Bai Huitian Tencent Research Institute postdoctoral fellow, researcher
The 2022 Beijing Winter Olympics is not only a grand event for athletes, but also a show for national tides. From the golden ice piers decorated with "Three Friends of the Cold Year", to the award dresses printed with the patterns of "Ruixue Xiangyun", "Hongyun Landscape" and "TangHua Feixue", to the "National Tide" armor that helped the Olympic athletes to be invincible on the field... The national tide is mixed with the wind and snow in Beijing, blowing from China to the world.
The integration of concept and technology gives birth to products, and the intersection of production and consumption creates brands. Guochao is a fashion trend and consumption wave led by Chinese products and Chinese brands, highlighting Chinese culture and Chinese aesthetics.
From the perspective of retail, the national tide economy contains three elements: "people", "goods" and "fields". "Goods" is the foundation of the national tide economy, "people" is the core of the national tide economic development, and "field" is the bridge connecting "people" and "goods".
National tide, why tide? The author will analyze the endogenous driving force of the national tide economy from three aspects: "goods" at the production end, "people" at the consumer end, and "fields" at the circulation end.
Figure 1 The "People's Freight Yard" Theory of National Tide Consumption (Author's Drawing)
The rise of "goods"
From domestic goods to national tide, how do we break through low-end manufacturing?
The process of industrial upgrading from domestic goods to national tide is also a process of extending from the bottom of the smile curve to both sides to increase added value. "Promoting the transformation of Chinese manufacturing to Chinese creation, the transformation of Chinese speed to Chinese quality, and the transformation of Chinese products to Chinese brands" outlines the clear context of industrial upgrading.
Figure 2 Industrial Upgrading from Domestic Goods to National Tide (Author' Drawing)
Upgrading to upstream industries requires strong intellectual support and resource investment, and "micro-innovation" can break through the threshold of resource constraints. In some areas where technology is now mature, innovation latecomers can quickly reach the top and produce differentiated products through "micro-innovation" to meet the needs of consumers in niche fields. For example, on the basis of traditional down jackets, Bosideng considers the dress needs of business people, and develops a windbreaker down jacket that integrates warmth and slimming, fashion and practicality, and the "micro-innovation" of "windbreaker + down jacket" may become a winter hit in the workplace.
Upgrading to downstream industries requires breaking through the existing brand "moat" and consumer psychological barriers, and the "big single products" with high-quality product strength can lead enterprises to stand out. "Big single products" are the main products that contribute the vast majority of profits in the enterprise, and can cut into the market in the fierce category competition and deepen the brand impression of consumers. Like Nongfu Spring, Coconut Palm Juice, Feitian Maotai and Yuanqi Forest, they are all typical examples of defining market segments and driving the competitiveness of enterprises with high-quality products.
The innovation of production mode has brought new opportunities for Chinese manufacturing, and has also expanded the production and marketing boundaries of domestic products. Many Chinese enterprises are foreign brand foundries, in the lowest end of the smile curve of the manufacturing link, the rise in domestic production costs and international industrial friction make the OEM oem processing enterprises more and more difficult, some choose to create their own brands, from OEM (Original Equipment Manufacturer, OEM) to ODM (Original Design Manufacturer, OEM) to OBM (Original Brand). Manufacture, private label production), innovative production mode to achieve a transition in the smile curve.
Figure 3 Domestic manufacturing chain system (author drawn)
The development of science and technology has opened up a road of innovation and exploration for "China's intelligent manufacturing", and the production model has entered the demand-driven era. From proprietary B2C (Business to Consumer), F2C (Factory to Customer, vendor to consumer) to C2M (Customer to Manufactory, direct consumer manufacturing), eliminating intermediate links, reducing circulation costs and inventory costs, has become the axis of model innovation. Compared with B2C and F2C, C2M represents the advance of the letter "C" of consumers, reflecting the leap from first production, then sales to first sales, and then production, and putting forward higher requirements for flexible manufacturing capabilities with consumer demand-driven production, guiding the way forward for supply-side upgrading.
Using emerging technologies such as big data and artificial intelligence to collect and analyze consumer portraits and consumer needs, and to meet customer needs with flexible and customized production lines, it is the path for C2M mode to empower and upgrade the production end. Compared with traditional retail production, C2M upgrades "manufacturing" to "intelligent manufacturing", which has obvious advantages in terms of inventory, channels and costs. In 2020, at the "New Industrial Infrastructure" forum of the JDD Conference, JD.com officially released the "C2M Smart Factory" plan; in the same year, Taobao released the C2M strategy for the first time, and Taobao Special Edition, "Super Factory Plan" and "Ten Billion Production Area Plan" were unveiled together. Domestic brands borrow C2M reverse customization to dialogue with consumers, think about what consumers think, and realize industrial upgrading from domestic products to national tides.
