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Like the sequel to a Hollywood blockbuster, future ad campaigns by online apparel retailer Vancl will have a lot to live up to. Will they ever be able replicate the sensation created by its series of offline ads last year --plastering buses, subways and billboards and hitting TV screens -- which swiftly went viral across China as countless "netizens" designed their own versions of the ad? It's not an easy call -- at least not among China's fickle urban youth whom Vancl's ads want to reach with their simple, down-to-earth appeal and whose list of celebrity endorsements includes that of Han Han, the country's wildly popular speed racer and writerappearing in simple jeans and a t-shirt alongside his quote listing what he loves (including food stalls at night and car racing) and what he stands for ("I represent myself. I'm like you.… I am Vancl.")

Vancl's 2010 campaign has raised the bar for youth marketers in China. "The genius of the campaign seems to be the very personal resonance with the mindset and emotions of Chinese youth," says Wharton marketing professor David Bell. "This occurs not through the use of iconic figures, but through a conversational style and an ability to … reflect on what it means to be young and Chinese [today]." With that, Vancl has joined a growing number of companies in China that are becoming "very good at building a community" with young consumers.

There's good reason for that quest. China's youth "will become the core driver of consumer spending in China," predicts Allison Luong, managing director of Pearl Research, a San Francisco-based firm analyzing the interactive games and entertainment industry. Pearl estimates there are more than 300 million Chinese between the ages of 16 and 30 with some US$136 billion to spend.

According to Starcom China, a division of Paris-based advertising and communications firm Publicis Groupe, these consumers -- most of whom have grown up as only children under China's single-child policy -- directly or indirectly account for 50% of all household spending in China. That gives them unprecedented purchasing power, says Angie Chan, Greater China senior research manager at Starcom China. Although relatively new to the shopping malls and boutiques that have helped global brands in the West thrive for years, China's young consumers are already making a mark.

But winning their loyalty today requires going beyond the cash register, say corporate marketing strategists. As in other countries, China's new generation of consumers seek out brands that they feel reflect who they are, and are "a quick way to express something … [or] compensate for things that aren't there," says Wharton marketing professor Keisha M. Cutright. But arguably unlike in other countries, what's beginning to emerge now in China is that its youth are also receptive to brands that can improve -- or even radically change -- how they lead their lives.

'Awakening Sense of Self'

Figuring out how to do that is a big conundrum for corporate marketers -- both local and foreign -- not least because the values and identities that China's youth say they uphold often change just as fast as a fashion season. "The kids in China now can decide what they want," says Qiaowei Shen, a Wharton marketing professor who was born in Hangzhou and educated in Beijing before moving to the US. "When I was young, you would accept what your parents chose for you. We weren't rich. There wasn't a lot of money to spend." Today, youth are more focused on their own needs, and "more than ever before want to define themselves in a different way," she says. "They want to be unique…. I think there's an awakening sense of self."

That awakening has been most apparent in Beijing, Shanghai and China's other big cities, as young urban shopaholics tote Prada, Gucci, Hermes and other top-end labels, "to show their social status [and] wealth and to impress others," says Shaun Rein, founder and managing director of China Market Research Group (CMRG), a market intelligence firm in Shanghai, and author of a forthcoming book, The End of Cheap China.

He cites CMRG research involving 5,000 consumers in 15 Chinese cities, which found that consumers under the age of 28 "had zero savings." The reason? "They are so optimistic about their futures that they are willing to spend everything they earn on clothes and consumer electronics. [The survey respondents said they] expected 10% to 20% annual salary increases so that they are spending completely [for purposes of] enjoying themselves." A lot of that optimism, he adds, has helped drive up the number of credit cards in circulation in China, from 13.5 million in 2005 to 240 million last year. "That is why you often see Chinese secretaries making US$800 a month buying US$1,000 Gucci bags," says Rein.

But those youthful high-end shoppers are only part of the picture, as companies are discovering. As they look further afield to expand their national foothold in China's smaller cities, for example, big global brand names face a tougher sell, notes Chan of Starcom. "Youth there have less money and say that [luxury] brands don't matter at all, and that if they see a friend wearing a name brand ... they would be looked upon with scorn and viewed as being wasteful," while buying local, less expensive brands also shows their support for "China Inc." For marketers, she says, that means "assuming that all Chinese youth are 'aspirational' and wish to live the life of youth in the big cities is incorrect, as is assuming that all Chinese youth wish to emulate a Western lifestyle."

