Latest / Skin Anarchy / E.357: Everything Beauty Brands Need To Know About Chinese E-Commerce Strategy Ft. Samarkand Global
Transcript
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- 0:49SPEAKER_02: Hi guys, and welcome back to Internal Anarchy.
- 0:52SPEAKER_02: This is a very special episode because we are going to be learning a lot in this one, and I'm really excited.
- 0:58SPEAKER_02: So without further ado, I want to introduce you guys to the directors for Summer Kind, um, which is a wonderful firm.
- 1:06SPEAKER_02: And um, they're gonna dive into exactly what they do.
- 1:09SPEAKER_02: But without further ado, I want to introduce you guys to Jack uh Portius and Julia uh Celenon.
- 1:16SPEAKER_02: So I I I completely botched that, Julia.
- 1:19SPEAKER_02: I'm so sorry.
- 1:20SPEAKER_03: It is totally fine.
- 1:23SPEAKER_02: But um welcome to the show.
- 1:24SPEAKER_02: I'm so so happy to have you.
- 1:28SPEAKER_01: Thank you so much.
- 1:30SPEAKER_01: Um I guess it'd be good if we just introduced ourselves quickly at the start.
- 1:34SPEAKER_01: Julia, do you want to kick us off?
- 1:37SPEAKER_03: Yeah, for sure.
- 1:38SPEAKER_03: So I'm Julia Sélignon.
- 1:40SPEAKER_03: Um I'm originally from France, and I've recently joined SamarCount Global as the brand strategy director.
- 1:48SPEAKER_03: And so um in this role, I advise niche luxury brands on their marketing strategy as they launch and grow in the Chinese markets.
- 1:59SPEAKER_03: Um, and prior to this role, I worked um at the Estee Lauto companies for a number of years, developing um one of their brands, a French skincare brand called Darfin, across various social media, e-commerce, and physical retail channels in China.
- 2:16SPEAKER_03: Um I'm a Mandarin, uh I'm a fluent Mandarin speaker, and on a personal level, I'm very beauty obsessed.
- 2:24SPEAKER_03: Um, I try out all the new brands and the latest innovations, so have really enjoyed working in that space.
- 2:30SPEAKER_03: Um, Jack, do you want to introduce yourself?
- 2:32SPEAKER_01: Yeah, thanks, Julia.
- 2:34SPEAKER_01: Um, so yeah, my name is Jack Portius.
- 2:36SPEAKER_01: I'm the client services director for Sama Khan Global.
- 2:39SPEAKER_01: What that means is uh I look after our relationships uh with our amazing beauty clients from across the beauty space.
- 2:47SPEAKER_01: Um like Julia, I I've lived and worked in China, so I've been like involved in the kind of China-UK space for a little while now.
- 2:56SPEAKER_01: Um, and I've previously worked uh as the head of retail and e-commerce for the China-Brita Business Council, which promotes uh links between the two countries, um, as well as kind of a few other roles kind of dotted around in the public and private sectors before that.
- 3:11SPEAKER_01: Um, and a little bit about the company as well.
- 3:14SPEAKER_01: Samakand Global.
- 3:15SPEAKER_01: Um, so uh first question we always get is is why on earth are we called Samakand uh global?
- 3:22SPEAKER_01: Samakand is a city in Uzbekistan uh where we do not have an office, but uh it was a key trading point on the old silk road between China and and Europe.
- 3:34SPEAKER_01: Uh so that really the idea is that the inspiration is that we're trading and facilitating uh cross-border trade between those, between you know, China and and uh and the West.
- 3:46SPEAKER_01: Um as a company we do a couple of oh, sorry.
- 3:50SPEAKER_02: I I said that's wonderful, that's a wonderful name.
- 3:52SPEAKER_02: I love that.
- 3:53SPEAKER_01: Uh yeah, I can't take any credit.
- 3:55SPEAKER_01: Um that goes that goes to our founders.
- 3:57SPEAKER_01: Um so we were started, we're a relatively young company, six years old, uh, founded in 2016.
- 4:03SPEAKER_01: Um, and really the mission of the company and the vision of the of the two founders, Simon and David, uh, was to make Chinese e-commerce accessible, simple, and profitable for international brands wherever they are in the world.
- 4:18SPEAKER_01: Um and we have kind of developed a real focus on beauty and and particularly premium and luxury beauty, because that's where um there's a lot of strength in the cross-border trade.
- 4:32SPEAKER_01: There's a lot of demand amongst Chinese consumers for cross-border beauty uh and getting uh products, the best new products from the US and from and from Europe as well.
- 4:43SPEAKER_01: Um and then also we are you know at our core, really, we're a cross-border e-commerce technology company.
- 4:50SPEAKER_01: Um so we've developed some solutions that help us in our day-to-day business and have helped us integrate really closely with some amazing sales channels, um, as well as providing bespokons to some really exciting leading merchants uh to help them sell uh more to China in a more compliant way and to help Chinese consumers have a better uh experience while they're doing it as well.
- 5:18SPEAKER_02: That's very interesting.
- 5:19SPEAKER_02: And I and I would love for you guys to dive into this beauty, you know, the difference between the consumers, you know, the Chinese consumer and the US consumer, and how that really plays into the work you guys do.
- 5:32SPEAKER_02: And I mean, are there any hurdles or any any things that are really stand out and different?
- 5:38SPEAKER_03: Yeah, that sounds that sounds good.
- 5:40SPEAKER_03: Um we can we can definitely go over kind of like the main ways that the Chinese consumer is different to the consumer um in the US.
- 5:49SPEAKER_03: I guess we could summarize it in maybe like five different attributes.
- 5:55SPEAKER_03: So the first one would be um low consumer trust.
- 6:00SPEAKER_03: The second one would be um search for immediate efficacy from consumers in China.
- 6:06SPEAKER_03: The third one would be that um Chinese consumers are real skincare experts and experts in ingredients and formulations.
