APPLICATION OF SOCIAL MEDIA IN CHINESE FINANCE INDUSTRY 1
APPLICATION OF SOCIAL MEDIA IN CHINESE FINANCE INDUSTRY 10
The Application of Social Media Marketing in the Chinese Asset Management Industry
Research Question: what are the challenges and opportunities of applying social media marketing in Chinese asset management industry?
Interviewees: 8-10 (In social media industry and asset management industry)
Could include but not limit to those questions.
1. Do you use social media for marketing?
2. Has the company invested much in this area? What did people/money do
3. On which platforms is it used?
4. What is the purpose of the application? What problems have you helped the company solve?
5. Are there any challenges in the current application process? (From the platform, internal management, government supervision, or customer feedback)
6. Has the company thought about how to break through the challenges?
7. What other opportunities will be encountered after using social media marketing in asset management industry?
2. Literature Review
Asset management is fast gaining global recognition due to rising fraud and corruption concerns. Known as the process of maintaining, selling, and or developing assets in cost-effective ways, asset management is mainly critical among firms or individuals that manage assets for external entities (Alves, Fernandes, & Raposo, 2016). Since every firm needs to keep track of its assets, assets management ensures stakeholders adequate assets capable of guaranteeing favorable returns. As such, assets management remains one of the most rapidly growing industries, especially in China. Having come into existence just 2 decades ago, the Chinese asset management industry has been expanding graciously (Fuchs, 2017). According to KPMG China, China’s fund management has achieved remarkable growth, having grown from $1.27 Billion in 1998 to over $2 trillion by 2019. It is anticipated to reach over $5.6 trillion come 2025 making it the world’s second-largest asset management market (Gorjon, 2018). However, the Chinese asset management market is extremely competitive and diversified, making its characteristics unique, thus creating diversified product promotion and marketing, mainly social media.
2.2 Characteristics of the Chinese Asset Management Industry
China is one of the world’s most populous nations, thus offers ready and available markets, but its attractiveness contributes to its most challenging problems. The Chinese fund management market is characterized as one of the world’s most competitive and diversified. Despite only ten Fund Management Companies (FMCs) controlling over 51% of Chinese market share, there are over ten thousand FMCs in the country (Diamonds, & Schell, 2019). Domestic companies are facing intense competition from international firms, while the Chinese tech giants are also set to offer competition given their huge capital and stronger distribution channels. As such, banks, insurance companies and tech firms will all be competing with the FMCs thereby necessitating innovations, but stronger marketing will be the silver bullet to capturing a share of the growing Fund Management market (Gorjon, 2018).
The Chinese Fund Management industry also faces a challenging retail market. Retail plays an important role in asset management. China’s retail was the dominant segment of the asset management market until 2007 until changes in stocks compelled investors to prefer less risky assets (Alves, Fernandes, & Raposo, 2016). As such, the Chinese distribution channels are fast changing. For instance, Tianhong launched Yuebao; a FinTech channel that has grown into the world’s largest money and asset market fund. This determines the importance of technology as a marketing and distribution channel in the FMCs. As such, the Chinese Asset Management industry is influenced by technology, mainly social media platforms. Over the years, online sales channels have proved most effective for investment products such as money and assets market funds (Liu, 2019). Given that China’s range of products in asset management comes from closed-end funds, the introduction of products such as fixed income funds and exchange-traded funds provide better opportunities for FMCs though there must be a well-established product promotion and marketing platforms that will increase not only sales but also competition in the retail segments (Diamonds, & Schell, 2019).
2. 3 Chinese Social Media Platforms
Most Chinese asset management firms utilize social media for sales. With over 634 million internet users, China makes one of the world’s most internet-savvy countries (Ngai, Qu, & Hou, 2016). Therefore, it’s understandable that the Chinese social media makes up the world’s main target, especially by international marketers. Chinese businesses are thus influenced by the internet, given that there is over 50% internet penetration rate; half of China’s population is online (Zeng, & Seok, 2019). However, China’s social media platforms are the most dynamic, challenging, and unique. Despite the growth in social media usage, China’s social media platforms are state-controlled and different from western platforms (Zeng, & Seok, 2019). For instance, Weibo is China’s version of twitter while WeChat represents Facebook. As such, it’s necessary to determine and understand which social media platforms are effective and applicable for specific marketing and product promotion (Ngai, Qu, & Hou, 2016).
