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With the Football World Cup beginning tomorrow, many Chinese will have their eyes on Brazil.  Despite the fellow BRIC’s time zone being 10-13 hours behind China’s, CCTV is banking on a bumper of a tournament and a massive 530 million Chinese are expected to follow it online according to iResearch.

Whilst football fever in China may be subdued versus Latin American, European, African and even other Asian countries, there are definitely signs in China that football’s holy grail is upon us. There’s the usual branding activity with everything from soccer ball imprinted burger buns and mugs at KFC to World Cup beer.  Taobao stores are supporting diehard fans selling hundreds of fake doctor’s notes for as much as ¥300 ($48).  China’s online lottery sales are expected to grow 70% this year to ¥71 billion ($11.4 billion) on the back of the World Cup.

Although no Chinese footballers will be on the field, there’s no shortage of pandering to China and its audiences. To predict the winner this year, Paul the Octopus has been replaced by a very cute baby panda from Sichuan, picking winners by climbing trees. FIFA has even jumped on the China-wagon, supporting the Middle Kingdom’s claim to be the “Cradle of the Earliest Forms of Football,” subsequently questioned by international experts.

Following Tmall’s outlay of ¥141.6 million ($22.7 million) sponsoring scorer rankings for CCTV’s World Cup coverage, Alibaba has just shelled out another ¥1.2 billion ($192 million) to buy half of the championship football side, Guangzhou Evergrande. Who knows, post the IPO cash injection they may be buying European clubs – one-upmanship on WeChat’s endorsements by European-based footballers.

For our readers who are football fans, we hope you manage to digest this week’s Skinny before the carnival begins.  All the best for your respective teams!

Consumers, Chinese Consumers

Coming Clean: Celebrities Paid to Endorse Soap on WeiboGuangzhou’s Time Weekly reports that celebrities are paid between ¥20,000 and ¥1.2 million (US$3,200-$192,00) to post about products on their Weibo. To better regulate online marketing, China’s revised Consumer Rights Protection Law came into effect in March, stipulating that organizations and individuals endorsing goods and services will share responsibility if they are found to have problems, meaning celebrities can be found liable for false advertising. On the subject, here are the appearance fees for China’s top-10 celebs, eight of whom are women.

Bribery Probe for Chinese State TV Exec Who Slammed Apple, McDonald’sThe big fish at CCTV behind singling out misdemeanours from Western companies such as Apple, McDonalds and Volkswagen and local businesses as well, is under currently being investigated for corruption.

Chinese Consumers Pay a High Price for LuxuryA Deutsche Bank study has found that the USA is home to some of the best consumer bargains.  Although China has some good deals on commodities and public transport, name brands are pricey. Luxury sedans are up to 37% more in China than the USA and leather goods are about 50% higher. Great result for Chinese tourism to the USA. 

Recreation and Sports

World Cup Zeal Rises to Fever PitchSponsors, broadcasters, brands, tourists and fans in China are jumping on the Football World Cup bandwagon.

Alibaba Buys 50% Stake in Chinese Soccer Team for $192 MillionIn true playboy billionaire fashion, Jack Ma’s Alibaba has bought a 50% stake in championship football side Guangzhou Evergrande for ¥1.2 billion ($192 million) after a 15-minute negotiation. Given Alibaba’s $6 billion spending binge on acquisitions over the past year, the purchase price was barely a rounding error.

Online: Internet, Mobile & eCommerce

Alibaba Will Soon be a Mobile Telco, Close to Launching Ali Telecom in Coming WeeksAlibaba will be the first of a likely run of China’s online big boys to launch a virtual mobile network. The company launched a promotional page last week, claiming their initial prepaid network will cover 29 cities. This will give the online giant even more valuable data about consumers and will no doubt bring some synergies with their other mobile initiatives.

Overseas Chinese Tourists

Quality, Not QuantityBritain has a poor scorecard for attracting Chinese tourists, with arrivals increasing by 8% last year — much less than the worldwide increase of 17% and 23% in the USA. Nevertheless, Chinese tourists spend four times as much as the average foreign visitor to Britain, believed to be encouraged by tougher visa requirements.

Photos: 7,000-Strong Chinese Tourist Group Sweeps Through L.A.In what sounds like a mini-Golden Week, LA has hosted a big-spending 7,000-strong tour party for a week, believed to be the largest Chinese tour group ever to hit American soil. 86 planes, 26 hotels, 160 buses and who-knows how many umbrellas were required for the spectacle.

Malaysia Thinks It Can Woo 2 Million Tourists Despite Missing MH370Tourism Malaysia’s promotions in China will soon be resumed in hope of clawing back some of the 30% of Chinese bookings cancelled in April. Malaysia is confident it can attract 2 million Chinese tourists this year, up 15% on 2013. The campaigns may win over some of the Chinese who were considering visiting Thailand, where the coup has caused a 19% drop in arrivals in the first four months of this year.

China’s Thrill-Seeking Wealthy Travellers Aim for AdventureFor China’s uber-wealthy travellers who spent an average on $150,000 per trip, the most popular holiday was on an island, followed by a self-drive trip, food & shopping, South & North Poles and a nature adventure. Bolivia, the Poles and Africa top the wish list of destinations, with Mediterranean cruises and New Zealand the most desired first world destinations.

Premium Food & Beverage

Ecommerce to Heat Up Chinese Cold Chain LogisticsThe Chinese cold chain logistics sector is expected to grow into a ¥470 billion ($75 billion) industry, growing at the rate of 25% annually until 2017, driven by soaring demand for eCommerce and fresh agricultural produce, seafood, frozen food, photographic film, chemicals and pharmaceutical drugs. Sales of fresh products grew 195% on Taobao and Tmall in 2013.

