The document summarizes key findings from a study analyzing the digital competence and social media strategies of 100 luxury brands in China. Some of the top performing brands in terms of their "China IQ" include Audi, Burberry, BMW, Volvo, Benefit Cosmetics, and Cadillac. The study evaluated brands across their websites, social media presence, digital marketing, mobile strategies, and other online efforts in China. It also discusses the rapid growth of China as the world's largest luxury market and importance of adapting strategies to local platforms and consumers.

1. September 13, 2011
SCOTT GALLOWAY
China IQ
NYU Stern
DOUG GUTHRIE
The George Washington University School of Business
© L2 2011 L2ThinkTank.com

2. Friday, October 14 HOSTED BY:
CEIBS, Shanghai
China Europe International Business School
Pre-event reception:
Thursday, October 13
Four Seasons Shanghai
For an invitation &
more information, contact:
CLINIC Joseph@L2ThinkTank.com CORPORATE PARTNERS:
The Social Graph: China
L2’s inaugural event in China will probe the underpinnings, platforms,
and best practices of social media in China.
Year upon year of double-digit economic growth and urbanization has armed tens of
millions of Chinese consumers with increasing disposable income and a voracious
appetite for luxury goods. In 2009, China surpassed the United States as the world’s
second-largest luxury market, trailing only Japan. However, while several prestige
brands have been operating in China for almost 20 years, most are still trying to
determine how to best tap this enormous but complex opportunity.
The social media landscape in China is dramatically different from other markets. MEDIA PARTNERS:
Industry leaders like Facebook, Google, YouTube, and Twitter are non-factors in the
market, requiring even the most digitally adept brands to fundamentally adapt their social
media strategies to local platforms like Baidu, Youku, Sina Weibo, and RenRen.
The L2 China Clinic will provide a framework for thinking about the overall opportunity
in China for prestige brands. Speakers will explore the key digital players and strategies
that lead to success, as well as findings from the 2011 L2 Prestige 100®: China IQ.
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China:
The greatest opportunity for prestige brands
in a generation Tomorrow Belongs to Me
McKinsey reports that 73 percent of Chinese luxury consumers are
under the age of 45, and upwards of 45 percent are under the age
Over the next 15 years, the global addressable market
of 35, suggesting that the majority of prestige purchasers are digitally
for luxury goods is expected to grow by 600 million
native.3 In the U.S., the average female prestige consumer registers
consumers, provoking growth forecasts of 2.2 times GDP.1 Much
household income of $150,000 and spends $3,000 annually on
of this growth is projected to come from one market: China. In
handbags. In contrast, the average female prestige consumer in
2000, the Chinese market accounted for a fraction of luxury sales
China makes $18,300 (125 RMB) and spends $2,000 annually on
globally, however torrid growth means in 2015, China will likely
handbags.4 Often these purchases occur after two to three months
overtake Japan as the world’s largest luxury market.
of research and consideration, most of it done online.
Forget What You Know The fastest growing luxury channel(s) in China:
The algorithm for success in China is different: Paris and New York
Increasing wariness of counterfeit merchandise, coupled with
• Less about a 50-something millionaire, more about a 30-some-
significantly lower prices abroad, has led to 56 percent of Chinese
thing, upper middle class consumer
luxury purchases occurring outside of China, suggesting that a
• Less about retail in Tier I cities, more about new modes of distri- brand’s digital marketing investments on the mainland drive sales
1. McKinsey & Com- bution in Tier ll and lll cities in Shanghai and Beijing... and New York, Paris, and Hong Kong.5
pany, “Understanding
China’s Love for
Luxury”, March 2011.
• Less about print, more about mobile and emerging platforms
2. Ibid.
• Less about “expert” editorial, more about peer reviews, as Digital Is Different
3. Ibid.
60 percent of consumers indicate that the Internet is one of the Not a single global Internet leader is number one in China. The pro-
4. Pao Principle, 2010.
5. Bain & Company, primary sources for information on luxury goods (up from 30 liferation of SNS platforms, BBS sites, and other digital channels
“China’s Luxury Market
Study 2010”, percent in 2008)2 present a challenge to marketers. The environment favors brands
November 2010.
© L2 2011 L2ThinkTank.com 3

