Co-branding in China – Reach Chinese Consumers Synergistically

co-branding in China

Co-branding in China is an exciting opportunity for businesses to create synergies that go beyond the simple addition of two brands. Cross-brand collaborations bring fresh, creative, and exciting co-branded products and services to Chinese consumers.

Find out how to grow your client base and raise brand awareness, tap into new markets, increase your sales and revenue, and much more with the China experts China Gravy.

The Chinese Market

With the Chinese GDP predicted to reach almost 30 trillion USD by 2027, the Chinese economy is a high-potential market for local and international businesses alike. All of this while dealing with the aftermath of the Covid-pandemic, rising energy costs, political and economic hardships, and global supply chain disruptions. 

China’s transition from a low-cost producer to a consumer-led economy is resulting in increased household income and domestic spending. Young Chinese, in particular, love to shop online. 

So, how to lift the potential of this booming but also super-competitive and saturated Chinese market? Chinese marketing continuously evolves and requires new and innovative marketing strategies to continue to excite Chinese consumers.

One trending and smart marketing strategy is co-branding. This strategy is particularly interesting at present (end of the year 2022) where many companies are cutting marketing budgets due to the generally challenging economic situation post-Covid worldwide: inflation, an imminent recession, the energy crisis, and war in Ukraine.

Co-branding has the potential to create mutual benefits at shared marketing costs as long as it is ensured that all parties of the partnership contribute something to add value, e.g. funds, market knowledge, and/or reach. 

So, let’s take a closer look at everything that is behind this and how to get started in the Chinese market with your international brand.

What is Co-branding?

To begin with, co-branding is a marketing strategy where two (or more) brands, celebrities, or other entities collaborate to jointly promote an existing product/service or create a new one. This strategic alliance is also known as brand partnership. 

Besides, Co-branding can also be the result of a company merger or acquisition as a way to transfer a brand to a better-known or more reputable company.

Finally, co-branding may also include sharing technologies and expertise of each brand partner. In other words, co-branding goes beyond a typical collaboration or synergetic marketing efforts as a new product or service is created with its own branding (look & feel).

Examples of Western Co-branding

Nike x Apple

A well-known example of co-branding is sports brand Nike and tech company Apple. In 2016, Apple and Nike created and promoted the Apple Watch Nike+.

Co-Branding Apple x Nike

Burger King x McDonalds

Another example showing that even competitors can join forces is Burger King and McDonalds. In 2019, they collaborated to raise money for childhood cancer in Argentina.

Proceeds from McDonald’s Big Mac sales for one day were contributed to this charity cause. Burger King did not sell their Whoppers (Big Mac equivalent) on that day and encouraged purchases of McDonald’s Big Mac.

co-branding example (Burger King x McDonalds) - charity

And again, during the Covid-pandemic in 2020, when keeping employees and business going was the focus, these fast-food chains collaborated by encouraging their customers to also purchase from other fast food places.

co-branding example (Burger King x McDonalds) - Covid
Source: Burger King UK’s Twitter

Who is Co-branding for?

Generally, co-branding is a suitable tactic for all brands – small, medium, and large – that wish to 

  • expand their customer base, awareness, and loyalty
  • tap into new markets/niches or expand market reach/share
  • increase revenue streams and profitability
  • boost brand image and value
  • save marketing costs 

Regardless of whether your business is in retail, service, manufacturing, or other – co-branding has the power to create impressive synergies by leveraging the individual USPs of each brand.

Types of Co-branding

Co-branding is typically divided into product-based and communications-based co-branding:

Product-based Co-branding

Linking multiple brands from different companies to market an existing or new product/service, naturally, referred to as product-based co-branding marketing strategy. 

There are two main strategies:

  • Parallel co-branding: multiple brands create a combined brand
  • Ingredient co-branding: ingredients or components from one brand are used in another brand for enhanced reputation and positioning; usually occurs between larger well-known brands

Communications-based Co-branding

Linking multiple brands from different companies to jointly communicate and promote their brands is known as communications-based co-branding.