Why Chinese Booze Costs More Than Fine Wine at AuctionHalf litre bottles of Moutai Baijiu distilled in the 80s, often found under beds and in the back of pantries, fetched between ¥60,000 ($9,700) and ¥70,000 ($11,300) at a Beijing auction last Sunday. The going rate 18-months ago was less than half that. 1982 Lafite Rothschild sells for around $5,000 for a 750 ml bottle.

Netizens Gobble Up Watermelon MicroblogThe Office for Watermelon Sales Service in Zhengzhou, Henan launched its Weibo account late May and had 22,200 followers within a week and thousands of comments on its 60-odd posts.

Banking, Property

Luxury Lifestyle Report: High Net Worth Real Estate Consumers54% of affluent Chinese would choose a waterfront property for their next real estate purchase. 93% wanted to make a legacy purchase to remain in the family. 51% wanted space to display the art collection and 48% would be most proud to own an eco-friendly home.

High End Fashion

Fast Fashion Offers ‘Affordable Luxury’China’s apparel market grew 69% from ¥905 billion ($145 billion) in 2008 to ¥1.53 trillion ($245 billion) in 2013. Fast fashion brands are doing particularly well, with Uniqlo, Zara and H&M doubling brand share between 2010 and 2013.

Kooky, Weird & Wonderful

Chinese Inventor Builds a Scooter That Doubles As a SuitcaseAnother example of Chinese creativity to make life better – a ride-on suitcase that can zip around at 20km/hour and travel as far as 60km from on one charge.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

There are new stats and figures coming out about China every day.  They are often staggering, and regularly inconsistent.   China’s diversity and opaqueness means there’s often a few stray figures, but after studying enough China research and data, consistent trends and themes do come through.  Notwithstanding, sometimes even the most reputable of sources don’t align with these trends. 

Late last month, FT, backed by data from Credit Suisse released some stats and an opinion piece outlining China’s preference for foreign brands.  The article includes stats such as ‘91% of Chinese consumers intend to buy a foreign handset in 2013’, whereas in reality, just one of China’s top-six selling handsets isn’t Chinese.  The opinion piece alludes to Chinese consumers having an unwavering preference for foreign brands across many segments.  Whilst Chinese do hold many foreign brands in high esteem, the article could give foreign companies the impression that there is limited competition coming from Chinese brands.  We disagree. 

It is important for foreign brands to be aware that local companies are upping their game, and Chinese consumers no longer unconditionally put foreign brands on a pedestal – they need to earn that reputation.   Brands from Apple, to Nike, to KFC, once some of the most-trusted Western businesses in China, have seen their brand reputations slide and market share diminish recently.  Foreign films no longer dominate China’s box office.  The biggest foreign fast food chains aren’t keeping up with the segment’s growth.  And although domestic car maker’s share of the local market has actually dropped, local manufacturers are being recognised for improving their standards, and it’s likely they’ll start growing their share. The FT article made good points that local brands better understand how to appeal to traditional ideas, but they are also making inroads in classic Western-style marketing and messaging as well.  Many foreign brands remain aspirational and have an advantage of perceived higher standards, but marketing needs to be smarter than ever to convince Chinese consumers that its worth spending more on imports.  Hopefully this week’s Skinny will help you do just that.

For our Australasian readers, China Skinny’s founder Mark Tanner will be presenting at the China Digital Forum in Melbourne on 19 November and Sydney on 21 November. Mark will be joined by executives from Baidu, Alibaba (Taobao), Tencent (WeChat) and China Telecom in what is destined to be an excellent event.  China Skinny Weekly subscribers can receive special full and half day rates by entering the promo code ‘CS’. Find out more at the Australian Business Forum website.

We hope you enjoy this week’s Skinny!

Consumers, Chinese Consumers

China: Foreign values: According to FT, Chinese brands only really making headway at the commoditised end of consumer goods in China. Reading this, a foreign brand could be led to believe that Chinese brands aren’t too much of a challenge. Chinese products and services are upping their game across the board in the domestic market and are increasingly challenging established foreign brands, with a little help from the authorities.  In addition to that, Chinese consumers are much more discerning when choosing products and services and no longer just automatically assume foreign = better.

How Chinese Consumers Prioritize Spending: Watches, Handsets, Perfume and Autos top categories for purchasing foreign brands according to FT and Credit Suisse. Bottled water, cigarettes, dairy and tissues top domestic purchases. Some of these stats largely contradict countless other studies, including China Skinny’s own research and actual sales figures. Take mobile handsets for example, the research claims 91% of Chinese consumers intend on purchasing foreign brands in 2013 – Samsung is the only foreign brand in the top-six in China at present – just try buying a limited-offer Xiaomi online. And dairy at 92% of local brands?

Lane Crawford’s President, Andrew Keith, Talks About Why Selecting the Right Mix of Goods for Chinese Consumers is Like Conducting an Orchestra: “Our consumers are moving from buying products that reflect status toward really appreciating products and how it reflects their lifestyle. It’s not buying a statement piece to show off. It’s about feeling confident in purchasing to your lifestyle requirements,” says Andrew Keith, president of Lane Crawford.

Chinese Consumers See Their Rights Enshrined in Major Legal Review: China’s consumer protection law has had its first major overhaul in 20 years. Changes include online shopping and harsher penalties for businesses that mislead shoppers.

