China Brands Beyond Borders – An R3 Report

China Brands Beyond Borders

Brands With Room to Grow
The global success of Chinese brands
comes with increased quality of Chinese
products, a constant drive to improve and
innovate, and novel marketing strategies
that hinge on social media and digital
channels. Rapid R&D and go-to-market
strategies for products that appeal to a
global audience while adapting marketing
strategies to a localized context has
provided Chinese brands more visibility on
the global stage.

There has been a general upward trend in
valuation of Chinese brands in recent years,
but a few notable highly-ranked brands in
2019 and 2020 dropped in rankings in 2021.
There is, however, room to grow for both
established brands and newcomers. A
more robust brand strategy, improved
implementation and use of private traffic,
and optimized marketing operations can help
Chinese brands build long-term growth and
resilience in the face of the challenges posed
by tightening regulatory environments.

MOVING CHINA BRANDS BEYOND BORDERS

The Changing Value
of Chinese Brands

BRANDS

Kantar BrandZ 2022 Most Valuable
Chinese Brand

Year
Established

Brand Value
(US$ Mil.)

2020

2021

2022

2022

Tencent

1998

2

1

1

204,378

Alibaba

1999

1

2

2

137,031

Moutai

1999

3

3

3

108,490

Douyin (ByteDance)

2012

14

8

4

43,483

Meituan

2010

9

4

5

41,945

ICBC

1984

4

9

6

36,017

JD.com

1998

8

7

7

34,198

Huawei

1987

5

5

8

33,663

Haier

1984

12

11

9

33,206

Ping An Insurance

1988

7

6

10

26,320

Sources: Kantar

YoY Brand Power Growth by Category – Developed Markets

29%
21%
13%

8%
-2%

Total brands YoY growth: -3%

-3%

-5%

-6%
-14%

Online Fast
Fashion

Content
Apps

Smart
Devices

Mobile
Gaming

OTA

Home
Appliances

Consumer
Electronics

Sources: Google and BrandZ Chinese Global Brand Builders (Kantar 2021)

Alcoholic
Drinks

Cars

-20%

Banks

-26%

-27%

Airlines

E-commerce

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Starting The Global Journey At Home
Chinese consumers want three things from brands:
value for money, quality, and aftersales service.
Local brands are emerging as the preferred provider
as they provide good quality products at an affordable
price. Improvements in quality and branding have
injected impetus into domestic products in growing
sectors, including clothing, automobiles and
cosmetics, with their popularity triple that of foreign
counterparts in 2021.
Chinese firms’ decision-making process is
comparatively nimble compared with foreign
companies that often need to go through a multilayered approval process before launching a new
product. And foreign cost structures are often
less competitive in China. Besides good quality
and customized products, domestic brands have
become a rage among young consumers due to their
innovative use of traditional Chinese elements and
culture that appeals to young Chinese consumers’
strong sense of national identity.

Many local home-grown brands, such as Florasis
and Lilith, are now selling overseas. The primary
consumers of these brands seem to be young people,
particularly women, who are price sensitive. Chinese
brands are known for their relatively cheaper-priced
products in foreign markets.
The main marketing strategies that these brands
utilize are localization and globalization. Chinese
brands are well-aware of the need to brand their
products strongly and to adapt them to different
countries and cultures. Therefore, upon expansion
overseas, each brand differentiates its products and
marketing to appeal to the cultural context of the
country. They use country-specific models and
locally-run social media channels. They also consider
how their products would fare on the global stage at
the point of product development to ensure that they
have overseas success potential.

Leveraging e-Commerce
and Social Media
China’s cross-border e-commerce export
growth rate increased by 40% as many
Chinese brands started taking their
e-commerce products globally. Alongside
their increased exportation, China’s
innovation ecosystem is booming
with mobile commerce, social media,
live streaming, and digital wallets to
improve marketing efforts and facilitate
increased ease of purchasing.
Chinese brands are localizing their
products and defining their brand image
through social media. They are localizing
products with branding strategies to
align with the target audience’s culture
by employing social media tactics and
influencers to increase brand exposure
to their target demographics.

