TOMORROWHOW CHINESE TEENS USE DIGITAL

Getting to know your customers of

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Ask any marketer in the US what the defining consumer demographic has been over the last half-century and assuredly the baby-boomer generation will be at the top of their list. However, a new and younger population of eager consumers over double the size can be found across the Pacific in China. Chinese teenagers, born into a China already feeling the effects of Deng Xiaoping’s economic miracle, are eager to take advantage of the unprecedented position they occupy. Not only do they benefit economically from being the only children in their family; but this is a demographic confident and determined to display this new independence through their consumption. Despite their eagerness however, brands cannot just reap the benefits passively. A closer look at this consumer group reveals a unique mix of modern and traditional; a mix that must be understood by brands hoping to establish meaningful relationships with consumers.

Not only do these teens have the unique opportunity to grow up in China during a time of exceptional economic growth, they are also part of a rapidly expanding digital age. China occupies the top position in terms of Internet population, and with only 44.1% penetration, it is sure to continue to grow. Teens, with their early exposure to digital technology are especially keen in its usage and the alternative cultural realm it can create. Considering the vast cultural differences between this generation and the one before it, the Internet can act as an escape from such contradictions. With mobile devices in particular, the barriers of imagination are broken down and the user can truly become an actor in the story. Capturing the curiosity and excitement of this growing demographic is a goal brands in China must work towards.

Vladimir Djurovic President

Words from the President

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Contents

HOW CHINESE TEENS USE DIGITAL: GETTING TO KNOW YOUR CUSTOMERS OF TOMORROW 5

INTRODUCTION: GETTING TO KNOW THE POST 90S GENERATION 6

THE BIG PICTURE: KEY POINTS ABOUT THE WAY CHINESE TEENS USE THE INTERNET 8

THE POWER OF MOBILE 10

FRAGMENTED SOCIAL MEDIA HABITS THAT LEAVE LITTLE SPACE FOR BRANDS 12

THE LATENT POTENTIAL OF E-COMMERCE 16

CONCLUSIONS AND IMPLICATIONS FOR BRANDS 18

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HOW CHINESE TEENS USE DIGITAL: GETTING TO KNOW YOUR CUSTOMERS OF TOMORROW

When crafting marketing strategies in China, brands are often confronted to the issue of generational differences. While differences between different generations of customers exist in every market, these differences are even more important in China. The nation’s breakneck speed of development over the last 30 years has created a fragmented society in which generational differences mean more than simple age gaps but refer to fundamental differences in life experiences and mindsets. For many brands, understanding these differences and designing multi-layered strategies to address each demographic group with the most relevant message is a pre-condition for success.

The question of generational differences in customer behavior is even more important now as the first batch of post 90s university graduates entered the job market last year. This generation has many characteristics that make it unique, one of the most important of which is the importance of digital in their behavior as individuals and consumers.

Labbrand was invited to talk about Chinese teenagers’ digital habits at the first Social Media Week in Shanghai, a 5-day conference on tech and social media in China. In order to prepare for the presentation, Labbrand’s market research and strategy teams went out to talk to Chinese teenagers and conduct video ethnography in front of Shanghai high schools. A focus group was then organized to go deeper in understanding the role and perception of digital in this demographic group that represents the future for many brands. Here is what we found.

In the following report, we use the term “teenagers” and “post 90s” repeatedly. While year of birth is an imperfect criteria for segmentation (individuals born in 89 and 91 might have more in common than individuals born in 91 and 96); we have chosen to use the most widely used terminology for the sake of clarity. The core target of our study is composed of Chinese youths from ages 14 to 18 who are currently in junior high school or high school.

Chinese teenagers are aware of their uniqueness as a generation but are in no way rebelling against their elders.

INTRODUCTION: GETTING TO KNOW THE POST 90S GENERATION

Understanding how Chinese teens use digital starts with understanding why this generation is unique, how it differs from the generations before it and how it perceive itself and its place in modern Chinese society.