Wal-Mart to Accelerate China Expansion With 110 New Stores: While some foreign bulk retailers are struggling in China, Walmart is upping its expansion, especially in smaller cities. Net sales grew 6.3% in Q2, but shopper traffic declined 6.8%.

Consumers, Internet, eCommerce, Mobile & Social Media

Asia Messaging Apps Seek to Upend Rivals with Marketing Might: WeChat has big plans outside of China, budgeting up to $200 million on marketing this year alone. 150 million of WeChat’s 600 million users globally are now outside of China.

Report: Only 13% of Chinese Consumers Will Buy Smartphones Priced Over $330: Chinese consumers have an overwhelming preference for a mid-ranged Chinese smartphones, with 57.8% wanting to pay $165 to $246. Just 13% are prepared to pay over $330, ensuring the Apples and Samsungs of the world still have the premium end covered.

Chinese Food and Beverage

China Pushes Genetically Modified Food: Beijing’s propaganda machine is talking up Genetically Modified foods, possibly laying the groundwork for a roll out of more GM stock in the Mainland. The social media sphere, bloggers who are already acutely aware of the toxic food scandals rarely respond positively online on the subject.

Yihaodian to Offer More Choices of Imported Food: Online food retailer Yihaodian is looking to develop partnerships with trade commissions and agricultural organizations in the United States, Australia, South Korea, the United Kingdom, Italy and Spain. Yhd.com sells more than 18,000 imported products on its site, of which 78% is imported food. ¥63 billion ($10.4 billion) worth of imported food came into China in 2012, with growth averaging 15% a year for the past 5 years.

Local Tastes Tempt China Diners Away from Golden Arches: McDonalds is looking to slow its expansion in China as local competitors eat into market share. Despite heavy investment, McDonald’s market share has been stagnant at 2.7% since 2007. Consumers eating cheaper alternatives or dining at home has seen their growth rate halve over the past 5 years to 8%.

China’s Dairy Market Policies Clear as Milk: Among high-end baby formula brands in China, foreign companies currently hold more than 75% of the market. The Chinese Government wants that portion to be 30% by 2015. In related news, Japanese dairy giant Meiji has quit China’s baby milk market, citing rising costs, however analysts believe it is more political and safety fears could be involved. The company remains optimistic about liquid milk in the Mainland.

Sweet-Toothed Chinese Consumers Turn to Chocolate: Chocolate in China is picked to grow 10.1% a year in value and 7.4% in volume until 2017.

Cooking Oil Blends Worry Chinese Consumers: Blended oils in China often only contain a tiny percentage of the promised oil – less than 5% peanut oil or a drop of pure olive oil, bulked up by often more than 50% palm oil.

You May Never Eat Street Food in China Again After Watching this Video: On the subject of cooking oil, if you’re a fan of the local hole in the wall, or street vendor, probably best to skip this 2 min vid. An estimated 10% of oil in China is the gutter stuff.

Tourism and Travel

How the Chinese Learned to Embrace Independent Travel: 90% of Chinese travellers are under 45.  They are focused on individuality and making their own choices, and finding it easier than ever to get visas. Bloggers such as Gu Yue (who backpacked from Beijing to Berlin to see his girlfriend) is creating a huge amount of romantic adulation for the idea of life out on the open road.

LVMH’s DFS Group Plans First Europe Shops as Chinese Travel More: Tax free shopping by overseas Chinese tourists grew 20% in the first quarter of 2013 and DFS is hoping to tap into it by opening its first store in Europe.

Recreation and Sport

Sina Expands NBA Partnership to Woo Advertisers: Sina and NBA enhance their partnership to focus on mobile broadcasting, community interaction and live video in a bid to sell more data-driven advertising.

Q & A: Tom Byer on Soccer in China: Tom Byer hired as head technical adviser for the Chinese School Football Program to teach football to tens of thousands of Chinese children.

Film and Entertainment

Co-Produced Movies Gain Popularity in China: 190 million Chinese went to the cinema last year, next year it’s expected to be 290 million.

Sculpture and Art

Forging an Art Market in China: After peaking in 2011, China’s art market dropped 24% in 2012, some say due to a lack of trust in authenticity. “Eagle Standing on a Pine Tree,” a 1946 ink painting by Qi Baishi, turned the art world upside down in 2011, selling for $65.4 million, but it still sits in a warehouse as the winning bidder still thinks it’s a fake.

Auto and Cars

Chinese Cars: More Reliable Than You Think: Four Chinese auto brands outperformed industry average for issues. Although it doesn’t appear to be helping with Chinese manufacturers having just 27% of the local market, down from 31% in 2010.

Understanding Chinese Consumers in 2013: Younger, More Savvy and Not Lacking Money: Chinese car buyers are getting younger, and females are increasingly playing their part, accounting for 31% of auto purchasers in China. More and more buyers are looking for individuality and branding.

Premium and Luxury Goods

Luxury Goods Sales Slowed as High-End Chinese Consumers Cut Purchases: Luxury sales in China are picked to grow just 2.5% this year.

Luxury Brands In China Face Four Major Challenges: The four biggest problems with luxury brands in China: 1) Intellectual property; 2) High costs; 3) Finding qualified staff; and 4) Protectionism.

That’s The Skinny for the week!  China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

Mention Shanghai to a Beijinger, and there’s a good chance they’ll scoff. Talk about Beijing to Shanghainese, and there may also be some jeering.  Northern Chinese like noodles, southerners have a preference for rice.  Travelling between regions in China, differences are evident in people’s appearance, diet and aspects of their culture, as well as climate variations. Whilst most of us are aware of this, curiously a lot of our marketing efforts still treat China as one big homogenous land, or at best, separates sophisticated high tier city consumers from the smaller ones.