- 6:14SPEAKER_03: Um the fourth one would be that you know Chinese consumers um are not necessarily the more the most loyal consumers because they have so many brands that has flooded their market um in the past years.
- 6:27SPEAKER_03: And the fifth one would be that the Chinese consumer really sees um shopping as a kind of of entertainment.
- 6:35SPEAKER_03: And so if you'd like, I could kind of like go into more explanation about um the characteristics of the Chinese consumers.
- 6:44SPEAKER_03: Absolutely.
- 6:44SPEAKER_03: Yes, please.
- 6:45SPEAKER_03: Yes, please.
- 6:46SPEAKER_03: So, yeah, the first one is that um consumer trust is is low, and Chinese consumers, the Chinese beauty consumer, needs a lot of touch points before deciding to buy um a beauty product.
- 7:00SPEAKER_03: And so this journey kind of takes them through different social media platforms, online and offline locations, uh, brand official websites, chat boards, review sites, etc.
- 7:10SPEAKER_03: etc.
- 7:11SPEAKER_03: And so what they're really looking for is recommendations for from people that they trust.
- 7:16SPEAKER_03: So it could be vendors, could be friends, could be influencers, it could be other consumers.
- 7:22SPEAKER_03: Um, and and getting those recommendations and seeing these reviews is an incredibly important part of their purchasing journey.
- 7:30SPEAKER_03: And this is reflected in the average eight touch points that are required by a Chinese consumer before making a purchase decision.
- 7:37SPEAKER_03: And that's roughly like double the number of touch points that consumers need um in the US or in Europe.
- 7:46SPEAKER_01: Um and just to just to jump in there as well, I think it's alien to a lot of consumers in you know, in Europe or in the US to as soon as you decide that you love a product, whether it's a beauty product or a fashion product, whatever it is, but you know, uh particularly uh with beauty, it can be quite a personal decision, right?
- 8:04SPEAKER_01: You know, it can reveal a lot about your skin type or you know, whatever your regime is, to immediately take to your social media and say, I've just bought this, I think it's amazing, or I've just bought this, it's given me like super oily skin, don't buy it, right?
- 8:18SPEAKER_01: But in China, like regular consumers advocate, or you know, the opposite of that, for products or brands that they love or dislike through their own socials.
- 8:30SPEAKER_01: So um there's a real kind of like active community of online reviewers just sharing their experiences, and it comes from a really authentic place.
- 8:41SPEAKER_01: Um, and that is you know part of this part of this issue of trust that Chinese consumers have with uh you know official information sources from brands where they've maybe been burnt a little bit in the past or there've been consumer protection scandals and they like to kind of verify what the brand is saying against what their peers are saying.
- 9:01SPEAKER_02: That makes sense.
- 9:01SPEAKER_02: And I actually have a question, a follow-up to what you guys just described.
- 9:05SPEAKER_02: And you know, I know here we have Reddit, right?
- 9:08SPEAKER_02: I mean, Reddit is for us, I think, a great, great way for us to kind of check each other and really get reviews.
- 9:15SPEAKER_02: And I'm wondering in China, is there some something that's similar to that in terms of forums?
- 9:19SPEAKER_02: Or like, can you give me an example of like what kind of places a lot of the consumers uh kind of go to for that kind of candid advice?
- 9:28SPEAKER_03: Yeah, so um there is actually a platform called um Little Red Book or Xiao Hong Shu um in Chinese.
- 9:37SPEAKER_03: Um and it's the main platform on which uh beauty consumers um look at reviews of the products that they're thinking about buying.
- 9:45SPEAKER_03: So, you know, a lot of brands that we work with really focus on doing product seeding to influencers or consumers posting on that platform.
- 9:58SPEAKER_03: Um to give you kind of like a sense of like who, like what this platform is and who is the user of that platform.
- 10:06SPEAKER_03: Um, they're mostly predominantly female.
- 10:08SPEAKER_03: Um they live in tier one and tier two cities like Shanghai or Beijing or Guangzhou.
- 10:14SPEAKER_03: Um and they spend a really significant amount of time looking at reviews on this platform.
- 10:20SPEAKER_03: Um, and on average, um, an average user, an average user spends more than half an hour a day on that platform, um, you know, reading reviews about brands, about products.
- 10:30SPEAKER_03: So a big focus uh for us when we work with brands is to make sure that there is a big pool of content about a specific brand um and their product on the little Red Book platform to make sure that this kind of like drives um traffic to um their sales channels um in China.
- 10:52SPEAKER_01: Yeah, and like for the for the comparison with Reddit, I think no offense to big Reddites out there, but I think Little Red Book is a little bit cooler than Reddit, maybe.
- 11:01SPEAKER_01: Um but um it's it's also a lot more visual.
- 11:06SPEAKER_01: So in terms of visual style, it's a lot more like opening Instagram and seeing a feed of you know both beautifully curated content from your favorite brands and your favorite influencers, as well as a load of stuff from uh you mates, you know, and other user-generated comment uh content from topics that you follow.
- 11:24SPEAKER_01: Uh, but then underneath the pictures, like it's a lot more common to have huge like reviews of products, right?
- 11:31SPEAKER_01: You can be scrolling for ages when you're when you're reading these things on Little Red Book, uh under under the Neath the pictures, where there's uh you know paragraphs and paragraphs about you know why they love this product, whether they think it's the right price, whether it's perfect for your skin, whether it's immediately effective, or you have to use it for three weeks before you notice a difference, like all these kind of things.
- 11:49SPEAKER_01: Um so it it kind of combines that like amazingly impactful visual element of Instagram with the depth of content that you can get on Reddit.
- 12:00SPEAKER_02: That's very cool.
- 12:00SPEAKER_02: I'm gonna have to check it out.
- 12:02SPEAKER_02: That's really cool.
- 12:04SPEAKER_02: Yeah, you definitely should.
- 12:05SPEAKER_03: There's so much, there's the wealth of information on Little Red Book is just uh crazy.
- 12:11SPEAKER_02: Well, I I love that there is a resource like that.