  • Same-company co-branding: advertising multiple in-house brands through a single product, e.g. Courtyard by Marriott hotels
  • National to local co-branding: small local businesses partner with nationally known brands to increase national brand awareness while increasing small business revenue, e.g. credit card collaboration with local retailers, or vehicle manufacturers partner with local car dealerships
  • Joint venture/composite co-branding: partnership between well-known companies to present a new or existing product or service that couldn’t exist individually, e.g. streaming services partnering with film studios to create/host movies/TV shows
  • Multiple sponsor co-branding: companies partnering up to share technology and promotional events like athletic events and concerts to increase sales, brand recognition, and reputation, e.g. multiple credit card partnerships

Advantages of Co-branding

Co-branding has a large number of potential benefits.

  • Access new target audiences, including new customer demographics (increase reach)
  • Increased sales
  • Establish credibility, expand brand awareness
  • Brand revitalization and positive charging
  • Adds value and differentiation
  • Smaller brands can benefit from more prominent co-branding partners
  • Strengthens brand positioning
  • Resources and advertising costs can be (partly) shared, and risks minimized

Next, let’s take a look at the potential downside.

Limitations of Co-branding

The possible risks of co-branding include:

  • Individual company mission and vision must align to avoid incredibility and unsettle consumers
    • advice: identify brand partners with deep synergistic opportunities and similar core values
  • Keep in mind that brand values typically pass over to each other through co-branding; carefully consider if you want your ideal target audience to associate your brand with the other brand(s) traits
    • advice: choose brand partners who are leaders in their niche
  • Marketing strategies must be aligned with the brand partner, which can lead to less direct influence and control
    • advice: retain full approval and refusal rights for all communications
  • Larger brands may not experience a strong pull from smaller co-brands but may have other benefits like access to a particular niche
    • advice: clearly define the goals and objectives of the collaboration and communicate them transparently with your brand partner to create a “win-win” situation
  • Reach may be more niche targeted compared to a generic all-in-one brand
    • advice: be clear on your own and your partner’s objectives and communicate them; niche reach may just be what they/you want or need

To sum it up, co-branding partners should be chosen very carefully. A beneficial strategy could be to roll out a co-branded product or service gradually (e.g. by region, marketplace, etc.) and adjust it accordingly with the learnings. Likewise, A/B and focus group tests can help to avoid hiccups during the rollout of the actual marketing campaign.

Co-branding goals

Generally, there are four main co-branding goals:

  1. Market penetration: increasing the market share of a product in a specific environment
  2. Global brand strategy: merging global recognition with localization through core values, and CI
  3. Brand reinforcement: activities to ensure that newly created brand equity does not depreciate over time
  4. Brand extension/stretching: a brand’s established reputation serves to launch a new product

So, how does all of this translate to the Chinese market? Let’s find out!

Co-branding in China

Co-branding strategies work particularly well in the Chinese market. Through co-branding, many brands have successfully increased traffic, boosted sales, and taken their brand image in China to the next level over the last few years.

In fact, co-branding is a highly efficient and effective marketing strategy. Now more so than ever in the face of an overall challenging economy post-Covid (inflation, imminent recession, energy crisis, Ukraine war) where many companies are lowering their marketing budgets. Here, co-branding can come in handy to share marketing costs while gaining a large variety of benefits.

Starting co-branding in China

As you are aware, doing business in China has its own rhythm and rules. 

To make your co-branding collaboration in China a “win-win” situation, make sure…

  • …you understand the local culture & social context (conduct market research if necessary) and localize your co-branding strategy
  • …you have completed trademark registration of your brand in China (prevent “trademark squatting”) and register to co-brand timely (do your due diligence beforehand to avoid legal IP infringements)
  • …you have accounts on China’s most popular social networks (WeChat, Douyin, Xiaohongshu, Weibo), so that you can link your co-branding campaigns to your own Chinese social media accounts and your customers can get in touch with you
  • …you have a shop for your ecommerce products that is accessible in China and localized (e.g. payments) – either on WeChat, CBEC or local platforms, or your own Chinese website
  • …to consider limiting the number of co-branding collaborations to maintain exclusivity and credibility of your brand
  • …to have a co-branding and licensing agreement to document the details of your partnership, avoid misunderstandings and legal issues in the future

For example, in terms of culture, traditional Chinese culture is gaining popularity in the aftermath of the global Covid-pandemic. Nostalgia marketing campaigns and partnering with established Chinese brands could be good strategies to capitalize on this development.

