Jean-Yves Coste, Senior Healthcare Director at Michel Dyens, France, explores China's digital expansion and the challenges and opportunities going forward.

China is mutating into the digital powerhouse of the world and in the process of surpassing the US.

E-commerce is skyrocketing and building a major springboard for online consumption.

It represents an unmatched phenomenon resulting in the largest internet user database in the world. The Alibaba advertising market represented Yuan 154bn in 2014, more than the overall skincare market in China (Yuan 142 bn in 2014, according to the Fung Business Intelligence Institute)

Microblogging site WeChat boasts 0.5bn Direct Active Users (DAUs), and is closely followed by Weibo, Youku, etc. It is driven by the ultra-connected Millennials and the advent of an affluent upper middle class in China. It capitalizes on the trends towards personalization and empowerment, which can be fulfilled in online platforms. It will be further fueled by the expansion of smartphone market penetration:

- Mobile E-commerce currently accounts for 51% of all online sales in E-commerce and will account for 42% of all growth in Chinese Private Consumption in the next five years compared with a global average of 35% according to the Fung Business Intelligence Institute

- By 2020, mobile e-commerce is projected to account for 74% of all online sales in China, according to a consultant in “ BCG perspectives” in a broader report called “The New China Playbook”, published in December 2015.

Key factors of success

Medical Aesthetics and Dermocosmetics Players consequently have to master a whole new skill-set in order to keep up with the pace of transformation. Key factors of success will be:

- Ability to reach critical size by constructing datacenters and servers infrastructures

- Offering personalized and differentiated contents

- Catering to the health-consciousness, mobility and connectivity of Millennials

- Taking advantage of the ecosystem and friends’ recommendations

- Create incentives with playful tools and features to promote loyalty

- Ability to “Click and Collect” to see the materialization of the online offer in physical boutiques

- Accumulating data-mining capabilities, market intelligence, data analytics tools, CRM capabilities

- Optimize the metrics for quantification of traffic

The established brick and mortar specialists risk being marginalized if they do not shift their business model towards digital.

Digitalization provides an easier gateway to China due to the virality of the word of mouth propagation and the lightning speed catalyst enabled by the connectivity of Millennials. There are endless opportunities to fully resonate on these new marketing platforms:

- Connect in sync with the social networks as Millennials drive the shift from portal to social

- Have fully clickable contents and the possibility to perform blogging and videoblogging

- Continue to engage internet users on a real-time basis to drive up traffic

- Leverage blogs and the viral marketing power of influencers on the social channels

The next frontier will be the 4G roll-out increasing time-spent on mobile devices:

- On a Monthly / Weekly/ Daily/ Hourly basis, take corrective steps to redirect the product marketing

- They are going to accelerate the conversion by causing a quicker connection to the social network platforms, enabling the brands to proliferate rapidly. This development will be reinforced by the development of new algorithms, the economies of scale efficiencies, the advantage of the 4G to enlarge the territorial coverage

The winners will be able to leverage digitalization as the most powerful channel.

Digitalization has become an integral part of the DNA of Dermocosmetics with the phenomenal rise of online beauty. A parallel can be made to the accelerated integration of other groundbreaking innovations, eg. 3D printers and nano-biotechnologies

It is fueled by the trend of personalization of dermo-cosmetic treatments: the advent of the easily “clickable” connected beauty. It is also driven by the growing importance of post-operative skin care treatment, cocooning as well as the healthy living and prosumer trends. It enables enhancement of consumer loyalty and secures a high rate of reconsumption.

With “the greying” of demographics, there is a huge opportunity for preventive and personalized solutions for skincare maintenance and regular rejuvenation treatments as part of an everyday routine.

One can wonder whether the future Holy Grail will represent a mix of brick and mortar and attachment to traditions together with the most advanced digitalization technologies or even the ability to interconnect the flow of consumers from one channel to the other (offline to online)?