- 12:13SPEAKER_02: I mean, we could really learn from that, especially because you know, even the US markets are just flooded with products at this point.
- 12:19SPEAKER_02: So there's definitely, you know, we can take a page from the you know, no pun un intended, but we really could take a page from their approach.
- 12:27SPEAKER_02: Um, I want you to uh go into the second point though.
- 12:30SPEAKER_03: Um if you could sure um so the second point was all about Chinese consumers looking for immediate efficacy.
- 12:40SPEAKER_03: Um and you know, when you think about American or European consumers, they could pay close attention to ingredient sourcing, environmental impact, or brand social commitments.
- 12:51SPEAKER_03: Um, but the Chinese consumer's first obsession is product efficacy.
- 12:56SPEAKER_03: And, you know, those other factors that I just listed, they you know, they definitely play a role in um, you know, their purchase decision, but the very first purchase driver is efficacy and most specifically immediate efficacy.
- 13:10SPEAKER_03: Um the Chinese consumer has always been kind of like very efficacy driven, but this is even true now, um, you know, in the wake of repeated lockdowns in China and the threat of unemployment, uh, which is pushing consumers to be, I guess, uh more mindful about um the products that they're purchasing and making sure that whatever they're buying is gonna make a difference, a difference on their skin.
- 13:36SPEAKER_03: Um, and I was looking um the other day and comparing um the product page for you know Estee Lauders Advanced Net Repair, their US website versus um their product page on uh on TMOL in China.
- 13:52SPEAKER_03: So on their US website, they have you know five numerical claims um coming from consumer tests saying however many, like 95% of users said their skin felt more moisturized or plumped or whatever it was.
- 14:06SPEAKER_03: Um on China, on the Chinese product page, uh you had double the number of numerical claims, and they were all clinical claims.
- 14:14SPEAKER_03: So proving by how many percent were the wrinkles reduced after using a specific product and the expected results at different time points immediately after applying, one hour after applying, eight hours after application, three days, um, along with the percentage of active ingredients, et cetera.
- 14:32SPEAKER_03: So I think this example kind of like speaks to the different expectations of American consumers versus Chinese consumers when it comes to efficacy.
- 14:41SPEAKER_02: Yeah, no, that that makes sense.
- 14:43SPEAKER_02: And I think that, you know, I've always been curious, you know, I'm I'm by no means an expert, but just from what I've heard, you know, through the grape line about uh, you know, how Asian consumers are more inclined to lean towards, you know, efficacy and just the the benefit of products rather than just buying whatever looks beautiful, you know, on a shelf.
- 15:03SPEAKER_02: That's always been something that's been back of my mind, you know, given that, you know, when I first started my skincare journey, it was something that I really experimented with with a lot of um Asian brands, you know, um, and I noticed that it wasn't so much about packaging, it was about the actual contents and about, you know, if it works, if it doesn't work.
- 15:22SPEAKER_02: So that makes a lot of sense.
- 15:25SPEAKER_03: Exactly.
- 15:25SPEAKER_03: And and, you know, in that search for efficacy, um, the the Chinese consumer has become an expert in like formulation.
- 15:36SPEAKER_03: And some of them, um, we could even call them like ingredient geeks because they have spent so much time doing research on you know platforms like Little Red Book and reading reviews online that they kind of like really know a lot about formulation and have very high expectations about um, you know, what their skincare should do.
- 15:57SPEAKER_03: Um, so you know, simple functions like moisturizing, you know, it doesn't cut it anymore.
- 16:02SPEAKER_03: And they want, you know, very specific active ingredients um in their products.
- 16:07SPEAKER_02: That's really interesting.
- 16:08SPEAKER_02: And also, what about the point that you made about the, you know, they're very really educated and about the ingredients and the the science.
- 16:16SPEAKER_02: I would love to learn more about that and where they get their information because I know that a lot of PubMed and you know, there are some restrictions, right, in China in terms of what you can access from on the internet in terms of journals and medical journals.
- 16:29SPEAKER_02: So, how does that work?
- 16:32SPEAKER_03: Yeah, so I mean there are kind of like different um touch points that um consumers can um look to when researching about a product.
- 16:42SPEAKER_03: Um so the most uh I would say like the most uh um popular ingredients um at the moment are um vitamin C and retinol, which are like you know, um authorized um in the market.
- 16:57SPEAKER_03: And um there um is a huge volume of reviews uh and and comments about how those actives work on the skin and and what kind of impact can uh consumers see after using using those products.
- 17:15SPEAKER_03: Um another very uh very popular ingredient in the market right now is uh Proxylane.
- 17:22SPEAKER_03: Um and it's kind of like the super seen as the superstar molecule for anti-aging, and L'Oreal has done a fantastic job across their different brands to communicate around this kind of like hero ingredients.
- 17:34SPEAKER_03: Um, and then we're seeing also more and more um Chinese brands who um are winning the hearts of of consumers by um you know catering to their need for um specific ingredients.
- 17:49SPEAKER_03: So there is a brand that uh we've been looking at quite closely called um Jirben, um, and they um you know create uh they're a local Chinese brand and they create products specifically for sensitive skin.
- 18:03SPEAKER_03: Um, and they have their own lab in China where they create um you know their own trademark ingredients in collaboration with um universities um in the country.
- 18:16SPEAKER_03: And um it's super interesting when um you know a consumer purchases a product for them from them in the box, they will get a leaflet um with um you know uh a lot of information about the ingredients and all the research and the clinical tests showing how the specific ingredient will impact their skin.
- 18:37SPEAKER_03: And it literally feels like you're getting a scientific review with your package to prove the formula's efficacy.
- 18:43SPEAKER_03: Um, and it's full with like graphs um, you know, uh to show how a certain molecule is is impacting the skin.
- 18:51SPEAKER_03: Um so you know, brands are definitely, especially local Chinese brands, are doing an amazing job at um, you know, proving the efficacy of their products and giving a lot of information to consumers about the ingredients and the formulations um in their products, which is something that Western brands are maybe a bit uh more um cautious about doing.