4

Social Commerce 2025 Market Size (Billion USD)
2021-2025 CAGR

US
$99 GMV
25% CAGR

UK
$13 GMV
27% CAGR

China
$1,015 GMV
26% CAGR

India
$17 GMV
59% CAGR
Brazil
$5 GMV
30% CAGR

GMV: Gross Merchandise Value
CAGR: Compound Annual Growth Rate

Source: Accenture Social Commerce Shopper Survey

MOVING CHINA BRANDS BEYOND BORDERS

Export by Platform
The cross-border e-commerce industry has seen an
explosion in platforms offering a full suite of digital
infrastructure and logistics support.
The most successful platforms allow foreign brands
to sell in China without needing a Chinese business
license. These platforms also provide logistics support
with many operating warehouses and shipping
stations across China so that customers have access
to reliable and fast shipping.

In addition, successful platforms also have to battle
the rampant counterfeit goods that proliferate
Chinese markets and the perception of low-quality
Chinese goods. As such, the procurement models of
these platforms are of great interest to customers,
and assurance of quality through direct purchase from
overseas providers is needed to satisfy customers.

Local Platforms with Global Reach
Platform

Description
The international arm of Taobao Tmall,
owned by Alibaba. Many of the largest
luxury fashion brands from around the
world host their products on the platform.

Cross-border arm of B2C e-commerce
platform JD.com. Tencent, Google, and
Walmart are among their partners.

Unique Selling Proposition
•

Tmall offers cross-border shipping specialists to help
handle logistics, allowing for 5-8 working day delivery and
tracking.

•

JD.com is more known for computer, communication and
consumer electronics products.
With a comprehensive logistics network of warehouses
and shipping stations across China, JD Worldwide
provides leading in-house integrated logistics services.

•

•
VIP International is the cross-border
e-commerce division of VIP Shop, a flashsale e-commerce platform.

•

•

Suning International is the cross-border
e-commerce arm of Suning. Suning is
a smart retail platform that combines
its e-commerce operations with a vast
network of brick-and-mortar storefronts
across China.

Youpin is an e-commerce platform
operated by Xiaomi, a Chinese consumer
electronics giant known for their
smartphones and consumer IoT devices.

The platform enables customers to pre-order products in
bulk from excess inventory to sell at a significant discount.
To combat counterfeits, VIP International has set up
procurement overseas, and all products are sourced and
bought directly from overseas.
VIP International also operates an in-house logistics
network.

•

Suning International offers two cooperation models:
– The entry model, where businesses sell through
Suning’s own in-house integrated logistics network.
– The procurement model, where businesses sell to
Suning’s overseas partners directly.

•

As a Xiaomi operated platform, most of its domestic
product offerings are from the Xiaomi ecosystem.
Youpin Global works mainly with foreign governments
to bring overseas products to Chinese customers on its
platform.

•

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Fortifying Chinese Brand Strategies
Chinese brands can benefit from building four key areas that impact brand value and internal marketing capability.

1

Clear and agile
brand positioning

four
key
areas

2

3

In-house specialist
capability

Brand
management

4

Brand
protection

1

2

Clarify brand positioning
and find out the
competitive advantage of
product differentiation.
Understanding the valueadd of their product in
the eyes of consumers
will enable brands to
position their appeal and
strategically shape their
brand image. Having
partners that can deliver
relevant, timely and
innovative insights will
help brands enhance
decision-making.

Clear and agile
brand positioning

6

In-house specialist
capability

3

Brand
management

4

Export companies can
produce a wide range
of visibility through
successful innovation
knowledge management,
thereby gaining the ability
to create new brand
value. Many companies
have so far only focused
on absorbing and
training management
and marketing talents,
ignoring technical talents
in product innovation,
design, and R&D. To
solve such problems,
companies need to pay
attention to the training
of brand research
and development
professionals.

