Developing Brands in China: AI is driving forward an already digital-forward market

For international brands seeking entry into China, the landscape has shifted significantly over the past decade. Despite persistent narratives and legitimate concerns about market difficulties, China’s environment today—while still complex—offers more clarity and structure for foreign businesses than at many points in recent history.

The fundamental challenge remains the same: understanding the market deeply and aligning offerings with the expectations of digitally native Chinese consumers.

Understanding consumers

China’s commercial transformation has been largely driven by its unique digital ecosystem. Compared to Western and other Asian markets, China’s e-commerce landscape is far more mature, deeply integrated and fast-moving. The traditional reliance on brick-and-mortar retail that still dominates in many overseas markets is far less relevant here than it once was, and sticking to such a model can mean brands risk underperformance.

Success in China depends on understanding the digital-first nature of consumption in the country, with platforms such as Douyin—TikTok’s Chinese sister app—and Xiaohongshu—known as RedNote in other parts of the world—shifting consumer discovery from keyword-driven searches to content-based browsing. In this environment, brands must move beyond fixed catalogs and instead meet consumers where they are: inside a stream of videos, live content and product reviews that combine entertainment and commerce into a single experience.

Chinese consumer behavior has also undergone a transformation in recent years. Today’s younger consumers are less interested in outward displays of wealth than prior generations, instead prioritizing wellness, purpose-driven purchases and self-expression. This does not mean they are not willing to spend on the right product, more that their purchases are increasingly targeted and individualized. As a result, industries such as beauty, health supplements (nutraceuticals) and activewear have seen rapid growth. The success of brands in outdoor performance and fitness categories—such as Arc’teryx and Lululemon—attests to this shift toward self-care and lifestyle-oriented spending.

Services, particularly domestic travel and leisure, are also seeing post-pandemic growth, as consumers are choosing to spend on experiences and wellbeing, rather than purely on material goods. This transformation is not only cultural, but also reshaping the competitive dynamics of the e-commerce sector across China.

Digital changes

The traditional e-commerce platforms such as Tmall and JD.com were originally built around search. A consumer arrived with the intent to purchase a specific product, typed that into the search bar and was then presented with a number of listings for that product. But much like visiting a physical mall, Chinese consumers now increasingly browse with no particular goal in mind, instead discovering products through influencer-led live streams and curated content.

Douyin has been pivotal in facilitating this evolution. Consumers log on not to shop, but to be entertained, informed and inspired, yet they often end up purchasing products they didn’t know they wanted, introduced by creators with whom they identify. This shift lowers the barrier to market entry for brands, allowing them to tap into vast, demographically targeted audiences through entertainment-first strategies.

In this content-driven environment, influencers—or Key Opinion Leaders (KOLs)—are central to any viable digital strategy. The overwhelming majority of successful e-commerce campaigns in China rely on robust influencer involvement. Platforms have invested heavily in back-end systems that help brands match with relevant KOLs based on audience demographics, interests and purchasing behavior.

At the grassroots level, Key Opinion Consumers (KOCs)—users who authentically share product experiences—often grow into full-fledged influencers. The influencer economy is therefore dynamic, decentralized and deeply intertwined with brand success.

Extending beyond borders

China’s digital capabilities have also extended beyond its domestic market. In recent years, the country has emerged as a logistical and strategic hub for accessing the broader Southeast Asian region. Infrastructure investments in cities such as Shenzhen, which serves Southeast Asia, Weihai for South Korea and Qingdao for Japan have made it possible to move products across borders with extraordinary speed.

For example, a product ordered before 4:00 pm via e-commerce platforms such as Shopee or Lazada can be packaged, labeled with localized compliance requirements and flown overnight to be ready for last-mile delivery in a Southeast Asian capital by 9:00 am the next day. This logistics performance meets—and in many cases exceeds—consumer expectations for speed and reliability.

Previously, brands attempting to operate across multiple Asian markets had to manage fragmented inventory in each country, not only creating inefficiencies but also introducing high forecasting risks, especially for products with expiration dates or fast fashion cycles. Today, many companies operate from China’s bonded warehouses and free trade zones, centralizing inventory and labeling dynamically for each local market.

This logistical advantage applies not only to goods made in China, but also to products manufactured in Europe, Japan, Korea and elsewhere. Consolidating operations in China can enable seamless regional execution without full importation into the domestic market until a sale is confirmed.

Scaling Content with AI

The efficiencies don’t stop at logistics. Artificial Intelligence (AI) is transforming how brands produce, adapt and distribute content. Influencer “cloning” is now a reality: a live streamer in China can appear as a native Japanese speaker in one market, and as a Korean speaker in another—complete with culturally appropriate visuals and real-time translation.

With this capability, a single piece of content can be localized at scale. A fashion shoot conducted in China can be adjusted using AI to reflect different body types, ethnic features and languages—allowing a one-time investment in content to yield returns across different regional markets.

AI is also already deeply embedded across the e-commerce value chain—from inventory forecasting and programmatic advertising to customer service and CRM. Predictive analytics play a major role in ad spend efficiency. If temperatures fall in a certain city, AI can reallocate advertising dollars toward winter wear in that region. If a football star scores a goal and triggers a surge in jersey demand, AI can also shift spend accordingly.

Additionally, AI-driven CRM platforms are on the rise, enabling personalized customer engagement across languages from a centralized support center. The ability to serve users in their native tongue while retaining centralized operations is a major step forward in operational efficiency.

Importantly, given the nature of the data required for e-commerce operations, China’s recently updated cross-border data transfer laws have reduced obstacles to AI-enabled operations. Relatively vague commercial insights—such as age, gender, location and product purchased—are more valuable than personal identifiers, which are neither collected nor necessary for strategic execution.

Toward real-time retail

Looking forward, AI will unlock even more granular personalization. The ability to generate millions of customized content streams—each tailored to an individual’s behavior, preferences and purchase history—will redefine customer engagement. This generative approach is already beginning to reshape marketing and media. As compute power increases, so too will the scale of personalization, driving significant gains in conversion rates and customer satisfaction.

Shein provides an excellent business model example to learn from. The fast fashion giant is using real-time trend monitoring, AI-driven product design and hyper-efficient manufacturing to reduce time-to-market to under a week, challenging legacy cycles in industries like apparel, where traditional design-to-shelf timelines stretch six to nine months. As AI becomes more powerful, brands that fail to adapt to these accelerated models risk falling behind.

From a cost perspective, platforms like Shein have eliminated many of the intermediate steps in the value chain. Their business model connects factory directly to consumer, minimizing overhead and maximizing responsiveness to emerging trends.

Future trends

Success in China today depends less on capital investment and more on cultural adaptability, digital fluency and a willingness to rethink entrenched commercial models. The tools now exist to centralize logistics, scale personalized content and access a region-wide market from a single operational hub.

Ultimately, brands that understand how to harness China’s digital infrastructure—not just to serve Chinese consumers but to extend reach across Asia—will gain a lasting strategic advantage. The future belongs to those who can match speed with insight, and innovation with execution.