- 19:14SPEAKER_02: That makes sense.
- 19:15SPEAKER_02: No, it makes sense, and it's interesting to me how you know the Chinese consumer is just so in touch with you know the real meaning of, I guess you could say skincare products, because I keep trying to preach on this website or not this podcast, sorry, about how we really need to approach you know skincare as a science.
- 19:35SPEAKER_02: And we need to approach it with this mindset of just being scientists, you know, in our own rights.
- 19:40SPEAKER_02: And it feels like they've got that down, you know, they've really got that part down.
- 19:44SPEAKER_02: So that's very interesting to me.
- 19:46SPEAKER_01: Yeah, and I think exactly to that point, you're totally right.
- 19:50SPEAKER_01: Um, that they're super focused on like the scientific side of skincare.
- 19:55SPEAKER_01: I th this creates an interesting like future opportunity, but current challenge for clean beauty brands in particular.
- 20:02SPEAKER_01: Um, you know, you heard it from your podcast and other, you know, uh beauty information outlets about like the huge clean beauty wave and and the trend that's going on like all through the US and and in Europe at the moment.
- 20:16SPEAKER_01: It's China's a little bit behind that because of this desire to get immediate efficacy.
- 20:21SPEAKER_01: But then I think what we're also starting to see is uh consumers who are more and more educated about uh the ingredients that are going into their products and are looking to avoid those nast the nasties, you know, that we're also looking to avoid when we're making skincare choices with choices when we're in, you know, Ulta or Sephora or you know, wherever it is that we're buying our stuff.
- 20:45SPEAKER_01: So um it's a it's it's going to be a delicate balance for clean beauty brands trying to articulate their efficacy through, you know, their cleanliness and also like the explaining the things that they're not doing to you that other other brands might be.
- 21:02SPEAKER_01: Um, but it's it's still quite challenging for clean beauty brands in the market at the moment.
- 21:07SPEAKER_02: Yeah, I can imagine, you know, I can really imagine because that's a very excellent point that you bring up, you know, in terms of clean beauty, because I won't lie, you know, even just you know, being a scientist myself, it's there's a very thin line between things like organic, natural, clean, and then efficacy.
- 21:25SPEAKER_02: You know, it doesn't and that's something that I feel like the US markets really need to reevaluate because I don't blame the Chinese consumer.
- 21:34SPEAKER_02: You know, I find myself more so thinking like them when I approach products because, you know, who wants to buy something that's never gonna work?
- 21:42SPEAKER_02: You know, who wants to buy like an anti aging product that's never going to show you any results?
- 21:48SPEAKER_02: Why?
- 21:48SPEAKER_02: Just because it's clean or natural or organic.
- 21:51SPEAKER_02: You know, that doesn't make any sense.
- 21:52SPEAKER_02: It's just it's marketing.
- 21:54SPEAKER_02: And so I completely I resonate with what they're you know really looking for, it seems, in in the Chinese.
- 22:00SPEAKER_02: uh space.
- 22:02SPEAKER_03: And and I think that a lot of the like in the US or I see a lot more now on Instagram like sort of like skin intellectuals or people trying to like debunk um skincare myths and making that information about ingredients and efficacy more widely available um to to consumers.
- 22:23SPEAKER_03: So I feel like you know we're beginning to see that um in in the US and in Europe but um in China um a lot more people seem to be extremely well versed um in skincare ingredients and and formulation.
- 22:36SPEAKER_02: I love that.
- 22:37SPEAKER_03: Now Julia I want to ask you about the point you made about the lack of loyalty component um in terms of you know how many options they have could you speak a little bit more about that right so they're just you know so many Western brands have um flooded the market in the recent years um and there now for the past few years have been a lot of local Chinese beauty brands um that have um emerged and you know a few years ago they were maybe considered as like a second or third choice substitutes uh for consumers in in the market but now they're winning consumers over with you know high quality affordable prices and market insights you know exactly what I was describing about this this Chinese brand giving out a leaflet about the scientific research behind the formulation with with all of their um with all of their uh you know packages that they that they send out so I think that you know given the overwhelming number of options both international and local um the the consumer tends to kind of like jump around quite a bit from brand to brand and really on the lookout for you know the newest product um and the product that's gonna have the highest concentration of the trending ingredients um or the best numerical claims so it it takes a lot for brands to get the consumer's attention um so that explains I guess the lack of loyalty I the a lot of the you know the Chinese luxury beauty market has been a story of incredible growth over the last five ten years um and as a result of that every major beauty brand in the world has looked at that market and thought this is where I I should be investing my money right particularly at the start of the COVID pandemic in 2020 China had a rough kind of first couple of months but then for much of 2020 and 2021 was kind of operating normally on an internal market basis.
- 24:48SPEAKER_01: So you know a lot of brands really kind of plowed extra cash into it extra marketing and that's not just US European brands it's Chinese brands like Julia said and also it's Korean Japanese other Asian brands who are a bit closer to the market who've got a really good understanding of uh skin types uh you know that are specific to China or specific concerns that people have um and when you've got that it's it's hard to be loyal when people are offering you an amazing deal on a product that's kind of claiming to be slightly better than the last one you tried.
- 25:23SPEAKER_01: So um there's a been a huge amount of jumping around brands over the last 10 years by Chinese consumers.
- 25:29SPEAKER_02: That's so interesting you know because I I I feel like the marketing must be so different, you know, in terms of to the Chinese consumer like you know here I feel like in US uh you know markets like when you're approaching uh like the branding and marketing I hear from a lot of brands that I often invite onto the podcast you know I'll hear from them like well we're trying to appeal to the customer on this level or you know we you and I like or all of us here we brought up clean beauty organic beauty but you know it's also about like how does it look on your vanity does it make you feel nice but it's like how do you approach marketing to a Chinese consumer you know it's like as if if you don't have the science then I mean are they even going to look your way that that's very interesting.
