies and ways of working to position itself as more business-friendly. The world’s second largest economy has signalled that it’s working hard to rebuild trust with foreign businesses, governments and regulators. H.E. Li Qiang, premier of the State Council, took to the World Economic Forum’s stage in Davos earlier this year, outlining five ways China intends to bring momentum back to its national economy, from international cooperation to industrial specialization and green development.

As for the sectors to watch, those directly backed by the central government—primarily technology, green energy, and services—are the most likely to shape China’s business environment for the future. Both adaptability and strategic alignment will be crucial to succeed in this evolving landscape.

2. 'New Productive Forces' and Innovation

Q: As China emphasizes leveraging science and technology innovation through its ‘new productive forces’ policy – announced at the recent Two Sessions – how might this impact both domestic and international businesses? What opportunities or challenges could arise?

A: The focus on ‘new productive forces’ encourages investment in science and technology and could lead to breakthroughs in areas such as artificial intelligence, quantum technology, clean energy, and biotech. That’s why companies that align their R&D investments and collaborations with these top-down priorities can gain a significant competitive edge.

On the opportunity front, the development of ‘new productive forces’ could lead to a more transparent regulatory environment, which would benefit domestic and international companies alike. With an ambitious goal of around 5% GDP growth this year, China is courting investment from foreign businesses and making these changes with a view to sustaining this economic growth. As Fellow of The Asia Society , Neil Thomas suggests, this high-energy focus on foreign technology and advanced manufacturing will in turn bolster Chinese companies working in key growth industries, both globally an domestically.

As for challenges, international businesses may have a hard time adapting to China’s regulatory framework. The end vision of the policy is clear, but the path to get there is far more complex. It will be vital for multinational brands looking to conduct business in China to work more closely than ever with local partners and experts. Business leaders and brand communicators will also find a huge value with member organizations, such as BritCham, which facilitate knowledge sharing and share insights from conducting business in China.

3. Creating an International Business Environment in Shanghai

Q: Shanghai’s recent action plan aims to establish a 'first-class international business environment.' For new businesses and brands entering the market, how should they strike a balance between maintaining their global brand identity and meeting local market expectations?

A: I believe this comes down to striking the right balance between global brand strategy and execution of a localized roadmap. The latter must account for the preferences and behaviours of Chinese consumers, local competitors and the overall business landscape, and should also consider possible product and marketing adaptations to meet local market expectations.

As an example, when WE Red Bridge partnered with global athleisure giant Lululemon for its entry into the Chinese market, we put huge emphasis on consumer centricity. Understanding its consumer needs and expectations is a philosophy that runs deep throughout the Lululemon brand, meaning we had some great insights to work with. We scrupulously vetted and selected local influencers and media to assess a good 'brand fit' and genuine alignment with Lululemon’s values and ethos. We partnered with them to create a genuine community of brand enthusiasts and evangelists, giving Lululemon a strong foothold in a market that’s increasingly important to its brand growth.

I vividly recall a Lululemon’s executive’s perspective on market expansion, a point of view I often share with clients aiming to build up their own loyal customer base: ‘We don’t push ourselves into new markets. We aim to understand consumers and get pulled into new markets by offering the right products at the right time.’

4. Consumer Behaviour Shifts

Q: Given recent observations of more conscious spending by consumers, how should brands in China adapt their strategies? What actions can they take to resonate with this trend?

A: 51% of consumers surveyed by PwC indicated that they are holding back on non-essential spending (and plan to do so in the coming months), compared to 53% globally. The way brands position themselves and communicate with their customers in China will, therefore, be essential to maintain a competitive edge.

I’d advise brands in China on four key actions. First, value-based offering: maintain quality assurance at a competitive pricing. Chinese consumers have become more cautious in recent years, with quality and functionality increasingly critical drivers of purchase behaviour, relative to emotional considerations. A good example of this is the 'chengfendang' or 成分党 — the 'ingredient club' — reflecting the rise of ‘skintellectuals’ in the skincare category, with consumers paying close attention to the source and efficacy of product ingredients and formulations. Shoppers, particularly in Gen Z, are more confident and informed, conducting extensive research before they buy.

Second, customization: provide high functionality tailored to a specific market need. Doing this will build closer connection between your brand and its partners, clients and consumers. While this is a balance that needs careful consideration, your authenticity and integrity here will build trust and confidence in your products and communications.

Third, local relevance — it is critical for brands to understand China’s cultural nuances and act accordingly. From improving accessibility and cultural sensitivity in online and VR environments, to leveraging cultural moments in the national calendar, alignment to these nuances could provide brands with a significant competitive advantage in the coming year.

Lastly, agility: adopt a test-and-learn approach to keep pace with market evolutions. This approach allows marketers and communicators to scrutinize the effectiveness of their personalization strategy quickly and accurately. The boom in AI in marketing and ad tech will make this possible at a faster, more granular level than ever before. Creating this effective feedback loop in your strategy removes the ‘gut check’, working to maximize the effectiveness of your strategy.

5. ESG Strategy for Early-Stage Brands

Q: For brands and businesses in the early stages of their environmental, social and governance (ESG) journey, what practical advice can you offer to kickstart communicating their ESG strategy? How can they align with their sustainability commitments?

A: We watch China’s sustainability landscape very closely at WE Red Bridge, as reflected in our latest Brands in Motion research, which looks at the evolution of ESG in the country and explores opportunities for corporate players to differentiate themselves through ESG.

Topics within ESG, led by sustainability, are important to businesses operating in China today, but respondents to our research believe that they will be indispensable in the future. In the next three to five years, business leaders expect sustainability credentials and measurement to be the top determining factor in customers’ purchasing decisions.

From 'ESG Means Business in China': shifting priorities — sustainability jumps up as a high priority for planning three to five years out.

This sentiment is already carrying weight, with research by PwC showing that Chinese consumers are already willing to pay up to 20% above average price for ESG-related products or services.

If you are part of a global business and have a clear ESG vision and roadmap to draw on, make sure you do these three things: understand the needs of your customers; balance global versus local ESG expectations; and deliver holistic, locally relevant stories with a tangible upshot.

If, on the other hand, you are starting from scratch, determine what you want to achieve through your ESG efforts as a first step. Then identify your key audiences and tailor your ESG communications to them. Our Brands in Motion research is clear: B2B brands must act now to develop their ESG narratives or risk losing out on potential business. What’s more, this strategy must meet the varying needs of stakeholders at all levels and communities in which your business operates.


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