What’s the Story?

Chinese New Year, also known as Spring Festival, is an important calendar event for brands and retailers targeting the China market. This year, the holiday falls on February 11–17. In this report, we discuss the opportunities that Chinese New Year presents for international brands and retailers, with examples of festive marketing campaigns that we saw for the holiday in 2020 as well as those we have seen so far in the lead-up to the 2021 event. Building on these observations, we offer five key strategies that international brands and retailers can employ to engage meaningfully with Chinese consumers for this year’s holiday and for the Spring Festival in future years.

Why It Matters

Chinese New Year is the most important holiday of the year in Chinese culture, with consumers shopping for a range of holiday merchandise such as decorations and gifts, as well as for new clothes, in the lead-up to the event. Retail sales in China during the Chinese New Year holiday increased steadily between 2011 and 2019 (see Figure 1). In 2019, the retail sales during the Spring Festival week (February 5–11) exceeded ¥1.0 trillion ($154.9 billion), up 8.5% from 2018, according to China’s Ministry of Commerce. However, the 2020 holiday is likely to have been significantly impacted by the Covi-19 outbreak, and we estimate that total retail sales dropped by 20.5% to ¥799 billion ($123.1 billion) during the Spring Festival week (January 24–30) as a result. For 2021, we estimate that retail sales during Chinese New Year will once again see growth, increasing by 19.7% to $957 billion ($147.4 billion), though not reaching the level of 2019. Figure 1. Retail Sales in China During Spring Festival (USD Bil. at Constant Exchange Rate) [caption id="attachment_121605" align="aligncenter" width="700"] Source: China’s Ministry of Commerce/Coresight Research[/caption]  

Five Strategies for International Brands and Retailers To Capitalize on Chinese New Year

With Spring Festival in China fast approaching, we look into the key strategies and marketing campaigns that brands and retailers can employ to capture a late share of consumer spending during the 2021 holiday and plan ahead to implement for Chinese New Year in future years. We present examples of what we saw from international brands in 2020 and have seen so far for the 2021 holiday. Figure 2. Five Strategies for International Retailers To Capitalize on the Chinese New Year Holiday [caption id="attachment_121606" align="aligncenter" width="700"] Source: Coresight Research[/caption]   1. Launch Themed Products, Exclusive Items and Sets for Chinese New Year Creating Chinese New Year-themed products or exclusive items and sets is a popular strategy for brands and retailers to engage with Chinese customers. Often, these use the color red, which traditionally symbolizes good fortune in Chinese culture, as well as the relevant zodiac sign for that particular year: With 2021 being a year of the ox, many brands have integrated an ox motif into their collections. Burberry revealed its 2021 Chinese New Year campaign at the end of 2020, which features a limited-edition Thomas Burberry monogram featuring ox imagery. [caption id="attachment_121607" align="aligncenter" width="700"] Source: Burberry[/caption]   At the end of 2020, Converse teamed up with NIKE’s Jordan Brand to launch a range of footwear and apparel in honor of Chinese New Year 2021. The capsule collection consists of color schemes and materials that draw inspiration from Miaohui (meaning Chinese “temple fairs” or festive gatherings). According to NIKE, the collection’s designs fall under three themes: “the explosive firecracker, the artisanal Chinese knot and the naturalistic spring blossom.” [caption id="attachment_121608" align="aligncenter" width="700"] Source: NIKE[/caption]   The North Face has launched a capsule collection for Chinese New Year 2021. The materials of the iconic Mountain Light Jacket and hoodies in the collection have a floral design featuring ox imagery, and the product is available in a variety of colors, including red. The T-shirts in the collection feature similar patterns in a prominent graphic. [caption id="attachment_121609" align="aligncenter" width="700"] Source: The North Face[/caption]   2. Create Branded Red Packets, Stickers and Games On digital channels, brands and retailers can introduce branded red packets—monetary gifts given in China during the holidays and on other special occasions—as well as stickers and games for the Chinese New Year. To effectively leverage this opportunity to increase customer reach and engagement, international brands can partner with Chinese social media platforms such as WeChat. Brands including Gucci and Disney created customized red packets on WeChat for the 2020 Spring Festival. When WeChat users opened the red packet via the dedicated campaign page, they would be entered into a lucky draw to win coupons and discounts. NIKE collaborated with WeChat to create customized stickers displaying the brand’s logo. When WeChat users typed “NIKE” into a chat during the Chinese New Year 2020, an on-screen animation of raining stickers would appear. Tapping a sticker would redirect users to a dedicated WeChat mini program, through which they could obtain coupons for discounts on NIKE products, such as ¥50 ($7.70) discounts on orders over ¥500 ($77.30). As part of its Chinese New Year 2020 campaign, Burberry launched an online platform game called Ratberry, in which the central character (pictured below) was designed in honor of 2020 being a year of the rat. Burberry used this game to increase engagement with consumers. The brand also released Chinese New Year stickers on WeChat, featuring the Ratberry character and products from Burberry’s Chinese New Year capsule collection. [caption id="attachment_121610" align="aligncenter" width="700"] Source: Burberry[/caption]   3. Join Chinese New Year Campaigns Organized by E-Commerce Platforms E-commerce platforms in China usually kick off Chinese New Year sales in advance of the actual week of Spring Festival, offering a way for brands and retailers to boost sales and generate excitement ahead of the holiday. Alibaba has been hosting its annual Chinese New Year Shopping Festival since 2016. Last year, the company’s Tmall platform promoted customized gift boxes from brands such as L'Occitane in the beauty category, Wyeth in the parent-and-baby category, Huawei in electronics and Coca-Cola in food and beverages. Tmall also used its social media account on Weibo to promote the gift boxes. Procter & Gamble teamed up with Tmall Supermarket to promote a campaign for Chinese New Year last year: On January 8, 2020, Tmall Supermarket launched a virtual Spring Festival party with animated hosts (including the Tmall mascot, a black cat), which featured Procter & Gamble products. The campaign garnered more than 3 million views on Weibo. [caption id="attachment_121611" align="aligncenter" width="580"] Tmall’s Weibo post about customized gift boxes (left); and Procter & Gamble’s Weibo post about its holiday campaign (right)
Source: Official Weibo accounts of Tmall (left) and Procter & Gamble (right)[/caption]   4. Host Chinese New Year-Themed Livestreaming During the Spring Festival sales period, brands and retailers can host Chinese New Year-themed livestreaming to promote products, increase customer engagement and drive sales. Estée Lauder hosted 20 Chinese New Year-themed livestream sessions in January 2020, covering topics such as the “must buy” makeup products for the holiday. [caption id="attachment_121612" align="aligncenter" width="580"] A series of Estée Lauder Chinese New Year-themed livestreaming sessions (left) and a host promoting makeup products during one of the sessions (right)
Source: Taobao[/caption]   Chinese snack brand Three Squirrels hosted more than 100 livestream sessions on Alibaba’s Taobao Live platform from December 16, 2019 to January 20, 2020 as part of its Chinese New Year 2020 campaign. According to the brand, livestreaming contributed to overall sales of ¥3.7 billion ($570.9 million) between December 16 and January 18, representing a year-over-year increase of 40%. Furthermore, Three Squirrels was ranked as the top brand in terms of GMV gained via livestreaming sessions in the snack category on Taobao Live during the Chinese New Year festival, according to the platform. [caption id="attachment_121613" align="aligncenter" width="580"] A series of Three Squirrels Chinese New Year-themed livestreaming sessions (left) and a host promoting Three Squirrels products during one of the sessions (right)
Source: Taobao Live[/caption]   5. Prepare Logistics Some logistics firms do not operate during the Spring Festival week, or even in the week leading up to the holiday. Brands and retailers should therefore be prepared to adjust their delivery services—working with service providers that continue to operate throughout Chinese New Year—in order to meet consumer demand.