- 26:16SPEAKER_03: Well though there are yeah go ahead I was gonna say there are there are other you know I I guess yes the first and foremost um you know purchase driver's efficacy and and if you don't have that I mean packaging certainly you know plays a role into it having beautiful luxurious packaging is also very appealing to the Chinese consumer um and you know then you can do other things on the marketing side maybe like you know because word of mouth is so important and because people you know look up and respect the opinions of certain like tastemakers or influencers in the market you know having kind of like collaborations with um well respected uh people could could also be could also be um an option but for sure um brands who can't speak to their products um efficacy are gonna have um a harder time being being successful in the market that makes sense now Julia you had brought up the idea of how shopping is more of a form of entertainment and it that really leads me to obviously learn more about that from you but also ask you know how do things like uh for example like a platform like TikTok or you know just uh influencers really play into the daily you know um type of media that Chinese consumers are engaging in when it comes to the stuff yeah um so you're you're totally right um shopping isn't dysfunctional in China and people really see it as a a form of entertainment and you know uh so TikTok in China is called Doyin um but do yin um has uh you know uh exploded um in in the past year and you know live streaming e-commerce has really um taken off um in China in the past I would say like maybe like five years and um live commerce or live streaming has really transformed the retail industry and has established itself as as a major um sales channels.
- 28:17SPEAKER_03: In the past I I read somewhere that in the past uh year over 700 million uh consumers had had watched at least one live stream um which is basically half of the population so you know shopping as an entertainment and live commerce um is is uh you know a major uh cultural phenomenon um in China and you know when I think of like live streaming I think about like Instagram lives and it's you know either one person speaking to the camera or sometime you know there is like a guest speaking to a host um but you know live streaming in China um that is looks quite different.
- 28:59SPEAKER_03: The live streams are very professionally produced.
- 29:02SPEAKER_03: You typically have a very beautifully well designed set with um you know the host and maybe a guest you have the right lighting you have sometimes like sound effects to create you know content that is not just about a brand or about a product but it's really like a show that uh you know people want to watch and want want to watch for a long time.
- 29:26SPEAKER_01: Yeah I I I totally agree with that Julia and I think the other thing that whenever you know we get sent recordings of live streams or we're watching them when we've got a brand participating in one of the things that really stands out to me is like how overwhelming they can be as a sensory experience as well.
- 29:45SPEAKER_01: Like there is a uh you know there's the there's the main influencer who is often uh like a you know a a good looking man or woman who's using the product and demonstrating it um you know and they're very like chatty and engaging and they've often got an assistant um and then there's sound effects going off and there's little stickers popping up on the screen and there's a million messages from people watching the live stream popping up at the same time and there's little notifications about who's bought what constantly and your screen is just full of a thousand different things and it's a really kind of interesting like cultural like insight as well that like I can watch 60 seconds of it before I feel like my brain's about to explode and I I'm just not I'm just gonna stop right um but the the you know these live streams last four or five hours and I'm not saying consumers sit and watch the whole thing right um but they'll they'll dip in and out of a few different live streams looking for deals checking out what their favorite influencer their favorite celebrity is saying that particular day.
- 30:52SPEAKER_02: That's so interesting.
- 30:53SPEAKER_02: I love that though I think that that's that you know I love how engaged uh the Chinese consumer is that's really for me it's it's fascinating because I feel like here in the US we you know I'm always you know battling with brands when I try to explain to them like you know the person on TikTok that's just scrolling through you know just endless content they know nothing about what they're buying at the end of the day.
- 31:19SPEAKER_02: So the fact that the Chinese consumer is diving so deeply into what they want what they want to learn about, I love it.
- 31:26SPEAKER_02: You know I love that that's I feel like you know we could really learn a lot from that and I really encourage even US consumers to really adopt this philosophy because with skincare, you know, as we've all been talking about here it's a science it's a there's a very you know there are very important touch points that you have to cover when it comes to figuring out what's good for you, what's not good for you.
- 31:49SPEAKER_02: And you can't do that by just watching a 30 second you know reel on TikTok and just seeing somebody like apply some face cream you know what I mean like it's just it just doesn't make sense to me when I look at when I compare the US um you know culture with social media to what we've been talking about here.
- 32:06SPEAKER_02: So that's very fascinating.
- 32:08SPEAKER_01: Yeah and look and you and you're totally right like TikTok as a you know as I'm sure you and many of your listeners know have kind of tried to push out the live streaming functionality into the UK market over the past year.
- 32:22SPEAKER_01: And it just you know they've found it really difficult to make that model work and to adapt it to fit with what you know your viewers on TikTok are really looking for.
- 32:33SPEAKER_01: And it just doesn't they don't seem to have found a way to quite make it fit in the way that it seems to have really activated something in Chinese consumers.
- 32:41SPEAKER_01: And indeed they were going to launch in the US I think TikTok with the live streaming e-commerce kind of later this year but they've uh shelved it for now just because it it they were really struggling to make it work in their launcher their launch markets outside of China.
- 32:54SPEAKER_01: So yeah I think watch this space for that there's going to be somebody who makes it work um at some point.
- 33:00SPEAKER_02: Well I'm very interested Jack to see when it does happen and you know how they bring it out and and make it work because right now I can honestly tell you you know I was talking to somebody from Spotify and we were discussing the role of audio in the US consumers um you know day-to-day understanding of you know whether it's beauty or whatever it is you're listening to and it seems like audio is playing a huge role in the same similar sense you know what you're describing where people are actually listening you know for an hour versus like you know 30 seconds on TikTok or Instagram reels.
- 33:32SPEAKER_02: So I'm very interested in how they bring live stream you know into the US market.
- 33:36SPEAKER_02: That that would be very cool to see.
- 33:40SPEAKER_02: Now I want to uh actually ask you guys about the you know the next point which is just an introduction to the cross border e-commerce piece.
- 33:48SPEAKER_02: I would love for you know Julia Jack either of you to get us started on that and you know um tell us a little bit about it.
- 33:55SPEAKER_01: Uh yeah sure I'm happy to take that one.