We thus kicked off discussions with questions about how participants perceived their generation. What stood out first is that all of the Chinese teenagers we spoke with are acutely aware of their uniqueness as a generation. Having grown up in a relatively stable environment characterized by constant progress and ever-rising prosperity, they are well aware that their life experiences are very different from those of previous generations (including the post 80s generation with which they often have trouble relating because of major differences in mindset and life objectives).

They perceive themselves as being more active, more enthusiastic, more forward looking, more open to change (be it in the form of new ideas or new technologies) and more eager to challenge the status quo. The flip side of this impression of uniqueness is a sense of being often misunderstood by the rest of society, as if their pre-occupations and experiences were not shared amongst the larger social body.However, this feeling of being misunderstood and different does not translate into a desire for open rebellion. This is an extremely important nuance to grasp for western marketers used to social paradigms whereby rebellion against established institutions and previous generations is often a crucial element of generational affirmation. Chinese teenagers do not want to overthrow their elders.

They simply want their attention, encouragement and often their validation. They want some breathing space for them to express and prove themselves. Not only do they not seek to break away, they are also aware of their own shortcomings such as fickleness and insufficient maturity.

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The post 90s perceive themselves as being extremely reliant on the internet.

A very interesting aspect of the way participants perceived their generation lies in the way they see their relationship with the internet: based on discussions, it appears that Chinese teenagers are not only extremely reliant on the internet but perceive themselves as being so. Discussions suggested that Chinese teenagers are highly aware of how important the web is in their daily lives to find relevant information, even compared to people of similar age in other countries.

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THE BIG PICTURE: KEY POINTS ABOUT THE WAY CHINESE TEENS USE THE INTERNET

The first key takeaway from conversations was that the web in all its forms is a constant presence in the life of Chinese teens. Web-enabled devices follow individuals throughout the day from sunrise, with many participants checking their social media accounts right after getting up, to sunset, some participants confessed to regularly falling asleep while surfing the web on their phones. In between, the web is used for many daily activities and also comes as a complement of dull or mundane activities such as homework.

Un-surprisingly, the web is the central hub of content consumption for everything from news to culture, music, videos, and TV content. Nowhere is the role of the web as a mainstream source of quality, credible and innovative content more obvious than in web video. TV is fast loosing relevance in the eyes of most Chinese netizens and TV usage steadily declines with each new generation, a fact that was verified during our interviews with most participants consuming nearly all of their video content online. Unlike what we can see in other countries, web platforms in China operate in an environment in which competing sources of media and entertainment content are either few or fast loosing influence because of their perceived lack of relevance to modern habits.

The web is the central hub for the consumption of all types of content.

MUSIC

CULTURE

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Not only is Chinese web content extraordinarily rich and sophisticated but it is also very diverse. This represents an important change in China where many marketers used to addressed audience that has grown up in environment where sources of information and media content were few and conformity and uniformity were not only valued but more or less imposed. While we have not reached the level where sub-cultures are important enough to have a broad social impact, Chinese teenagers are nonetheless developing niche tastes, pursuing their personal interest and bonding with people over these interests on a hitherto unthinkable scale. This means that marketers addressing Chinese teenagers are talking to an audience that is extremely diverse, hence the need to go further in developing a more accurate understanding of different target groups.

Then, it is remarkable to see how important web platforms are in Chinese teenagers’ social lives. To a much greater extent than in the west, young Chinese netizens use web platforms not just to stay in contact with their close friends but also to actually deepen relationships with them and build new friendships through online exchange. This keycharacteristic of the Chinese Internet scene has been well documented and was verified by our study. One participant even declared that she would find it easier to get to know somebody online than offline since online allows for greater information sharing and intensity of exchange.

Finally, on a deeper, more sociological level, we see that the web is providing Chinese teenagers new ways of expressing themselves. This is again very important given that traditional Chinese education

might not reflect much individuality or self-expression.