The Regional Differences video below, explains how we need to think about China in terms of a matrix, considering city-tier sophistication, alongside regional differences in culture, climate and diet.  There’s the often-cited example of skin care needs across China, with consumers in the humid south having different requirements than those in the dry north.  There are cities where smog-protection is most important for skin cream, and others where it is sun-protection.  

Localising your product or service’s features is just the beginning, the other elements of your marketing mix and customer experience should also take the regional differences into account.  It’s seldom practical to have a something unique for each of the hundreds of Chinese cities with millions of people, but there’s often room for improvement. Advertising in general, even at a superficial level will be more effective if it’s regionalised.  A backdrop of the Great Wall or the CCTV building and a pirate-sounding voiceover will be better received in the North, than say, The Pearl Tower.   With many of us increasingly using the web, social media and mobiles in our marketing, we can be quite specific in targeting different areas of China.  

Maturing Chinese consumers are becoming more confident, and as a consequence, are increasingly developing their own identity and unique parochial traits.  So it’s best to take that into account with your marketing.  Hopefully regionalisation, coupled with what you’ll read below, will all help with your China plans.  Enjoy!

Consumers, Chinese Consumers

Regional Differences: 17:52 video about not just grouping Chinese consumers by city tier, but working with a matrix that considers city-tier with region, to account for distinctive differences in culture, diet and weather. Regionalised examples include McDonalds, slower to localise its menu in China, but now with regional menus catering for noticeably different palates across China. Unlike those interviewed, China Skinny is a believer in regionalising advertising where appropriate, as Chinese can be very parochial. It doesn’t always have to be expensive.

American Execs Say China is Getting Expensive, and Profitable: 90% of American businesses surveyed now have profitable operations in China, but their optimism is tempered by soaring costs and finding the right talent.

Number of Chinese Billionaires Skyrockets: China ‘officially’ now has 6% of the world’s ultra rich (although the actual number is likely to be much higher) – those with a net worth of over $50 million – higher than every country except the USA. USA accounts for almost half of the total.

CCTV Interviewed Chinese on Streets: “What is Patriotism?”Although Chinese receive systematic patriotism education from day one, there are some interesting responses when they’re asked what patriotism is [not viewable inside the Great Firewall].

Haier, Sina Weibo, ZTE in New Foreign Tie-Ups: Three quite different tie-ups between Chinese and American organisations is likely to be an increasing trend which sees Chinese brands make more of a mark abroad.

Consumers, Internet, eCommerce, Mobile & Social Media

Mobile Use Differs Markedly Between Cities: 54% of 18 to 32 year olds in China’s Tier 1 & 2 cities use social media apps on their smartphones, versus 41% in Tier 3 & 4. In China’s big cities, consumption, sports, tourism and navigation apps are hugely popular, whereas entertainment is a focus in smaller cities.  It would be interesting to see how it differs regionally.

China’s Online Retail Turnover Rocketed 70% YOY To 880 Billion Yuan In 2013 H1: A cool 271 million Chinese shopped online in the first half of 2013, 29 million more than the six months before. That number doesn’t even count consumers who have someone else do the shopping for them.

Trending in China: Cross-border E-commerce: Still a minnow compared to the local sales, but cross-border online shopping from China is picked to grow from $35 million this year to $160 million by 2018. Chinese consumers are the most worried about product safety and authenticity when buying online.

Macy’s Shelves Internet Expansion Plans In China, But It Isn’t Worried About Slowing Chinese Economy: Macys is holding off on big China plans as it needs to learn more about Chinese shoppers.  It hopes to get some insights from it’s minority shareholding in local online retailer VIPStore.

Chinese Food and Beverage

China’s Coffee Industry is Brewing: Chinese consumers drink an average of four cups of coffee a year, with instant coffee accounting for 80% of that. Nevertheless, the number of cafes has doubled in the last 5 years with more than 30,000 in 2012. Coffee drinking is growing 10-15% a year.

Trends and Developments in the Confectionery Sector in China: Quality and taste have become the primary motivations for Chinese consumers buying chocolate. Dark chocolate’s low sugar and fat content and rich taste has helped drive chocolate sales in China. Women eat the most.

Sausage Ceasefire May Not End War Between China’s Noodle Kings: China’s $8.8 billion a year instant noodle industry has seen competition heat up so much, margins have taken a big hit. Firms have been giving away sausage, drinks, extra seasoning and gifts to get a larger share of the 44 billion packets of noodles consumed in China each year. Another reason to position yourself as a premium brand in China if you can.

Chinese Losing Taste for Fried Chicken: Once the darling of Western businesses in China, KFC sales in China have plunged 11% in the past three months, following a disastrous quarter before that. Chinese consumers are opting for cheaper, healthier and more Chinese. Curiously, there’s nothing in the article about the string of scandals and negative press from Government media that hit KFC around poor products and the birdflu outbreak, something KFC has never been able to claw back from. Apple, Fonterra, Nike and Japanese car brands will be watching with interest.

Tourism and Travel

China Gambles on Theme Park, Whale Sharks to Lure Punters from Macau Casinos: Construction of a $5 billion resort and theme park development is well underway, 10 minutes drive from Macau, said to be China’s answer to Orlando.  The park hosts a mega rollercoaster and whale shark tank, hoping to capitalise on the 30 million tourists who went to Macau last year.