- 33:57SPEAKER_01: So uh cross border e-commerce or CBEC CBEC uh as it as it's quite often referred to um is a specific route to the Chinese market and um I'm not gonna go too deep into it.
- 34:10SPEAKER_01: We're not gonna talk about you know the different tax rates and that kind of stuff because it gets super dry and I don't think that's what people are here for.
- 34:16SPEAKER_01: But I'm happy to talk about that with anybody you know separately who wants to but I I don't think it's for you know mass public consumption.
- 34:24SPEAKER_01: But the the the core to it really is um you know back before it was introduced in 2014 it was a uh prior to then it wasn't a an official legal channel there were Chinese citizens living all over the world whether they were uh you know like um economic immigrants and they they'd moved to the US for work or they'd moved to Australia for work or whatever it is or they were students and we have a lot of Chinese students in the UK um in particular um and their relatives and friends who lived back in China were asking them to buy products and and send them back or sell them back to them um via you know e-commerce uh the Chinese government really quickly realized that that was quite an unregulated space they were worried about people getting ripped off um but more than that they were worried about not getting any tax uh from from that particular channel because it was just a consumer-to-consumer transaction that was really hard to to uh you know to to monitor um so they endorsed this new channel introduced some like uh beneficial terms for international merchants to enter it and that's really when you got TMO Global who I'm I'm sure many you know of the brands listening have heard of which is kind of the main uh one of the main B2C marketplaces in China and JD worldwide their big competitor that was when they launched their cross-border channels um for international brands to sell directly to Chinese consumers um the key thing being that the the product crosses kind of customs in China at the point of of purchase or after shortly after it's purchased so uh the transaction has to be between a Chinese person living in mainland China um and a an international brand um beauty really along with a couple of other categories some mother and baby products um and and and some food and drink categories have really been the massive success story of cross-border e-commerce um why is that there's a couple of reasons one is um you know uh in the in the origin days in 2014 2015 there was a lot of concern about Chinese manufactured products uh and so anything that you consumed or put on your skin or you gave to a baby um was you know uh dealt with with suspicion and people wanted to buy directly from overseas brands um the second is that particularly among beauty brands uh animal testing was the thing that people really really wanted to avoid when entering the Chinese market and this gave people a legitimate route to market that allowed them to do that.
- 36:58SPEAKER_01: So advantage of cross-border e-commerce is you don't have to do any Chinese labeling, uh any kind of heavy product registration you just have to kind of submit a couple of things to customs and you don't have to do the product testing for market entry like you would if you wanted your products to be on the shelves in beauty stores or department stores in the Chinese market.
- 37:23SPEAKER_01: So people may have heard that in May last year, May 2021 um the the rules were changed a little bit and um now it's possible to get some products registered for the market for for general trade through stores and uh and you know entry into the market um without doing testing on animals but there's still plenty of things that aren't on that list.
- 37:45SPEAKER_01: So anything with SPF in as an example still can't be gone through still can't go through that route.
- 37:51SPEAKER_01: There's a there's an ingredients list that all your ingredients have to be on so it might involve reformulation if you've got something that doesn't quite fit with uh with what the Chinese government has set out as their set of rules.
- 38:03SPEAKER_01: And it's quite a lengthy process to do that registration.
- 38:06SPEAKER_01: So it can you can get it done as quick as six months but it can take you know a year and a half to get your products registered and it's about 5k US dollars just in just in the registration fees per SKU.
- 38:21SPEAKER_01: So it's not a kind of immediate straight to market option for a new product that you're entering into the market necessarily particularly for niche brands and particularly when Chinese consumers are still you know super enthusiastic about shopping via cross border e-commerce um and finding products online.
- 38:41SPEAKER_02: That's first that's really interesting because it must limit them then it's so much because I mean so many brands are you know they are being launched by for example dermatologists you know launch brands that are very very efficacious they're very um you know they work right and so to be able to as an entrepreneur who doesn't have the you know thousands or even millions um that must be very difficult for brands to get into the Chinese market then yes or is that not true?
- 39:11SPEAKER_01: You can enter via cross-border e-commerce is kind of the answer to that and that's that's what we specialize in at SummerCon Global you know we don't test products on animals and uh the brands that we work with also don't do that.
- 39:23SPEAKER_01: So we've we've and also you know there's a we work with quite a lot of smaller brands as well as some bigger ones um who you know simply just don't have the resources to be able to to do that.
- 39:34SPEAKER_01: But there's plenty of other advantages to selling via cross border e-commerce you don't have to set up a Chinese business you don't have to enter into a huge long relationship with a distributor who you know in the in the current climate we're in uh with uh limited travel between China and the rest of the world you may never meet in person or you may not have met yet in person.
- 39:54SPEAKER_01: So it's it's a really good kind of market entry route and you can build a multi-million dollar business into the Chinese market just via cross-border e-commerce.
- 40:05SPEAKER_01: So cross-border grew about 17% in 2021 um and there were more than 230 million consumers who bought at least one product via cross-border e-commerce in China last year.
- 40:16SPEAKER_01: So it's by no means a small market.
- 40:20SPEAKER_01: And yes the the market once you've done the product registration is much bigger because you can open your own stores if you've got enough money or you can be distributed in uh in some of the really great department stores and and kind of mixed beauty stores that they've got over there.
- 40:35SPEAKER_01: But um yeah definitely don't be scared uh don't be put off China if you can't afford that yet because cross-border e-commerce is a really great way to to test the water.
- 40:45SPEAKER_02: I love that I love that so much that makes uh you know that creates so many possibilities for smaller brands and especially you know I've interviewed so many wonderful brands that are you know very science vaced and they're very um heavy with the you know as Julia had talked about earlier about the advocacy side of things you know and so it would be lovely to see them really kind of utilize your services and and get into that that space you know and just spread the word about their brand because you know it it's I feel like one thing US you know the US is a real leader in is this the scientific innovation side of things.
- 41:20SPEAKER_02: You know at least that's what I've picked up on um from the brand interviews I've done and it would be wonderful to see that you know go worldwide you know for some of these brands just be available everywhere.