FMCs must understand that in China, social media platforms are not as “normal” as it is in other countries. Despite social media’s massive popularity, the Chinese are forbidden from using conventional social media such as Facebook, Twitter, Instagram, and YouTube due to a state-imposed ban known as the Great Firewall (Alves, Fernandes, & Raposo, 2016). As such, China’s digital ecosystem is parallel to the conventional social media channels and as such, there are different modes of interaction and habits among users. For any FMC or any firm operating in China, social media presence is critical; however, they must establish social presence using specific channels while adhering to state regulations different from the rest of the world (Sajid, 2016). The successful application of social media by FMCs will require an understanding of China’s social media platforms and its challenges and opportunities.
2.4 Social Media Marketing
The importance of social media is obvious for any firm operating in a highly competitive niche. With over 316 million active users per month on twitter and over 1 billion YouTube users, social media’s value is significant (Zeng & Seok, 2019). An asset management firm must therefore be on social media platforms. According to PwC and Asset Management in the Social Era, 40% of FMCs active on social media made many sales compared to brick and mortar establishments while the top 50 asset management firms active on social media controlled over $309.9 billion of assets. As such, asset management is moving from retail to the internet; in 2014, Schroders controlled the online asset management platform with over 20,000 Twitter followers and a potential audience of above 120,000. Therefore, social media is a digital strategy used to reach tech-savvy clients while opening up new market segments. Despite the unavailability of Twitter or YouTube in China, it’s critical to consider their impacts on public perceptions in regards to asset management.
2.4.1 Social marketing in China
FMCs using Chinese versions of Twitter and YouTube need to benchmark their contribution to asset management against their global competitors. Social media is redefining the traditional marketing channels. The business-to-business and business-to-consumers is being replaced by business-human; a model that sees everyone in social media platforms as a potential consumer (Wang, 2016). The Schroders 60-seconds video is among YouTube’s most-watched videos and accounts for over 80% of all video views while according to PwC, in 2014, YouTube was the most used social media platform with over 44% of all asset management firms preferring YouTube marketing (Niedermeier, Wang, & Zhang, 2016). It’s therefore critical for the Chinese FMCs to utilize social media platform to albeit international competition. Giver the various online platforms such as WeChat, Sina Weibo, Tencent QQ and Tencent Video, and Xiao Hong Shu; China’s top five social media platforms, FMCs in China, must take advantage of the country’s social media advantages (Niedermeier, Wang, & Zhang, 2016).
2.4.2 Value of Social Media Marketing
Given the huge boom in the Chinese financial sector due to higher online presence, it’s important to note that China is experiencing higher levels of wealth thus influencing its asset management market as well. China’s growth in finance and funds management is increasing rapidly due to better products and the proliferation of its sales channels hat is promoting higher demand for financial services. Given that over 225 million Chinese households earn a range of $11,500 to $43,000 annually, it’s clear that the demand for asset management will continue and FMCs must take advantage of using the various online marketing tools at their disposal (Cheung et al., 2020). China is also favorable due to its dominant economic and social forces. About one in every five persons on earth lives in China making it enjoy a massive GDP that promotes growth opportunities for its financial sectors (Kaur, 2016). As such, expansion is linked to access to a wider market share. Therefore, the use of social media should create value and offer access to China’s $45 trillion financial sector. Therefore, social media should create access to this lucrative market while offering various advantages to the FMCs (Felix, Rausschnabel & Hinsch, 2017).
