How ‘Wang Hong’ Online Celebrities Changed the Face of Chinese Retail

How ‘Wang Hong’ Online Celebrities Changed the Face of Chinese Retail

There has been a recent rise of online celebrities (Wang Hong) in the Chinese retail market. Undoubtedly, the internet influencers are having a significant impact on the retail market of China. The transformation of the industry is taking place, and customer bases are getting affected. Even the supply chain levels are changing. It seems the success of online celebs is here to stay as they have become a stronger force in China’s retail business. The big question is “How can we adapt to this new landscape of industry”?

Famous Internet Influencer of China

We need to look at the most renowned web celebrity, Zhang Dayi. Previously, a famous fashion model, Zhang Dayi is a highly successful internet celebrity, having a following of four million people. She has her own online shop, known as “The Wardrobe I like”. Her videos have more than 9 million views, as she is very selective in showing outfits to online followers. These followers, after looking at these outfits, rush to stores setting groundbreaking sales records. The largest shopping channel of China reported 5000 sales within just a few seconds after Zhang uploaded a new video. She is having her own factory employing around 100 people in it.  

Power of Online Influencers

Amazingly, Zhang Dayi is not just the only online influencer who has made waves in China. Her success is an indication of the rising trend of “Online Celebrity Economy”. Interestingly, there are more online influencers (commonly known as Wang Hong in Chinese) establishing their own brands, selecting their designers and placing orders in the manufacturing factories. These internet celebrities are indeed becoming a significant force in the online retailing business in China.

A New Supply Chain Type

Online influences are even having an impact on the supply chains of the retail industry. They have a much simpler value chain for all their online brands that are from a factory to an online store. On the other hand, overseas brands have a very long value chain. It consists of several variables such as factory, trading agent, global logistic agent, overseas wholesaler and then the final overseas retailer. The internet influences do not have to bear many traditional retail costs, such as marketing charges, HR fees and store rents. They can easily use up their existing influence to promote sales. Due to these reasons, internet influencers are known to be quite generous in paying to their suppliers. They even have more significant profit margins, which enables them to have higher negotiation power.  

Impact of Influences on Chinese Factories

Internet influencers have made changes to run their business in accordance to the factories. They make quite large orders. For instance, at Zhang Dayi’s store, we can easily see about 5,000 to 8,000 units each item in stock. What is meant by these quantities? Usually, the world’s most famous brands would manufacture a few thousand units for each item. It means Zhang is confident of her selling capability and has been successful as well on a practical basis.

Their flexibility in terms of production details is higher as they are the ones who can receive technical suggestions from the suppliers. The job of the factory becomes much easier. This does not take place with the traditional process of the brands. It is due to the involvement of many intermediaries. Without a doubt, emerging online-only Chinese brands have become more attractive for factories. They can pay them higher costs, the order in large quantities and ensure higher flexibility.

Lessons Learnt

Good news for the apparel factories in China is that they do not need to face fierce competition from other Asian countries. Chinese influencers do not need to put their orders with those countries’ items at a lower cost. Though, it is bad news for global retail fashion companies who would want to keep their manufacturing in China simply because of reliable service and premium quality. So, the least two things we can learn from the internet influencers are; first, their successful marketing style can be adopted, and value chains need to be reduced to reach out Chinese suppliers as directly as possible.  

Tom Spiggle
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