Up to now Chinese teens effectively had very few channels for self-expression and definition. With the web however and especially the mobile web, Chinese teenagers have the tools to express both deep seated opinions on important topics but can also record and share their daily lives with the people who matter most to them. This emergence of new practices fuelled by modern digital channels and focussed on self expression brings about important changes in individuals’ perception of themselves and their relationship to society. Brands now have to talk to people who are used to talking too and integrate this when crafting web campaigns by injectinga participatory element into their digital communication strategy.

Digital is giving Chinese teens new ways to express themselves as individuals and build their identity.

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As a personal Internet terminal, mobile is a symbol of independence for Chinese teenagers.

THE POWER OF MOBILE

One of the key takeaways was the very important role of the mobile web in absolute and also relative to other web terminals. Quality smartphone are fast democratizing amongst the audience studied with most people interviewed stating that majority of classmates are smartphone users. This trend is doubtless fuelled by the fast pace innovation maintained by local smartphone makers who frequently introduce low priced models that put quality smartphones within the reach of more and more people. It is interesting to note that smartphones are often purchased as a reward for good academic achievement and its acquisition can thus be seen as representing an important milestone in teenagers’ lives.

Mirroring the broader market, teens favour Apple, Samsung and HTC. From a tech perspective, it is interesting to note that not only

is Android’s market share high but teen Android users appear to use their phone as intensively as iOS users. This only confirms the need for brands to pay greater attention to the (admittedly complex) local Android eco system.

The most used applications were games, instant messaging and micro blogging. Beyond usages, what really stood out was that for Chinese teens nowadays, mobile is not a secondary point of access to the Internet. For many (if not most) members of this generation, mobile is the main gateway to the web and the main reason for which the Internet is such a constant present in their daily life. Amongst the reasons for this is the role of mobile as a symbol of independence. Most Chinese teenagers do not possess their own computer and mobile represent their own personal device that allows them to escape parental supervision

and circumvent parental rules on Internet use. Many participants shared stories of mobile allowing them to carry on their online activities after parents restrict access to the family computer.

Mobile also allows Chinese teenagers to satisfy their desire for self-expression. With the mobile web and camera features (photo editing apps are consistently amongst the most downloaded on Chinese app markets), Chinese teens can express themselves on the go, keep their friends posted about their activities and share exciting moments with those who matter most to them. Simply put, mobile has transformed many teens’ social media space into personal diaries that just aren’t that personal anymore.

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QQ remains the undisputed king of social platforms.

FRAGMENTED SOCIAL MEDIA HABITS THAT LEAVE LITTLE SPACE FOR BRANDS

A key point of discussions was of course social media. We set out to understand not only what were the preferred platforms of this demographic but also how they use them and how open they are to interactions with brands on social media.

Conversations revealed that despite the hype around platforms such as Sina Weibo and to a lesser extent Weixin, RenRen or Douban; the undisputed leader in the social space remains QQ. All participants cited QQ as the social platform they spent the most time on. These teens have been using QQ since they first touched a computer and a big chunk of their online social life is built around Tencent’s (QQ’s parent company’s) eco-system. While QQ is primarily known as a live chat tool, its very rich social features (including the Q-Zone social network) make it compete with pure social networks on many levels. The lasting strength of QQ shows how strong Tencent’s position is with the target audience and how brands should pay attention to Tencent platforms (who often get less attention than they deserve in western media).

Behind QQ, the two other social networks most used by participants were RenRen and Sina Weibo. It is interesting to note RenRen’s enduring popularity amongst this audience (even though Sina Weibo is currently getting more attention from marketers and media) due to the platform’s perception as being more suited to exchanging with close friends as opposed to Sina Weibo which many participants saw as being too cluttered and better suited to finding online content and information.