The Chinese have even coined a term for the preference for local domestic products: 国朝 (guochao) which can be translated to “national trend”. Unlike the “older” generation in China, younger Chinese did not grow up to learn a “West is Best” attitude.

So, how to find and select an appropriate co-branding partner in China?

Find & Select the Right Partner for Co-branding in China

Co-branding is highly synergetic. Failure to select the right partner to create a sought-after product can easily result in a backfire.

Chinese social media, WeChat above all, is a great place to research potential partners and get a first impression of their overall appearance, and relevance in the Chinese market.

When selecting a co-branding partner, consider the following

  • Are your core values compatible?
  • What is the image, visibility, and reputation of your potential partner?
  • Is there an added value or benefit for the target consumers?
  • What does the other brand have that your brand lacks and vice versa? How could you complement each other?
  • Are your brands competitors in any way or contradicting each other’s values/message
  • Which risks come to mind?

When creating a new product or service, both brands can ask the following questions

  • What do Chinese consumers want and need from this specific brand collaboration?
  • How can brand collaboration fulfill those needs and wants, considering Chinese traditions, beliefs, values, and the inner emotions of the target group?
  • Can adequate product quality, affordable prices, and customer support be ensured?

If you are not sure how to get started, the China experts at China Gravy are here to help.

Case Studies: Co-branding in China

To demonstrate the power and potential pitfalls of co-branding in China, let’s take a look at a few real-life examples.

Douyin co-branding Hashtag

On Chinese popular social media app Douyin, the hashtag for co-branding “联名” was used in 450 million posts/videos since the hashtag was created (see screenshot below). 

The Chinese character 联 means “united” or “to connect”, and 名 means “name” (in this case “brand”).

Co-branding in China: Douyin co-branding hashtag
Source: Douyin (Q3/2022)

Successful Examples of Co-branding in China

First, we’ll take a look at positive co-branding examples in the Chinese market, and afterwards, we’ll take a look at some negative examples with the objective to gain learnings and insight.

Gucci x Adidas (Global Campaign)

This global 2022 co-branding collaboration by Gucci and Adidas was well received internationally. Their exquisite collection excelled at online brand engagement with an estimated reach of 7 million people and 5,000 organic posts in just 30 days. Celebrities from Harry Styles to Brad Pit are wearing these pieces.

Traditional Italian luxury fashion meets established quality athleisure in this trendy collaboration.

Through this co-branding collaboration, both companies have successfully accessed new consumer bases, increased their revenue and sales through combined market strength, and gained many other benefits.

Dove x The Forbidden City Museum

This 2020-collaboration displays a deep understanding of Chinese culture through branding wordplay and excellent co-branding fit.

The Forbidden City Museum (故宫博物院) recently entered a large variety of local and foreign collaborations to expand its reach, including the 2020-Spring Festival collaboration with American chocolate brand Dove (different from the Dove personal hygiene brand).

This co-branding campaign in China revolved around the traditional Chinese concept of “blessings” (福) for the new year. The Chinese character “福” is pronounced as “fú,” which is the same pronunciation as the second character of “德芙” (dé fú), Dove’s Chinese brand name.

At the same time, “德芙” (dé fú) is pronounced like “得福” (dé fú) in Chinese, meaning “blessed” or “to get blessed”.

Tradition has always played an important role in Chinese culture, and even more so in recent years among younger generations. Luck and blessings, especially during traditional Chinese holidays, are particularly significant.

This was a smart and well-adapted co-branding strategy by Dove, honoring Chinese culture respectfully. Partnering with the Forbidden City Museum demonstrated an understanding of the culture that captured the attention and hearts of young Chinese consumers.

The hashtag 我真得福了 “I’m so blessed” was used as a hashtag challenge owned by Dove and promoting the Dove x Forbidden City Museum collaboration. There were six winners, and the first winner received 10,000 RMB (~1,400 USD). All in all, the hashtag was used almost 1.6 billion times – an amazing viral success.

Benefits for the Forbidden City Museum from co-branding campaigns include higher prominence and attracting more visitors (especially from abroad), as well as consolidating its modern and fashionable image among younger generations. On the other hand, the main benefit for Dove is to increase its brand awareness and reach in China.