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that adopt nimble, platform-agnostic digital strategies that can be Internet Tidal Wave
adapted to multiple channels. A testament to the pace of change,
INTERNET USERS IN THE WORLD’S LARGEST LUXURY MARKETS
Chinese microblogging platform Sina Weibo was not analyzed in 2010 vs. 2015
our May 2010 study. Launched in August 2009, the platform has
(in Millions)
added more than 10 million users per month and recently topped
200 million registered accounts. Sina Weibo has become the 800
platform of choice for prestige brands—57 percent of the brands = CHINA
740
in the study now maintain an official presence. = U.S.
= JAPAN
= U.K.
China IQ = Growth = FRANCE
Our thesis is that success in the world’s fastest-growing prestige 600
market is inextricably linked to digital competence. This study
attempts to quantify the digital competence in China of 100 iconic
TOTAL:
Internet Users (in Millions)
brands (The Prestige 100®). The majority, 91, compete globally,
450 447
while nine are of Chinese/Hong Kong origin. Our aim is to provide TOTAL:
a robust tool to diagnose digital strengths and weaknesses and 401 43
400
help managers achieve greater return on incremental investment. 39 50
44
Like the medium we are assessing, our methodology is dynamic,
97
and we hope you will reach out to us with comments that improve 94
our approach, investigation, and findings. You can reach us at
scott@stern.nyu.edu and guthrie@gwu.edu.
200
Sincerely, 257
224
SCOTT GALLOWAY DOUG GUTHRIE
Founder, L2 Dean, 0
The George Washington
Clinical Professor of Marketing,
University School of Business
2010 2015
NYU Stern
Source: eMarketer, April 2011.
© L2 2011 L2ThinkTank.com 4

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Addressable Market for Luxury Brands
POPULATION WITH INCOME > $30,000 USD
(1995-2025 Estimates, in Millions)
1,500
= REST OF THE WORLD
= CHINA
= JAPAN +600 million
= EUROPE (2010-2025)
= U.S.
1,200
900
Population (in Millions)
+300 million
(1995-2010)
600
300
0
5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5
199 199 199 199 199 200 200 200 200 200 200 200 200 200 200 201 201 201 201 201 201 201 201 201 201 202 202 202 202 202 202
Source: Goldman Sachs, March 2011.
© L2 2011 L2ThinkTank.com 5

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Methodology
40% SITE: China Digital IQ Classes
Effectiveness of brand site.
IQ Range IQ Class
FUNCTIONALITY & CONTENT: 70% BRAND TRANSLATION: 30%
• Site Technology: Load Time, • Chinese Social Media • Site Aesthetics 140+ GENIUS
Hosting Location Integration • Messaging & Imagery
Digital competence is a point
• Site Navigation & Search • Customer Service • Chinese Relevance & of differentiation. Site content is
• Product & Promotions • Account Services Translation innovative and optimized for the
• E-Commerce • Content Localization Chinese consumer. Chinese social
media efforts complement broader
digital strategy. Brand experience
30% SOCIAL MEDIA: seamlessly extends across mobile
Brand presence, community size, content, & engagement on major Chinese social media platforms. platforms.
MICROBLOGGING: SNS: ONLINE VIDEO:
• Sina Weibo: Presence, Programs, • Renren: Presence, Programs, • Youku: Views, Number of
110-139 GIFTED
Community Size, Interaction Rate Community Size, Interaction Rate Uploads, Subscriber Growth, Brands are experimenting and
Viral Videos innovating across site, mobile, and
• Tencent Weibo: Presence, • Kaixin: Presence, Programs,
social platforms. Digital presence
Programs, Community Size, Community Size, Interaction Rate • Tudou: Views, Number of
is consistent with brand image and
Interaction Rate • Douban: Presence, Programs, Uploads, Subscriber Growth, larger marketing efforts.
Community Size Viral Videos
90-109 AVERAGE
DIGITAL MARKETING: Digital presence is functional yet
15%
Marketing efforts, off-site brand presence, and visibility on search engines. predictable. Efforts are often siloed
across platforms.
• Search: China Site Traffic, Web Authority, SEO and SEM on Baidu and Google
• Advertising & Innovation: Recent Brand Initiatives, BBS, Taobao and Jiepang Activity
70-89 CHALLENGED
• Brand Buzz: Mentions and Video Uploads on Chinese Social Platforms
Limited or inconsistent adoption of
• Email: Frequency, Language, Content, Chinese Social Media Integration, Promotions
mobile and social media platforms.
Site lacks inspiration, does not
MOBILE: translate to the Chinese consumer.
15%
Compatibility and marketing on smartphones and other mobile devices.
• Mobile Site: Compatibility, Functionality, Transaction Capability
< 70 FEEBLE
• iOS Applications (iPhone & iPad): Availability, Popularity, Functionality Investment does not match
opportunity.
• Android & Ovi Applications: Availability, Popularity, Functionality
© L2 2011 L2ThinkTank.com 6