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Then, it is clear that the rising star in the social networking space is called Weixin (or Wechat as it is known in the west): the mobile chat/social network app has already broken the 200m members bar and is capitalizing on QQ’s eco system (users can seamlessly import their QQ contacts). For Chinese teens, Weixin is clearly becoming the dominant mobile platform and is even replacing text messages and voice calls to stay in touch with close friends. In the future we only see Weixin’s importance rising and brands who want to target a young audience should start thinking about how they can integrate this new platform into their marketing mix.

Other social platforms cited by participants include traditional BBS/forums such as Baidu Tieba (百度贴吧) and Tianya (天涯) who remain popular especially amongst girls to stay informed and participate in discussions about key topics of interest such as fashion or TV shows. Kaixin (开心) was mentioned by some but its popularity appears to be fading fast and lack of innovation in platform design has severely affected its appeal to teens.

Overall, when looking at the way Chinese teens use social media, we see a division between two sets of platforms: the first one includes Weixin, RenRen and QQ. These tools

are mostly used to stay in touch with close friends through picture sharing, one to one or group discussions, and the organization of real-world outings. The second set includes Sina Weibo and BBSs (Douban can also be included in this category although its popularity amongst teens does not appear to be huge). The primary use of these platforms is geared towards finding content and staying informed on hot topics or topics of interest. While this division is not clear with all teens, it is still relevant and important to understand for brands since it affects the way they will use different social platforms.

Weixin is rising and dominating mobile web habits, providing new opportunities for brands.

All in all, it appears that social media time is scattered across different platforms. For this reason we advice brands to conduct case by case research into their target’s social media habits in order to allocate efforts and spending in an optimal way.

Beyond which platforms are used, it is interesting to look at how these platforms are used. Here again we see the role of digital as a medium for self-expression. Most Chinese teens appear to use social networks as space on which to build their online identity and tell their daily life stories by, for example, sharing pictures of seemingly mundane daily life-events and posting about their mood and feelings of the moment.

It is also interesting to note that Chinese teens perceive social media (and microblogs in particular) as extremely credible sources of information not only about “light” topics but also about important current affairs issues. This credibility of social media as not only a channel but a source of rich, credible content represents a huge opportunity for brands but also requires them to go beyond mere communication and adopt a more media organization-like vision.

There is a division between social platforms primarily used to deepen relationships and those used to discover content.

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It is also interesting to note that Chinese teens perceive social media (and microblogs in particular) as extremely credible sources of information not only about “light” topics but also about important current affairs issues. This credibility of social media as not only a channel but a source of rich, credible content represents a huge opportunity for brands but also requires them to go beyond mere communication and adopt a more media organization-like vision.

Chinese teens perceive social media as a credible source of quality content and reliable information.

Another important question is whether or not Chinese teens use social networks to interact with brands and what they expect from brands in the social space. Few of our participants followed brands on social networks and those who did only followed a few (brands that came up include Vancl, Watsons, Adidas and Sony). However, this apparent lack of interest for official brand content in no way means that they do not integrate social networks in their consumption behavior. Quite the contrary, they heavily rely on the social web to find product and brand information, gather user reviews and share their purchases with friends. Only they do not do so through official brand accounts. This seems to point to a clear opportunity for brands to better adapt their social media presence to the demands of Chinese teens, chief amongst which is quality, entertaining content.

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Chinese teens integrate social media in their purchasing behavior but not official brand channels.

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THE LATENT POTENTIAL OF E-COMMERCE

With e-commerce and m-commerce spending rising exponentially and expected to reach respectively $265b and $15.3b in 2013 (McKinsey), we sought to understand whether Chinese teenagers were participating in the trend and how open they were to buying online.

Discussions suggest that Chinese teenagers are not yet very heavy e-commerce shoppers (although their online spending is probably higher than that of teenagers in other countries). They mostly use online channels to purchase very functional items or objects for which in-store contact is not of primary importance (such as books and certain electronic products).

The key reason for which Chinese teens’ e-commerce spending remains comparatively low is that they seem to still value retail experience. The process of going out, handling products in shop, discussing them with friends and walking away with their purchases is still important in their eyes.

