Are Luxury Brands Succeeding or Failing Digitally in China?

on December 19 2012 | in Beauty Digital Retail Trends | by | with No Comments

L2, a think tank on digital innovation, believes that the “success of prestige brands in China is inextricably linked to digital competence.” L2’s third annual Digital IQ Index®: China benchmarks the digital competence of 100 luxury brands in China.

So how are luxury brands performing in the digital space?

Of the 100 brands in the Index, 22 are considered top performers (genius and gifted), 17 are average performers, and 61 are underperformers (challenge and feeble).

The following ten prestige brands rated highest in digital competence as measured by successful multi-channel, digital campaigns; functional sites that cater to local needs; strong social presence and integration across platforms:

1.   Estee Lauder
2.   Audi
3.   Chow Tai Fook
4.   Lancome
5.   Volvo
6.   BMW
6.   Buick
8.   Land Rover
9.   Benefit Cosmetics
10. Burberry

China’s digital landscape remains robust and changing. According to L2:

  • While only 19 percent of Chinese consumers visit an official brand site,  48 percent say these sites influence their intent to purchase.
  • Sina Weibo has 400 million users in November.
  • Chinese Bulletin Board System (BBS) communities remain a vibrant place for brand education, user reviews and showing off (“Shai”) of recent purchases.
  • Eighty percent of BBS users seek the opinions of others online when making purchasing decisions.
  • Ninety-five percent of Internet users in Tier 1, 2 and 3 cities are registered on at least one social media site and more than half use microblogs.
  • Forty percent have either read or posted a product review, and nearly 80 percent use social media to learn more about luxury brands and products.

Luxury brands are working to strengthen their digital competence in China, but they still have a lot of work ahead. L2 found that 61 percent of the brands have sub par digital competence – many of these brands are in the fashion and watches & jewelry categories. L2 notes in its report:

  • Two thirds of fashion brands and 64 percent of watches & jewelry brands are feeble.
  • Beauty category continues to lead in site sophistication. Beauty brands are most likely to feature live chat and user reviews but fail to provide international store locators for global travelers.
  • Nearly half of the 47 international prestige retailers have e-commerce available for China, including Macy’s, Neiman Marcus, NET-A-PORTER, and YOOX.
  • Only four luxury brands have launched direct e-commerce since 2011.
  • Social media adoption by prestige brands is now ubiquitous.  Sina Weibo is the de facto choice for prestige brands in China.
  • Automobile brands boast the largest communities on Sina Weibo, while Fashion brands register the greatest engagement and growth.
  • Thirty-six percent of brands in the Index feature at least one Chinese celebrity endorsement. Seventy percent of the celebrities with a Sina Weibo page mentioned the brands they endorse at least once.

Video is expected “to capture the greatest incremental digital spend in 2012.  For brands present on Chinese video sites, localization is key,” according to L2.  PR firm Burson-Marsteller indicated that, “Chinese consumers love to see how global brands tell their story in China, but with Chinese characteristics.”


photo credit: burberry

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