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
Innovation in technology: maintains presence on six different social media sites in addition to its
1 AUDI Automobiles 170 Genius own OurAudi.com
Luxury’s digital darling doesn’t disappoint. From Jiepang VIP guest passes for Beijing grand
2 BURBERRY Fashion 157 Genius opening to Christopher Bailey soundtrack on Youku, Burberry claims the fashion crown
From “beasts to joy”—sheer social pleasure; great translation of a global campaigns for
3 BMW Automobiles 155 Genius the Chinese market
4 VOLVO Automobiles 133 Gifted C70 Sina Weibo challenges consumers to design the plot for the next Volvo commercial
Local e-commerce launch caters to consumers with samples and gift-with-purchase offer; Sina
5 BENEFIT COSMETICS Beauty 127 Gifted Weibo and Kaixin “Benefit Beach Honey” contests delight
6 CADILLAC Automobiles 124 Gifted Recently released Route 66 short film starring Karen Mok across site and social media
6 ESTÉE LAUDER Beauty 124 Gifted EL-Lady BBS includes videos, games, Q&A, and link to purchase
8 LAND ROVER Automobiles 122 Gifted “The Evoque Effect” sets the standard for multichannel digital campaigns
SLK Mask Party contest provides winners tickets to China Fashion Week and site visitors an
8 MERCEDES-BENZ Automobiles 122 Gifted opportunity to create their own virtual mask
Innovative comparison tool and stunning microsites for each model are the engine of their
10 PORSCHE Automobiles 112 Gifted online presence
11 FERRARI Automobiles 111 Gifted Sina Weibo fans earn tickets and tees for Ferrari Racing Days in Shanghai
Online owners club provides access to forums, downloads and events; however could be updated
12 INFINITI Automobiles 110 Gifted more frequently
13 HERBORIST Beauty 108 Average Launched sampling program through popular fashion BBS communities Only Lady and Metroer
© L2 2011 L2ThinkTank.com 7

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
13 SWAROVSKI Watches & Jewelry 108 Average Dedicated channel on PPTV sparkles with live event feeds
15 CARTIER Watches & Jewelry 107 Average Love microsite is shareable across Kaixin, Douban, and Sina Weibo
15 GUCCI Fashion 107 Average Gucci Style iPhone app transcends language barrier
15 LANCÔME Beauty 107 Average Rose Beauty continues to score points, but Sina Weibo hasn’t been updated since October 2010
18 LOUIS VUITTON Fashion 104 Average Voyages microsite and Jiepang tie-in promote exhibit at National Museum of China
19 CHANEL Fashion 103 Average Chinese iPhone app provides access to Chanel News content and fashion videos
20 KIEHL’S Beauty 102 Average Dedicated Sina blog profiles local influencers
21 CHRISTIAN DIOR Fashion 101 Average Lady Blue Shanghai film disappoints with only 146 views on official Tudou page
22 CLINIQUE Beauty 100 Average More than 145,000 users participated in Renren “Knock Out the Old Me” campaign in early 2011
22 DOLCE & GABBANA Fashion 100 Average Live-streamed summer men’s fashion show exclusively through iOS and Android platforms
More that 180,000 user wishes have been submitted through the “Start Early” microsite
24 SK-II Beauty 98 Average for a chance to win gifts and samples
Resting on the laurels of China legacy; dedicated Youku page and well-configured watch finder
25 OMEGA Watches & Jewelry 96 Average aren’t enough to keep time
26 M•A•C Beauty 95 Average Dynamic product recommendation engine transcends borders
© L2 2011 L2ThinkTank.com 8

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
27 HENNESSY Champagne & Spirits 94 Average China-only Hxindian microsite hosts online contests, product videos and a members-only zone
28 JOHNNIE WALKER Champagne & Spirits 91 Average Yulu campaign features 12 mini films highlighting local personalities
28 LEXUS Automobiles 91 Average Generic site fails in pursuit of perfection
30 COACH Fashion 90 Average Mobile optimized site features the men’s collection
DIANE
30 Fashion 90 Average Diane’s personal Sina Weibo account gets a boost from media mogul Hong Huang
VON FURSTENBERG
30 LONGINES Watches & Jewelry 90 Average China-specific iPhone app cross-promoted on site
33 ACURA Automobiles 89 Challenged Creative promotions on Sina Weibo drive to the dealership
33 CHOW TAI FOOK Watches & Jewelry 89 Challenged Hong Kong jeweler showcases dedicated Taobao shop
Live-streamed a press conference announcing its new models, but needs to push the accelerator
33 JAGUAR Automobiles 89 Challenged on its digital efforts
1,570 participants on the Rouge Aomatique microsite indicates the brand is puckering up to the
36 GUERLAIN Beauty 88 Challenged Chinese market
Teaming with Formula 1 racer/blogger Han Han to create limited edition watch and accompanying
37 HUBLOT Watches & Jewelry 87 Challenged Sina Weibo page
38 CLARINS Beauty 86 Challenged “Looking for V-Girl Contest” in search of perfect face shape received more than 7,000 entrants
Dedicated Youku page for eight episode miniseries directed by Gil Wadsworth received more than
39 YUE-SAI Beauty 83 Challenged 1.5 million views
© L2 2011 L2ThinkTank.com 9