The Online Travel Industry in China is Booming, as China’s Largest US IPO in 2 Years Shows: 20% of Ctrip’s hotel bookings and 15% of flights were booked through its mobile app in Q2 2013.

Air China’s Expired Food Causes Dozens Vomit, DiarrheaChina’s only national flag carrier, Air China, served up expired food causing at least 30 passengers to get really crook.

Learning and Education

In China, Parents Bribe to get Students into Top Schools, Despite Campaign Against Corruption: Want to get your precious only child into a good Chinese school? Maybe gifting the school an elevator or telescope would help. Almost everything, from admission to grades to teacher recommendations, is negotiable if you have the right contacts and the cash, parents and teachers say.

Recreation and Sport

In China, Golf Has a New Hazard: Killer Smog: Players’ health has been sacrificed for the financial benefits of establishing golf tournaments in China’s lucrative market [not viewable inside the Great Firewall] .

Fine Art

Chinese Buying Frenzy Helps Sotheby’s to $540 Mln Record: More collectors from China and elsewhere in Asia helped Sotheby’s HK break records with US$540 million, including a $3 million Zeng Fanzhi painting, a $3.9 million bronze Buddha and a $2.4 million Chenghua-era “Palace” Bowl. China’s new wealthy “don’t just want to collect and enjoy, they want to be No. 1,” says HK-based dealer, William Chak.

Is Chinese Contemporary Ink Painting the Next Big Thing?: Traditional ink paintings are picked to be the next big thing in Chinese are as art dealers and auction houses look to expand and diversify the art market in the Mainland.

Auto and Cars

Chinese Auto Marketing Shifts from TVCs: More than 100 auto companies organised micro-movies in the last quarter of 2012, and had product placements in close to 500 micro-movies. 60% of Chinese surveyed believe it helps brand image, with 33% believing it made people more likely to purchase a car.

Premium and Luxury

Luxury Companies Are Making Budding Aficionados of Chinese Consumers: Including luxury experiences as part of the luxury goods offering ensures a much stronger proposition. Good examples are Johnny Walker “experiential brand centres” and Porsche multi-city road show, with support online activity.

That’s The Skinny for the week!  China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

Welcome back to our China readers, we hope you had a good break. If peak hour crowds at People’s Square or Xizhimen subway stations are your thing, then let’s hope you managed to get out to see some of China’s tourist attractions over the golden week just passed. In what has been described as “tourist apocalypse”, a reported 100 million Chinese were on public transport each day of the national holiday, 50% more than this year’s record Spring Festival traffic. China’s top 125 tourist attractions saw almost 20% growth from last year’s golden week.

All the old favourites were inundated with countless tourists. On Monday, Tiananmen Square hosted 110,000 visitors and the five tons of litter they left behind. On Wednesday, a lack of buses and gridlock saw more than 4,000 tourists in Sichuan’s Jiuzhaigou Valley stranded for up to ten hours.  On Thursday, the two and a half hour drive between Yunnan’s Dali and Lijiang took more than ten hours. National parks around the Mainland were sold out, and some of Gansu’s Mogao Caves may have to close after thousand-year old paintings were damaged by the excessive carbon from masses of heavy-breathing tourists. If you didn’t make it to the Great Wall, Hangzhou, The Bund or the Yellow Mountain, here’s a few snaps to see what you missed.

The massive hordes of tourists should be music to the ears of China Skinny readers. The local tourist chaos is likely to drive a few more Chinese consumers to travel further a field next year to escape the extreme crowds. Even more importantly, the record travelling numbers for this golden week are further affirmation that Chinese consumers are feeling wealthier and more optimistic, and are spending like they never have before. In August, China reported year-on-year retail sales growth of 13.4 percent, the highest in 2013 and almost double that of GDP growth.

In other news, it’s just two weeks until the China Digital Marketing & Social Media Summit in Sydney – the Southern Hemisphere’s largest conference of its kind. China Skinny’s founder Mark Tanner will be presenting insights about eCommerce and marketing in China. If you can be in Sydney on Thursday 24 October, sign up at thechinagap.com. On Wednesday 23 October, Mark is available to discuss opportunities for your business in China . If you’re in the neighbourhood, please reply to this email to arrange a time to meet.

We hope you find something in this week’s Skinny that helps you get a share of that increased spending.  Enjoy!

Consumers, Chinese Consumers

China Has Problems, but Household Consumption Isn’t OneApril to June this year may have seen consumption in China drop as a percentage of GDP, but that measure is affected by the volatile swings in investment.  A safer gage of household consumption is China’s real consumption growth, which has been steadily rising at an average rate of more than 9% for the past five years.

Harrods Targets Chinese Consumers: By 2030, 13 million households in China would be earning more than $150,000 a year, and Harrods London is doing what it can to attract them. The store has hired more than 70 Mandarin speakers, produced Chinese store guides and expanded it’s tax return service. Chinese now account for 35% of international sales, with watches, jewellery, fashion and accessories most popular.

How Can Firms Tap Into Chinese Consumers?: A 3:28 video about 20-something-year-old Chinese consumers – discovering their self-identity much sooner than earlier generations, much more open minded and more likely to debate and love technology.

Overseas Marketers’ Real Problem In The Chinese Consumer Market: Unlike other developing markets, where the essentials arrive first, then the luxury goods, everything has come at once in China, creating an unusual market where the masses are fickle, willing to change brands rapidly, with many shopping on price alone. However, there is a fast-growing segment who are more loyal to brands, demonstrating similar characteristics as consumers from developed markets.

