Luxury brands looking to woo the Chinese consumer have got to do a whole lot more with their websites than they are now . . . because digital competency is the key to success in China – the world’s fastest growing market – according to a new study. 

Released by New York University Leonard N Stern School of Business, the study ranks the digital competence of 100 prestige brands in China, scoring each brand against more than 100 qualitative and quantitative data points. Each is then assigned a digital IQ ranking of Genius, Gifted, Average, Challenged, Feeble or Luddite. 

The rankings are authored by Scott Galloway - marketing professor at NYU Stern and founder of marketing innovation think-tank, L2 – together with China expert Doug Guthrie, management professor at NYU Stern and dean designate of the George Washington University School of Business.

Galloway said: "Prestige brands can do just OK everywhere else and still create enormous shareholder value by getting one thing right: China."

The study reveals a large disparity in digital competence across prestige brands in China. While 80 per cent of brands in the study maintain a Chinese language site, only ten per cent are e-commerce enabled in the world’s second largest luxury market.

Galloway added: "China has 384 million Internet users, more than the US and Japan combined, and 80 per cent of Chinese luxury consumers are under 45. In addition, in three years, the number of Internet users in China will explode to more than 800 million. 

"Tapping into the enormous online market in China could define success or failure in the prestige industry over the next decade."

The top ten brands in the Digital IQ Index (ranking from ‘Genius’ to ‘Gifted’) include:

1. Lancôme
2. BMW
3. Esteé Lauder
4. Audi
5. Clinique
6. Mercedes-Benz
7. Clarins
8. Acura
9. Cadillac
10. Wuliangye

Among the bottom rankings are champagne brands Veuve Clicquot and Dom Pérignon, which are labelled ‘Luddites’. The full 100 rankings and observations can be found here. 

Other key study findings include:

Selling is knowing: The ten brands that are e-commerce enabled have digital IQs 50 points higher than brands that are not transacting online. Beauty and skincare brands are the earliest to embrace e-commerce, and six of the 13 brands in the study sell online in China.

Digital disparity: Twenty of the brands in the study do not even maintain a Chinese language version of their brand site. Among brands categorised as ‘Challenged’ or below, 64 per cent lack store locator functionality and 54 per cent do not offer email opt-in.

Social mania: Prestige brands elicit thousands of user-generated comments and uploads on popular Chinese social networking sites RenRen, Qzone, Youku and Kaixin001, but most fail to maintain an official presence. Lancôme, Audi, BMW, Dior and Johnnie Walker are some of the few brands that are participating in the conversation.

Google, a distant second: While local search engine Baidu maintains 62 per cent market share, 29 per cent of prestige brand sites fail to be returned in the top three search results for a Chinese brand name search and 21 per cent fail to come up in the top three for an English brand name search.

Mobile: While many Chinese Internet users have transitioned from no Internet to mobile Internet, only 42 per cent of prestige brands maintain a site that loads on a smartphone. Only one brand, Shanghai Tang, has a Chinese language iPhone app.

Stores do not equal brand equity: There is no correlation between digital IQ and a brand’s retail footprint in China. Furthermore, analysis of the 28 fashion brands indicates that buzz on social networking sites and brick and mortar expansion in China prove unrelated, suggesting building stores is not the only way to generate brand awareness in China.