Why China is 10 years ahead in social commerce

Social media platforms are moving to e-commerce, and e-commerce players are developing their own social platforms in an epic clash of the titans between heavyweights Alibaba and Tencent.

In the largest market in the world, there’s a fierce battle being fought in social commerce. And there’s a lot to be learnt.

Chinese netizens are massive creators of content while their Western counterparts are mainly spectators. The population on social media platforms in China is older, while the population with disposable income is younger.

The result of these two opposite trends is a very small overlap in the West between the population on social media and brand consumers. Hence the difficulties for Facebook to monetise its platform with brands without putting off its members. In China it is the reverse, the huge overlap makes social media platforms a natural battleground for brands.

If the demographics explain the better fit between social media and brand engagement in China, it is the origin of the development of social media which explains why Chinese are such avid content creators. There, the adult Chinese population, isolated by the vastness of the country and the lack of family social life resulting from the one-child policy, jumped on this new tool to redefine social ties and create communities in defiance of authorities, media and institutions they did not trust.

The result is 300 million people who will never make a purchase without having first collected all the existing information on the net plus the experiences and opinions of their peers on both social and e-commerce platforms. In China, 75% of all online users post ratings and reviews at least monthly. In the US and Europe, the figure is less than 20%.

Social media is a small component of the overall marketing activity in the West; it is the backbone of any brand engagement in China.

Generally speaking, Western brands are not capitalising on the social nature of online shoppers in China, and it is largely the local players that have embraced social components on their e-commerce platforms, having understood that user-generated content is even more important in China than elsewhere.

Western companies need to stop thinking that Chinese companies are merely copying what they do. They improve, add functionalities and transform them to fit behaviour. Companies such as Taobao, Tmall, Jingdong and Meilishuo offer highly sophisticated product recommendations that drive transactions and increase average order value. Mobile app WeiXin (WeChat) has the messaging functionality of WhatsApp plus geo-localisation, mobile e-commerce features, and a rechargeable mobile wallet.

China is 10 years ahead when it comes to the use of social media, online and mobile shopping. Marketers would be wise to anticipate this development by watching China’s trends, technology developments and user behaviour very closely.

Vincent Digonnet is executive chairman of Asia Pacific at Razorfish.