Marketers should insist
on brand marketing
innovation and strengthen
brand management
awareness so companies
can develop their brands
overseas.

Brands need to prioritize
intellectual property
and insist on brand
maintenance, including
maintaining brand quality
and technology, cracking
down on counterfeiting,
establishing a corporate
brand awareness of
crisis management and
putting into place a crisis
management mechanism.

Brand
protection

MOVING CHINA BRANDS BEYOND BORDERS

Export-Ready Marketing Strategies
Marketing Strategy
•
•
•
•
•

Committed to exploring European and American fashion trends, combining the facial and skin
characteristics of Asian people
Spokespeople are highly popular with the youth
The brand developed makeup shades to match local skin tones and upgraded its oil control
technology to meet consumer needs
Co-brands content with popular local brands and local celebrities
Technology and data-driven business model that builds performance-based marketing
campaigns

•
•
•
•
•

“Oriental Makeup” is the brand positioning of Florasis
Beautiful packaging reminiscent of Chinese sensibilities and legends
Products are imbued with Chinese beliefs and cultural roots
Works with micro-influencers on TikTok to promote products
Co-brands products with prominent events, combined with a distinctly Eastern take

•
•
•
•
•
•

Brand positioning of “color experts and beauty artists from China”
High-end product positioning, the average price is 30-50% higher than the domestic price
Operates an offline omnichannel sales network through large retailers and supermarkets
Distributes through large e-commerce platforms like Amazon
Product packaging and design tend towards Western aesthetic tastes
Co-branded products with institutions inclined towards cultural, art, and fashion international
IPs that have a high degree of brand/makeup fit, high recognition, and high topicality

•
•
•

Building an international business incubation center
Launching imported flagship stores
Setting up a dedicated team to provide merchants with one-on-one Chinese and English entry
services
Private traffic pools such as WeChat service accounts and mini-programs used to mine users’
needs and convert potential customers into loyal users
Incubating 40 new import trend categories and accelerating the creation of new imported
products through new world factory model innovation and marketing services

•
•

•
•
•
•

Launch celebrity stores project, in which JD Worldwide invites celebrities and KOLs to open
stores to bring more traffic to the platform
Recruit customers who are passionate about recommending products to become its influencers
and join livestreams and offline activities
Visit universities to select over 1,000 Key Opinion Consumers to increase its appeal among
young customers
Technology and data-driven business model that builds performance-based marketing
campaigns

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Case study

JD.com
Founded in 1988, JD.com is one of the two massive B2C online retailers in China and a prominent competitor to
Alibaba’s T-mall. JD has invested in expanding its warehouse network, expanding the quick delivery services in the lowertier cities, and strengthening its omnichannel offerings. JD is in a much better position with the Chinese Communist Party
than other Chinese stocks and is less sensitive to regulatory downturns.
Lately, JD is focusing on expanding into Europe and America. They recently opened two robotic shops by the new brand
name “ochama” in the Netherlands. The model merges online ordering and in-person pick-up shops and utilizes robots
to prepare the parcels and home delivery service. These locations mark the first omnichannel retailer in the Netherlands
that offers both food and non-food in one shopping app.
They also announced a deal with Shopify that will allow American merchants to access the Chinese market and vice
versa. Previously, it would take 12 months for international brands to begin selling in China, but JD has streamlined the
process, and its sales channel allows Shopify brands to get started in 3-4 weeks. JD will provide a supply chain network
with a global reach and end-to-end fulfillment service from the U.S. to China. JD will also provide intelligent translation
and smart price conversion services on the backend. Shopify will collaborate with JD to allow simplified access and
compliance for Chinese brands and merchants looking to reach consumers in Western markets.
Marketing
The celebrity stores project is where JD works with leading entertainment companies to invite celebrities and KOLs to
open stores to bring more traffic to the platform and improve the diversity of their customer base. It will also continue to
recruit customers who are passionate about recommending products to become its influencers and join livestreams and
offline activities. JD also goes to universities to select over 1,000 Key Opinion Consumers, especially those with strong
knowledge in vertical categories, in order to increase its appeal among young customers.

