How can local brands tug at Hong Kong consumers' heartstrings?

Only 7% of locals will choose homegrown brands over global ones, a study found.

More people across the world have been putting their money to their homecourt with 56% saying that they trust local brands more than global brands in 2018, according to a study by advertising giant McCann. In APAC alone, local brand believers are a bit higher than the global average at 59%.

But Hong Kong is an outlier, where only 7% of consumers are inclined towards local brands, indicating success for global players that have been working overtime to establish brand recall.

“Attempting to take advantage of mainland Chinese’ spending power and to ensure that their brand is top of mind amongst mainland Chinese who are in Hong Kong, global brands have in recent years been more proactive in marketing and in connecting with people in the city. This has, to a certain extent, been washing out local brands, which often are of a smaller scale and have a tighter budget,” McCann Worldgroup Hong Kong CEO Brandon Cheung and strategy director Karen Chan told Hong Kong Business.

The McCann study found out that consumers in Hong Kong prefer global brands due to the availability of more choices and better quality.

Rupam Borthakur, Hong Kong CEO, Insights Division at research consultancy firm Kantar believes that the global over local mindset in Hong Kong has taken root because residents have been exposed to global brands for a comparatively long time than their regional peers. “As a result, [they] are more discerning than consumers in other Asian markets: they appreciate quality, understand product nuances and trust brands that offer innovations that address their needs.”

Hong Kong, unlike China and India, failed to witness an explosion of local champions challenging global players in many categories during the past decade, according to Borthakhur. “And as their [local brands] penetration increases, so does people’s trust in them, resulting in a strong response favouring local brands. The emergence of local brands in HK has not been as prolific as in some emerging economies, and we don’t see local brands competing across categories in such an aggressive way,” he added.

Additionally, both Cheung and Chan believe that consumers have become more demanding so it is all the more important for brands to listen attentively and engage consumers in a more agile, effective and creative way. This has led brands to develop certain strategies to reach out to their targets. One of which is the “抽水” culture that could be translated as ‘real time response’ or ‘newsjacking’ advertising. “Brands and consumers alike often take advantage of a certain event or ironic incident, and re-create their own version of the event or a timely response to the incident in order to poke fun at it. These memes or posts often go viral very quickly and are a great budget-friendly way for brands to stay current and top of mind,” Cheung and Chan explained.

“IKEA is a brand that has done this particularly well: someone had to saw off part of a mattress to fit it into his room because he had bought the wrong size from a furniture store that did not accept returns. In response to that, IKEA quickly put out a post saying that there is no need for sawing even if you don’t like it, because at IKEA, they offer a 100-day trial period,” they continued.

Another advertising strategy is integrating creative messages in properties to optimise the impact of communication, the two said. “An example is Nike’s ad featuring Hong Kong female high jump record holder Cecilia Yeung that was placed directly across the Wan Chai Sports Ground with an inspiring message for aspiring athletes.”

Finally, nothing beats experience. According to Cheung and Chan, brands have been leveraging experiential marketing and creating more events and activations, citing Hong Kong Tourism Board’s Art Month Campaign which turned MTR cars into mobile galleries that can reach out to millions of commuters daily. “From pop-ups to total transformation of physical space, brands are riding on consumers’ desire for experiences to create new connections.”

Who’s got it right so far?

Although it seems that a lot of local players in Hong Kong still needs to step up their game to lure more customers, it seems like some that have already won consumers’ hearts against global players. “Brands like Hang Seng Bank, Vitasoy, and Go Go Van all have very high trust ratings in comparison to global competitors in their fields. When these brands are looked at in context of their category their strong position is clear, but this may not be obvious from a broad-brush comparison of global versus local,” Borthakur said.

For Cheung and Chan, the way to the local’s heart is to improve their brands’ perception to better leverage their locality and understanding of local culture to add value to Hong Kong people’s lives. This was also echoed by Borthakur. “In particular, they need to find how their brand purpose can address the needs of modern Hong Kongers, leverage their local roots, and combine the two to communicate the message effectively.”

E-commerce startup Ztore is manifesting this strategy, according to Cheung and Chan. “Ztore’s mission is to preserve the Hong Kong local culture and has actively made connections with local creators to carry on the fast disappearing traditions and champion local businesses’ familiar intimate services through modern technology. Their recent campaign championed their mission by structuring Ztore’s services around emotional needs - if you miss the local tastes and if you need anything, Ztore is the good spirited service at a click away. The campaign did not only drive traffic to their site, but also won the heart of Hong Kong people.”