Figure 4 Comparison of traditional retail production models and C2M models
(Source: CICC Research Department)
With the development of the industrial Internet and the improvement of flexible manufacturing capabilities, China's intelligent manufacturing continues to empower domestic brands and national tide economy, and the upgraded supply side can respond more sensitively to changes in consumer demand and solve consumer pain points more quickly.
The splendor of "people"
"Generation Z" meets the new era,
Deciphering the tide of consumption of the country is surging with people
Who is buying The National Tide? Who will buy it? Answering these questions requires settling on "people." In a consumer society, all trends are defined by consumers and at the same time react to consumers. From the perspective of psychology and behavioral economics, consumers represented by Generation Z[1] have the typical characteristics of cultural self-confidence, fashion pursuit, and full personality.
The rise of national trends reflects the rising national identity and cultural self-confidence. Judging from the Baidu index, since April 2018, the index of netizens searching for "national tide" has increased from 0 to more than 700, reflecting the popularity of national tide among consumers as a whole. According to the "2021 Baidu National Tide Pride Big Data", the post-90s and post-00s have the highest attention to the "National Tide", accounting for 74.4%. A study of Chinese consumers by Yu-Lun Liu and Sahar Karimi (2018) found that more than 70% of participants' attitudes towards domestic brands were positively influenced by advertising that emphasized national identity, were proud of their country, and said they were more willing to support the development of domestic brands.
Figure 5 The level of national tide attention has not diminished since 18 years
(Source: Baidu Index[2])
Paying for the national tide is also paying for the advanced needs of aesthetics and entertainment, and the fashion psychology of consumers is becoming increasingly prominent. With the enhancement of consumption power, the high-value design and artistic atmosphere of goods have become part of people's real needs. The pursuit of the national tide that integrates oriental aesthetics and modern fashion has also become a boom in self-pleasing consumption and fashion consumption. More and more products have won the hearts of consumers with aesthetic marketing, appearance highlights and cultural cores, and have stood out in the market competition. Taking the makeup field as an example, the "national style makeup" of the rising star is a typical representative of the beauty of the East and the gorgeous and easy-to-use national tide products. According to Amoy data, in October 2021, makeup brand sales huaxizi and perfect diary ranked in the top two, highlighting the style of domestic products. Among them, at the beginning of the establishment of the Huaxizi brand, it laid the brand concept of "Oriental Makeup, Raising Makeup with Flowers", carefully created the appearance details, and integrated plant ingredients to adapt to makeup in hundreds of experiments, and the "light of domestic goods" represented by the Huaxizi brand not only has the appearance of beauty, but also has both quality beauty and cultural beauty.
Chart 6 Top 30 brands by brand sales of makeup/perfumes/beauty tools in October 2021 (Source: Tao Data)
From the perspective of symbol consumption, consumers will not only consume the national tide products themselves, but also consume the beauty, atmosphere, style and culture provided by the national tide products. The measurement standard of consumption has also expanded from cost performance to "price-to-situation ratio", and the use experience, appearance value and culture of the product have become important considerations for consumers when making decisions. In The Society of Consumption, Jean Baudrillard mentions that "people never consume the thing itself (use value)—people always think of things (in a broad sense) as symbols that can stand out from you." National tide consumption is a self-defining process. As the pioneer of symbol consumption, generation "Z" awakens to self-awareness, preference for freshness and desire for an independent lifestyle, creating a huge growth space for national tide products with both quality, appearance and experience. Many national tide brands often use the image of "I" in advertising for marketing, conveying the symbolic value of goods, driving the audience to express identity with consumption, and defining the self with identity, and the consumption of national tide elements can become a marker of individual identity, shaping the difference and difference between the self and other groups.
The construction of the "field"
"Tide" up or "fry" up?
Insight into the popular consumption areas and consumption opportunities of the national tide
From a broader perspective, consumers, customers, users... Its essence is all traffic. "Field" is the place where traffic is created and converted, "field" is the bridge connecting "people" and "goods", and "field" is the medium for realizing value exchange. In the Internet era, the "field" is built as a promised place where the flow of information and capital intersects, the old domestic goods are reborn through the "field", and the new national tide is on the "field" to move forward.