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MOVING CHINA BRANDS BEYOND BORDERS

Case study

Florasis
Founded in 2017, Florasis is a Chinese makeup brand. Western Europe, North America, Oceania and Russia are the first
regions to which Florasis has expanded overseas.
Florasis is famous for its intricately designed products imprinted with delicate floral designs. The target group of Florasis
customers is 20–30-year-old women, and the brand uses retro packaging and makeup concepts from traditional Chinese
style to stand out from the competition. The packaging and designs of Florasis capture the eye of consumers and is a draw
for the product. Florasis is also a master of storytelling, incorporating traditional Chinese legends and beliefs into their
products, packaging, and marketing efforts.
Marketing
Florasis actively uses TikTok to promote its cosmetics in foreign markets. The official TikTok account released content such
as unboxing videos of Florasis cosmetics, product reviews and make-up tutorials. In addition to the Chinese TikTokers,
Florasis also attracts Western TikTokers to make short videos.
The brand’s Instagram is steeped in traditional Chinese culture. They post tutorials and photos of Chinese KOLs using the
brand, such as make-up artist Emily Long. Florasis also hosts giveaways where subscribers can win cosmetics. The brand
shares subscribers’ stories showing the unboxing or application of Florasis cosmetics.
Florasis also has a Facebook page with links to Instagram, Weibo and the brand’s official website. The brand uses the
Facebook page to tell customers where the inspiration comes from.
Other than social media, Florasis also co-branded its products during New York Fashion Week. Florasis developed
co-branded clothing collections with two brands that hold Chinese heritage in high regard, including Sanzemeng 三泽梦,
a brand that sells the Chinese traditional clothing Hanfu that is popular among young Chinese, and the fashion brand
LUYANG BY YANGLU.

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Case study

miHoYo
miHoYo is one of the fastest-growing Chinese mobile game publishers. miHoYo is well-known for Japanese anime-style
action games. miHoYo’s action RPG, Genshin Impact (原神), has been successful both at home and abroad. More than
70% of the firm’s revenue came from overseas.
Genshin Impact is lauded for its breathtaking visuals, a massive open world, an interesting story, seamless combat system,
and soothing soundtrack. The game also has many playable characters; each has a unique voiceover and qualities.
Genshin Impact is not yet completed and is a long-term project. miHoYo announced a plan for several future updates which
will be implemented every 6 weeks, adding new content and features into the game to keep players excited. According to
the developer, it will take several years to complete the whole story content.
Marketing
miHoYo revealed the game at E3 2019, one of the largest video game conferences where developers and manufacturers
introduce upcoming games and gaming products to the world. miHoYo uploaded the first official YouTube video for Genshin
Impact that showcases beautiful in-game footage, raising public awareness of the game one year ahead.
miHoYo also utilized and turned the pre-registration process into a community event by creating a milestone rewarding
system in which players would receive more in-game rewards the more people sign up; thus, encouraging people to work
together and refer the game to their peers. With this marketing campaign, Genshin Impact achieved more than 10 million
pre-registrations on its official website. During the release period, miHoYo aggressively promoted the game through various
online channels. The firm invested in Google Ads to reach millions of people globally with video and image advertisements
that show real gameplay, story, and characters. The ads were different depending on their country of residence and other
demographical data.
miHoYo also uses social media like Facebook, Twitter, and Instagram to advertise and engage with the audience. They also
recruited gaming influencers to play the game, stream content, and encourage their fans to try the game. Besides online
channels, they also run offline advertising campaigns on billboards and public transport.

