Last Updated on May 29, 2023
NFTs in China are booming, and they’re booming fast. There lies, right now, a huge opportunity for international brands to get in on the ground floor. However, they must be aware that their usual approach towards NFT marketing and selling will almost definitely not be optimal in the Chinese market, because it holds significant differences to markets elsewhere.
- Chinese metaverse on track to grow to US$50bn industry by mid-2020s
- Of 80% of Chinese netizens who follow celebrities, 64% also follow ‘virtual idols’
- NFT transactions in China are estimated to rise from US$46.5 million in 2020 to US$4.57 billion in 2026
NFTs in China
As covered in our previous article, the Chinese government have embraced blockchain technology, and are supporting a system by which NFTs can be sold, but there are a few fundamental differences to the international NFT market.
First and foremost, they are not linked to cryptocurrencies; NFTs bought in China may only be exchanged for RMB.
Second, the government is taking steps to completely avoid the financialization of the NFT market. This means that NFTs are, essentially, non-tradable collectibles; they ought to be viewed as products, or gifts, not assets. In line with this, all marketing must avoid using the language of international NFT markets – NFTs are usually referred to as ‘digital collectibles’, for example. Third, the NFT ecosystem is not interoperable with the international NFT ecosystem. It is a walled-off market, NFTs may not be extracted into international wallets or other locations in the global metaverse.
What does this mean for your NFT marketing strategy?
First off, delinking from cryptocurrency means that marketers should not expect tie-ins with special coins, and should never advocate for their NFTs to be sewn into potentially lucrative speculative behavior. The Chinese government has been very clear on this: cryptocurrency, and the open trading of NFTs, represent a high financial risk to consumers, and are therefore strictly prohibited. Any marketing campaign that even hints at the potential financial benefits that might come from buying an NFT is illegal.
Second, there’s an opportunity to adapt more traditional marketing models for the digital era. The regulatory framework creates an environment in which NFTs are popularized based on two main factors: 1) hype, and 2) their intrinsic value. Hype is necessary anywhere for NFT sales, but a heightened desire for intrinsic value is, arguably, different to international markets.
By intrinsic value, we are talking about the value consumers attach to a given collectible, simply because of what it is, not what it might bring them. With the extrinsic value of trading for profit removed, collectibles must be interesting, new, and creative in ways that cause people to be happy, simply to possess them. This means that traditional messaging, around an artwork or collectible’s worth, is arguably more effective in China than it is elsewhere, where a large percentage of consumers simply sort NFTs according to which they might see more profit out of.
The Chinese metaverse
This begs the question: how can we adapt traditional messaging for the digital era in China? One key to the answer lies in understanding the Chinese metaverse. The majority of NFT collectors in China are from Generation-Z. The Chinese Gen-Z are rapidly becoming invested, in terms of both time and money, in the metaverse. Though still a relatively new concept, the metaverse refers to a digital reality which is increasingly becoming the site of individual attention and social interaction. It is splintered across multiple locations – some platforms where people may inhabit actual 3D avatars, others where they may simply act as users, similar to chatrooms – but to think of them as entirely separate, or just the internet as usual, would be to miss the point.
Baidu’s metaverse, XiRong. Source: Takashi Kawakami, asia.nikkei.com
Say, for example, someone purchases an NFT on one platform. They’re then able to display the associated artwork, or toy, on their social media, or within a multiplayer game. They might use it in a virtual showroom, they might share with their friends, and they might interact with a brand associated with the NFT on several other platforms. This informal communication and interaction between and across platforms is what constitutes the metaverse. In China, the metaverse exists essentially independently of the metaverse outside of China. Weibo, RED, WeChat, Jingtan, Huanhe, NFTCN, Tencent Gaming, Mihoyo, Bilibili, XiRang and more contribute to a growing metaverse of its own.
How to Make Use of the Chinese Metaverse
- Digital art collaborations. Partner with well-known Chinese artists to create a series of brand-specific digital collectibles.
- Build hype with KOLs. By now, this is textbook Chinese digital marketing. But it’s worth mentioning, that especially for digital products such as NFTs, KOLs drive hype more than traditional advertising.
- Digital idols. China’s fan culture extends to digital KOLs, or ‘virtual idols.’ Some of them are AI-generated, others are more traditionally animated, but they have an increasing amount of sway in terms of interaction and purchasing behavior.
- AR and VR. Allow consumers to step into the metaverse, to spend time with digital idols, and explore 3D collectibles together.
- Create a 3D visual identity. This will involve 3D graphics, but also possibly creating digital avatars that represent the brand, and that might eventually be seen as digital idols too.
- Use Chinese marketplaces.
Chinese NFTs and Games
Luxury brands have been creating tie-ins with popular Chinese video games for a while now. Louis Vuitton, Tesla and MAC Cosmetics have created content for Honor of Kings, Game for Peace and League of Legends. As yet, there’s no clear indication how this might be integrated with NFTs, so there are two options here. The first is to simply keep an eye out, and see if any functional tie-ins become possible as the new platforms develop. The second is to create informal tie-ins, along the principles of the metaverse. That is, create content that indirectly leads players to collectibles that are provided through other platforms.
Louis Vuitton x League of Legends, source: wwd.com
Channels for NFT Marketing
All digital marketing in China starts from the foundation of a China-based, China-registered website. There are two important things to note here. First, many other marketing services and tools, such as Baidu paid ads, require first having a Chinese website. Second, it is not advisable to simply port or translate an international site. Chinese net users interact differently to elsewhere; for maximum success, localization is key.
Chinese Social Media
What’s the main way to promote virtual collectibles? Hype. How does one go about generating hype in China? Weibo, Xiaohongshu and WeChat are good places to start. Not only do these apps provide access to huge, active userbases, they allow brands to interact, to have a true online identity. Caution must be exercised here. Controversy and taboo topics are easy to stumble upon, so a local specialist is a must.
The number of NFT-focused media and communities has boomed in China in the last year. There are numerous official accounts and group chats on WeChat, and influencers on other platforms. Decent agencies will have bridges to these incredibly influential actors, and can generate coverage by crafting press releases in language that piques their curiosity.
The tried-and-true strategy known to marketers everywhere. Enlist the help of a KOL, or piggy-back on a product launch, to insert vouchers, coupons or links to upcoming NFT releases within otherwise unrelated online content.
The Chinese NFT community is very active in forums. One of the best ways to be visible is to create positive content in form of discussions/topics around your NFT project. This will give both visibility and also create a layer of positive content that the community will associate your NFT with.
The Chinese NFT market represents a huge opportunity, but brands must be careful to adopt an appropriate strategy. Avoid financialization, embrace the metaverse, create content across multiple platforms, and create NFTs with high intrinsic value.
Of course, each NFT project is different, whether we are talking about marketing a foreign-listed NFT to the Chinese community or willing to localize your NFT in China. Reach out to us, Sekkei Digital Group can help tailor the most suitable approach for your project. Our 13 years of experience make us pioneers of the Chinese Digital Ecosystem.