Retail in Asia


Decrypting the metaverse : Chapter IX – How are brands leveraging NFTs in China?

The news that the Chinese government dislikes and has banned cryptocurrency is currently dominating the media. Worried about maintaining social and economic stability, the East Asian nation banned speculative and volatile crypto trading, citing the trading medium’s close association with gambling, money laundering, and alleged scams as the primary reason. Despite this, Crypto’s blockchain remains in the government’s favour. President Xi Jinping has embraced the technology, recognising its advantage in turning China into an industrial and digital powerhouse. The implementation of Crypto’s blockchain includes non-fungible tokens (NFTs), although it is strictly limited with certain conditions.

SEE ALSO : Decrypting the metaverse : Chapter VIII – Let’s talk about cybercrimes in the metaverse

NFTs in China

NFTs in China operate in a unique way from that of other nations. A stark difference to the west is that Chinese NFTs are not linked to cryptocurrencies and can only be exchanged for Chinese currency. They are hosted on so-called permission-based blockchains that operate under state oversight.

Additionally, the Chinese government is working to stop the financialization of the NFT market. Although NFTS can still be traded as collectibles or gifts, they are strictly not considered assets. NFTs must be referred to as ‘digital collectibles’, and all marketing in China must avoid the language of international NFT markets. With no crypto coins involved, and all payments made in RMB, there’s no opportunity for speculation. The Chinese system also only permits the acquisition of an NFT from a permitted platform, with no tolerance for trading in secondary markets like the global exchange OpenSea. This is to deter speculators from bidding up prices of collectibles.

Lastly, the Chinese NFT ecosystem is a walled-off market that cannot operate with the international NFT ecosystem. Therefore, NFTs may not be extracted into international wallets or other locations in the global metaverse.

How Chinese Regulations Affect Local NFT Marketing Strategies

For brands who want to leverage NFTs to market their products in China, a few things must be considered. Since NFTs are not linked to cryptocurrency, marketers cannot expect tie-ins with special coins or advocate NFTS for any potential financial benefits. Furthermore, because the Chinese government prohibits cryptocurrency and NFT trading due to its high financial risk to consumers, marketers must remember that promoting the purchase of NFTs as lucrative is illegal.

Corporate marketing departments in China may instead use traditional marketing methods for NFTs by promoting their intrinsic value. This puts more onus on the value consumers attribute to an object for what it is and not for what it may bring them. NFTs should therefore be new, exciting, interesting, and fresh. Marketers must also ensure that their audience would be happy with the prospect of just owning NFTs without benefiting from the financial gain they might offer. Unlike in international markets, where the value of an NFT is viewed in terms of potential profit, NFTs in China can only succeed based on creative, artistic value.

Leading the way for NFTs in China are Ant Group Co. and Tencent Holdings Ltd., which have pioneered alliances of blockchains controlled by groups of private companies under the authority of the government. Ant, which also operates Alipay, the world’s largest digital payments platform, launched a “Treasure Project” that allows galleries and museums to issue their digital collectibles based on its own blockchain technology.

Source : Shutterstock
Understanding the Chinese Metaverse

To adapt traditional messaging for the digital age, marketers have to thoroughly understand the digital reality that is the Chinese metaverse. The industry has been gaining attention and popularity, especially among the country’s youth. Features such as the chat rooms where users may inhabit 3D avatars are particularly attractive to this demographic as a means to socialise with peers. Like with NFTs, the metaverse in China is different from the international metaverse, and its main players include Weibo, WeChat, RED, Jingtan, Huanhe, NFTCN, Tencent Gaming, MiHoYo, Bilibili, XiRang, and more.

Since most NFT collectors in China belong to Generation Z, a generation that spends a lot of time and money in the metaverse, marketers need to quickly grasp the demographic’s needs and preferences. For example, Generation Z users prefer a harmonious experience across all their devices and social media platforms. As a result, the technology has been developed so that if a user in China purchases an NFT on one platform, they are able to display it on their social media, in a virtual showroom, or use it in a game. In addition, they may share it with family and friends, and interact with a brand associated with that NFT on different platforms. The innovation for the benefit of Generation Z users has meant that the metaverse is made up of informal communication and interaction between and across different platforms.

