China is an irresistible target for performance marketers — if they know how to crack the language and culture barriers.
Why is China so tempting? For one thing, China is the world’s largest smartphone market. Approximately one quarter of the two billion smartphones in use worldwide are in China, and more than 75 percent of the population will own a mobile phone by the end of 2016. And it looks like China will increase mobile ad spend by 58 percent this year.
The challenge for performance marketers is not just understanding the Chinese language; it’s also difficult to determine where Chinese mobile users and consumers spend their time online.
One interesting development is that, as TUNE noted earlier this year, many Chinese consumers are interested in cross-border e-commerce. Mobile users and others in China are searching for foreign products, from infant formula to designer bags. In fact, the luxury consulting firm Fortune Character reported that China bought nearly half of all luxury goods purchased globally in 2015.
However, middle-class and luxury consumers make up just a small fraction of China’s 1.36 billion people. To be efficient and to compete effectively, performance marketers need to know where these consumers are.
China’s top 5 cities for performance marketers
Chinese cities are classified according to tier. “Tier One” cities include instantly recognizable names such as Beijing and Shanghai. “Tier Two” cities, on the other hand, are mostly unknown to those outside of the country. These smaller locations may be of interest to savvy performance marketers. According to the McKinsey iConsumer China 2016 Survey, consumers in “Tier Two” cities spent the highest proportion of their disposable income on luxury goods from foreign vendors.
Since there are so many cities to choose from, it can be overwhelming when considering where to start. Fortunately for performance marketers, the Milken Institute has released comprehensive report on the best-performing cities in China.
In a piece for CityLab, New York University professor of global research Richard Florida examined the results and came up with observations about China’s top-performing cities.
According to the Milken Institute survey, Chengdu tops the list of first- and second-tier cities in China. An inland city in Sichuan, Chengdu is one of the fastest-growing cities in the world. Its competitiveness is based on more than just growth; Chengdu has strong aerospace and electronics manufacturing industries that support a growing middle class.
“I highly recommend Chengdu and Chongqing, two very westernized cities in China. Many gaming companies and developers are here, as well as some affiliate networks,” said Stephanie Wang, account director at Mobvista. “People like to spend money on brands or popular things while they have higher consuming power than the average consumer, so they can be more easily incentivized by effective marketing campaigns.”
Familiar to many people outside of the country, this financial hub has developed a savvy and sophisticated urban population that is eager to purchase foreign goods online.
“Shanghai is one of the top three cities in China for both GDP and high-tech industry, especially for the Internet. The top players of advertisers are usually located here for talent, partners and funding. Consequently, large networks come here to stay close to them,” said Diego Yu, COO of Mobisummer.
Over the last 20 years, the wide range of industries and development as a financial center have boosted the economy. Its location between the sea and Beijing has helped Tianjin’s growth in northern China. It was named the “New Wall Street” in China by Forbes in 2008, and the city’s Fifth Avenue area has seen a number of banks open since then.
Another seaport city like Tianjin, Dalian’s economy focuses on foreign trade and supporting foreign investments. These steps have been producing results as it ranks first of all cities in China in foreign direct investment (FDI) and GRP. Sometimes referenced as the Hong Kong of northern China, marketers should take interest because of its sophisticated and relatively affluent population.
Nanjing has had great job and wage growth due to several key development zones and industrial parks. It was the top-ranked manufacturing city in China in 2008. Translating to “southern capital,” Nanjing has a strong economic based and large transportation network.
Bonus tip #1: Check out smaller cities
Housing shortages and a relatively high cost of living in metropolises such as Shanghai and Beijing are powering growth in smaller urban centers like Suzhou. Researching these top-performing smaller cities may pay off for performance marketers.
Bonus tip #2: Partner with a local network
It’s always wise to seek out qualified help when attempting to tackle a new market (and different culture) like China. Performance-based mobile ad platform DU Ad Platform by Baidu is an emerging and trusted mobile ad network in China. The company aims to reach and impact the most customers globally, and succeed as a global network.
China’s economy may be transforming into a slower-growth model due to domestic demand. Because of that, a large mobile audience and an emerging middle class hungry for foreign luxury products present many opportunities for performance marketers. The major challenge is identifying the locations of these top consumers.
Fortunately, China’s hundreds of “tiered” cities are evaluated and ranked according to economic performance and potential each year. For performance marketers willing to do some research and reach out to potential in-country partners, China is a great investment for performance marketers the coming year.
Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. After living nearly a decade in San Francisco and Seattle, she has returned to her home of Charleston, SC, where you can find her enjoying the sun and salt water with her family.