Riding the ESG Wave to Global Success: How Chinese Ecommerce Brands Navigate Overseas Market Opportunities
In recent years, buzzwords such as sustainable development, environmental protection and recycling have not only sparked discussions on social media, but also influenced consumers’ purchasing decisions. In an interview with the AmCham China Quarterly, Jenny Lau, Head of SMB eCommerce, Greater China at Meta discusses the growing importance of ESG (Environmental, Social and Governance) and ESG hotspots across the eCommerce sector.
Can you briefly describe your responsibilities at Meta, and what motivated your team to publish this ESG Whitepaper?
Jenny Lau: I lead the business strategy for Meta Greater China, focusing on enabling the small to medium-sized business (SMB) eCommerce sector. Together with my regional team, I help SMBs in China reach international consumers using Meta’s digital marketing solutions and technologies.
We’re seeing strong growth in cross-border eCommerce and we want to help Chinese brands generate demand and drive growth by harnessing the massive reach of our platforms including Facebook, Instagram, Messenger, and WhatsApp. While a growing number of Chinese brands have begun their exporting journey, we’ve observed some growth opportunities that SMBs may not have the knowledge or technical expertise to accelerate growth.
One of these opportunities is ESG. International consumers are not only concerned about global climate change, sustainability, and gender equality, but are also increasingly turning these concerns into action by making value-driven purchases. According to one survey, 75% of Gen Z consumers in the US value a brand’s sustainability practices over its brand name when making purchasing decisions.
We found some Chinese eCommerce brands were missing out on ESG opportunities due to lack of knowledge and guidance. To address this, Meta collaborated with AVISTA Group to develop a comprehensive whitepaper and a tailored ESG framework for China’s cross-border eCommerce brands. Additionally, we provided consultations to selected DTC eCommerce brands, assisting them in improving their brand image on Meta’s social media platforms and leveraging ESG efforts for growth while finding scalable solutions to showcase their commitments.
Could you go into more details about the consulting that Meta provided – how exactly did you help these Chinese brands?
Jenny Lau: From July to November 2022, Meta invited external consultants to advise four Chinese direct-to-customer (DTC) eCommerce brands in the fashion industry, with the aim to help them improve brand strategy and operational fundamentals in relation to ESG.
We began the consultations by conducting one-on-one interviews with employees from various departments of each brand. From there, we advised the brands on specific ESG strategies and related operational improvements, as well as creative strategies that they implemented through advertising on Meta platforms. In the weeks that followed, we conducted testing and monitored the results.
One of the brands that we worked with was OGL, a fashion brand centered on sustainable women’s clothing that incorporates eco-friendly fabrics, sustainable manufacturing processes, and other ESG-related initiatives. With Meta and AVISTA’s guidance, OGL refined its ESG strategy and implementation. Not only did OGL integrate its ESG strategy into its daily operations by optimizing its value chain, but they also fully embedded their ESG strategy into the company’s overall business strategy. It was gratifying to see improved performance on multiple dimensions following the four-month consultation period, from brand impact to community bonding and marketing efficiency.
What’s your advice for Chinese eCommerce brands looking to improve their ESG-related social media strategies?
Jenny Lau: ESG-related content can help eCommerce brands get noticed on social media and engage potential customers, especially in mature markets like the US and EU. However, creativity must always be at the core of these ESG-centric digital advertising or social media strategies.
From August to November 2022, Meta worked with a group of Chinese eCommerce brands to test and learn how effectively ESG elements can increase branding and purchase intent from digital creatives in short-form video format, Reels. We identified five creative best practices to run impactful ESG campaigns:
- Think beyond the product to identify diverse ESG stories.
- Make it credible and clear: share facts and use simple yet clear language to communicate your ESG message.
- Give enough importance to both the product and ESG, see ESG message as a complement rather than either-or.
- Find the right audience: use ESG to analyze the demographics of your ESG campaign results to identify the right audience.
- Keep it real with Reels and build trust through authentic storytelling of Reels with key opinion leaders (KOL).
ESG is gaining importance as a system for assessing corporate sustainability and social value. What does this mean for China’s Commerce brands looking to engage overseas customers?
Jenny Lau: ESG’s growing importance means Chinese commerce brands must prioritize sustainability to engage overseas customers. Consumers seek recyclable packaging, affordable and sustainable products, reduced chemical usage, carbon-neutral shipping, and transparency in sustainability practices. Brands failing to meet these expectations risk losing business opportunities. 59% of global consumers plan to stop buying from brands not addressing climate change, and 24% of them will boycott those without sustainability plans.
Beyond consumers’ rising expectations, to what extent is ESG important and relevant to Chinese cross-border eCommerce brands?
Jenny Lau: Over the past five years, investors and shareholders have taken greater interest in ESG. According to a Bloomberg survey, 43% of buyers, sellers, and corporations believe ESG is becoming increasingly important in investment decisions. More than half of global asset owners have included or evaluated ESG factors in investment strategies. Another study found that companies that communicate their ESG performance experienced improved financial performance.
Growing expectations from stakeholders across the board means that eCommerce brands, especially those that operate with a DTC, can no longer afford to ignore ESG. Integrating ESG into corporate strategy and operations is important for brands to identify, manage, and mitigate risk.
‘In every risk there is an opportunity’ – do higher expectations for ESG also bring new opportunities?
Jenny Lau: Yes. Leading companies around the world are acting on three of the most popular ESG topics: circular economy; DEI; and transparency and traceability.
For example, IKEA has committed to becoming a circular company by 2030 through actions like including developing circular products that are easy to repair, refurbish, and recycle, using renewable materials, and providing recycling services.
On the DEI front, Chinese lingerie brand NEIWAI launched a “No Body is Nobody” campaign, featuring 30 models of different ages and body sizes.
Our work with DTC fashion brands shows that integrating ESG strategies improves performance, including community-building and marketing efficiency.
What are some common issues Chinese cross-border eCommerce brands might encounter when implementing ESG strategies?
Jenny Lau: Some Chinese brands already have ESG measures in place, but their approaches can lack structure and comprehensiveness, there are opportunities for improvement. Others do not have a full understanding of ESG and its importance or an awareness of ESG trends in their targeted overseas markets, resulting in slower adoption and missed business opportunities.
Some brands could opt to feature ESG-related content in their marketing collateral, but inadvertently present misleading or insufficient information and evidence, which results in being seen as “greenwashing.” Alternatively, they could lack clear communication with stakeholders.
What is the best way for Chinese SMBs to implement ESG strategies?
Jenny Lau: For many SMBs that are already trying to grow their brand awareness and drive sustained business growth with limited resources, ESG may seem to be a far-fetched vision. Yet there are some practical steps that SMBs could take to seize the ESG opportunity. First, take a good look at your value chain and try to integrate ESG concepts and measures across the entire value chain, from product development, raw material sourcing, packaging, supply chain management, logistics, to customer experience, green operations, human capital and social good. Simply put, grasp every opportunity to boost your brand’s ESG performance.
ESG training for employees, suppliers, and partners, in addition to environmental protection measures and ethical business operations guidelines, should be implemented on an ongoing basis. There isn’t a single winning formula, but having said that, whether you’re an eCommerce SMB or relatively established brand that’s already reaching overseas customers – prioritize ESG now, because one thing is certain: ESG is here to stay, and those who ride the wave will sooner reach the shores of business success.