Opinion|“Please give me your most expensive shoes!”: How guochao becomes a marketing strategy
Header image: ERKE/Facebook
More than 670,000 items with a total sale value of 110 million yuan (£12.3 million) were swiped from shelves during a consecutive 59-hour Douyin live streaming event. ERKE, or Hong Xing Erke, a Chinese sportswear brand, made history not only for its own but also for brands of this kind.
The record high sale came one day after the company’s “generous and low-profile” donation of food and drink worth 50 million yuan (£5.6 million) on 21 July to help with flood relief in Henan province. Earlier this month Henan province was hit hard by the torrential rainfall, resulting in the death of at least 58 as of 25 July.
As the city was swamped with water, goods and money poured in as Chinese celebrities and enterprises joined the disaster relief efforts. Donations from tech giants soon made national headlines and were listed on the hot search of Weibo - one of China’s most popular micro-blogging sites, the donation made by the lesser-known sports brand seemed less eye-catchy at first.
It wasn't until a number of “surprised” netizens who believed that the brand had already gone bust were “deeply moved” by its “generosity” despite a deficit net profit of 220 million yuan (£24.6 million) in 2020 and went on a buying spree of ERKE’s products during its livestreams that the company’s donation became an Internet sensation.
A record sale of 110 million yuan (£12.3 million) was made the day after ERKE's announcement of donation. Source: Feigua Data
As one of the brands that opted into the guochao campaign or "national wave" - a trend to embrace homegrown brands that combine contemporary design with a nostalgic edge - ERKE’s experience is an example of why guochao is a winning formula for domestic brands. The word guochao has become a buzzword in China since another Chinese sportswear brand called Li Ning made its debut at New York Fashion Week in 2018.
Making such a big donation with a low-profile announcement is viewed by many as a real act of “patriotism”. It is a key factor that attracted more Chinese people, especially Millennials and those belonging to the Generation Z crowd who are guochao fans, who have developed a strong confidence in their national identity and traditional culture.
More importantly, these younger generations are easy to speak to through social media, which makes the penetration of domestic brands easier and faster. These guochao followers are believed to be the backbone of the era of ecommerce consumption. With a population of 149 million in 2019, it is expected to make up 40 percent of the country’s overall purchasing power in 2020, according to the Purchasing Power of Millennials and Generation Z Report 2019 by Tencent. Data behind ERKE’s livestream provides no better evidence for that.
Millennials and Generation Z contributed to more than 60% of ERKE’s online sales between 22 and 24 July. Source: Feigua Data
The two-and-half-day livestream on its Douyin account between 22 - 24 July drew a view of more than 200 million times, and it garnered over 500 million likes with an estimate of 168.9 yuan (£18.95) spent by each individual, according to Feigua Data, a platform analysing the performance of e-commerce short videos, which is a brand under Xigua Video – a product owned by ByteDance.
Nearly 40 percent of the audience are aged between 25 and 30 years old, followed by the 18 to 24 years old age group (28.78%).
Hosts were left “shocked and clueless” by the “wild spending” of customers. “Please give me your most expensive shoes!” one commented in the livestream, “If shirts are sold out, I’ll buy your winter coats!” another said, “Please do not give me discounts!”
Customers also flocked to ERKE's local offline stores with some asking in-store staff to sell them display samples in the shop-front window.
The company saw a 52 times’ jump in sales on Friday 23 July, according to statistics provided by Chinese ecommerce platform JD.com. While prior to this shopping spree, an average of 50,000 tuned in during a several-hour livestream, where some hundreds of products were sold, producing an estimated income of 50,000 yuan (£5,607), a report from Xiaohulu.com, a website monitoring data of livestreaming platforms.
While ERKE did not “market” its donation, the act itself turns out to be a perfect marketing strategy that helped it win the trust and confidence of customers. In fact, domestic sportswear brands as a whole including Li Ning, Anta, Xtep, 361 degrees, and Guirenniao have seen a surge in sales of more than 280% between 22 - 23 July following announcements of donation.
The fact that ERKE made a generous donation regardless of its own financial difficulties made it a greater patriot than Anta who donated the same amount of money but saw revenue of 35.5 billion yuan in 2020 – 12 times more than ERKE’s 2.8 billion yuan in the same year. As customers are desperate to support these “humble” heroes, in the wave of guochao, even a “loser” is a winner.
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