Unlike the US and many other Western countries, China’s cultural stigma against used things has prevented the majority of car buyers from purchasing used cars in the past. Is the chip shortage “chipping” away at these long-held beliefs? It appears so. Second-hand car transaction data released by the China Automobile Dealers Association shows that in the first half of 2021, a total of 8.4342 million vehicles were traded in the second-hand car market, a year-on-year increase of 52.89%.

Altering the “Must Buy New” mentality among younger generations

As we mentioned above, “new” plays an important role in Chinese traditional concepts. Wearing new clothes for bring in the New Year, buy a new house when getting married, if you pay attention, you will find that “new” often appears in the Chinese language. Clothing rental platforms have struggled to take off, and while gaining some momentum, thrift stores are nowhere near as popular as they are in the US. Therefore, in order for China’s used car market to become more mainstream, the first thing it needs is to defeat the “new is better” tradition.

As Gen Zs consumers gradually enter the market and become the main consumer group, the traditional concept of “buying new and not buying old” is being eroded. In contrast to previous generations, contemporary young people pay more attention to value for money, making them more open to buying second-hand. A great example of this is the second hand marketplace app Xianyu, which has become quite popular among Gen Z consumers.

While young consumers’ attitudes towards used things may already be changing, when it comes to cars, the shortage of new vehicles may be accelerating this shift.

Supply and demand imbalance brings business opportunities for China’s used car market

The market is mainly composed of two parts, supply and demand. Opportunities arise when demand exceeds supply. Affected by the global epidemic, a large-scale chip shortage in the automotive industry has led to a decline in automotive production capacity. On average, a semi-conductor disk needs 3 month to “age” if not longer. On top of a chip shortage, other factors like the supply chain back ups and covid lockdowns in China and the Ukraine war shutting down factories, are further delaying new cars from rolling down the assembly lines.

However, the market demand did not decrease with the decline in the supply of new cars, so consumers have been forced to turn their attention to the used car market.

In addition to the supply and demand gap caused by the decline in production capacity, the reduction in income caused by lockdowns in China and a sluggish job market have also lowered many consumers’ budgets for a new car, but it did not decrease consumers’ expectations.

While there is a stigma against used cars in China, consumers are also worried about appearances. In the “face” driven Chinese culture, a vehicle’s brand is very important. To many people, a used Audi is still better than a brand new Toyota. With this mentality, many Chinese consumers are finding themselves in the used car market.

Policy changes and digitization promoting market development

In addition to the market opportunities brought about by the imbalance between supply and demand, the introduction of favorable policies has also contributed to the development of the used car market.

On the one hand, the cancellation of the relocation restriction policy has made the transaction and circulation of used cars more efficient. In the past, considering the pressure of environmental protection and complicated procedures, local governments usually restricted the inflow of second-hand cars from other provinces, which made it difficult for the second-hand car market to circulate throughout the country. The cancellation of the relocation restriction policy not only increases the circulation rate of used cars, but also further improves the value of used cars.

On the other hand, the reduction of value-added tax on used cars has also reduced the financial pressure of dealers to a certain extent and promoted healthy competition in the industry. Since personal transactions can be exempted from VAT, many used car dealers choose to conduct transactions through “scalpers”, which results in an overall VAT burden well below 2%. The reduction of value-added tax makes the tax burden fairer and healthier development of the market.

What’s more, online apps have also provided a platform for used cars, so that used cars are no longer confined to the small trading market, but can be noticed by more consumers through the Internet.

More information

The post Will the Global Chip Shortage Rejuvenate China’s Used Car Market appeared first on China Marketing Insights.

But what is unique to China is just how people are staging these images and creating these fake realities. In China the fastest way to appear rich on social media is, of course, a WeChat group.

The news that has everyone buzzing is a WeChat group called Shanghai Debutante that cost 500 RMB to join, filled with other people that have the same dream: to tell the world that they are living a high-end life and that they are socialites.

Appearing wealthy on social media

In these groups, people organize photo shoots with each other, split the costs of renting hotel rooms, luxury bags, etc. 

