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GWSB Study Measures Business ‘China IQ’

Audi took the top spot in the second annual L2 Prestige 100®: China IQ index, which measures the digital competence of 100 prestige brands in China, the world’s fastest growing luxury market.  The study was developed by Scott Galloway, founder of L2, a think tank for digital innovation, a team of experts from L2 and Doug Guthrie, dean of GW’s School of Business and China scholar.  The brands included in the study were scored on more than 300 data points across four dimensions – site, digital marketing, social media and mobile.

“In today’s global economy, China is the driver of so much growth,” said Dean Guthrie.  “For many companies, if you get your China strategy right, you are probably going to be okay.  However, the Chinese market is still tremendously misunderstood; and the digital landscape in China even more so.  L2 is a radical innovator in the area of research of digital research and marketing.  GWSB’s partnership with Scott and his team give us a real opportunity to put forward knowledge about China that is simply not out there.”

Sixty-eight percent of the brands in the study were classified as “challenged” or “feeble.”  Only three, Audi, Burberry and BMW, earned “genius” distinction, suggesting that digital efforts in China are nascent.  However, there is evidence the market is moving quickly.  The number of brands selling online doubled from 2010 to 2011, while brand participation on Chinese social media platforms increased from less than five percent to 66 percent of brands.

“The prestige market globally is predicted to grow at a rate of 2.2 x GDP, most of it powered by one market – China,” said Galloway.  “The online medium presents a tremendous opportunity to reach a Chinese consumer who is younger, digitally native and obsessed with luxury.”

The ten top-ranked brands in the study were: Audi, Burberry, BMW, Volvo, Benefit Cosmetics, Cadillac, Estée Lauder, Land Rover, Mercedes-Benz and Porsche.  Key findings of the study include:

  • Selling is Knowing: Twenty brand sites are e-commerce enabled, twice the number from 2010.  Brands selling online have an average “digital IQ” 16 points higher than those without online sales.  With 11 out of 15 brands selling online, beauty and skincare brands continue to have the highest e-commerce penetration.  However, the fashion category had the largest change from 2010 – increasing from seven percent to 24 percent.
  • Digital Disparity: Although 56 percent of Chinese luxury purchases are made abroad, only 58 percent of brands provide U.S. and European store locators, a large missed opportunity.  The majority of sites fail to list pricing in Chinese currency, provide user reviews or integrate Chinese social media.
  • Wild about Weibo: In the highly fragmented Chinese social media landscape, Sina Weibo, a Chinese micro-blogging site, is the platform of choice.  Fifty-seven percent of prestige brands maintain a presence on this platform, which launched in April 2010.
  • Buried on Baidu: With 76 percent of the Chinese search market, local search engine Baidu has continued to gain share at Google’s expense.  However, visibility on Baidu has declined since April 2010 with 42 percent of prestige brand sites failing to be returned in the top-three search results for a Chinese brand name search, up from 29 percent.
  • Mobile Incompatibility: Two-thirds of China’s 485 million Internet users access the Web via their phone, yet only 25 percent of brands (up from two percent in 2010) maintain a mobile optimized site.  While 60 percent of Prestige 100 brands have an app in the Chinese iTunes store (up from 16 percent in 2010), only two-thirds of these apps are available in Chinese.

To download the study’s complete rankings and key findings, visit this link.

Posted by gwsb on September 27, 2011 | Filed under: GWSB News.


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