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
Chloé’s short-lived Chinese-language blog live-streamed runway shows and garnered more than
40 CHLOÉ Fashion 82 Challenged 40,000 visitors
Almost 9,000 votes were cast in the search to find the best beauty expert on the brand’s 13,660
40 SHISEIDO Beauty 82 Challenged member BBS
42 MASERATI Automobiles 80 Challenged Strong configurator, but available only in English
Must spend time on more than a mobile-optimized China site and a Youku channel if it wants
42 ROLEX Watches & Jewelry 80 Challenged to raise its profile
E-commerce enabled iPhone app features city guides and taxi cards for Western visitors,
42 SHANGHAI TANG Fashion 80 Challenged but brand is lost on Baidu to Chinese consumers
Translated microsite allows Chinese consumers to celebrate the 80th anniversary of the Reverso
45 JAEGER-LECOULTRE Watches & Jewelry 79 Challenged collection
45 RAYMOND WEIL Watches & Jewelry 79 Challenged Global video contest boasts dedicated pages on Douban and eYeka
Single post on Sina Weibo account suggests “What Makes Love True” site will be launched
45 TIFFANY & CO. Watches & Jewelry 79 Challenged in September
48 BULGARI Watches & Jewelry 78 Challenged Exhibition at National Museum of China has no digital footprint
IWC
48 Watches & Jewelry 78 Challenged Interactive IWC forum is mobile-optimized but available only in English
SCHAFFHAUSEN
Sina Weibo following more than 400,000 strong; decicated Sina Weibo account provides
50 IDO Watches & Jewelry 77 Challenged customer service
51 CALVIN KLEIN Fashion 76 Challenged CK One virtual box extends life of event
51 L’OCCITANE Beauty 76 Challenged One of three in Index with e-commerce enabled mobile app
© L2 2011 L2ThinkTank.com 10

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
53 AUDEMARS PIGUET Watches & Jewelry 75 Challenged Royal Oak Offshore collection microsite is buttressed by Chinese translation
54 RÉMY MARTIN Champagne & Spirits 74 Challenged “Real Man” video contest via Youku encourages user-generated video from macho entrants
55 PANDORA Watches & Jewelry 73 Challenged Limited Chinese site content leaves a lot still trapped in the box
56 LANEIGE Beauty 72 Challenged Café Laneige online community enhances interactivity
Faulty store locator is limited to Hong Kong site, but only brand to support Taobao plug-in
56 LUK FOOK Watches & Jewelry 72 Challenged on homepage
56 PIAGET Watches & Jewelry 72 Challenged Official Sina blog has registered only 5,000 visits
59 ARMANI Fashion 71 Challenged E-commerce pioneer with Emporio Armani launch, but fails to innovate elsewhere
59 BOTTEGA VENETA Fashion 71 Challenged Site is slow to load and lean on Chinese customization
59 FENDI Fashion 71 Challenged Placing in-video ads through Youku, but not placing enough attention on its overall strategy
62 LAMBORGHINI Automobiles 70 Challenged Brand-approved Taobao shop showcases eight different models but has yet to post a sale
62 ROLLS-ROYCE Automobiles 70 Challenged It’s hard to “contact us” when info is only for North America
64 HUGO BOSS Fashion 66 Feeble Online footprint pales in comparison to monstrous brick-and-mortar presence
64 MONTBLANC Watches & Jewelry 66 Feeble Huge SNS buzz, but not much else
© L2 2011 L2ThinkTank.com 11

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
64 TAG HEUER Watches & Jewelry 66 Feeble Tick tock—patience runs out waiting for site to load
64 VERSACE Fashion 66 Feeble Versace Home is e-commerce enabled; Versace Fashion, not so much
68 ALFRED DUNHILL Fashion 65 Feeble Day 8 blog available in Chinese, but only shareable via Facebook and Twitter
68 BALENCIAGA Fashion 65 Feeble July site launch fails to incorporate Chinese language version
70 BOBBI BROWN Beauty 64 Feeble Users can tune into tips from experts on Sina Weibo, but site doesn’t support e-commerce
71 CHOPARD Watches & Jewelry 63 Feeble Chopard Diary boasts strong content; too bad it isn’t in Chinese
71 GIVENCHY Fashion 63 Feeble Sina Weibo alone is not going to move the needle
73 MIU MIU Fashion 62 Feeble Falling into fashion with global site redesign; noticeably absent from SNS
73 PORTS 1961 Fashion 62 Feeble First mover is one of few in Fashion to sell online
75 BALLANTINE’S Champagne & Spirits 61 Feeble Chinese golf fans can follow the action at the Ballantine’s Championship via online and mobile
75 WULIANGYE Champagne & Spirits 61 Feeble More than 9,000 members on site BBS
77 DE BEERS Watches & Jewelry 60 Feeble April site relaunch included simplified Chinese translation
77 FERRAGAMO Fashion 60 Feeble Not much other than a Sina Weibo account with 30,000 fans and not a single post
© L2 2011 L2ThinkTank.com 12