For example, a wanghong hotel in China is the Bulgari hotel in Shanghai. Girls like to take the following images:

• Wearing the Bulgari towels lying on the bed
• Having afternoon tea with the Oriental Pearl in the back
• Their breakfast
• Celebrating their birthday at the hotel

When they are taking these photos, for example wearing the Bvgalri towel or having afternoon tea or having breakfast, they follow strict rules not to make the towel wet and not to actually eat the food so that everyone gets a chance to pose with it. 

In the group, people also share the cost of renting a Ferrari for a day to take pictures with it.

On the Internet, these fake socialites are also called “Pinduoduo socialites” for their use of group buying tactics.

Appearing wealthy in real life

But it’s not all about the pictures, it’s also about real life too. One member might be renting a Hermes bag for a month, but she only wants to carry it for a few days so she asks other members whether any of them would like to share the bill and carry it for the rest of the month.

Some group members even go so far as to ask if others would like to share a pair of second-hand Gucci silk stockings.

Some people use these groups to build their social media following, while others do this because they want to show others that they are living well and they want to get into a relationship with a rich person.

For example, a screenshot from one of the groups showed a girl sharing her experience of a date. In the end she found out that the boy only drove a BMW and she dumped him. Because she was looking for someone who drove a Ferrari at least. Crazy!

What does this mean for brands?

Is it really important to show people that they are living well? Not exactly. The core reason people do this is the Internet traffic. The main way for these “socialites” to monetize is to get sponsorships from brands or to do ecommerce livestreams. To do this, traffic is what they need. So instead of purchasing fake followers, which brands are becoming more savvy at catching, they want to gain real followers by pretending to have a life that their followers aspire to.

Since these images can help them gain traffic, it shows that Chinese Internet users love seeing something sophisticated and they have great curiosity to see behind the scenes in the lives of a socialites.

In this scandal, brands are not exactly the victims. They get more exposure, for example, the Shanghai Bulgari hotel and many high-end afternoon tea places. But at the same time, if I see someone post about staying at the hotel on Xiaohongshu or I see someone carrying a Dior bag taking photos when having afternoon tea, I can’t help questioning the reality of it.

Read more:

我潜伏上海“名媛”群，做了半个月的名媛观察者

上海名媛算个毛，我扒一下流水线的高富帅，包你大开眼界

The post Wannabe Socialites Leveraging WeChat Groups to Build Their Fake Lives appeared first on China Marketing Insights.

For many sale associates in China, famous Taobao live streamers Austin (李佳琦) and Viya (薇娅) are their idols. These two former sales associates have shown what is possible, using their sales skills to become nationally recognized figures, a path that many sales associates dream of following. 

In April, Chinese department store INTIME began giving their sales associates a chance to make their dreams come true, collaborating with Alibaba to launch the “淘柜姐” or “Tao Saleswoman” plan, in which Intime sales associates are invited to be live streamers on Taobao. INTIME shared that they started this program 1. To boost sales and 2. To give their sales associates an opportunity to boost their incomes. It appears to be working. 100 INTIME saleswomen live streamed during the recent 618 shopping holiday, resulting in a 133% increase in sales YOY. 

Due to their skills, knowledge, and experience dealing with customers, sales associates are the perfect e-commerce live streamers and naturally have a leg up over those without a sales associate background. 

While I previously haven’t heard much about INTIME, from what I read it seems like an innovative retailer that is really looking towards the future. It is the first department store in China to have its own technology team, with over 200 people, a size equal to a mid-sized Internet company. It has its own app called Miaojie (喵街) which allows users not only to view product information, but to also see how many parking spaces are available at a store. 

INTIME equips its sales associates with data analytics tools reminding them when to stock up on certain items and predicting what products are likely to be in high demand based on hot topics, weather, holidays and other statistics.  

Read more: 商场导购转型“淘柜姐”？银泰百货要孵化自有带货网红

Will Selling Second-hand Items Become Celebrities’ Subsidiary Business?

