Wi-Fi advertising on Chinese trains will tap into huge consumer market
The Vancouver Sun
A B.C. company wants to put Canadian products in front of one of the largest captive audiences in the growing Chinese e-commerce market: rail passengers.
Richmond’s Freelife Solutions is partnering with Beijing-based C Media Group, a mobile technology company that currently provides free Wi-Fi service to about 1,000 rail cars in China through an app called “Luokuang” — or “bamboo basket” in Chinese — to launch “Canada Channel.” It will display information about Canadian tourism destinations, immigration processes and cultural events, as well as an e-commerce channel for booking flights and hotels or to purchase made-in-Canada products such as health supplements.
“We have about 180 million passengers — and we’re projecting that to grow to 200 million by the end of the year — covered through our Wi-Fi network on Chinese trains,” said Freelife executive director Jason Wang. “Because of the high speed of Chinese trains, the 2G and 3G network reception isn’t great for the passengers. So this is a very large audience.”
China has one of the world’s largest rail networks, totalling about 121,000 kilometres of track and carrying as many as 2.36 billion passengers a year. The Luokuang app hopes to cover about 50 per cent of the market by 2018, said CEO Carlo Pan, adding that the decision to start a Canada Channel was a result of market research.
“Most people think Chinese consumers care mostly about price and nothing else,” Pan said. “But our research shows that consumers care mostly about quality and expedited delivery, well ahead of price. For Chinese consumers, Canada means quality.”
That is why, Pan said, Freelife is looking for Canadian producers of everything from ice wine and bottled water to health supplements to sign on. The companies have to be able to certify their products as 100 per cent Canadian, he said, since that is an important factor driving consumers.
“Our model is that you can come to Canada anytime and check our vendors to see if everything comes from Canada,” Pan said.
He added that small companies without the means to enter the Chinese market themselves can use the Luokuang app to access customers in China through the delivery business model, making it an ideal way to test demand in the Far East.
“This resolves the problem of accessing the Chinese market for many small Canadian businesses, because sometimes the challenges of exporting regulations are too great to overcome,” Pan said. “With this, even if you have no desire to operate in China in any way, you can get your products to Chinese consumers.”
There have been similar forays by startups trying to link North American products to China’s ecommerce space, including by Chinese online giant Alibaba.
But the recent slowdown in the Chinese economy has worried some about the prospects of online advertising in China. In May, Chinese Internet software giant Tencent (maker of the WeChat app) said the economic slowdown dropped online advertising growth from 118 per cent a year ago to 73 per cent this year.
Wang, however, said given that China’s rail passenger market is largely unexplored, the potential for growth is huge.
“Right now, Luokuang only provides passengers with music, movies, games and reading material,” he said. “That’s already generating US$40 million in revenue for C Media every year. So you can see the consumption potential of these passengers. … What’s missing right now is e-commerce.”
Plans are underway to market Canada Channel in Vancouver and Toronto, and channels dedicated to the U.S., Japan, South Korea and Italy are potential future targets.
© 2016 Postmedia Network Inc.