It's Not Too Late! Introduction to China Inbound & Cross-Border E-Commerce [6]If you're doing cross-border e-commerce in China, ride the "infinite loop of purchasing behavior"!
Population: Approximately 1.4 billion.
The world's companies are now focusing on China's e-commerce market.
Cross-border e-commerce into China is relatively easy to enter, even from Japan. In fiscal year 2021, cross-border e-commerce from Japan to China alone reached a scale of 1.9 trillion yen (※1). This is a massive market that cannot be overlooked, not only for large Japanese corporations but also for SMEs.
※1 Source: Ministry of Economy, Trade and Industry "Report on the Fiscal Year 2020 Industrial Economy Research Commissioned Project (Market Survey on Electronic Commerce)"
This time, we focus on Douyin (TikTok), a short-form video platform boasting over 600 million daily active users (※2) in China.
※2 https://jp.reuters.com/article/china-bytedance-idJPKBN2661HU
Within Douyin, companies can leverage video content for sales promotion and branding, and directly sell products using its e-commerce functionality. Consequently, many companies outside China, including those from Japan, maintain official accounts and actively engage on the platform.
Junji Mizuno of Dentsu CXC, specializing in China business, introduces the appeal of cross-border e-commerce with China using "Douyin E-commerce" (hereinafter referred to as Douyin EC).
<Table of Contents>
▼Why China's Young and Old Are Obsessed with Short Videos!
▼What is the "Thorough Verification Approach" in Chinese Consumer Behavior?
▼Douyin EC's Proud Recommendation System
▼Is Chinese Purchasing Behavior Built on an "Infinite Loop"?
▼The 6 Phases Composing the Infinity Model
▼Douyin EC Global and Dentsu Group's Initiatives
In China, people of all ages are hooked on short videos!
China is experiencing astonishing digitalization across all sectors. The impact of mobile device proliferation is particularly significant, enabling everyone to access diverse information.
As a result, Chinese people now spend more time on mobile devices than with mass media, with short-form video platforms dominating their usage time.
Douyin offers a wide variety of content, from news to familiar Chinese family-themed skits, functioning as a comprehensive information media platform.
Its recommendation system tailors diverse content to users' preferences, making it popular with everyone from children to the elderly.
Douyin is not only a platform for enjoying video sharing but has also become a massive e-commerce marketplace.
What is the "thorough verification principle" in Chinese consumer behavior?
Before discussing Douyin e-commerce, let's first examine recent trends in Chinese consumers' behavior.
In recent years, Chinese consumers have become increasingly strict about product quality and safety, placing greater emphasis on a manufacturer's "trustworthiness" when making purchases. As a result, the effectiveness of traditional advertising has diminished, and the trend where "simply running ads doesn't easily lead to purchases" is even more pronounced than in Japan.
At the core of this consumer behavior, where people are reluctant to trust information originating from companies, lies what could be called a "thorough verification approach." No matter how appealing a product is, without "trust," it won't lead to a purchase.
One key point for product communication in China is leveraging information shared by individuals trusted by consumers. For example, content marketing utilizing creators known as "KOLs" (Key Opinion Leaders) is thriving.
Chinese consumers carefully evaluate information obtained from trusted KOLs and other sources, cross-referencing it with word-of-mouth before making a decision. They only proceed to purchase once they have reached a certain level of "certainty." This tendency is particularly pronounced among the 20-40 age group, who are frequent e-commerce users.
Douyin EC's Proud Recommendation System
In recent years, China has transitioned from traditional product-centric e-commerce to a new era of commerce centered around people and content, dubbed "Interest Commerce." Within this shift, Douyin was quick to launch its content-focused Douyin EC.
Interest-based commerce is characterized by the principle that "products find people, rather than people finding products."
Douyin EC's recommendation system is particularly outstanding, effectively reaching users interested in specific content. This recommendation system is the very heart that makes Interest Commerce possible.
Related articles on Douyin's recommendation system
China Cross-Border E-Commerce on a Video Social Platform Used by 600 Million People Daily!
So, what's the difference between traditional e-commerce and interest-based commerce on Douyin EC?
Traditional e-commerce starts by running ads to attract a large audience. From there, the numbers decrease through a marketing funnel: "people who show interest," "people who make purchases," and "people who become loyal users." This approach requires significant marketing investment to acquire new customers.
Interest commerce is different.
Ads and video content spread through the recommendation system. Users who see this content purchase products and then post UGC (user-generated content) like reviews or videos on Douyin. The recommendation system then spreads this new content... creating a loop. Once the business gains traction, it can snowball and grow exponentially, even with reduced new customer acquisition costs.
This recommendation system is exceptionally effective, delivering "good content" to the right users with remarkable precision.
This has created a new trend: companies can gain fans and loyal users simply by creating and posting "good content," without needing to increase ad spending.
Furthermore, Douyin EC features the "Douyin Mall" function, allowing users to purchase products directly within the app without redirecting to external sites (※). It also offers robust search and mall functionality comparable to traditional mall-based e-commerce platforms.
※Douyin Mall = The collective term for Douyin's e-commerce services is "Douyin EC." The "shelf-style e-commerce functionality," newly added in 2022 and identical to that of traditional e-commerce malls, is referred to as Douyin Mall.
