Covid-19 has changed almost everything. When it comes to China, this is not a trite statement because the changes that took place behind the Covid-19 wall are significant.
This means that the old methods of marketing in China are less effective. The consumer market has changed, and the nature of competition has changed. The successful solutions used pre-Covid-19 in China may be less effective.
Every Chinese citizen can annually import duty-free goods to US$2,000 ($2,698), so accessing this market presents a significant opportunity.
The most obvious change is the replacement of the foreign product premium with a national preference. Made in China is becoming just as important as in some foreign countries. Rather than emphasising foreignness, there is an increased advantage in promoting local authenticity and connections with it. This is also a result of China’s dual circulation policy that promotes the quality of domestic products, a more sophisticated approach to marketing that moves beyond the foreign preference for the simplistic use of dragons, lanterns and other stereotypical gestures towards the Chinese consumer. Marketing must reach deeper into genuine cultural insights to make lasting connections with consumers. There is a greater need to understand and use the current cultural preferences to develop marketing campaigns. This is a competitive creative space, so it is essential to move beyond simplistic stereotypes.
Marketers should reach out to Generation Z, millennials, and increasingly, to the so-called silver economy. This cohort of active retirees is prosperous and, postCovid-19, are looking to expand their horizons. Much of this will be focused on domestic experiences, but the thirst for foreign experiences will increase.
Pre-Covid-19 marketing was often all about WeChat and not much else. The Covid-19 barrier has accelerated the growth of a broader range of social media markets. These include Douyin, Xiaohongshu, Dewu and many others.
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Previously the best platform available to build a social community was Weibo, but as in the west, TikTok has come to dominate this space. Within the China domestic market, Douyin is rapidly becoming a strong challenger to TikTok. Douyin is becoming the preferred social community platform for establishing and promoting new consumer products and services.
Pre-Covid-19, there was often a focus on rapid return on investment at the sacrifice of long-term brand equity. This is partly related to a vast market where turnover could compensate for the need to develop and establish a brand. In the post-pandemic environment, there is an increased advantage in building meaningful connections with customers. The brands that sustained connections during the Covid-19 lockdowns have established a generational connection. The challenge for newcomers into the market is to do the same. This requires greater attention to the quality of the customer journey and experience.
The China market is always challenging, but the post-Covid-19 market challenges marketing departments to think differently to achieve effective market share.
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Technical outlook for the Shanghai market
The Shanghai Index is pausing around the first resistance target near 3,220. The 3,220 level is the lower edge of a resistance band. The upper edge of the band is near 3,280. The most bullish development is a further move towards 3,280, followed by consolidation within the resistance band. This has failed to develop. The least bullish move is a retreat from the lower edge of the trading band near 3,220, which is developing. Such a retreat is currently minor and may be in preparation for another resistance-level test.
The index chart has three features suggesting this breakout activity will continue and set a longerterm uptrend.
The first feature is that the index activity is part of a long-term trend reversal double bottom rebound pattern. The first target for the pattern is the top of the previous pattern peak near 3,415.
The second feature is the way a fan pattern defines the rebound action. The fan pattern is a unique pattern that signals a long-term trend change. The fan starts from a single point, shown as point 1. It consists of a series of trend lines, shown as lines A, B, C and D. The fan pattern is often associated with long-term breakout patterns that develop over many months. This is a trend reversal pattern, and it does not involve setting price targets.
The third feature is how the behaviour of the Guppy Multiple Moving Average (GMMA) indicators supports this breakout analysis. The long-term GMMA has compressed and turned up. This shows investors have become buyers and are supporting the emerging trend. The short-term group of averages are above the long-term group. Index values remain within the short-term group of averages. Traders are leading the breakout, but investors support them. This suggests a genuine trend change rather than just a short-lived rally
Daryl Guppy is an international financial technical analysis expert and special consultant to Axicorp. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a national board member of the Australia China Business Council. The writer owns China stock and index ETFs