Co-branding in China (Dove x Forbidden City Museum)
Source: Douyin app (Q3/2022)

Pepsi x People’s Daily

This co-branding partnership from mid-2020 is a prime example of meaningful and engaging collaboration. 

The People’s Daily (人民日报) is the largest newspaper group in China. PepsiCo is the second-largest food and beverage company in the world, behind Nestlé.

During the peak of the Covid-pandemic, Pepsi created four new packaging designs to honor the Covid frontline workers like doctors, nurses, and volunteers. For this, the Pepsi packaging adopted People’s Daily’s signature “newspaper color.”

Besides, Pepsi and People’s Daily also launched a WeChat mini program, where users can take personality quizzes.

Even though these two brands have a rather different brand positioning, they managed to create a culturally appropriate, and successful co-branding campaign, which added positive connotations like humanism to both brands.

Co-branding in China (Pepsi x People's Daily)
Source: (Q3/2022)

Here are screenshots from the 热爱守护者 (“love guardian”) campaign on WeChat. The QR code on the left side links to the mini app, and on the right side, you can see a screenshot of the Pepsi x People’s Daily mini app.

Pepsi x People's Daily WeChat mini app (brand partnership)
Source: WeChat (Q3/2022)

Uniqlo x KAWS

The Chinese simply love fashion, making co-branding collaborations in this segment a predestined hit, if done correctly. Fast fashion meets luxury is particularly intriguing.

This mid-2019-collaboration of Japanese casual wear designer Uniqlo and New York-based artist KAWS – famous for his unique graffiti style – is interesting because it led to a significant increase in the search volume for both brands right after the official launch of the collaboration on Chinese search engines and popular social media apps.

Tools like Baidu Index (not reflecting the actual search volume rather than a trend/index) or WeChat Index clearly reflect and demonstrate this. While the same co-branding strategy for the UT COLLECTION was not as successful in Japan and Korea, it was an absolute hit in China. Here’s why and how:

In China, Uniqlo’s Tmall flagship store was sold out within the first three seconds, which is not unusual for the new launch of trendy products in China. At the same time, physical Uniqlo shops in China were also overrun by excited shoppers, which even made the news.

In the screenshot below, you can see a comparison of 优衣库 (Uniqlo, green) and KAWS (blue), using Baidu Index. However, it shows a peak in the search index during the Uniqlo x KAWS campaign launch in June 2019:

Baidu Index Uniqlo x KAWS search index development for brand partnership campaign
Source: Baidu Index
Average Monthly Search Index on BaiduBefore June 2019June 2019After June 2019

Contrary to Western countries, collaborations between less expensive brands with upscale brands often have a stronger impact in the Chinese market due to the accessibility of luxury goods to everyday consumers, especially the younger generation. In China, good and exciting news travels quickly through Chinese social media, especially WeChat, Weibo, Douyin, and Xiaohongshu.

This is also the case in Uniqlo and KAWS’ collaboration. KAWS’ toy sets easily cost several thousand RMB/USD, and consumers love to buy affordable Uniqlo x KAWS t-shirts (UT COLLECTION), starting from 99 RMB (~14 USD), instead, so they can also have “a piece of KAWS at home”.

This is an absolute “win-win” collaboration that guaranteed sales: KAWS with his unique and sought-after design combined with Uniqlo’s accessible and affordable fast fashion.

brand partnership (Uniqlo x KAWS)
Source: (Q3/2022)

Uniqlo and KAWS launched their first collaboration in 2016 when the line sold almost one million units per month. Besides, Uniqlo also collaborated with Disney, Marvel, Lego, and many more. 

In China, Uniqlo has an established and positive brand image. Through various collaborations, Uniqlo can increase the sentimental and social value among consumers, particularly by ensuring affordability and accessibility among Chinese consumers.

Less Successful Examples of Co-branding in China

Now, let’s take a look at less successful brand partnerships in China, and the lesson to be learned from them.

H&M x Others

Compared to Uniqlo, the brand partnerships by renowned Swedish fast-fashion producer H&M are less successful, in particular, in the Middle Kingdom.

H&M started co-branding campaigns back in 2004 with collaborations including Versace, Balmain, Stella McCartney, and many more.

