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Chinese Businesses Eye Purchasing Power of LGBT Community

‘Pink Yuan’ Estimated at $300 Billion

Chinese businesses are starting to show interest in the purchasing power of the lesbian, gay, bisexual, and transgender (LGBT) consumer market, often referred to as the pink dollar,a trend led by e-commerce giant Alibaba Group Holding Ltd.

The U.S. business magazine Forbes says the purchasing power of the LGBT community worldwide amounts to $3 trillion annually. LGBT Capital, a venture capital firm in Hong Kong, says the figure for the mainland is $300 billion. Whats more, research shows LGBT consumers have above-average brand loyalty to companies they see as friendly.

While it is commonplace to see Western multinationals like Google Inc. and Coca-Cola Co. sponsor pride festivals and even marriage equality in the United States and Europe, the market potential is underdeveloped in China, which decriminalized homosexuality in 1997.

Alibabas shopping website is among the first group of companies eyeing the pink dollaror maybe the pink yuan is more accurate.

Taobao caused a stir in China on February 14 with its same-sex marriage themed promotion We Do. It partnered with several LGBT non-governmental organizationsincluding PFLAG China and the Beijing LGBT Centerto send 10 same-sex couples on paid honeymoons to Los Angeles. The prize offered the winners the chance to marry legally in California.

Taobao also sold a line of LGBT-themed bedding in partnership with Shanghai Bliss Home Textile Co. Ltd. and sold package holidays to five countries where same-sex marriage is legal.

Those marriages would not be legally recognized in China, but an Alibaba spokesman said the aim of the promotion was to raise awareness and understanding of LGBT issues in the country. 

Jacob Huang, the 26-year-old director of the Workplace Program at the Aibai Center, an LGBT rights advocacy group in the capital, said the promotion was a significant step forward for Chinese companies.

Its a good sign, he said. It shows that its a turning point for companies to realize that being open and diverse about the LGBT community is good for their business.

Huang, who works with Chinese and foreign companies to boost equality and workplace inclusion, said only a few businesses in China have realized the importance of the pink dollar, but the next five or 10 years will see an explosion.

They are also trying to test how tolerant the environment is, and how tolerant the media, the public, and the Chinese government are on the LGBT subject, he said.

Entrepreneurs are also seeking to profit from LGBT consumers through social media and online dating platforms. Ma Baoli, a former policeman, launched the gay dating mobile application Blued in 2012, after starting an online resource center for the LGBT community called Danlan.org. The app company has 60 employees and more than 15 million users, making it the largest platform of its kind in the world.

Ma said he plans to add an e-commerce function to Blued this year. The company also launched an English-language version of the app in the Netherlands on February 9.

Foreign and Chinese investors have shown interest in the dating app. The U.S. venture capital firm DCM Ventures invested US$ 30 million in Blued in November, and Beijing-based Crystal Stream Capital also committed an undisclosed amount.

Paul Thompson, the founder of LGBT Capital, said marketing to the LGBT community in China is still at an early stage of development, and he cited as obstacles a lack of understanding of the market and of strategies that could be used to target consumers.

We see the challenges being the lack of visibility of the market and companies still not understanding the potential and how to target this market, he said.

Keywords: 
LGBT, Alibaba