From offline channels to online and offline combination pattern, dtC (Direct to Customer, directly facing consumers) model has brought a huge expansion of the consumption field to the national tide industry in China, which is located in procurement, production, warehouse, logistics and sales. Per capita GDP exceeded 10,000 US dollars reflects the huge consumption potential, online development, channel sinking for domestic goods to open up a wider market outside the first and second tier cities, Douyin small videos, WeChat mini programs and even WeChat circle of friends have become the focus of national tide consumption, the existence of "field" with traffic everywhere. With the development of the digital economy, the DTC model shortens the sales link, and vertical e-commerce and private domain traffic reduce the cost of customer acquisition, speeding up and increasing the quality of the national tide product supply chain.
Figure 7 DTC Model Reduces Channel Pressure and Benefits Consumers (Author)
Guochao brand hitched a ride on the express train of all-media development, with the help of KOL (Key Opinion Leader, key opinion leader) and KOC (Key Opinion Consumer, key opinion consumer) to create a communication matrix, using the UGC (User Generated Content, user generated content) platform network effect, multi-dimensional linkage to achieve fission marketing. KOL with goods, KOC planting, UGC feedback, the trust network to build a consumption field to accelerate the implementation of consumption decisions. Suning's "Domestic Goods Consumption Trend Report" shows that from January to April 2020, live broadcast purchases (an increase of 126.3%) and community recommendation purchases (an increase of 147.2%) have become new scenarios for domestic consumption, and the fission-type transmission caused by KOL/KOC and the self-propagation generated by the UGC platform are the new growth points of domestic product consumption. With the help of big data and recommendation algorithms, the carefully constructed information network and communication matrix promote traffic conversion and realize the process of "field" leading "people" to "buy" goods.
Figure 8 Propagation patterns influence consumption decisions (authors)
The expansion of the "field" needs heat, and the national tide brand creates circle potential energy with IP joint name and cross-border marketing. The marketing logic behind IP co-branding and cross-border marketing to create a blockbuster is to promote highly personalized and highly differentiated limited-edition products in a short period of time with high exposure and loud communication, break the boundaries of the circle of audience groups, and play the > of "1+1" 2" business value. IP co-branding and cross-border marketing continue to expand the brand boundary, renew the image of the brand era, and give the brand a longer-term vitality. As the darling of IP co-branding and cross-border marketing, King Glory cooperates with different types of brands such as Daoxiangcun, Hongxing Erke, China Merchants Bank, etc., reflecting the infinite possibilities of national tide elements. In addition to the national style game, the national trend fashion, the national style makeup, and the national creation culture and entertainment have crossed the circle, bringing a more chic and novel consumer experience.
Figure 9 Guochao IP Co-Representative (compiled by the author)
IP co-branding and cross-border marketing is an enabling path for the vitality of the new consumption era of fierce competition, and for the national tide brand, how to solve the tedious psychology caused by consumer aesthetic fatigue and sensory adaptation is a long-term challenge. IP co-branding and cross-border marketing break the boundaries of channels, circles and fields, realize the interconnection of online and offline channels, the expansion of audiences in different circles, and the breaking of walls in the field of science and technology culture.
The development of digital technology has subverted the imagination of IP co-branding and cross-border marketing. Taking KOL with goods as an example, the development of artificial intelligence makes KOLs no longer real people, and the tea of Nai Xue, a virtual KOL Ling cross-border tea brand under Mofa Technology, incarnates as an AI tea researcher, leading young people to taste the charm of "national tide" tea, artificial intelligence, national tide elements, and tea products cross-border reflects the deep integration trend of science and technology, culture and consumption, and the construction of "field" is more diverse.
Figure 10 Ling's tea crossover marketing with Nesher
(Source: Xmov Mofa Technology)
Conclusion
The national tide economy is by no means a product of a flash in the pan.
The continuous upgrading of the production end and the increasingly boosting consumer end of the two-wheel drive, the two complement each other, continue to expand the market space of the national tide, while advanced technology and creative culture also continue to empower Chinese products and Chinese brands, the competitiveness of the national tide will be stronger. In the digital era, the spatial distance between "people" and "goods" is no longer an obstacle, and how to solve information asymmetry in the "field" and break through the perceived distance between "people" and "goods" is the key to the future development of the national tide.
But no matter what, the national tide has come and is about to go far.
footnote:
[1] According to the Seventh National Census, the total number of "Gen Z" people born between 1995 and 2009 exceeded 260 million, accounting for 18.5% of China's total population.
[2] Description: In 2018, China's Li Ning landed in New York Fashion Week to kick off the first year of the national tide, so 2018 was used as the starting time of statistics.