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
77 HERMÉS Fashion 60 Feeble Offline innovation doesn’t translate online
80 MOUTAI (MAOTAI) Champagne & Spirits 58 Feeble Eagerly awaiting impending BBS launch and reactivation of online e-commerce
80 PRADA Fashion 58 Feeble Luxury’s digital laggard; Sino efforts aren't any different
82 VALENTINO Fashion 56 Feeble Global e-commerce site ships to China, but consumers must be comfortable shopping in English
83 ASTON MARTIN Automobiles 55 Feeble One of two brands with mobile app for Nokia’s Ovi platform
83 CHIVAS REGAL Champagne & Spirits 55 Feeble Supporting site info for “Craft of Chivalry” concert tour is first step
Men’s runway at fashion week featured projections of Chinese landscapes; but with limited
83 ERMENEGILDO ZEGNA Fashion 55 Feeble visibility on Baidu, did content even reach Chinese consumers?
86 MARC JACOBS Fashion 54 Feeble Should read Louis Vuitton’s manual on courting China
Company website has good localized Chinese content but limited interactivity beyond
87 MOVADO Watches & Jewelry 52 Feeble flash navigation
87 RALPH LAUREN Fashion 52 Feeble U.S. digital fluency has yet to translate
87 VAN CLEEF & ARPELS Watches & Jewelry 52 Feeble Lacks SNS presence and Chinese-specific content on its translated site
90 PATEK PHILIPPE Watches & Jewelry 51 Feeble Strong brand equity; weak digital presence
91 HARRY WINSTON Watches & Jewelry 50 Feeble Rich site heritage content is tempered by poor load times
© L2 2011 L2ThinkTank.com 13

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Brand
Ranking
Automobiles Beauty Champagne Fashion Watches
& Spirits & Jewelry
Rank Brand Category China IQ Class Description
91 MOËT & CHANDON Champagne & Spirits 50 Feeble Recent “Mr. & Miss Moët” Sina Weibo contest suggests IQ is about to pop
93 VACHERON CONSTANTIN Watches & Jewelry 49 Feeble English-only watch configurator and absent concierge need resetting
94 BELVEDERE VODKA Champagne & Spirits 46 Feeble Facebook focus doesn’t help in the East
95 MACALLAN Champagne & Spirits 44 Feeble Interactive elements not translated—blogs, artistry, and photo contest in English only
96 YVES SAINT LAURENT Fashion 43 Feeble Despite the iconic brand’s worst efforts, it still manages to gain some buzz on Chinese social media
97 DAVID YURMAN Watches & Jewelry 42 Feeble Compared to the global site, the Chinese site has no luster
98 BACCARAT Watches & Jewelry 41 Feeble Struggling to shine online
99 DOM PÉRIGNON Champagne & Spirits 26 Feeble China is in love with the brand; its digital presence not so much
100 VEUVE CLICQUOT Champagne & Spirits 24 Feeble Flat
© L2 2011 L2ThinkTank.com 14

15. KEY FINDINGS
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China IQ Distribution
Key % OF BRANDS PER CHINA DIGITAL IQ CLASS:
Findings GENIUS CHINA IQ
Audi
Burberry
In the Company of Genius Volvo >140
BMW
3%
Benefit Cosmetics
Two of 2010’s five Genius brands, Audi and
BMW, retained their status, the other three,
Cadillac
GIFTED Herborist SK-II
Estée Lauder
CHINA IQ Swarovski Omega
Lancôme, Estée Lauder, and Clinique, Land Rover 9%
Mercedes-Benz
110-139 Cartier M•A•C
remained solidly in the top quartile, buttress-
Porsche Gucci Hennessy
ing the notion that constant innovation and Lancôme Johnnie Walker
investment are requisites for digital success in
Ferrari
AVERAGE Louis Vuitton Lexus
Infiniti
Chanel Coach
this dynamic market. New to the Genius and
Kiehl’s Diane von
Gifted ranks, Burberry and Benefit Cosmet- CHINA IQ
20% Christian Dior Furstenberg
ics, were among 2011’s biggest winners, both 90-109 Longines
Clinique
launching e-commerce in the past 12 months Dolce &
Acura IWC Gabbana
and making significant investments in Chinese Chow Tai Fook Scaffhausen
IDo
social platforms. Jaguar
Calvin Klein
CHALLENGED
Guerlain Hugo Boss Ermenegildo
Hublot L’Occitane Zegna
More than two-thirds of the Prestige 100® Montblanc
Clarins Audemars Marc Jacobs
posted a Challenged or Feeble IQ, suggesting Piguet TAG Heuer
Yue-Sai CHINA IQ Versace Movado
digital efforts in China remain nascent across Rémy Martin
Chloé
Pandora 70-89
31% Alfred Dunhill Ralph Lauren
the industry. The biggest differentiator between Shiseido Balenciaga Van Cleef &
Laneige Arpels
Genius and Gifted brands occurred across Maserati Bobbi Brown
Luk Fook Patek Philippe
Rolex Chopard
the Site dimension. Brands that score well Piaget Harry Winston
Shanghai Tang Givenchy
Armani
have developed transaction-oriented sites with Jaeger- Moët &
Bottega Veneta Miu Miu Chandon
superior customer service, Chinese-specific LeCoultre
Fendi
FEEBLE Ports 1961 Vacheron
Raymond Weil
technology integration, tailored content, and Lamborghini Ballantine’s Constantin
Tiffany & Co.
Wuliangye Belvedere Vodka
consistent translation. Bulgari Rolls-Royce
De Beers Macallan
Ferragamo Yves Saint
CHINA IQ
Laurent
37% <70
Hermés
David Yurman
Moutai (Maotai)
Baccarat
Prada
Dom Pérignon
Valentino
Veuve Clicquot
Aston Martin
Chivas Regal
© L2 2011 L2ThinkTank.com 15