Online: Internet, eCommerce, Mobile & Social Media

Chinese Smartphone Owners are Heavy Entertainment Users, But Only 27% Actually Pay for Content: Excluding texting and calling, Chinese smartphone users spend 60.6% of their time on entertainment services – 109 minutes a day on average. Just 26.9% of those have forked out money for it – although that’s still a lot of consumers.

Chinese Actor Tests Out Paid Membership for Fans in WeChat: In the name of getting more consumers to pay for things on their mobile, ¥18 a month ($3) will get you special access to Chinese actor Chen Kun’s fans-only account on WeChat. WeChat users can also spend their TenPay balance to buy from selected vending machines or order dinner on WeChat. In other news, WeChat’s parent’s Tencent have just paid $448 million for a minority share in search engine Sogou (a small percentage of Tencent’s $100 billion+ value) as China’s online space consolidates further.

There are 42 million iPhones on China Mobile already. All of them stuck on GPRS/EDGE, no 3G: China Mobile’s 42 million iPhone subscribers (5.7% of their base) currently get slooooow data on the network.  They’re some of the most likely buyers of the new iPhones if Apple and China Mobile do a deal. This opportunity is the main contributor to IDC’s forecasts that Apple will double its smartphone share in China in the next year. Nevertheless, if you wanted further evidence that the new iPhone 5C isn’t hitting the mark with Chinese consumers, Apple is already giving 5C discounts of a few hundred kuai.

Anger Spreads Faster On Social Media Than Any Other Emotion: Posts with powerful emotions such as anger and joy are more commonly shared on Weibo than those without, although anger is most likely to be forwarded and inspire similar messages according to a survey of 200,000 Weibo users.

No, China is NOT Unblocking Facebook (or Anything Else) in Shanghai Free Trade Zone: A more liberated Internet in a small part of China turned out to be a pipe dream. Very disappointing.

Chinese Food and Beverage

KKR, CDH, Modern Dairy Partner to Build Large Scale Farms in Shandong Province: China’s dairy consumption grew at 10% over the past 5 years. During that period, premium dairy products almost doubled in market share from 10% to 19%.

Beijing to Grant Baby Formula Makers CN30Bn in Largest Reshuffle: On the subject, the Chinese Government is still playing on the uncertainty caused by Fonterra’s contamination false alarm, by providing aid of up to ¥30 billion ($4.9 billion) to help five local infant formula companies restructure to better compete with foreign brands. It still has a long way to go, signalled by the social media mocking of President Xi Jinping for his comments that New Zealand should take tough measures on food quality.

Herbal drink giant’s recipe for home-grown success: JDB Group, maker of the herbal tea that unseated Coke to become the top selling canned drink in China, remains humble, admitting it has a lot to learn from Coca Cola, even with ¥20 billion ($3.3 billion) in sales in last year.

Chinese “E-tailing” Emerging as Exciting New Channel for U.S. Meat: Online food sales topped $8 billion in China, and with logistics improving, chilled meat exports have become a viable proposition to China.

Cargill Enters China’s Challenging Poultry Sector: Cargill has faith in China’s poultry industry, investing heavily in the country. China is expected to account for 20% of global growth in poultry in the next five years as diets and incomes change.

Retail and Fashion

What’s Up With Those Chinese Tour Buses at Barneys in Beverly Hills?: Chinese pop stars take front row seats at NY Fashion Week and Beverly Hills stores have changed their opening hours for Chinese tour buses who want cutting-edge trends coming out of NY and Hollywood.

Italian Footwear Industry Attaches Growing Importance to Chinese Market: In the first five months of 2013, Italian exports of footwear to China grew 31%, leading Asia in becoming “a decisive role for the internationalization strategy of Italian companies.”

Movies and Entertainment

China’s Wanda Unveils $8.2 Billion Movie Fund as Hollywood A-Listers Lend Support: China’s richest man has put his weight behind China’s movie industry, investing in a massive studio in Qingdao which will produce 30 foreign and 100 local movies a year, in a bid to make China’s movie industry the biggest in the world within 5 years. Nevertheless, the event hasn’t been praised by some of the Western guests of honour, claiming “to be shown like monkeys”.

Chinese Woman’s Rom-Coms Boost $2.8 Billion Film Industry: Women hold up half the sky in China and may soon hold up half the movie industry. There are more female directors making movies in China than any other country as Rom-Coms boost its massive box office.

Recreation and Sport

Aussie Builds the World’s Largest Skate Park: The world’s largest skateboard park, bigger than 4 football fields, is being built in Guangzhou as popularity of skateboarding culture and fashion soars in the Mainland.

Residential Property

More Than 100 Million Worldwide Dream of a Life in the US: USA is the world’s most desired destination for migrants, with 19 million Chinese dreaming of moving there according to a worldwide poll by Gallup.

Culture and Art

Selling Jesus to Atheist – Chinese Art Market Overview: The Chinese art market is picked by some to have halved since 2011, although still a respectable $6.5b. Chinese art buyers are still focused on investment and status and less on style, technique, or uniqueness.

Auto and Cars

Chinese Consumers Not Charged Up By Green Car Subsidies: China is aiming to have 500K hybrid and electric cars on its roads by 2015, and 5 million by 2020. Of the 19.3 million cars sold in China last year, just 11,375 were electric, so the Government is subsidising up to 60K RMB ($9,800) and hoping negative safety and quality perceptions will improve to meet targets.

Premium and Luxury Goods

China’s Luxury E-Commerce Market to Be Worth $27 Billion in 2013: 67% of Chinese luxury shoppers are confident about, or willing to try buying luxury goods online.