- 41:30SPEAKER_02: That would be so cool.
- 41:32SPEAKER_01: One 100% and I think you know because we're based in you know Julia and I both both both based in London um we work with a lot of European brands in particular entering the Chinese market.
- 41:43SPEAKER_01: And you know some of the brands that we work with only employ four, six, you know, less than 10 fewer than 10 people in that company.
- 41:51SPEAKER_01: So they're by no means large enterprises but they've really got something unique about them that makes them desirable among Chinese consumers and they've got great products and a great story to tell and often they are you know clinician led whether it's a dermatologist or an aesthetic surgeon or um someone like that.
- 42:12SPEAKER_01: But you know you can do it with that smaller team.
- 42:15SPEAKER_01: I think often US brands wait a little bit longer because your domestic market is so much bigger than uh ours here in the UK so you can go a lot further before you have to think about China.
- 42:25SPEAKER_01: But um yeah we we really see you know small interesting brands are quite nimble they can bring products to market really quickly they've got something unique and that's something that Chinese consumers are really looking for.
- 42:37SPEAKER_02: I love that I really love that I love that you guys are you know really kind of um spearheading this movement.
- 42:43SPEAKER_02: I really really you know love people who are trailer blazers in this way so you know really hats off to both of you for being part of such a wonderful you know wonderful initiative um now one thing I want to ask about is you know I really want you guys to talk about the um the things that you know we need to consider I mean if I had a brand what should I be considering um for a launch in China like what are some of the things like if we can go through them sure um so you know China is a great opportunity um like like uh we were just discussing but you really have to be prepared and there are kind of like maybe like five things to consider before um launching um in the market.
- 43:35SPEAKER_03: Um the first one would be um does your brand have an existing presence in China?
- 43:41SPEAKER_03: So is your brand being mentioned on social media platform or is it being sold in the market by third party sellers because this could be a good sign that your brand already has a a solid traction um in in the market.
- 43:57SPEAKER_03: So that would be one of them.
- 44:00SPEAKER_01: Yeah, I think I think we can also look at the market fit and fitting your products to the correct route to market as well.
- 44:09SPEAKER_01: So one of the things that we're talking a lot about at the moment is the decentralization of Chinese e-commerce.
- 44:17SPEAKER_01: So in the past, everything went through, you know, a lot of brands when they were first thinking about the Chinese market, they were spoke to Alibaba, they launched a T-Mall global store, they handed the keys over to a partner who operated it for them, often not particularly profitably, often at pricing controls that didn't really reflect the brand's values and didn't necessarily present the brand in the best way.
- 44:45SPEAKER_01: The world is changing a bit.
- 44:46SPEAKER_01: TMAL still has a super important channel and a way to present an official part of your brand, but there are other things that are happening, like we've mentioned with live streaming on Doin.
- 44:55SPEAKER_01: So Doin grew over 300% last year in terms of its um GMV, its gross merchandise volume.
- 45:04SPEAKER_01: And we've had some great success on there.
- 45:34SPEAKER_02: Right, right.
- 45:35SPEAKER_02: No, that's true.
- 45:36SPEAKER_02: That's interesting.
- 45:37SPEAKER_02: I mean, I I think that, you know, uh when I talk about this, I I'm thinking about the brands like that I mentioned before, you know, that are the smaller brands and they want to make sure they do this right.
- 45:48SPEAKER_02: So, you know, I I feel like there would be a lot of prep work, right?
- 45:52SPEAKER_02: In terms of just uh getting ready to kind of host this, uh, you know, or or you know, uh cater to this new group of consumers, you know, this new population of consumers.
- 46:03SPEAKER_02: So that's uh it's gotta be a a large feat.
- 46:06SPEAKER_02: I mean, I I can't imagine it being simple by any means.
- 46:10SPEAKER_03: For sure, and and and niche beauty brands especially um need to be um quite strategic in in their approach.
- 46:18SPEAKER_03: Um, like Jack were saying, if they were to open just like a store on T-Mall, um, you know, competing against the Lancôme and Estee Lauders of the world, um, it will be incredibly challenging if they don't have a massive marketing budget.
- 46:29SPEAKER_03: And so how we typically work with brands um is you know helping them to identify the right um channels for um their brand.
- 46:41SPEAKER_03: And we um as a company we focus on um you know leveraging the social cachet and the consumer trust of beauty-focused channels to incubate our brands.
- 46:54SPEAKER_03: Um and you know, we work with um different stores across the WeChat and the Taobao ecosystem that are run by influencers who are kind of like viewed as tastemakers in the market and you know, who are known for identifying the new up-and-coming niche brands.
- 47:11SPEAKER_03: Um, and so you know, we really focus um on working with our brands to identify the right channels for their brand in their specific category, because there is you know so many different e-commerce channels um in China that it can be uh quite overwhelming for for a small brand trying to enter the market.
- 47:31SPEAKER_01: Yeah, Julia, you're totally right.
- 47:33SPEAKER_01: And I think one of the channels that's really often overlooked is you know a channel you already have, your own website, right, your own web store that is your portal to the world.
- 47:46SPEAKER_01: Um so if you just excuse quite a uh a bit of a laboured uh analogy, but um at the moment, most international merchants are giving Chinese consumers who land on their website an absolutely terrible experience.
- 48:00SPEAKER_01: They're really not catering to them at all.
- 48:03SPEAKER_01: And potentially those merchants are missing out on like a lot of a lot of sales and you know traction in the market as a as a result of that.
- 48:10SPEAKER_01: So imagine Ecta, you go into you know a beautiful store, uh, it's lined with the latest um moisturizers and serums and every type of skincare that you could possibly want.
- 48:23SPEAKER_01: Um, but then when you take something to the till, the the shop assistant has to go back and get it from a back room.
- 48:30SPEAKER_01: It takes 15 minutes for it to get it, and you just sat there waiting, right?
- 48:33SPEAKER_01: That's the first problem.
