‘Digital competence’ in China key to success in prestige market

By Katie Nichol

- Last updated on GMT

Related tags China

Prestige brands need to increase their ‘digital competency’ in China in order to ensure future success in not just China, but in the global prestige market, according to a study from NYU Stern School of business.

The report ranks the digital IQ of prestige brands using four categories; SEO, social media, site and digital marketing.

According to the report’s authors, Scott Galloway and Doug Guthrie, there are 384 million internet users in China, which is more than both the US and Japan combined. Additionally, the country’s e-commerce market quadrupled between 2006 and 2009, making the internet an important retail channel.

China is not a market to be underestimated, Galloway told CosmeticsDesign.com, as “brands can do a marginal job in every other market, but if they get their China strategy right, they will still add shareholder value,” ​he said.

Beauty and skin care rank well

Estée Lauder, Clinque and Lancôme were the three top ranking beauty and skin care brands in the digital index, with Lancôme claiming the top spot and Estée Lauder coming in joint second with car manufacturer BMW.

When it comes to selling online, this market category was identified as a leader, with six of the 13 beauty and skin care brands ranked in the index (which measures 100 brands) selling online.

Brands such as Estée Lauder and Clarins are also savvy about creating online communities to encourage communication and generate buzz about products. Lancôme, which was rated as a ‘Digital Genius’ launched an online community, Rose Beauty, in 2006 and claims four million subscribers, according to the report.

The beauty brand with the worst score was Benefit, with the report noting that ‘lack of a Chinese language option prevents this LVMH brand from keeping pace with peers in Beauty’

Digital index: China vs US

The release of the digital IQ index follows the release of a similar study last year that focused on the US market.

Beauty brands showed the biggest disparity when it came to digital competence in the US and China markets, the report revealed, with a much higher score in China indicating these brands are aware of its potential.

Lancôme’s digital IQ was 162 in China compared to 109 in the US, a difference of 53 points. Estée Lauder and Clarins had China digital IQ’s of 155 and 134 respectively, compared to 117 and 96 in the US.

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