90% of globally renowned high-end brands have entered the Shanghai platform | Brand | Global

Thanks to its diverse urban character and century old business civilization, Shanghai has attracted 90% of the world's internationally renowned high-end brands to settle in, with many brands choosing to set up their headquarters in China or the Asia Pacific region here. "Shanghai has become a brand highland with domestic and international influence," concluded Zhou Lan, Deputy Director of the Shanghai Municipal Commission of Commerce, at the "Brand Ecological Prosperity Theme Forum" recently hosted by the School of Management of Fudan University.

In recent years, Shanghai has steadily promoted the construction of an international consumer center city. One is to vigorously develop the first launch economy, create a global first launch location for new products, and take advantage of opportunities such as the May 5th Shopping Festival to create online and offline platforms for new product launches; The second is to accelerate the gathering of international brands, utilize the spillover effects of the CIIE, create a 6+365 day platform, play a role in year-round exhibition and sales, and promote the settlement of internationally renowned brands in Shanghai; The third is to actively build new online consumer brands, leverage the advantages of Shanghai's e-commerce platforms, implement business digital transformation partnership plans, support platforms to empower brand development, and integrate digitalization throughout the entire process of brand development, production, sales, and dissemination. Taking the 2023 Tmall 618 event as an example, over 4000 new Shanghai brands established after 2020 participated, with a year-on-year increase of 35.3% and a total transaction volume increase of 78.3%, all ranking among the top in the country.

How can platforms empower brand development? Regarding this, Li Ran, Vice President of Taotian Group and President of Public Affairs Department, gave the answer of "user first, ecological prosperity, and technology driven". Relying on its e-commerce platforms such as Taobao and Tmall, Taotian Group has the largest product and merchant library on the entire network, providing sufficient nourishment for brand development. By utilizing the massive data and computing power provided by digital e-commerce platforms, enterprises can directly communicate with consumers and truly achieve the DTC model.

Matsuno Pai is an example of DTC mode. At the beginning of the establishment of Matsuno Pai in 2019, skiing, a segmented sports scene, showed the potential for rapid growth on Tmall. Using the data provided by the Tmall platform, Matsuno Pai has discovered a relative gap in the ski close fitting layer quick drying clothing market, and consumers still have a lot of functional needs that are far from being met. "Through data analysis, we found that the younger generation of consumers' preference for the close fitting layer is no longer traditional black basic underwear, but on the basis of functionality, they also want to be fashionable and wearable," said Zhao Bing, founder and CEO of Matsuno Pai. Based on targeted research and design polishing, as well as user profiles extracted from data, this startup brand has created its first super single product and expanded the brand's user pool in reverse, completing a leap from 0 to 1.

This is just a microcosm of many startups. "Everyone wants to face consumers directly, but under the traditional distribution model, the cost of facing consumers is higher. However, the emergence of platforms has greatly reduced the cost of facing consumers," said Liu Yang, General Manager of Taotian Group's Merchant Growth Center. The popularization of DTC mode not only benefits start-ups mainly engaged in new consumer goods, but also provides new opportunities for enterprises in the Red Sea field. Taking a new massager manufacturing enterprise as an example, with real-time tracking of sales data and user feedback on the Tmall platform, and real-time optimization and updates, this startup successfully entered the already competitive small home appliance market at a very low cost. "The digital services we provide reduce the cost of brand trial and error, thereby lowering the overall cost of the DTC model," said Liu Yang.

Some people refer to Tmall as China's Amazon, but this is not accurate. As a product oriented platform, Amazon users do not directly enter the brand flagship store, but only browse and purchase a single product. "Comparatively speaking, what the Chinese Internet platform provides is a place where brands can operate," said Ji Ying, senior director of Nike online direct Tmall. The public domain space created by the platform provides a large-scale public product to attract users and obtain product traffic, and on this basis, various brands rely on flagship stores to establish private domains, fully controlling product research and development, inventory management, orders, and customer service, etc. "The value chain and business model provided by platform service providers fundamentally provide the elements required for brand innovation," said Mao Jiye, a professor at the School of Business at Renmin University of China. Different from the pure trading platform represented by Amazon, the Chinese Internet platform represented by Tmall has deeply integrated the brand side into its own development strategy, and realized the integrated development of digital economy and real economy through resource sharing and co construction, competition and cooperation.

"Collaborative cooperation, sustainable development, and the interconnection of all things have been summarized as the underlying logic of Eastern management experience in China's continuous exploration since the reform and opening up," said Jiang Qingyun, a professor at the Marketing Department of the School of Management at Fudan University. From small town economy to platform economy, it reflects the characteristics of mutual benefit and win-win cooperation in China's industrial organizational structure.