Move over Douyin and Xiaohongshu, second-hand e-commerce platform Xianyu (咸鱼) has become the hot new place for celebrities to interaction with their fans. According to Xianyu, there are 56 celebrities actively selling on the platform. Customers buy these items either because they are discounted luxury products or because the celebrity has worn or used it before (明星同款).

The Top 5 items sold by celebrities are: skirts, shoes, bags, sweaters and gowns. According to the celebrities, most of the items come from cross-border online shopping, Daigou or are presents given to them by brands. Similar to ordinary users, they have been worn or used. Other than these items, celebrities sometimes sell lesser-known items. For example, Zhang Yuqi (张雨绮) once sold a candle fire extinguisher. Some celebrities even start selling used items from their own brands. Though they are sold at a steep discount, it appears to be a good way to promote their brands. 

Among top-tier celebrities, Shen Mengchen (沈梦辰) has earned the most selling second-hand items. According to the platform she has earned around 450k RMB. Among the top 10 celebrities on the platform, several of them are C list celebs whose ability to earn is less based on their celebrity status and more on the orginal value of the item being sold, for example a Hermes bag. 

But not all celebrities are in it for profit. Celebrity Jing Tian (景甜) donates all proceeds from Xianyu and regularly posts the amount which has drawn a lot of positive attention. 

The Xianyu platform gives fans the opportunity to own a piece of their favorite celebrities and, as seen by Jing Tian, can also be used to build a positive public image. But if it is used improperly, it could also provoke controversy as anything to do with money is sensitive. I think this is also an interesting opportunity for brands. 

Read more: 明星为什么都爱在咸鱼上卖二手？

What type of Travel Content is best for which Chinese Social Media Platform?

The tourism industry continues to boom as Chinese peoples’ incomes are increasing. Young consumers are leading this trend with 70% of travellers 35 years old or younger. Many of these consumers are getting inspiration and travel info from travel influencers and this article shares some typical characteristics of travel content on several major Chinese social media platforms. 

Douyin: To date there are only 3 travel influencers on Douyin that have more than 5 million followers. Though vertical videos typically do best on Douyin, a lot of travel content is horizontal. Many travel influencers on Douyin tend to post travel vlogs. Quality travel content is still in the early stages on Douyin but with its geotagging features the platform holds a ton of opportunity for the travel industry. 

Kuaishou: Again, travel videos tend to be vlog style. Influencers are mostly hiking and travel guides recording their lives abroad. 

Bilibili: Travel influencers on this platform typically live in a big city or another country, they understand its culture well, and share their experience to audience. They are also more like vlogs.

Xiaohongshu: Posts tend to be travel guides referred to as gonglue(攻略). 

Read more: 旅游短视频的钱景在哪？

China Influencer Marketing Podcast: Easternization & Understanding Young Chinese Consumers with Zak Dychtwald, Author of “Young China”

In this episode, we hear from Zak Dychtwald, author of the book “Young China” and Founder of the think tank Young China Group.

He and I dive deep, trying to understand young Chinese people and what they are all about. Zak shares some of the defining characteristics of the post 80s, post 90s and post 00s consumers, how they differ from older generations, as well as common misperceptions international companies have about this highly sought-after consumer group.

If you’re working for an international brand in the China market or one that’s looking to enter the China market, I highly suggest you listen to this episode and check out some of the videos of Zak’s speeches that I have linked below.

Listen online here, on iTunes here, and on Ximalaya FM here.

Influencer Spotlight:

Farfetch and Tmall are Taking Influencer Collaborations to the Next Level

While e-commerce platforms collaborating with influencers to drive sales is nothing new, e-commerce platforms in China appear to be taking influencer partnerships to the next level. Recently, Farfetch joined forces with renowned WeChat influencer Mr. Bags to launch a co-branded Mini Program store, while top e-commerce live streaming beauty blogger Austin Li became the first KOL to launch a Tmall Global Influencer Store.

Read more (In English) 

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