- 48:34SPEAKER_01: Then you go to pay and they won't accept uh Visa, MasterCard, or American Express.
- 48:40SPEAKER_01: So you have to figure out a different way of doing it.
- 48:42SPEAKER_01: Um then you ask for a bag and they've not got one, right?
- 48:45SPEAKER_01: So you just have to kind of wander out with all these products like cradled in your arms.
- 48:49SPEAKER_01: And then as you leave the door, uh you realize they've not added the tax, and you're then gonna have to wander down the road with all these products to go and pay the tax at the other at the office, right?
- 49:00SPEAKER_01: That is kind of a slightly labored analogy, but it's kind of what we're doing to Chinese consumers when they land on international websites.
- 49:07SPEAKER_01: Um, we don't accept the most common payment methods, we don't offer good logistics options that they're that they understand and they can track.
- 49:14SPEAKER_01: Um websites take forever to load.
- 49:17SPEAKER_01: The average loading time of a Shopify website in China is 40 seconds, which you're never ever going to get people sticking around for that long just in the hope that your websites load.
- 49:26SPEAKER_01: Um and then we're not declaring, you know, we're not registering products with taxes or brands aren't registering products with customs so that the correct taxes and duties are paid, which means consumers and then having to go and pay a huge amount extra when it gets to the uh when it gets to when it gets stopped at the border.
- 49:41SPEAKER_01: Um so I think brands, both big and small, whatever the stage of market entry, kind of overlook that channel.
- 49:49SPEAKER_01: Um, and it's something that we're hyper focused on and we're helping loads of loads of great companies like LookFantastic, um more Pacific, um, and then a load of SME brands as well uh in the UK uh and and Europe, like Royal Fern and Igne and Cliche, who are all skincare brands, kind of niche skincare brands, but who've got meaningful transactions with the Chinese customer because of uh because they've thought about how to address those problems and they've worked with us to be able to do it.
- 50:18SPEAKER_02: I love that you guys are doing that, and that's such an excellent point, Jack, that you bring that up.
- 50:23SPEAKER_02: I think that that's definitely something that even if you're prepping to go into an international market, you could work on as a brand, you know, in and even just as a prep phase.
- 50:33SPEAKER_02: I mean, if you're if someone is listening and you're an entrepreneur and you are, you know, you own a niche brand for skincare.
- 50:40SPEAKER_02: I mean, these are some of the things that you should a great place to start, I feel like, you know, if you're if you're going to go down this road.
- 50:47SPEAKER_02: And, you know, yeah, a website, you would think, would be the easiest way to shop for products.
- 50:52SPEAKER_02: You know, it would be the easiest way for consumers to really get the experience of your line, of your brand.
- 50:58SPEAKER_02: And if that's becoming an issue and a hurdle for international consumers, then that's you know, that that's just the lack of I guess initiative on the part of the founder.
- 51:08SPEAKER_02: You know, I I don't I I personally would not be, you know, keen to support a brand like that at all either.
- 51:13SPEAKER_02: So I think that that's a really great point that you brought up.
- 51:16SPEAKER_02: And I really encourage anyone who's listening who who is, you know, an owner or founder of a of a niche skincare brand or anything, you know, just really consider some of the things that Julia and Jack have brought up here because these are you know, this is uh the protocol, you know.
- 51:31SPEAKER_02: I I really do as a scientist, I believe in protocols, I believe in there's a proper way of doing things, and I think you should definitely employ the right uh uh uh people and the right experts to do it.
- 51:41SPEAKER_02: So if any of you are interested, I really encourage you go check out the website um for SummerCand, it's uh www.samark a n d.global and check them out and really kind of employ their services.
- 51:58SPEAKER_02: I think this is a wonderful opportunity for a lot of the brands and a lot of the listeners we have because a lot of you I know are founders and entrepreneurs.
- 52:05SPEAKER_02: So thank you so much, Julia and Jack.
- 52:07SPEAKER_02: This has been so informative and so lovely to talk to both of you.
- 52:11SPEAKER_01: Uh thank you so much for having us, Hector.
- 52:13SPEAKER_01: And I'd just add as well, yeah, please check out our website.
- 52:16SPEAKER_01: If you want to contact Julia or I directly, LinkedIn is a great place to do it.
- 52:19SPEAKER_01: We've both got relatively unique names, so we should be fairly easy to find.
- 52:24SPEAKER_01: Um and um yeah, like whatever the size of your brand, or if you work with brands and you just want more information, we've created loads of resources, we've created you know content to try and help people understand the amazing opportunity that there is in the Chinese market, and we're totally happy to share some of that.
- 52:43SPEAKER_01: So uh yeah, get in contact and and we we can always have a chat.
- 52:47SPEAKER_02: Absolutely, Jack.
- 52:48SPEAKER_02: And I will be tagging both of you on LinkedIn because I post everything for everyone, anyone who's tuning in and you know about our LinkedIn page or mine.
- 52:56SPEAKER_01: Fabulous.
- 52:57SPEAKER_01: Yeah.
- 52:57SPEAKER_02: I'm tagging everything there.
- 52:58SPEAKER_02: So you guys will easily be able to get in touch.
- 53:00SPEAKER_02: And if you have any other questions, any inquiries, please send us an email.
- 53:05SPEAKER_02: Um, you know, Sconcare Anarchy can be reached at you know, just uh sconcureanarchy at gmail.com.
- 53:11SPEAKER_02: I mean it's easy as that.
- 53:12SPEAKER_02: And send us your questions and we pass them along to Jack and Julia's team.
- 53:17SPEAKER_02: So thank you so much, you guys.
- 53:18SPEAKER_02: This has been wonderful.
- 53:19SPEAKER_03: Thank you.
- 53:20SPEAKER_03: This was so nice.
- 53:21SPEAKER_03: Thank you, Ida, for having us.
- 53:23SPEAKER_02: Oh, it's my honor.
- 53:24SPEAKER_02: Thank you so much.
- 53:27SPEAKER_02: Hey guys, so I hope you love that episode.
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