Advertising and Retailing on Internet Channels in China

To stay relevant in the changing consumer landscape of China, retailers and consumer service firms must tap into the rapidly growing Internet user base in China, exploiting both advertising and commercial channels. In this article we will explore how to engage Tencent’s WeChat, Alibaba’s Taobao, and Sina Weibo to reach Chinese consumers.  Throughout we will review how firms can protect their trademarks in the Chinese market.

Firms coming to china should be wary of Chinese trademark laws. Trademarks are granted on a first come, first serve basis in China. When a foreign enterprise chooses to bring a product to market in China, they can be prevented by a situation where a regional Chinese authority grants the trademark of the foreign product to a local Chinese company. Re-acquiring a trademark can be lengthy and costly for the foreign enterprise.

WeChat

WeChat is a glorified instant messaging app that includes voice, walkie-talkie, and multimedia interfaces. Users can create contacts with friends, celebrities, and brands by searching the app’s user database or (the much more popular method) of scanning QR codes either generated by the app on-screen or advertised in print. WeChat is primarily used on mobile (available on Android and OSX) but also has a downloadable app for PC and Mac.The vast majority of WeChat’s over 350 million users are in their twenties and engage in over 700 million location-specific actions every day, and send billions of messages. WeChat is the third most popular search on Chinese mobile devices. Firms should leverage WeChat in their marketing plans to engage young consumers in the Chinese market.

To engage consumers, marketers should make their QR codes available for scan in print (shops and advertisements across China boast the codes, consumers know they are for WeChat) or on digital advertising to attracter followers on WeChat. Once the advertiser is in the customer’s pocket, non-aggressive, text message-like communications with the customer are the norm.

Advertisers should be weary of two things. First, the consumer has invited them into their pocket, and while this nearly guarantees that messages will be read, the privilege should not be abused. Second, WeChat is a two way street. Advertisers should be prepared (or have the infrastructure in place) to respond to consumer’s responses (whether in person or digitally).

Taobao

Taobao is China’s eBay and Amazon (in other words it is utterly popular and breathtakingly large) owned by international Internet giant Alibaba. Taobao has popularized consumer-to-consumer (C2C) sales in the style of eBay. While Taobao is famous for c2c sales, b2c sales are growing. If you can buy it in China, you can buy it on Taobao.

Taobao is the most popular search on all computers in China and the second most popular on mobile devices. Taobao was a major part of the 2012 boom that increased online shopping in China by a breathtaking 60%.

Selling on Taobao requires that a firm a) has a business registered in China and b) has a bank account registered in China. For a discussion on types of businesses in China (and the tax implications of each) please watch the following video.

Sina Weibo

Sina Weibo is the WeChat of the over-twenties of China.  If Facebook and Twitter merged, it would look something like Sina Weibo (which, in fact, was created to fill the void the Chinese government ban on the two American social media sites created).

While the advertising on Sina Weibo creates a less personal advertisement than WeChat, the reach of the advertising is much larger. 50% of users indicate that that they access e-commerce if they notice mention of a certain brand while online, another 28% actively search for brands (the average user follows over eight).

Advertising on Sina Weibo offers another distinct advantage- the demographic. 55% of users were born in the 80’s. Of all users 61% have a bachelor’s degree. Companies looking to reach the older, more educated demographic have a friend in Sina Weibo.

Before firms begin to advertise on Sina Weibo, they should be certain their trademarks are all registered. As discussed above, trademarks are granted on a first come, first serve basis. Trademarks are also granted on a regional basis. Please read this article about protecting your intellectual property.

	Richard Hoffmann is a Partner at ECOVIS Beijing China. Richard obtained an honor’s degree in law and worked in Germany, America and China for various prestigious law firms prior to joining ECOVIS. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV. Contact: richard.hoffmann@ecovis.com
Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter or give us a call  +86 10-65616609 (ext 811/806)   or contact us directly via Beijing@ecovis.com