188.8.131.52 Interactive Marketing
China enjoys a stronger and favorable user database. The number of Chinese using social media platforms increases each day and over 40% of Chinese spend over 25 hours per week online (Zeng, & Seok, 2019). For instance, by 2020, there will be over 802 million Chinese online (Wang, 2016). This equates to 57.7% of China’s population, while 98% of the social media users link to the internet via their mobile devices compared to 73% in U.S.A (Yadav, & Rahman, 2018). As such, China’s Finance industry is set to grow rapidly due to social media presence. Social media platforms are usually equipped with interactive functions such as forwarding, comments, likes and mention friends. Companies can interact with users through these interactive functions, so as to achieve the purpose of marketing. During the interaction, enterprises can precisely locate users and achieve precision marketing. Thus, success in the industry will be influenced by online marketing. As such, FMCs should spend more time online to ensure more brand exposure while creating more interactions.
It’s also critical to understand that China’s social media is more fragmented and is ever-evolving. FMCs in China needs to ensure the application of the latest social media tools. It’s evident that most online Chinese prefer various networks and are attracted to the latest trends (Tuten, & Solomon, 2017). Every change or introduction of new forms therefore influences the market; however, given the increasing demand for social media in China, online marketing is here to stay. Firms must ensure latest trends while catching up with client’s latest needs (Hanski, & Ojanen, 2019). With increasing Chinese on social media, they are likely to demand newer platforms where they will be able to interact while sharing content in various ways freely. Therefore, the fragmentation of the Chinese online marketing will continue changing its networking landscape completely and those lagging behind will be left behind (Hanski, & Ojanen, 2019).
184.108.40.206 Client Relations Management
It’s critical to understand the Chinese online habits that could help to build good client relationship. Their immediate social networks influence most Chinese. Most Chinese are increasingly distrusting the conventional media and are relying on social media for most information (Kalback, 2019). Social media platforms can effectively close the gap between users and enterprises, continuously strengthen the communication with existing and potential users by releasing information and planning activities, and accumulate a large amount of user data. At the same time, through the data analysis tools provided by social network platforms or third-party data service companies, users’ habits, behaviors and demands can be deeply explored, so as to establish more targeted business strategies that conform to the customer life cycle. As such, social media is most effective and for marketing, especially for new asset management brands entering the Chines market. The finance industry’s success depends on stronger content and better delivery (Kaur, 2016). This is because, in China, the most shared online content is perceived to be carrying a stronger sense of legitimacy and is perceived most reliable by users (Felix, Rausschnabel, & Hinsch, 2017). It’s also critical to note that most Chinese are influenced by the opinions of their closest online circles in the same regard. FMCs must therefore ensure reliable content capable of “going viral” and should also be aware of the fact that the Chinese appreciate direct communication with a firm; thus, application of social media platforms with instant messaging and responses will highly influence sales (Felix, Rausschnabel, & Hinsch, 2017).
220.127.116.11 Brand Recognition
It’s obvious that the use of social media creates value by exposing a firm’s products to millions of users. With intentional marketing and appropriate target audience, including choosing the most effective social media channel, online marketing increases sales. Brand awareness is one of the most important aims of marketing. According to Statista, over 3 billion social media users will come 2021 (Cao, Ajjan, Hong, & Le, 2018). As such, given that most people can aces the internet mainly through smartphones, any sort of online marketing will imply instant brand recognition and brand value through increased sales. It’s critical for FMCs to ensure online engagements to cause greater awareness while promoting brand loyalty and client satisfaction (Cao, Ajjan, Hong, & Le, 2018).
To sum up, all behaviors and activities of people in the future will be inseparable from social media. Therefore, social media marketing will be an indispensable part of the overall marketing structure of companies. Online marketing is critical in asset management as it promotes interactive marketing that promotes better client satisfaction and better client relations. Success in the Chinese finance sector is therefore influenced by social media marketing such as use of selfies and sharing of product images, including immediate contact with clients to improve client satisfaction and relations. The asset management industry needs to constantly adjust its social media marketing methods based on the characteristics of the industry itself. References
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