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Why eco-conscious brands will succeed in China in 2023

As Chinese consumers become more discerning about the origins of the products they buy, smaller brands like Hunter and Rothy's can have the edge over the likes of Zara and Nike – here's how to follow their lead

by James Brodie
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Are Chinese shoppers more discerning than their Western counterparts when it comes to demanding supply chain transparency? It’s clear that sustainable brands will increasingly have the edge in 2023, so how should you communicate with Chinese consumers about the credentials of your products?

Like people in countries all over the world, Chinese consumers are experiencing the effects of climate change and unmanaged waste products first-hand and are concerned about the future; concerns that have only been strengthened by the Covid-19 pandemic. To varying degrees, these concerns are now translating into greater consideration of the sustainability credentials of brands and, ultimately, purchasing intentions.

“Walking the talk on sustainability issues is something that [brands] can no longer afford to ignore. Consumers nowadays have so much more information on the sustainability credentials of products, as well as the companies behind them and their impact on the wider community,” says Anson Bailey, Head of Consumer & Retail for ASPAC at KPMG China, on ‘Moving the Needle: Threading A Sustainable Future for Apparel,’ a research report by KPMG and Serai on sustainability in the apparel industry.

launchpad CBBC

How much do Chinese consumers know – and care – about sustainability?

The lack of public environmental activism in China can paint a picture of a consumer base disinterested in sustainability, but this is not the case. A June 2022 consumer survey by PwC showed that 34% of Chinese consumers “often” or “always” agree that a business’ environmental actions influenced their decision to buy – in the US this figure was just 29%. The Covid-19 pandemic seems to have accelerated this trend. For example, a KPMG study in 2021 found that since the beginning of the pandemic, 68% of Hong Kong consumers and 65% of those from Greater Bay Area cities in Mainland China have become more conscious of a product’s origins.

Pollution, notably air pollution, has been a day-to-day experience for many people in China, with direct effects on their health. Product quality issues, particularly food safety scandals such as the 2008 melamine-contaminated baby formula scandal, have also caused a lot of concern among consumers. This has created a genuine desire to purchase products made from high-quality, durable or chemical and pollutant-free materials, which are usually better for the environment as well. “Chinese consumers are most concerned about sustainability for the following categories (ranking with the highest level of willingness to pay extra): furniture, homeware, clothes, and personal care,” says CBBC China Business Adviser (Consumer Retail & E-Commerce) Celine Tang.

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Chinese business and e-commerce expert Sandrine Zerbib has noted that this points to a potential distinction between Chinese and Western consumers that brands should be aware of: the decision to purchase sustainable products is not only aimed at contributing to a greener environment but also aimed at protecting themselves from a polluted environment. This statement particularly applies to older, more affluent consumers, while millennial and Gen Z consumers can be motivated to purchase a product on sustainability credentials alone.

For all groups of consumers, the most obvious barrier to more widespread adoption is cost. As Tang explains, “[Chinese consumers] agree that sustainability is crucial yet only about half of them have ever spent money on it.” Data from The Silk Initiative’s TSI Navigator shows that only 30% of Chinese consumers are willing to pay a premium for sustainable products, especially if that premium doesn’t translate into better quality.

For British brands in China, although sustainability must come with other unique selling points, customer education is the most important thing to focus on – Celine Tang, China Business Adviser (Consumer Retail & E-Commerce), CBBC

How to talk to Chinese consumers about sustainability

Chinese consumers, like their counterparts in the West, are often sceptical of corporate sustainability claims, with Credit Suisse finding that more than 50% of Chinese consumers were distrustful of said claims. Transparency is key, especially when it comes to supply chains; a 2021 survey by The Silk Initiative found that ‘supply chain transparency’ was one of the sustainability claims that resonated best with Chinese consumers, ranking much higher than ‘fair-trade products’ or ‘safe working conditions.’

Brands also need to demonstrate actionable initiatives and a sense that sustainability is built into their DNA, something that could give younger, smaller brands, particularly in the luxury sector, an advantage over established players like Nike or Zara. Vanessa Wu from marketing solutions firm GustoLuxe emphasises the need for brands to find a sustainable cause they can own and then communicate honestly with consumers through influencers or public figures dedicated to that cause. She points to boot brand Hunter’s “For the World Outside” campaign, which has resonated well with Chinese consumers.

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Education is also critical. “Chinese consumers do not have enough information about sustainable products and how sustainability is achieved through design,” says Tang. A lack of information about which products are available and what benefits they have is a key barrier to sales conversion for green products.

Live streaming is proving to be a very effective way of demonstrating a product’s eco credentials while also building a narrative about how consumers can use the product as part of a more sustainable lifestyle. San Francisco-based sustainable footwear maker Rothy’s and haircare specialists Olaplex have found success with this strategy on Tmall. Tmall has also launched features such as eco-friendly labelling on products and recycling initiatives for parcel packaging, to make it easier for consumers to make greener shopping decisions.

As Fashion Summit/KPMG’s report ‘Sustainable Fashion: A Survey on Global Perspectives’ concludes, “Given the well-documented need of [Chinese consumers] to have as much information as possible about their purchases, companies will not only have to take full responsibility for how their products are made and the conditions under which they are made, but also to tell the story of how all this happens in a transparent way.”

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