When iconic British fashion brand Burberry reported a drop in annual profits in 2016, it turned to a powerful tool to pull itself back to the forefront: WeChat, the social platform that penetrates every aspect of China’s society. It’s a strategy that small and mid-sized enterprises (SMEs) can leverage to their benefit, as well.
Burberry did a WeChat-exclusive campaign for a new handbag style that could only be bought in China via WeChat shops. Certain colors of the bag sold out almost immediately, and the campaign tripled the company’s customer reach. BBC reports that, while Burberry’s overall sales in the second quarter of 2017 increased by 4 percent, growth in China was significantly higher, reaching the “mid-teens.”
WeChat (known as Weixin in China and owned by Chinese tech giant Tencent Holdings Ltd.) has 768 million daily users, but that’s not its main draw. “What’s really impressive with WeChat is the depth of it,” says Thomas Graziani, co-founder of WeChat marketing agency WalktheChat. “WeChat makes up one-third of all time Chinese users spend on apps.”
That’s because WeChat isn’t just a social messaging app; users can also order food, hail taxis, make peer-to-peer payments, conduct business, read the news, shop for products—and that’s just a snapshot of the app’s capabilities. “We call it a life-operating system,” says Charlie Gu, director of China Luxury Advisors, a consultancy that advises brands on how to engage global Chinese consumers. “It provides many more functions that interact with people’s daily lives.” WeChat sounds overwhelming, but for SMEs looking to enter the Chinese markets, it could be just the thing to give them a competitive edge.
In 2015, one year after it launched WeChat shops, 53 percent of small to mid-sized businesses selling on WeChat were already earning revenue. Although WeChat didn’t include SME revenues in its 2016 report, it did state that the percentage of WeChat users who made purchases on the platform more than doubled to 31 percent. “WeChat is particularly good for smaller companies,” says Graziani. “[WeChat] does not operate by the same mechanisms as platforms like Tmall, Jingdong, etc.—all search-driven e-commerce companies. For SMEs trying to get into the market using WeChat, a good way to break through the fact that a business doesn’t have search value is by using the social nature of WeChat to leverage other growth mechanisms.”
“There are three big blocks to selling to China via WeChat,” says Graziani. “The first block is getting a WeChat Official account.”
There are two types of public accounts on WeChat: subscription and service. A subscription account is the most basic and mainly allows businesses to push content to its followers; a service account has many more capabilities, such as collecting user data and e-commerce. For SMEs that intend to sell to Chinese consumers via WeChat stores, a service account is the best way to go.
"There are three big blocks to selling to China via WeChat. The first block is getting a WeChat Official account."
Graziani likens WeChat Official accounts to Facebook pages: “It’s a device that people are going to follow and which will send them push notifications…that people can ‘like’ and interact with.” If you want to conduct business in China, an SME needs to have an Official account; if you try to use a personal one, you run the risk of getting blocked by WeChat. However, while it’s easy for China-based businesses to obtain Official status, it’s much harder for foreign companies; non-Chinese accounts need to go through a special application process through an agency like WalktheChat if they want visibility on the mainland. “We have a partnership with WeChat, and it takes us about two months to create a new account for foreign businesses because it needs to be approved by WeChat,” notes Graziani.
The above applies mainly if an SME wants to continue using a foreign business license for their WeChat account. Although the verification process is slower and costs more in annual fees ($120 per year vs. about $50 for those with Chinese licenses), you retain full legal control over your business. SMEs also have the option to obtain a WeChat account using a third-party Chinese license or with a local Chinese company; the main drawback is that you would have to cede control and ownership to the Chinese entity.
For businesses that sell physical products, the next step would be setting up WeChat’s in-app e-commerce platform. “There are lots of expectations for what the account is going to look like, what the products are going to look like, what the checkout is going to look like,” emphasizes Graziani. “This is the second part: getting that China-friendly, WeChat-friendly e-commerce.”