While the H&M x Alexander Wang partnership (2014) and the H&M x Moschino collaboration (2018) both received positive feedback similar to the Uniqlo x KAWS collaboration, H&M’s cooperations have become less attractive ever since. They couldn’t live up to the expectations in terms of brand awareness, sales increase, and consumer engagement. 

The quality of the co-branded clothing fell short in the eyes of the consumers, especially the H&M x Versace collection, which had a high number of returns, resulting in H&M canceling its return policy for recent co-branding campaigns.

Moreover, fashion producers like H&M and Nike have received backlash after using “Xinjiang cotton” where allegedly Uighur forced labor occurred in the production process. After calls for a boycott from many Chinese, many producers have ceased collaboration with Xinjiang cotton, and H&M has largely retracted from the Chinese market.

Durex x HeyTea

Likewise, this 2019-brand collaboration between Durex (杜蕾斯) x Hey Tea (喜茶) received some negative attention. 

Their joint marketing campaign “for one night” (不眼夜), which was launched on Chinese social media platform Weibo, was unsuccessful due to the ambiguous meaning of “not a single drop would be left tonight” (今夜一滴都不许剩), which is particularly inappropriate in China’s more traditional culture. In fact, HeyTea quickly removed the social media posts and released a public apology

Dolce & Gabbana x Karry Wang

Another example of a less successful co-branding campaign, that even resulted in a backlash and negative feedback, is the 2018-collaboration between Italian luxury fashion brand Dolce & Gabbana x Karry Wang (pop idol and influencer). 

The promotional video by D&G was ill-received due to Chinese stereotypes and disrespect for its culture, following the termination of the brand collaboration.

Even though negative brand attention in the Middle Kingdom is not ideal, damage can be controlled through timely and powerful PR strategies in China.

Learnings from Unsuccessful Co-branding Campaigns in China

Let’s take the quote “When you lose, don’t lose the lesson.” by the Dalai Lama as inspiration to gather learnings from less successful co-branding partnerships in China.

Take into account

  • Do you and your brand partner understand the Chinese market and Chinese mentality?
  • Do you and your potential brand partner share a target market?
  • What do you and your potential brand partner each bring to the table?
  • Which obvious risks come to mind that could arise from the partnership?
  • What elements will you and your potential brand partner share?
  • What does your potential brand have that your brand lacks, and vice versa? 
  • How can the brand message be created in a positive and culturally sensitive fashion?
  • Do you already have brand accounts on China’s most relevant social media platforms, so your new consumers can engage with your brand?

Remember that you can always test co-branded products and marketing messages with Chinese consumer focus groups, e.g. to ensure that there are no cultural, language, or other misunderstandings. A China expert like China Gravy can help you with this if you like.

Co-branding in China – The Takeaway

In a co-branding relationship or brand partnership, multiple brands work together to create a joint product that represents both of their brand identities. It is an effective way for brands to synergetically combine power, often leading to increased brand visibility and profits at reduced individual costs and risk. 

Co-branding allows each of the involved companies to respond to the ever-changing marketplace and raise brand awareness, as well as tap into new customer bases (e.g. GenZ demographic) and markets, in order to ultimately increase revenue.

  1. Generation Z consumers account for about 30% of Chinese online consumption. They are particularly open to co-branded products and services, in particular, if they have an element of exclusivity.
  2. Chinese GenZ consumers return to traditional Chinese values. Local brands that embody Chinese values and nostalgia marketing have an easier time capitalizing on this.
  3. Overseas brands should understand Chinese culture well and adapt their brand collaboration respectfully and authentically instead of just “riding the guochao wave” to avoid backlashes.
  4. If done appropriately, co-branded products can be a win-win-win for local and international brands as well as consumers.

When carried out correctly, co-branding offers “the best of both worlds” through combined compatibility and efficiency to create a “win-win” situation. Leverage China’s “fans economy” and maximize its potential through strategic brand partnerships.

Would you like to discuss if and how co-branding in China could accelerate your success in the Middle Kingdom? Or would you like to explore other potential China marketing options for your brand?

Whatever your situation, goal, and budget – the Asia specialists at China Gravy are happy to talk China with you. Message us for your FREE consultation.

Discover a large variety of additional China marketing options to boost your brand in the Middle Kingdom cost-effectively depending on your individual needs.

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