In September 2017, the China government has declared that initial coin offerings (ICOs) are illegal and called a halt to fundraising involving virtual coins, in the latest move to curb risks from unregulated areas of the financial system. The reasons of this act are multifold, with being a ICO being a form of unapproved illegal public financing behaviour, “raise suspicions” of illegal securities issuance, financial fraud, and other “criminal activity” being the most prominent ones, as stated by the central bank. This act was much in line with Xi putting financial security as a top priority in his agenda for the year set out previously. In retrospect, Chinese ICO activity had accelerated in recent months, with RMB 5 billion in fundraising in July and August, according to figures cited by the official Shanghai Securities News.
While Mainland China has banned ICO token fundraising and secondary market trading, Hong Kong has remained open for business. In February 2018, The Hong Kong Securities and Futures Commission (SFC) will still allow the trading of ICO tokens as long as they are not classified as securities.
In fact, despite more stringent regulations, Chinese investors will still be able to invest in ICOs via overseas platforms. Certainly we will not see Chinese entities marketing ICOs to mainland investors, but there’s nothing to stop an overseas legal entity or platform from having a Chinese version of their website, capturing a share of it. In this blog post, different means of ICO promotion in China will be probed into, in the hope to explain the phenomenal success of the ICO industry in China despite the Chinese government tightening its grip on ICOs.
STEP 1: Establishing reputation in China
In China, crypto sites, WeChat, and press release are the cornerstones to establishing reputation of one’s business.
On crypto sites, despite the ban of ICOs, web pages which provide crypto information are still very prevalent in China. To name but just a few, Jin Se Cai Jing (金色財經), BiShijie (幣世界), Tuo Luo Cai Jing (陀螺財經), IT Er’duo (耳朵財經), are some of the highly competitive sites that ICO projects look for. In general, these sites provide viewers with up-to-date quotes to most crypto products, in addition to opinion and instant news on related products.
Take Jin Se Cai Jing (金色財經) as an illustration, the website provides extensive analysis on new and popular blockchain and ICO projects, with a staggering 120K daily visitors. It also provides cutting-edge online courses on blockchain and investment strategies, alongside with opinion columns from the epitome of the industry. By means of publishing articles on these sites, it increases the exposure of the launcher and its products.
For those who are not familiar with WeChat, here’s a very brief introduction to it…
WeChat was launched in January 2011. It was a simple chat app featuring functions similar to WhatsApp. It was created by a small team of just eight developers within Tencent’s R&D team offices in Guangzhou. Over the following five years after WeChat was launched, its functionalities increased exponentially. For example, WeChat allows users to transfer money, execute payments, top-up one’s phone, order cabs, buy movie tickets etc. Yet despite having a staggering variety of features, messaging and communication are still the primary functions.
In the context of marketing in China, WeChat plays an indispensable role. Besides carrying out the basic functions of messaging, more advanced functions have been tailor-made to facilitate the publicizing process of sellers. Hereunder, under the framework of crypto products, we shall introduce some common techniques used by sellers to publicize their products more strategically and effectively.
By creating an official account on WeChat, it allows companies to promote their projects effectively. These accounts are largely similar to Facebook pages and public Instagram accounts of which anyone can follow them and will receive push notifications from them.
When accessing one of these accounts, you can usually click a bottom-menu linking to a HTML5 website which might sell products or services.
For most businesses in China, either a Chinese Business License obtained by a local company or Chinese ID of a Chinese national with a WeChat payment account is needed to establish an official WeChat account. Alternatively, if one does not have a business license in China, there are still other means to obtain an official account. There are however several ways for you to create a WeChat account even if you don’t have a Chinese business license:
Firstly, one may consider registering a company – Wholly Foreign Owned Enterprise (WFOE) in China. This is not the recommended approach as it is a costly and year-long process. After the company is set up, the business license is needed to create an account. But it is a large investment, and is only really worth it if you plan to hire people in China.
Alternatively, one can simply buy a third party business license. Business licenses can be purchased from another Chinese entity (each Chinese company can register 50 WeChat accounts). Companies like Twinova offer the service to create an account for roughly US$500 a year, with the account remain attached to the Chinese legal entity. However, one can still pick one’s desired account name, logo and description, but the legal name of the company will also appear on the account.
Last but not least, one can choose to go through a special process from the Tencent team, by paying a US$300 verification fee, but it is a case-by-case process.
In a nutshell, WeChat marketing is all about of gaining followers to your account, getting them actively engaged with the content, and eventually converting them to customers through the bottom-menu that they can use to purchase items or reach out to you.
Above all, it is of paramount importance to make one’s business in China user friendly in China. To a bare minimum, this entails translating related documents such as the ICO whitepaper, tailor-making a Chinese website to cater the needs of Chinese customers. By so doing, it increases exposure of one’s business in China, paving its way to success.
Stage 2: Pre-ICO
After establishing some reputation in China, the frequency and coverage of promotion has to be scaled up. Forum communities, short messages, and pop-up banners are common means employed to promote ICO projects during the pre-ICO stage.
With the help of forum communities, it helps attract attention to one’s ICO projects. Forum communities are analogous to search engines and developers such as Google and Yahoo in the West, Baidu, Tianya and Sina are their counterparts in China. In particular, certain sections on these websites are dedicated to crypto products, which allows investors to be kept up to date. By frequently posting discussions on China’s such forums, it fosters communication and enhances engagement between the agent and the host, which ultimately attracts attention from the targeted audience.