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Top 20
2010 2011
Brands Rank Brand IQ Class IQ Score Rank Brand IQ Class IQ Score
China Digital IQ
Scores #1 Lancôme Genius 167 #1 Audi Genius 170
#2 BMW Genius 157 #2 Burberry Genius 157
= BRANDS THAT RANKED IN TIE
THE SAME IQ CLASS IN #2 Estée Lauder Genius 157 #3 BMW Genius 155
2010 & 2011
= BRANDS THAT RANKED #4 Audi Genius 150 #4 Volvo Gifted 133
IN THE TOP 20 IN BOTH
2010 & 2011 BUT #5 Clinique Genius 146 #5 Benefit Cosmetics Gifted 127
CHANGED IQ CLASSES
#6 Mercedes Benz Gifted 138 #6 Cadillac Gifted 124
TIE
#7 Clarins Gifted 137 #6 Estée Lauder Gifted 124
KEY
#8 Acura Gifted 130 #8 Land Rover Gifted 122
Automobiles TIE
#9 Cadillac Gifted 124 #8 Mercedes Benz Gifted 122
Beauty
#10 Wullangye Gifted 121 #10 Porsche Gifted 112
Champagne
#11 Lexus Gifted 119 #11 Ferrari Gifted 111
& Spirits
#12 Infiniti Gifted 118 #12 Infiniti Gifted 110
TIE
Fashion #12 Land Rover Gifted 118 #13 Herborist Average 108
TIE
#14 Moutai (Maotai) Gifted 115 #13 Swarovski Average 108
Watches
& Jewelry
#15 Cartier Gifted 114 #15 Cartier Average 107
#16 Porsche Gifted 113 TIE #15 Gucci Average 107
#17 Herborist Gifted 112 #15 Lancôme Average 107
#18 Christian Dior Average 109 #18 Louis Vuitton Average 104
#19 Louis Vuitton Average 108 #19 Chanel Average 103
TIE #19 Tiffany Average 108 #20 Kiehl’s Average 102
#19 Luk Fook Average 108
© L2 2011 L2ThinkTank.com 16

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Key
Findings
GENIUS BRANDS: Audi
Sina Weibo:
A branded Sina event page,
linking to the official Weibo
account, features the interactive
Audi Driving Experience game.
The winner receives a PS3 or
iPad 2. Fans on the brand Sina
Weibo page grew 70 percent to
almost 61,000, from July 1 to
August 1.
The Audi Driving Experience
hashtag #奥迪驾控汇# has
generated 147,850 posts on
Sina Weibo. Audi also maintains
separate Weibo pages for many
of its models.
Renren:
Users compete for a chance to win
professional racecar training at
Shanghai’s Formula 1 race track.
© L2 2011 L2ThinkTank.com 17

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Key
Findings Mobile:
Multiple Chinese-
GENIUS BRANDS: Audi language mobile
apps provide
virtual tours of
the Audi A8L and
complement a
mobile optimized
brand site.
Tencent Weibo:
Presence on
Tencent Weibo is
in its infancy.
Kaixin:
181,450 followers.
Youku:
275,590 video views.
© L2 2011 L2ThinkTank.com 18

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Key
Findings
GENIUS BRANDS: Burberry
Mobile:
E-commerce
enabled Chinese-
language mobile
site translates.
Site:
Chinese-language,
e-commerce enabled
site mirrors the brand’s
global experience,
including Chinese
subtitled versions of
the Burberry Acoustic Digital Innovation at Brick and Mortar Stores:
video series. Burberry’s Chinese stores are outfitted with the latest in digital
technology, including full-length touch screens and iPads.
© L2 2011 L2ThinkTank.com 19

20. Want to know more about your brand’s China IQ?
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Key
Findings
GENIUS BRANDS: Burberry
Youku:
Milan Fashion Show live stream on
Youku garnered Burberry almost
1.2 million views on its channel.
Live Stream:
An all-digital, holographic fashion
show was streamed on brand site,
marking the grand opening of the
flagship Beijing store.
© L2 2011 L2ThinkTank.com 20

21. Want to know more about your brand’s China IQ?
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Key
Findings
GENIUS BRANDS: Burberry
Kaixin:
61,920 followers.
Sina Weibo:
182,250 Sina Weibo
fans are treated
to product videos
and pics, magazine
covers, and celebrity
sightings. Douban:
20,780 members enjoy
Acoustic series videos,
product photo galleries,
and a music channel on
Douban.fm.
© L2 2011 L2ThinkTank.com 21