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MOVING CHINA BRANDS BEYOND BORDERS

Case study

SHEIN
Marketing
While established fashion retailers typically use Instagram to engage with their consumers, SHEIN partnered with
countless micro-celebrities on TikTok through its SHEIN Official Affiliate Program. This mutually beneficial partnership
allows the brand to expose itself to new audiences, while giving many small influencers a chance to receive free clothes
and other products from SHEIN.
The program also allows its affiliates to post TikTok videos of their #SHEINhaul, which parades an array of trendy outfits
to their online fans. The hashtag went viral, especially among Gen Z consumers, who look to the TikTok hashtag trend
as a source of fashion inspiration. Some even participate to express their pride in finding low-cost items that replicate
high-end looks. As a result, SHEIN created an environment that allowed shoppers to feel smart and savvy in finding,
purchasing and owning the “perfect” outfit.
SHEIN uses user-generated content for its promotional activities. In blogs, articles and videos, the idea is to connect with
content creators and real-time users to make convincing stories about their products. Younger consumers have trust
issues with celebrity endorsements, as people know that celebrities are paid to do the promotion. With real-time users,
they have higher level of reliability. Highly rated products sell out faster.
SHEIN has implemented gamification into its app, rewarding customers with points for frequent cumulative logins, playing
its in-app minigames and leaving reviews as younger shoppers spend more time on mobile devices. In May 2021, it
surpassed Amazon to become the most downloaded shopping app in the United States.

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Case study

Perfect Diary
Perfect Diary is an e-commerce-based cosmetic brand. Founded in 2016, the Yatsen-owned brand has quickly
conquered China’s cosmetics market with its slick marketing tactics and deep understanding of what makes its young
consumers click.
The company is committed to exploring trends in international cosmetics and provide easy-to-use products for young
Asian women. Perfect Diary launched co-branded cosmetic products with KOLs, idols and even organizations like the
British Museum.
With Southeast Asia’s beauty market expected to be worth $47.1 billion by 2025, Perfect Diary chose the region as its
first destination abroad. And in just one year, the brand top cosmetics categories in Malaysia, Singapore, and Vietnam.
Marketing
To break into the highly competitive western beauty market, Perfect Diary started to work with beauty Youtubers. Kelly
Strack, a famous beauty guru with over 886K subscribers, posted a video named “Testing New Makeup Brand Perfect
Diary” in collaboration with the brand. One of the first American Youtubers that Perfect Diary worked with, the video
attracted over 50K views and over 300 comments. Majority of the comments mentioned they never heard of this brand
before. The video was released only a week before Black Friday, and Perfect Diary was able to gain a wider consumer
base and a possible sales boost.
Perfect Diary appointed Troye Sivan as its brand ambassador for a collection. Although it was officially promoted in
China, the videos featuring the music artist were uploaded all over online platforms in western countries such as Twitter,
YouTube and Instagram. The population base is much smaller in Western countries, but the market for beauty products
is relatively more saturated than in China. Having products promoted indirectly on Western social media platforms is an
effective channel to westward expansion without setting up bricks-and-mortar stores early in the expansion process.

12

MOVING CHINA BRANDS BEYOND BORDERS

Case study

Shang Xia
Shang Xia, founded in 2009, offer high-quality products with a contemporary twist on traditional Chinese aesthetics and
crafts.
As a Chinese luxury label backed by the international luxury brand Hermès, Shang Xia’s products include ready-to-wear,
leather goods, accessories, furniture and home accessories. The products are designed to fill the nostalgic gap left by
the Cultural Revolution when many traditional Chinese artefacts were lost. Each piece is delicately crafted with all raw
materials sourced from within China.
Marketing
One huge obstacle that stood in the way of the success of Shang Xia’s initial brand communications was “How does one
make the concept of “Made in China” ultra-chic?”. The negative association of Made in China products as being poor in
quality was an issue that Shang Xia had to tackle head-on.
To do this, they created a digital campaign surrounding a mysterious masked man travelling from China to bring “culture
seeds” to Paris. The campaign’s high-end aesthetics generated organic conversations on Sina Weibo, one of China’s
most popular social media websites. The campaign garnered over six million views on social media platforms and
provided Shang Xia with exposure in the initial launch days.
Shang Xia lands in Paris through an exclusive collaboration with the Musée des Arts Décoratifs, coinciding with the
celebration of the Chinese New Year. They wanted to attract French customers through this new collaboration and
introduce its historical “savoir-faire” to the European public.