The use of short messages and pop-up banners on crypto sites and mobile applications are also prevalent in the pre-ICO stage.
On short messages, there are short messages panels in various crypto websites and mobile applications, which often feature instant news alerts. For example, there is a short message panel on JinSeCaiJing (金色財經), which operates from 07:00 to 24:00 daily. By notifying related investors through short messages, it raises awareness of one’s ICO projects, which help attract potential investors.
On pop-up banners, there are pop-up banner bars in various crypto websites. For example, BaBiTe (巴比特), one of the oldest blockchain information sites, has a banner bar at the top of the banner page, prompting out banner ads at regular time intervals. By posting upcoming ICO projects advertisements on these sites, it boosts the Click-through rate and raises awareness, allowing the projects to be promoted more efficiently.
To further increase exposure of ICO projects during the pre-ICO stage, developers will also promote their projects in particular WeChat groups. By creating active investor WeChat Groups, it helps create noise in China through extensive networks of WeChat communities, hence enhancing the exposure of one’s business. In general, through extensive connections, the relevant investors are attracted into a main investor group, which acts as the main channel for communication and advertisement of one’s products. In particular, a common technique widely used is known as investor community engagement, where the ICO project will be promoted through dialogue. By engaging in potential investors in the group within a short period of time, this is an effective way in converging audience into real investors.
Stage 3: ICO
Throughout the ICO and post-ICO stages, air drop serves for several purposes: to maintain the price stability of tokens, to enhance the exposure of a company’s ICO project passively, and to allow investors to share their wallet address to the project developers.
Air drop is a common technique used by launchers to effectively publicize and promote their projects. Air drop figures distributing crypto tokens to facilitate the process of adoption for the particular token. Some ICO projects choose to give out their tokens practically for free to members of their community as a means of encouraging the token’s adoption and usage with the hope that in the process, there will be increased demand for the token which will in turn help to drive up its value. Usually after the main crowd sale events, a small percentage of the total tokens are set aside for air drops.
It is natural for one to wonder how launchers capture gains from air drop. In fact, the non-monetary benefits are multifold. First, air drop can be viewed as a mean of propaganda, which works similarly as distributing leaflets. By depositing credits into the users’ digital wallet, it arouses users’ interest to probe into the potential returns of the crypto products.
Moreover, air dropping is an advanced financing method which builds up the investor base and diversify the risk of holding such crypto products, thus stimulating the demand and stability of crypto products, and boosts the value of such products.
During the ICO stage, project developers also resort to influencers when promoting their projects. In particular, the influencers’ WeChat accounts are used as the main means of promotion.
By using influencers, it helps build instant credibility of one’s business. In particular, The People’s Bank of China has declared 90% of ICOs as “fraudulent”, with the use of influencers, it helps distance one’s business from these claims by receiving recognition from trusted individuals.
Hereunder figures a list of the top influencers in the crypto industry on WeChat:
|Influencers||WeChat ID||Audience Base|
Influencers take many forms, besides group influencers, there are many individual influencers as well – chief among them is Li XiaoLai (李笑來), who is hailed as “China’s father of Bitcoin”. Li, aged 45, has currently accumulated more than 100 Million USD worth Bitcoin in stock. He started investing Bitcoins in 2011, and has been making a fortune out of it from a starting capital of about 10 Thousand USD. After years of involvement in the crypto industry, in June 2017, Li’s launched its first ICO campaign – EOS. Despite being questioned by multiple parties, the campaign successfully financed a staggering 185 Million USD in a mere 5 days. In July 2017, the total market value of EOS has reached 5 Billion USD, which was also known as “5 Billion worth out of thin air”.
As illustrated above, Li is one of the key influencers in the ICO industry in China, with almost 300 thousand followers on his WeiBo account. By cooperating with such influencers on multiple social media channels, it undoubtedly helps boost credibility of one’s business instantly.
Notwithstanding the above, it is important to note that the cost of Roadshows and connecting with influencers are relatively high and can vary greatly. In addition, the successfulness of such promotions also depends greatly on the quality of the ICO project.
Stage 4: Preparing for exchange listing and retaining service
After ICOs, it is important to keep the investors and venture capitalists up to date about the project through press release distribution and media exposure (which is generally referred as community management). Below features a list of China’s largest finance news and media platforms, which allow projects to catch attention from potential investors.
|Media||Audience Base||Website URL|
Apart from media exposure, project developers can also device a roadshow scheme to promote and sustain their projects. In general, a comprehensive roadshow scheme includes the following elements: regular schedule, media coverage, side effects, and cost analysis. In particular, the spillover effects of media coverage are multifold. Firstly, a successful roadshow campaign can potentially attract enthusiastic participants, of which the high attendance rate and the heated discussions boost the publicity effect of ICO projects. Moreover, by featuring keynotes and networking sessions hosted by professionals, it allows project developers to gain goodwill, which ultimately boosts investors’ confidence in one’s projects.
In this article, we have outlined the key steps of ICO marketing in China. With more than 50 Crypto projects carried out in China, ChainPlus has assembled an experienced and diversified execution team, with full-service packages of ICO marketing in China, including but not limited to services such as WeChat content marketing, WeChat group and KOL promotion, press release in China, crypto media editorial, forum marketing and community engagement in China. For more information, do not hesitate to contact us!