That’s The Skinny for the week!  China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

If you needed further proof that China is constantly changing, look no further than consumer habits. The Luxury segment, not long ago a bastion of guaranteed growth for western businesses in China, has hit the brakes. Chinese consumers are increasingly looking beyond the most expensive wares as the only ones to be seen with. For the first time in recent history, mid-range retailers grew faster than luxury retailers in China. Even in Hong Kong, where 35 million Chinese tourists annually have a big impact the retail industry, outlet stores are seeing much faster growth than mid-level malls, which are growing faster than high-end ones.

While most Chinese shoppers aren’t going for the worker-from-the-fields-look, they are becoming less inclined to spend 3-months salary on a handbag, confident enough as consumers to shop at H&M, Zara, Gap and a string of promising local retailers. Is it the crackdown on corruption that’s driving it? Partially, but the trend runs much deeper. Increasingly discerning Chinese consumers are looking for more than just a shiny label when they shop; they’re looking for value and quality. Its a habit closely mimicing consumers in more mature markets, but there are still many distinctively Chinese characteristics.

Nevertheless, Luxury sellers shouldn’t be crying into their cocktails just yet – most luxury segments are still growing faster in China than any other major market.  It’s likely to be a while before we again see the luxury hyper-growth of the past 5-years, but those who understand Chinese consumer changes and adapt to them, are still sitting on a golden goose.  As always, below you may find some news and views to further that understanding. We hope it helps.  Enjoy!

Chinese consumers Chinese Consumers

Asia’s New Affinity For Cheap Chic: Asia is the biggest retail market in the world, accounting for $3.8 trillion in 2011, or 41% of retail on the planet. The number of luxury stores in China has doubled in the last 5 years, but for the first time in years, mid-range retailers’ growth rates are faster than luxury retailers, as Chinese consumers increasingly turn to cheap chic and embrace local brands.

On Fleeting Hong Kong Trips, Chinese Make Frugal Fashionable: Of the 35 million Chinese tourists who visited Hong Kong last year, 20 million of them came and left on the same day. They’re not going for the luxury goods to the extent they used to, with many opting for cheap fashion. Citygate, an outlet store, saw sales rise 22% last year, versus -1% for high-end Pacific Place and 3.5% for mid-level Cityplaza Mall.

The Chinese Balancing Act: Economic rebalancing in China to rely less on overseas manufacturing exports, and more on sectors like services (shops, education, insurers, etc) appears to be paying off. In Q1 this year, services accounted for a record 47.8% of GDP, up from 45% last year. For the first time, it overtook the growing industrial output and construction at 45.9%. Agriculture shrunk from more than 10% in 2012 to 6.3% (although it was the winter quarter).

Chinese Internet Internet, Mobiles & Social Media

Baidu Acquires PPS.tv For $370 Million: The Youku-Tudou gorilla, may no longer be the biggest ape in China’s online video space. Baidu’s acquisition of PPS has it claiming that it is now China’s largest online video platform.

Amazon Beats Google With China Apps: Amazon has become the first western tech firm to offer paid-for Android apps in China, even ahead of Android’s creator, Google.

Amazon’s Kindle Likely To Fizzle In Chinese Market: Nevertheless, Kindle’s entry into China doesn’t guarantee success. With nearly 200 million regularly read online in China last year and digital publisher revenues soared 31% in 2011.  Kindle will struggle to make inroads past the established Shanda & Dangdang who have better brand recognition in China, and better relationships with local publishers and regulators. Regarding readers, smartphones remain by far the most popular way Chinese read books online.

China’s Changing Internet Landscape: Good overview of China’s Internet, some trends and the challenges & opportunities for the big players.

WeChat Now Has 190M Active Users, Close To Passing Whatsapp: WeChat now has 190 million active users a month, with total users picked to surpass 400 million later this month.

Chinese food and beverage Food and Beverage

Chinese Consumers Don’t Trust Products Bought In China Either: It’s no longer enough for Chinese consumers to buy foreign food & beverage in China, many only buy certain products from overseas.

Police Destroy Counterfeit Red Wines In Shanghai: There’s now 3,000 less bottles of fake plonk in the market in Shanghai – $6.5 million worth. Still a long way to go, but it all helps…

Wal-Mart Bolsters Food Safety In China: The 3rd largest retailer in China, Walmart, is investing $16.3m into its China stores to improve food safety management following a string of food scandals including mislabeling cheap pork as the organic stuff. The latest was being accused of using expired eggs in baked goods.

Tainted rice scandal hits Guangzhou eateries: First the meat, now the staple. Chinese inspectors find tainted rice and noodles in Guangzhou, with cadmium content exceeding national standards.

Starbucks, Nestlé Square Off In Bid For Dominance Of China’s Coffee Market : China’s coffee market has been growing at around 15% a year, and is picked to rise from the current $11 billion to $161 billion in ten years. Instant coffee accounts for 80-90% of China’s market. Starbucks have traditionally targeted higher end consumers, versus Nestles mainstream approach, although their strategies are becoming more similar. Starbucks aims to have 1,500 stores by 2015. Costa: 2,500 by 2018.

Sea Cucumbers, Abalone Off The Menu In China Frugality Drive: Long live the sea cucumber.

Chinese property Property

Chinese Online Searches For Australian Property Up 61% As Macquarie Targets Significant Investor Visa Applicants: Australian property searches by Chinese on overseas property portal Juwai.com have increased 61% since the start of the year, with property viewings up 162%. It’s all related to the better Australian visa policies for wealthy investors spending more than $5m and Macquarie’s investment funds aimed at the investors. Chinese born people living in Australia has increased 54% between 2006 and 2011.