• On December 28, 2020, YTO Express and STO Express both announced that they will continue to provide delivery services from February 4 to February 19, covering the Spring Festival of 2021.
• Jitu Express and Yunda Express have signed an agreement to serve as the express delivery partners of e-commerce platform Pinduoduo during the Spring Festival 2021, providing merchants on Pinduoduo with additional logistics services.
• Best Express issued an announcement on January 1, 2021 stating that it will continue to provide delivery services during the Spring Festival. From February 4 to 19, Best Express will make efforts to ensure the quality of express delivery services and meet customer needs, according to the company.

What We Think

For Chinese New Year 2021 and beyond, international brands and retailers should seize the opportunity to capture share of increased consumer spending in the China market by launching new products and implementing dedicated marketing campaigns. Implications for Brands/Retailers

• In future, brands and retailers can begin promoting Chinese New Year products as early as December, to generate consumer excitement. Themed products could feature the relevant zodiac sign for that year or any symbols from Chinese culture, such as the color red, that are suitable to celebrate the holiday.
• Brands can leverage social media platforms such as WeChat and Weibo to increase engagement with consumers before and during the holiday—even launching specialized games. Digital campaigns that include Chinese New Year-themed stickers and red packets can be effective in driving sales.
• Livestreaming can be an effective way for brands and retailers to connect with shoppers and promote products. Brands could incorporate the Chinese New Year theme into livestream sessions to provide a festive atmosphere and generate views. We look forward to seeing which international brands utilize livestreaming for the holiday this year and how they approach product promotion.
• Brands and retailers can also join Chinese New Year shopping festivals organized by e-commerce platforms, such as by launching exclusive gift boxes.
• Brands and retailers should be aware of the working schedule of logistics firms for Spring Festival—as some will not be operating and some will limit their service scope—and adjust their fulfillment strategies accordingly.