Of course, establishing a WeChat shop would be moot if you couldn’t get paid. “You have to set up cross-border payment, which is a service provided by WeChat and Tencent,” says Graziani. “That’s when Chinese customers pay, the money is automatically transferred to an account, in USD or other currencies.” The service is provided through WeChat Pay, WeChat’s in-app mobile payments service. Luckily, establishing cross-border payment accounts is relatively simple compared to getting an Official account—Graziani says it takes about two weeks to get things ready.
“One of the interesting things about WeChat is that a lot of user acquisition happens through word-of-mouth,” says Gu.
As Graziani mentioned, SMEs don’t necessarily have the global name recognition of an Apple or Louis Vuitton, and should make use of WeChat’s inherent social nature to promote their company or products. A company might be tempted to grow its following organically, but Graziani says that is nearly impossible.
One of WeChat’s biggest pitfalls is also what makes it so powerful: its size. “It’s very competitive,” he warns. “All of the marketers are trying to get people’s attention—it’s not by any means easy to get traction on WeChat. That’s why we talk about using influencers, bloggers—basically people who already have an audience on WeChat—and leveraging this audience.”
"One of the interesting things about WeChat is that a lot of user acquisition happens through word-of-mouth."
Graziani emphasizes using Key Opinion Leaders (KOLs, which is what WeChat calls its influencers) when advertising on WeChat. Although businesses can purchase programmatic ads (such as advertising on WeChat Moments, which he equates to ads on Facebook Newsfeeds), Graziani says that it currently is not very targeted; it’s most useful for established companies looking to increase engagement. For SMEs, finding a relevant KOL in their industry and reaching out to them for sponsorship provides the most efficient cost-per-click. Top KOLs such as Thomas Ye Si (known as Gogoboi on WeChat) can get more than 100,000 page views per article, and, especially if combined with a discount code, could “generate a lot of sales right away.” Although KOLs can be expensive, Graziani thinks they are worthwhile investments for SMEs.
While KOLs are great for expanding outside of an SME’s network, Gu also suggests leveraging what he calls “micro-influencers”—people who may not have the social reach of a KOL, but who can enact significant impact within their realm. “WeChat groups (similar to private Facebook groups) are very important,” says Gu. As an example, he explains that a tour guide once shared the WeChat account of his hotel client Sofitel Los Angeles with his WeChat group; overnight, the Sofitel account gained 300 new followers. “In China, there are so many of these groups, either interest-based or profession-based,” Gu shares. “Being added to one of these groups and sharing information with them is important. Word-of-mouth should always be a part of that.”
“Content is essential to almost every WeChat account,” emphasizes Gu. He divides content into two categories: structural and ongoing.
Structural, he says, is simply the WeChat interface. “When you enter someone’s account, you see a little menu at the bottom—what is the structure of the menu? What kind of information should we include there?” he says to ask yourself. “You treat it as a mini-website for your brand.”
Ongoing, on the other hand, is more advertorial. “That’s the push message,” Gu says. “It usually takes a lot of time. For most brands, the challenge is not only having a presence, but what kind of communication do they use to stand out to users, and how can they acquire users through this content?”
KOLS are a popular way to acquire users and push out brand content, but even KOLs need to create content that their followers are actually interested in—and preferably that content will capture a brand’s essence. According to the 2016 WeChat Impact Report, the key to getting users to re-share articles is to make it “valuable,” “interesting,” and/or “emotionally touching.”
For Swedish watch brand TRIWA, these tactics—utilizing KOLs and creating an “emotionally touching” brand story—paid off handsomely. “TRIWA worked with KOLs, flying them over from China to Sweden to show them their factories, the way they’re actually developing the brand,” says Graziani. The company shared a great story about their mission and values (as well as had a sleek, well-designed product) that resonated with Chinese consumers. After the trip to TRIWA factories, Graziani says that “then the KOLs wrote about TRIWA, and that led to a very significant return-on-investment on this campaign.”