By Richa Naidu and Casey Hall
LONDON/SHANGHAI (Reuters) - Durex-owner Reckitt is hoping that Chinese consumers' penchant for livestream shopping will also extend to purchases of condoms, but the company will have to toe a "delicate line" as it looks to grow its slice of the $5-billion-plus condom market.
The hype around livestreaming, which has become a major driving force of an e-commerce boom that has been sweeping China since the beginning of the COVID-19 pandemic, could help the British consumer goods group in its quest to drive growth in the world's second-biggest economy.
Livestreaming generated sales of $238 billion in 2022 in China. That is estimated to rise to over $300 billion by 2025, according to research firm eMarketer.
Reckitt has already tasted success liveselling household products in China, but condoms might prove a harder sell as Chinese regulators closely monitor sex-related content online - without always clearly spelling out what exactly crosses the line.
"There is no clear definition of what vulgar content is - that's up to the regulator to decide and the system is quite socially conservative," said Kendra Schaefer, head of tech policy at China-focused research firm Trivium.
"So how do you talk about sexual health without tripping the 'vulgar' issue? It's a delicate line to walk."
The upside for Reckitt, however, is compelling given the multi-billion dollar size of the market for condoms. The China Business Research Institute has tipped China’s condom sales will hit $5.2 billion in 2024, with market leader Durex boasting a 40% market share as of 2020, according to Daxue Consulting.
On Wednesday, Reckitt reported a 1.2% year-on-year decline in fourth-quarter like-for-like net revenue, and a 7% slide in overall net revenue to 3.56 billion pounds ($4.51 billion). The company doesn't disclose its China sales figures.
Arjun Purkayastha, who leads Reckitt's business in Greater China, said livestreaming is a significant growth driver for the firm, accounting for a "close to double-digit" portion of sales in the country for Reckitt products - including Dettol sprays and Strepsils throat lozenges.
"People are not used to seeing condoms on livestreaming yet," Purkayastha said. Reckitt began livestreaming "selective" Durex products over the summer on Douyin, the local version of TikTok, with an eye to scaling up in future.
"Intimate wellness usually takes a little while to build up acceptance because sometimes there are fears of complaints or other things... Initially, with Durex, most platforms were like 'whoa, hold on' but I think now they are opening up much more," he added.
'CLASSY' MARKETING
Purkayastha said Reckitt's livestreaming channels in China differ from the Instagram-led model common in the West featuring paid influencers who have used products themselves and recommend them personally. Instead, employees in studios or other locations like factories describe product origins, sharing information and pitching them to shoppers.
"It's just a matter of time that we learn to do it in a classy manner without offending anyone" in China, Purkayastha added.
The shift in China's media consumption habits toward livestreaming and short video make it a vital channel, even for condoms, said Yaling Jiang, founder of research and strategy consultancy ApertureChina.
"Chinese people can easily get sick and tired of a brand. I think Durex understands this...It's good to see them trying new things," she said.
If there's anyone who can make livestream condom sales work, Daxue's Suheng Wu says, it might just be Durex, which has a decades-long history in the Chinese market punctuated by clever marketing campaigns and relatively few missteps.
This is largely due to a history of skillfully skirting the boundaries of China's socially conservative media landscape, attracting millions of followers on social media platforms such as Weibo (NASDAQ:WB) and Douyin in the process.
Its campaigns, such as last year's Chinese New Year Durex mahjong gift set which replaced traditional tile names with clever alternatives brushed with innuendo, or a Durex version of tetris on super app WeChat, often go viral.
But the intrinsic discomfort with sexual content will remain a problem in some contexts, Wu, 24, said.
"If I was watching Douyin and a condom livestream came on, I would be curious to see what it says," he added. "But if I was in the room with my parents, I would swipe away so fast!"
Livestreaming in China has helped boost spending in part because it often offers deep discounting and low prices, but an increasing number of brands, including Reckitt, now say they are making the shift to less discounting.
"There's a lot of reason to be optimistic," Purkayastha said of the China market. "This talk of deflationary environment and all these things, we don't really identify with it - I think it's big headline news. But the reality on the ground is it's almost business as usual."
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