How Can Brands Use NFTs in China?

NFT ownership can be easily tracked and proven due to its record on an open-source blockchain registry. This provides the advantage of exclusivity, which can be capitalised on by the luxury industry. As NFT artwork can expand a brand’s virtual presence and reach, many international and domestic brands now use the NFT market as part of their digitalization strategy.

Brands are slowly entering the metaverse by presenting their virtual spokespersons and NFT products. For example, Prada teamed up with Adidas Originals to launch a “first-of-its-kind” Chinese NFT project. Barbie and Balmain collaborated to offer three unique Barbie avatars, which received NFT bids of around USD 2,000 each.

Louis Vuitton in the Metaverse – An Example

While most brands mainly create digital characters or virtual fashion pieces, Louis Vuitton tried a different strategy and developed its own video game for the metaverse called “Louis the Game.” This adventure-based game was launched for the brand’s 200th birthday and allows users to play as the in-game protagonist Vivienne. Players can customize their character with different Louis Vuitton monogram prints and colorways. Playing through six different worlds, they have to collect 200 candles to commemorate the birthday of Louis Vuitton.

Louis the Game is a unique way for consumers to explore the LV universe, learn about the brand history, highlights from past runway shows and collaborations, and trivia about the company’s innovations. The video game is a perfect tool for communicating Louis Vuitton’s brand message – focused on heritage, craftsmanship, and creativity – to new and existing audiences.

Louis the Game, of course, comes with rewards, including 30 embedded NFTs a player can find throughout the game. These include 10 by the artist Beeple, whose digital collage has been sold as an NFT at a Christie’s auction this year for USD 69.3 million. In line with Chinese regulations, each LV NFT collectible can only be found by playing the game and cannot be sold.

One reason why LV was so successful with its NFT video game is the growth of the industry as a whole. In 2020 alone, due to the pandemic-related stay-at-home orders, the revenues of the gaming industry grew by 23 percent, the highest growth rate in over a decade. Through Louis The Game, LV has had an opportunity to reach the young gaming audience in an engaging way without pressuring them to purchase anything. LV found this to be the perfect way to introduce the brand and share their message to new consumers.

Source : Louis The Game
How Can Brands Use NFTs in China?

Here are a few ways that brands can leverage NFTs in China:

  1. Digital art collaborations – By partnering with well-known Chinese artists, brands can create brand-specific digital collectibles.
  2. Partner with Key Opinion Leaders (KOLs) – Chinese digital marketing is more effective when working with KOLs than when applying traditional advertising.
  3. Digital KOLs – In China, virtual idols that are AI-generated can create equal hype as KOLs.
  4. Leverage AR and VR – Brands can invite consumers to step into the metaverse, spend time with digital idols, and explore 3D collectibles.
  5. Create a 3D visual identity – Brands may also opt to create digital idols using 3D graphics or digital avatars that represent them.
The Crypto Community’s Take on China’s Approach

While cryptocurrency and NFTs can be traded in other markets, China tightly controls digital collectibles on its own networks and won’t allow them to be sold on global, independent platforms such as Ethereum, where most NFT artworks are minted. This has two parallel NFT ownership regimes as a result. Since the crypto community believes in a global, decentralized market without any authority to answer to, they disagree with state-operated blockchains like China’s. They believe it may lead to other authoritarian governments following suit in an attempt to keep up with the latest tech innovations. At the same time, they question whether products can truly acquire long-term value without any secondary market that prices them.

SEE ALSO : Decrypting the metaverse: Chapter VII – How do retailers and the metaverse go hand in hand?


Despite restrictions imposed by the government, the Chinese NFT market represents a key opportunity for brands. By following the rules, including embracing the metaverse, avoiding financialization, creating content across multiple platforms, and promoting the intrinsic value of their NFTs, they can communicate their brand message, promote their products and services, and reach a wider and younger audience through China’s state-controlled blockchain.

(Source : Branding Records)