US Insights

The 3 Fast-Growing Markets Chinese Brands are Eyeing

Martin Guo

Editor-in-Chief, Kantar China Insights

Brands 04.17.2019 / 09:00

3 oppo markets cover

Kantar has identified hotspots of potential growth for Chinese brands.

WPP and Kantar recently jointly launched 2019 BrandZ™ Top 50 Chinese Global Brand Builders Ranking report in Beijing. Using Google search index, Kantar research and other sources, we have identified in the report three hotspots of potential growth for Chinese brands in specific product and service categories and we offer guidance on how they can best seize these opportunities.

Opportunity 1: Automotive in the Middle East

Why here and why now?

The Gulf Cooperation Council (GCC) states of Bahrain, Saudi Arabia, Oman, Qatar and Kuwait are highly urbanized, and their citizens are both highly affluent and highly connected – a powerful combination. Incomes are around triple the global average here, and, in Qatar, the richest of the Gulf states, GDP per capita is over US$124,000.

Internet penetration is nearly 90%, and smartphone usage is soaring. In Saudi Arabia, for instance, smartphone ownership has risen by 50% over a five-year period, and the average number of connected devices each consumer owns has grown from two to three.

What you need to know

There are no domestic car brands, so buyers have to look internationally. Google search index shows consumers are primarily looking for luxury German cars and in the mid-range are browsing Japanese and US brands. SUVs, luxury, vehicles and sports cars are the most popular model types.

In such an affluent market, price is barely a consideration; buyers’ priorities are quality, brand, performance, design and other features.

This is a highly connected market. Take Saudi Arabia as an example: 85% of Saudi car buyers say that watching car-related videos online helps them choose, and one-third of those say that watching videos means they’re willing to skip a test drive and just buy.

EN Mid -east Auto Search

How to make your move

Automotive brands looking to tap the huge opportunity we see in the GCC countries would do well to focus their energies around the following three data-driven recommendations:

Product

Offer the right models and vehicle sizes to match local buyers’ preferences: SUVs, super-luxury, sports cars, sedans and pick-up trucks.

Positioning

Stand out from the Japanese, US and European alternatives through a focus on brand, quality, design, performance and other buyer priorities.

Marketing priority

Put a digital focus on communications, especially online video.

Opportunity 2: E-commerce in India

Why here and why now?

This is a vast market of increasingly affluent, young consumers – almost half the population is aged under 25, and the Indian economy is growing at close to double the global pace (over 7% in 2018).

Internet connectivity is low by world standards, but it is on a steep growth trajectory. Penetration of Internet access has shot up from 17% to 35% between 2013 and 2017, with smartphone usage tripling in that time thanks to rising incomes and the availability of less expensive handsets.

What you need to know

While e-commerce accounts for just 2.9% of total retail sales, the scale of the sector is tremendous; online sales in 2018 alone were worth US$32.7 billion. Growth under way in this sector is seismic.

According to eMarketer, the value of e-commerce sales in India is expected to more than double by 2022, to almost US$72 billion a year. Fewer than a quarter of Indians are now shopping online; in four years, that figure will be over 40%.

Mobile devices and accessories is the category most often purchased online in India. Of all other categories sold online, FMCG and fashion (for men and women) drive the most shopper traffic.

The autumn festival season is a huge opportunity to capture online sales. Almost a quarter of annual e-commerce revenue is raised in this period. Google search index shows consumer interest typically surges in the two to three weeks ahead of key festivals such as Diwali, and shoppers are looking for festival-specific clothes, shoes and other items. Consumers are seeking to balance price and brand; in India, good value doesn’t mean the cheapest deal.

EN India Online Categories

How to make your move

E-commerce brands looking to expand into the high-potential Indian market are advised to build their strategy around the following three areas:

Product

Drive traffic with in-demand items such as fashion, FMCG goods, mobile phones and accessories.

Positioning

Highlight the brand strengths not just of available products but of online platforms themselves.

Marketing priority

Plan well ahead for the festival season. Share in the celebratory mood to match the way buyers are searching ahead of festivals. Highlight value and brand strength, and consider celebrity collaborations, which drive particularly high engagement.

Opportunity 3: Smartphones in Indonesia

Why here and why now?

Indonesia is the fourth-biggest country by population, it’s young (average age: 30), and the level of adoption of smartphone-based internet is world-leading. GDP is growing at over 5% – strong by world standards – and this is unlocking disposable income for consumers.

Internet penetration has rocketed from just 29% in 2013 to 56% in 2017, and the majority of connections are via smartphone. In fact, 91% of Google searches in Indonesia are made using a smartphone or tablet.

What you need to know

While smartphone sales are in decline globally, in Indonesia, they’re still on the rise, up by 14% year-on-year in 2018, compared to a worldwide decline of 4% over the same period. This reflects the huge numbers of Indonesians who are buying their first smartphone; in many developed markets, growth is stagnant as penetration is universal and the desire to upgrade has waned.

There’s another phenomenon at play, too, which provides a second layer of opportunity. The average selling price of handsets has risen 7% in a year – in line with growth in consumer spending power. This signals that existing smartphone users are looking to upgrade, and they’re willing to pay a premium for more advanced models and brands. Search index shows buyers are balancing style with function when making a choice.

EN Indonesia Smartphone Factors

How to make your move

Smartphone brands with plans to enter or expand in Indonesia should bear in mind the following points of guidance:

Product

Low prices aren’t everything; balance value with the features consumers seek, focusing especially on design and photo-related functions for the premium buyer.

Positioning

Consumers have a vast degree of choice, so brands need to differentiate their positioning. Shifting from entry level to a premium offering is part of this.

Marketing priority

Rising connectivity and the media habits of young Indonesians demand that brands make a commitment to expanding their digital presence. Communicate product innovation and brand superiority.

To download the full report in English and Chinese, please click here .

Source: Kantar

Editor's Notes

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