However the advantage of e-commerce in terms of choice and price is fully perceived amongst participants. Some of them confessed to sometimes regretting having purchased something offline after discovering that its price was lower online. Moreover Chinese teens appear to be extremely knowledgeable about e-commerce, often helping their family members select and pay for products online. We can thus assume that as they grow older, most members of this generation will naturally turn into very heavy e-commerce users.

Chinese teens are knowledgeable about e-commerce and perceive its advantage but still value the retail experience.

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The e-commerce journey starts with social media for Chinese teens.

Finally, in order to understand the way Chinese teens (and the adults they will become) use digital; it is necessary to take a deeper look at their “journey to purchase.” Chinese e-commerce habits are very different from those in other countries in that the gateway to e-commerce is often social media. Social media websites (and micro blogs in particular) are the primary drivers of traffic towards e-commerce website. Most stories we heard about e-commerce started with the participant on a social media site seeing an item and clicking on the Taobao link. Brands who wish to sell online to Chinese teens must thus consider the entire customer journey and acknowledge the role of social media in driving e-commerce traffic.

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CONCLUSIONS AND IMPLICATIONS FOR BRANDS

Our journey into teen mobile habits unearthed many insights about a population that brands can no longer afford to ignore be it because they are targeting it now or because today’s teens will be tomorrow’s adults.

The picture we paint is that of a population for whom digital plays a very important role as a social bond, a promoter of diversity, a mean for self expression and a tool for consumption.

Here are 5 simple, concrete tips for brands that are interested in leveraging digital channels more effectively to reach Chinese teenagers

1. Tap the opportunity:

The first step is acknowledging that digital is probably the most effective channel through which to reach and interact with Chinese teenagers. Not only is time spent on web platforms considerable, these channels are also extremely influential and are seen as being extraordinarily credible as sources of content of all types.

2. Understand your target to adapt the approach:

Chinese teenagers have online habits that on many points different from those of Chinese netizens as a whole. Brands targeting this audience need to adapt their approach both in terms of the platforms chosen and the type of content promoted. For this they must invest in the necessary market research to develop a fine understanding of their target customer

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3. Go mobile:

For brands trying to reach Chinese teens, mobile should not be an after-thought, a secondary channel that takes the backseat in their web strategy. The sheer amount of time spend on the mobile web by Chinese teens shows the need to develop an innovative, mobile optimized presence.

4. Get them involved:

Chinese teenagers are used to using the web to express themselves. Content creation is a key part of their web habits. Brands must thus no longer just speak but also get their audience involved when trying to influence Chinese teenagers. User participation must be a central element of campaigns.

5. Offer something:

Despite being heavy web users and integrating the internet in their customer journey for most product categories; Chinese teens still seldom interact directly with brands online. In our view this is because too many brands are content with “being out there” and offer fans nothing in return for interacting with them online. It is important for brands wanting to reach Chinese teens, a very demanding and discriminating audience, to have a clear idea of their online “value proposition” be it original media content, discounts, or exclusive online-only information.

Our findings mainly apply to T1 cities. This report is meant to provide a big picture view of teen digital habits and we encourage brands to conduct their own research to refine this view.

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LabbrandTeam

EDITORS

CHIEF EDITOR

STAFF WRITER

GRAPHIC DESIGN

MEDIA CONTACT

Ying Muying.mu@labbrand.com

Charlotte Zhang charlotte.zhang@labbrand.com

Vladimir Djurovicvladimir.djurovic@labbrand.com

Kevin Gentlekevin.gentle@labbrand.com

Catherine Tsuicatherine.tsui@labbrand.com

Tao Wangtao.wang@labbrand.com

Ying Muying.mu@labbrand.com

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Labbrand Labbrand is the leading China-based brand consultancy that provides market and consumer research, brand strategy, and creative services to develop and manage successful brands. With headquarters in Shanghai and featuring an international team of market research and branding experts, Labbrand combines innovative perspective with effective branding actions to inspire, guide, and create stronger brands.

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