22. Want to know more about your brand’s China IQ?
CONTACT US
Key
Findings
GENIUS BRANDS: BMW
Mobile Site:
Provides BMW model
overviews and pricing,
but fails to take advan-
tage of mobile features.
Sina Weibo:
240,300 fans on Sina
Weibo experience
the Joy of BMW.
iPhone App:
Exclusive iPhone app for Chinese
BMW owners, MyBMWClub
includes click-to-call customer
service, a dealer locator, and
offline meet-ups and events.
© L2 2011 L2ThinkTank.com 22

23. Want to know more about your brand’s China IQ?
CONTACT US
Key
Findings
GENIUS BRANDS: BMW Youku:
There are 31,800 unofficial BMW
videos on Youku, the most of any
brand and testament to brand
strength.
Tencent Weibo:
BMW has the largest
brand following on Tencent
Weibo, with more than
173,000 fans.
Jiepang:
Fans checked in on Jiepang to
the Bird’s Nest National Stadium
in Beijing for a virtual badge and
a chance to win tickets to the
BMW 3 Series fashion concert.
Kaixin:
622,640 followers.
© L2 2011 L2ThinkTank.com 23

24. KEY FINDINGS
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Key Top Five Biggest Winners & Losers
Findings 2010 VS. 2011 IQ PERCENTILE RANK
Benefit Vacheron Constantin
FEEBLE GIFTED
-41% FEEBLE FEEBLE
Top-notch e-commerce and program launches on
Youku, Tudou, Kaixin, and Sina Weibo propel this
LVMH brand to the top of the Beauty rankings.
+67% Hour Lounge BBS available in Chinese receives
minimal updates.
Dolce & Gabbana Van Cleef & Arpels
FEEBLE AVERAGE -43% CHALLENGED FEEBLE
Fighting on every front; has launched a presence on
nine social media sites globally including three in
China. Developed mobile app for Ovi platform.
+48% Flash and media-heavy site has had few technology
or functionality updates.
Johnnie Walker Chivas Regal
FEEBLE AVERAGE -56% AVERAGE FEEBLE
Launched presence on Sina Weibo and Douban;
Yulu campaign featuring Jia Zhangke documen-
taries is shareable across social media.
+44% With the exception of Douban page,
few updates since 2010.
Burberry Wuliangye
CHALLENGED GENIUS
-67% GIFTED FEEBLE
One of first in Fashion to launch e-commerce.
Has extended social media prowess to Chinese
platforms.
+40% Localized site and high participation BBS forum aren’t
enough to hold their ground.
Audemars Piguet Moutai (Maotai)
FEEBLE CHALLENGED -68% GIFTED FEEBLE
Launch of Chinese site launches brand from Feeble
to Challenged. +37% E-commerce functionality alone isn’t enough to keep
this iconic liquor brand in the Gifted ranks.
© L2 2011 L2ThinkTank.com 24

25. KEY FINDINGS
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CONTACT US
Key
Findings Brand Site Sophistication
% OF SITES WITH THE FOLLOWING ATTRIBUTES:
Selling Is Knowing (2010 vs. 2011)
The biggest change in site investments year
on year are tied directly to sales. The number 88% = 2011
of brands that were e-commerce enabled 85% = 2010
doubled, and one-fifth now sell online. In 80%
addition, 23 brands have added offline retail
locators. E-commerce continues to be directly
correlated with strong digital performance
62%
across dimensions, and brands selling online
registered average IQs 16 points higher than
Feature Adoption (%)
those without online sales, suggesting that as
an organization begins generating revenue
online, additional resources are allocated to
digital marketing.
33% 32%
The Beauty category leads the way with 11 of
the 15 brands in the study boasting e-commerce
20%
capability. The Fashion category posted the
largest year on year change as the percentage
of brands selling went from just seven percent 10%
to 24 percent. Some Fashion brands, such as
Valentino and Diane von Furstenberg, that do
0%
not host a Chinese site sell and ship to China
via their global site.
(continued on next page) Chinese Locate Retail Site Hosted E-Commerce
Language Within China in China Enabled
© L2 2011 L2ThinkTank.com 25

26. KEY FINDINGS
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Key
Findings E-Commerce Payment Methods
% OF E-COMMERCE ENABLED SITES EMPLOYING THE FOLLOWING:
Selling Is Knowing (August 2011)
(continued from previous page)
Weak credit card penetration rates and online
fraud fears continue to present e-commerce 79%
obstacles. E-commerce enabled brands tackle
the payment infrastructure in a variety of ways,
the most popular being accepting payments
63%
from the customer’s bank online. More than
58%
60 percent of brands provide payment option
% of E-Commerce Enabled Sites
through Alipay, a PayPal equivalent, popularized
by B2C e-commerce site Taobao. Nearly 60
percent of brands still accept cash on delivery.
32%
21%
0%
OTHER
Online Banking Alipay Cash on Credit Card Other
Delivery
© L2 2011 L2ThinkTank.com 26