It also supports "live commerce," where sellers directly sell products to users during live streams. Douyin has evolved into a platform capable of supporting all layers of e-commerce, not just "interest-based commerce."
With such robust e-commerce capabilities, renowned global companies and brands are now expanding their sales channels onto Douyin EC.
Is Chinese purchasing behavior built on an "infinite loop"?
Marketing in the Chinese market fundamentally involves the back-and-forth between Seeding (building trust) and Harvesting (driving sales).
As mentioned earlier, Chinese users place great importance on "trust" and are cautious about purchasing products or services.
Therefore, the strategy involves not only "obvious advertising" but also creating daily entertaining video content and implementing live commerce initiatives. This fosters an environment conducive to generating "authentic UGC (user-generated content)" like word-of-mouth and KOL posts.
This builds consumer trust on the platform and increases potential customers.
Once a solid "foundation of trust" is established, sales-inducing measures like ads and campaigns are implemented to convert potential customers into buyers. This is the fundamental marketing flow on Douyin EC.
The key point is that Seeding and Harvesting are not about "ending once a purchase is made."
The true essence of Douyin EC lies in this "infinite loop": a purchase triggers new content creation, and that content attracts new customers.
Videos "shared" by users trigger widespread "exploration," leading through "empathy" and "verification" to "purchase." When users who actually use the product become "convinced" it's good, they "share" it again, creating a new cycle.
We at Dentsu Inc. CXC abstracted this infinitely and seamlessly circulating interest commerce purchasing behavior and named it the 'Dentsu Inc. Infinity Model.'
We at dentsu CXC have abstracted this infinitely and seamlessly circulating interest commerce purchasing behavior and named it the "Dentsu Inc. Infinity Model. "
The Six Phases Composing the "Infinity Model"
Finally, we explain each phase of the Infinity Model within Douyin EC.
【Exploration】
High-precision recommendation systems display brands and products likely to interest users based on their preferences, even when browsing casually, sparking their interest. Powerful search functions also deepen product understanding during exploration.
【Connection】
Users who comment or like a post thinking, "Oh, this is nice. Might suit me," receive recommendations for related content. These recommendations are highly accurate, and frequent exposure to similar products helps increase interest.
【Verification】
Users can thoroughly evaluate whether a product is truly trustworthy by viewing others' posts and review videos. Using Douyin EC's search function, they can search for products and reviews to compare and consider options. Furthermore, for Chinese consumers who strongly believe "buying at full price instead of sale price is a loss," the ability to compare prices across different e-commerce sites within Douyin EC is a crucial feature.
【Purchase】
When users are watching videos or live streams and feel "This is pretty nice!" or "This is exactly what I wanted!", their purchase intent peaks. At that exact moment, they can seamlessly proceed to purchase the product without being redirected to other e-commerce sites.
【Confirmation】
Even after purchasing, users adhere to a "thorough verification principle," checking reviews from similar users to confirm the product's reliability and usage. Ultimately, they gain the conviction that "I made the right choice buying this," along with a sense of validation for acquiring a good product.
【Sharing】
Driven by the validation desire sparked during the "verification" phase, users proactively create and post video content and word-of-mouth reviews. Douyin EC makes video editing and posting simple for anyone, facilitating easy sharing and dissemination. This content is then widely distributed through the recommendation system, perpetuating the cycle to new users.
This is the Infinity Model: all phases occur seamlessly within a single platform, creating a continuous loop that expands infinitely.
To sell products on Douyin EC, you must build your strategy aligned with the Infinity Model, appropriately combining "advertising content," "non-advertising content," "live commerce," and other elements at each phase.
In future sessions, we will introduce specific Douyin EC utilization methods by theme, including "creating more effective videos," "utilizing KOLs," "live commerce," and "account management."
Douyin EC Global and Dentsu Group Initiatives
The Dentsu Group has developed original solutions and sales packages for Japanese companies' cross-border e-commerce in China, leveraging the services of "Douyin EC Global," which operates Douyin EC.
- You're already doing cross-border e-commerce but are dissatisfied with sales growth or advertising ROI, seeking new approaches or breakthroughs.
- Want to start small overseas using short-video platforms while keeping initial investment low.
- For overseas business, you seek not just outsourcing partners, but business partners who will grow together with you.
- Want to be among the first to implement cutting-edge "Interest Commerce" and accumulate know-how and insights applicable to future domestic business.
If you are interested in cross-border e-commerce targeting China, please feel free to contact Dentsu Inc. CXC!
Business Transformation Division, Dentsu Inc. China Xover Center
＜ dentsucxc@dentsu.co.jp＞
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Author
Junji Mizuno
Dentsu Creative
Originally from China. Responsible for developing new direct, e-commerce, and D2C Inc. ventures for clients in Japan, managing promotional PDCA cycles, and formulating and implementing CRM strategies. Since 2016, has gained broad experience across diverse fields including business design for Japanese clients' cross-border e-commerce in China, PDCA implementation for initiatives, and solution development and promotion design utilizing data clean rooms in collaboration with Japanese e-commerce platform providers. Seconded to Dentsu Inc. since 2023. Specializes in designing integrated marketing strategies that combine branding and sales through the utilization of purchasing data and CDPs for Japanese companies, along with verifying their effectiveness.