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HOW R3 CAN HELP

14

Agency
Review

Like an executive recruitment consultant helping you find new
staff, R3’s Review process helps you reduce risk and maximize
the value of your new agency hire. We leverage our latest agency
market insights and benchmarks for fees to conduct a thorough
and efficient search process. Our objective is to create a long-term,
mutually profitable partnership of talent that will drive brand and
business growth.

Agency
Remuneration

A successful client-agency relationship is one in which both goals
and expectations are aligned. That relationship requires periodic
checks to make sure both parties are still aligned and to rectify
any issues promptly to ensure continuous improvement. It is
important that a sound compensation structure is in place – one
that works to align expectations through set Key Performance
Indicators and Performance Based Remuneration. Regular
updates to share feedback and expectations allow agencies
to be informed of their performance at an early stage so that
improvements can be made accordingly.

Agency
Relationships

Finding someone to wed is never as challenging as keeping the
marriage intact year after year – it requires work. Our Relationship
Management tools differ from most in-house or self-administered
tools in that they focus on the future, not the past – to ensure the
right expectations can be set.

MOVING CHINA BRANDS BEYOND BORDERS

About R3
OUR REASON FOR BEING
In a word, we are about transformation. R3 was
established in 2002 in response to an increasing
need from marketers to enhance their return on
marketing, media and agency investments, and to
improve efficiency and effectiveness.
We want to help CMOs make marketing
accountable.

RETURN ON AGENCIES
We help marketers find, pay and
keep the best possible agency
relationships – covering Creative,
Media, PR, Digital, Social,
Performance, Event, Promotions
and CRM.

OUR BACKGROUND
We’ve worked with more than one hundred
companies on global, regional and local
assignments to drive efficiency and effectiveness.
We have talent based in the US, Asia Pacific and
Europe and partners in LATAM and Africa.

We take the lead on improving the
Integration process through
proprietary software and consulting.

Through global work for Samsung, Coca-Cola,
Johnson & Johnson, Visa, Unilever, and others, we
have developed robust benchmarks and process
targets for more than 70 countries.

What we do
We are an independent transformation
consultancy hired by CMOs to make their
marketing more measurable and accountable
to business impact.

How we do it
•

We invest in the best talent, bringing in senior leaders
from marketing, agency and analytic backgrounds.

•

We’re independent. Because we’re not your
marketing team or agencies, we’re empowered
to be honest and transparent.

•

We use external benchmarks. We have
proprietary data pools to inform our in-depth analysis.

•

Since 2002, we’ve interviewed more than 2,000
marketers about their agency relations.

•

Since 2006, we’ve spoken to more than 80,000
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continue to do so every three months.

•

We have co-developed software to measure
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•

Each month, we exclusively track over 500 agency
new business wins, as well as 100’s of deals in the
marketing M&A space.

•

We have insight into global best practice. We work
with companies who want to do best-in-class
marketing across diverse categories and geographies.

•

We authored the book “Global CMO” about marketers
leading Digital Transformation around the world.

•

We maintain an ongoing database of media costs
for key markets.

Driving
Transformation for
Marketers and Their
Agencies

RETURN ON MEDIA
We offer professional analysis of
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buying with proprietary benchmarks
and tools to set and measure
performance.
We conduct financial audits to
validate and benchmark
transparency.

RETURN ON investment
Using a bespoke and proprietary
methodology, we help benchmark
and provide insights into how your
digital strategies perform in your
category and across categories.

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Contact us
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