27. KEY FINDINGS
Want to know more about your brand’s China IQ?
CONTACT US
Key
Findings
Missed Opportunities
Fifty-six percent of Chinese luxury purchases Site Features:
are made abroad, however, just over half of % OF SITES WITH & WITHOUT THE FOLLOWING TOOLS
Chinese language sites provide a U.S. and (August 2011)
European store locator, a missed opportunity
to provide information to Chinese tourists. % of Sites WITHOUT the following: % of Sites WITH the following:
Although, specific international information is
European &
limited on many sites, so is local customization, 42% U.S. Store 58%
and less than a third of sites publish prices in Locator
Renminbi.
Common 2.0 tools including user reviews and 52% Wish List 48%
social media integration, that are ubiquitous on
U.S. sites, particularly in commerce-oriented
Prices
categories such as Auto and Beauty, are only 68% Viewable in 32%
RMB
incorporated on eight sites. In most cases, when
incorporated, social sharing via Chinese SNS
and solicitation of user reviews is relegated to User
92% Reviews 8%
simple interface BBS forums.
Content
92% Shareable on 8%
Chinese SNS
© L2 2011 L2ThinkTank.com 27

28. KEY FINDINGS
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CONTACT US
Key Brand Name Search Results Paid Search Tactics
Findings POSITION OF BRAND SITES IN
ORGANIC SEARCH RESULTS
% OF BRANDS PARTICIPATING IN THE FOLLOWING
FOR BRANDED SEARCH TERMS
Google: (August 2011) (August 2011)
A Distant Second
= 2010: = 2010: = CHINESE
Google continues to lose share in the Chinese 1ST POSITION OUTSIDE TOP 3 = ENGLISH
search market since redirecting searches to = 2011: = 2011:
Hong Kong in early 2010. The market share of 1ST POSITION OUTSIDE TOP 3
local search engine Baidu stands at 76 percent
versus Google’s 19 percent.6 This is a dramatic 71%
67%
shift from 2009, when Baidu controlled 58 per-
cent of the market versus Google’s 36 percent.
Prestige brands continue to struggle with
visibility on the local leader. Only 31 percent
of brand sites come up first in organic search 43% 42%
results for the Chinese brand name, and 42
percent of sites are not returned in the top
31%
three. Organic visibility has actually declined 29% 30%
26% 25%
on the platform since our May 2010 report,
22%
as the Baidu algorithm increasingly prioritizes
18%
organic returns of customers purchasing terms 15%
13% 12%
on other Baidu platforms.
Brands are doing better on Google, however
optimizing for a search engine that has de- 0%
creasing relevance is short-sighted.
Baidu: Google: Baidu: Baidu: Google:
Chinese Brand Chinese Brand Brand Zone Paid Search Paid Search
6. Analysys Name Name
International,
“Seasonal Survey of
China Internet Search
Market in Q2, 2011”,
July 2011.
© L2 2011 L2ThinkTank.com 28

29. KEY FINDINGS
Want to know more about your brand’s China IQ?
CONTACT US
Key
Findings
Six Simple Strategies for Successful SEO in China:
Pay to Play
1
Paid search accounts for 31 percent of total
online ad spend in China and search revenues Get Your License:
were up 67 percent year-over-year for 2010. 7
A legal ICP license is crucial. Without a certificate, site may be omitted from search results.
A quarter of the brands are engaging in paid
search on Baidu. Many are using paid search
2
to bypass Baidu’s algorithm and ensure visibil- Host Your Site in China:
ity of their Chinese site. Despite being a proven Baidu’s crawler is “impatient” and will skip sites experiencing even minor latency issues eliminating
source of traffic, less than a quarter of the the chance to appear in organic search results.
brands are purchasing Baidu brandzones.
3
Without a presence on Baidu, brands are Buy a Baidu Brandzone:
virtually invisible in China. Baidu’s algorithm Brandzones drive results. Brands report up to 30 percent of their traffic originating from a brandzone
is different than Google’s and requires a and have seen click through rates up to 75 percent.
dedicated strategy. In many ways, Baidu is
4
simpler and more accessible than Google,
Reap What You Sow:
and can be a very powerful tool with mini-
Baidu content is prioritized in the search results. Curating brand content on Baidu platforms Tieba
mal investment.
(à la forums), Baike (à la Wikipedia), and Zhidao (à la Yahoo Questions) is “free” and can improve
search results 10-20 percent if done right.
5
Cut the Code:
Baidu’s crawler is not very sophisticated and requires aggressive spoon-feeding. Streamlining code and
adding alternative text improves visibility. As with Google, flash-heavy sites encumber the crawler.
7. iResearch, “2010 Q4
6 Backlinks Boost:
Targeted efforts to acquire backlinks can significantly improve ROI and search visibility.
China Search Engine
Market” January 2011.
© L2 2011 L2ThinkTank.com 29