And as Chan notes, on a day-to-day basis, they wield as much consumer clout as their big-city counterparts. She recalls during a recent visit to a small Chinese city meeting a couple, who told her that they let their 20-year-old son make all the buying decisions in the household since he's more familiar with the brands on offer. "We don't know what a good product is," the mother told Chan. "So we just let him choose and we use whatever he purchases."

Bling and Blogs

Whatever the size of the city, China's youth are setting themselves apart from other global consumers in several ways that are heavily influencing marketing decisions. For example, there are currently 195 million micro-blogging users in the country -- or 40% of China's total online population of 485 million, according to the China Internet Network Information Center, a quasi-government organization.

Then there's their adoration for mobile technology. In China, 73 million mobile owners are between the ages of 13 and 17 -- that's 20% of all teen mobile owners worldwide and three times more than the US mobile teen market, reports mobileYouth, a London-based youth research firm. "With the importance of mobile phones in China and the fact that they are always on hand, China youth take the time to select the best phone and the best brands carefully, using the phone as their 'social currency,'" says Chan. "They also use it as a fashion accessory, switching phone brands or models often and decorating their phone with gems, 'bling,' accessories and photos." While that, of course, is a boon for the balance sheets of mobile phone makers, it also has big implications for all kinds of companies and their digital marketing strategies.

But the changes in how marketers are reaching China's youth go beyond gadgets and technology, mobile or otherwise, says Jay Mark Caplan, research manager and head of creative production at China Youthology, a Beijing-based consultancy. A big difference between China and other markets is that in China, there are few resources for youth to develop interests or hobbies, he says, so brands can play a role in filling that gap.

This is where "tribal marketing" comes in. Though not a new concept in global marketing circles, companies in China are just beginning to figure out how to make the most of tribal marketing by joining forces online and offline with communities of young people. United by a shared lifestyle interest or hobby, such as photography, travelling or skateboarding, these communities are one route for companies to introduce new products and services while getting closer to target customers in ways that go beyond what they sell. That may, for example, require companies focus on ongoing community-service activities, such as building sports facilities, and organizing local sporting events or concerts, which is what both Nike and Converse have been doing, says Caplan.

For companies, the big challenge, however, is identifying which tribes to partner with. John Solomon, founder and managing director of Enovate, a Shanghai-based research consultancy focusing on China's youth market, describes a need among China's youth for "individuality within a safety zone of numbers," balancing wanting to both stand out and fit in. That need is also influenced in part by growing up as only children. "There's some loneliness there, and a lot of pressure on that one child," he says. "A lot of people go online because they're looking for people to talk to or relate to, to share ideas."

That sharing can happen in a number of formats. According to a survey of Chinese youth by Pearl Research, chatting was cited as top reason to go online, following by gaming.

"In China, the idea of 'tribes' is different [from other countries] in that Chinese youth are still exploring what they like, who they are and what they stand for," says Starcom's Chan. That's why it is not uncommon for Chinese youth to dip in and out of various tribes and areas of interest, or to belong to several simultaneously. In contrast, she says, youth in the US tend "to steadfastly proclaim their allegiance to one tribe."

Caplan says Chinese youth "have tended to change allegiances depending on what's popular." That tendency toward homogeneity is especially evident in smaller cities, where the consumer culture is just beginning, and maintaining the status quo is still very important. As a result, says Caplan, "it has sometimes been a frustration for certain markets: How can I [as an advertiser] differentiate myself from the competition build loyalty when my target market wants to be the same as everyone else?"

As Vancl showed, China's youth are drawn to communities to help them express themselves. Those communities can be either online or offline, virtual or physical. McDonald's, for example, launched a campaign across China in 2009called "Let's Meet Up," which encouraged online groups to plan activities and meet at their local McDonald's. Young people took photos together that they posted online, generating a buzz beyond the event. "That was a great campaign because it bridged the online and offline world," says Solomon. "Viral videos come and go, but having a great experience [with a brand] is much more powerful…. It's got a lot more emotional benefits, and those emotions end up being associated with your brand."

For sure, getting all that right is a tall order for marketers, says Caplan, requiring a deeper knowledge of both their company and their customers than many bargain for. "As a marketer coming to China, you’ve got to ask: '...What do you really care about, and how can you share that passion with youth?" he says.