Chinese Investments Investments

Chinese Economist Proposes Limits On Overseas Investment For Individuals: Influential Chinese are advocating limits to overseas investments by Chinese to reduce risks. These recommendations cap overseas investment at $100-$150K or 50% of portfolios. 51% of Chinese with investible assets of more than ¥100m ($16.3m) have overseas investments.

Chinese art Art

Seeking Visibility For China’s Art: Although China’s art market dropped 24% last year to a little under $14b or 25% of global sales, Chinese buyers can still be found everywhere looking for art from small European towns to NY and HK. China doesn’t yet have a culture of passing art down through the generations, so when they realise something has value, collectors turn to the market and “go shopping”.

Chinese luxury Luxury Goods

The Bling Dynasty: An HSBC report on luxury retail trends found Chinese tourists spent more than one third of their travel budget on shopping, versus 11% on food and lodging – no doubt it’s skewed by short stay destinations such as HK, where 57% of Chinese visitors are in and out on the same day. Hong Kong’s tax-free shopping is wooing increasingly more of the customers from Europe. 75% of watches and 60% of handbags and accessories sold in HK are to visiting mainland Chinese tourists. Chinese tourists to HK increased 25% this year over the Spring Festival.

What’s Behind China’s Luxury Slowdown? Look To Several Factors: Looking deeper into the slowdown of China’s luxury growth, just 7% this year, there is a lot more to it than just the Government clampdown on corruption. Before the change of guard, we were already seeing less craving for bling, representing further change of Chinese consumer behaviour and sentiment.

Weird and wonderful in China Weird & Wonderful

Kiwi Booster Firm Targets Chinese: At risk of ending up in your spam box: A kiwi company is targeting the 200,000+ Chinese tourists who visit NZ each year, with a natural booster for nighttime activities.  The company is hoping to capitalise on the New Zealand’s reputation of high quality health products and China’s love of herbal medicines.

That’s the skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a stack of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

You probably heard the news late last week about China’s fake beef and lamb made from rat and fox. Couple that with the H7N9 chicken drumsticks, decaying pigs in rivers, hauls of putrid, dead fish flavoured with ginger infused with highly toxic pestacide –  and that’s just in the past month.  It doesn’t exactly leave you salivating.

Although local brands in some segments are on the rise in China, a dismal track record of local food and beverage has seriously eroded trust in Chinese producers.  More and more Chinese consumers can afford to be choosy about what they eat, and with the web, social media and an increasingly transparent Government media helping spread the news of dangerous local produce, imported food is on the up.  An Ipsos survey last year discovered that 61% of Chinese shoppers were less confident about local food than in 2011, with 28% planning to buy more of the imported stuff. That sentiment has resulted in sales of imported food officially growing 28% in 2012.  Those figures were all prior to the past month’s avalance of meatmares.

While food scandals may not last forever in China, they will inevitably be here for a while yet.  The infamous melamine milk scandal and its 300,000 victims focused Government attention on fixing food supply chains, but five years on we’re still seeing grilled kebabs made from vermin. Quality food and beverages are among the shining performers of western businesses in China, especially those brands who understand the Chinese market.  As always, there’s some news and views below that may help you get the Chinese market a little more.  Enjoy!

Chinese consumers Chinese Consumers

Top 10 Retail Priorities: The top-10 priorities for Chinese youth consumers when shopping in bricks & mortar: 1. Quality; 2. Price; 3. Reputation; 4. Cleanliness; 5. Service; 6. Promotions; 7. Information; 8. Location; 9. Displays; and 10. Sales people.

Legislature Mulls Consumer Rights Law Changes, Online Shopping Included: The Chinese Government is considering changes to consumer rights covering better information privacy and online retail laws – including a seven day right of return.

Made in China: 8 insights into Chinese consumers: 1. There’s no ‘One China’; 2. Constant conflict between fitting in & standing out; 3. Aspiring to be global, not Western; 4. Status anxiety – displays of status via luxury goods or gifting, even the poorest household spend 30% of their budgets on gifts and festivals; 5. The growth of individual shoppers; 6. Huge investment in ‘Little Emperors’ – it’s not unusual for 30% of household income to be spent on education; 7. Power to the women; 8. Connecting through Social Media..

How Chinese Tastes Are Reshaping American Malls: Chinese shopping trends are now influencing American consumers from foot massage salons and “bubble” milk tea in malls. Django Unchained’s withdrawal from Chinese cinema’s is providing further impetus for Hollywood to cater movies more to Chinese tastes and rules, not to miss out on the huge market. Chinese-inspired big smartphones, Buicks, green tea and luxury goods are all pushed along in the US by China’s influence.

Chinese food and beverage Food and Beverage

China’s Toxic Harvest: Consumers Flock To Imported Food: Imported food grew 28% in China last year, to $18 billion. Imported food labelled ‘organic’ was much more trusted than similarly labelled local products. Well recognised western seals of quality control made food even more desirable.

Danone: Premium Formula Need Spurs China Imports: An under-supply of premium products are driving f&b imports for western countries according to Danone. Danone are limiting exports to China because there are capacity constraints, regulation, and the only sustainable answer to demand is from locally produced products. Their strategy is to build brands, equity and categories for local consumers, not to ride the current fears of local products, which could be temporary. Danone’s baby nutrition sales were up 17.1% in Q1, helped by strong China demand.

Over 900 Arrested In China For Meat-Related Crimes: A 3-month campaign has resulted in 904 arrests from 382 cases of meat-related crimes in China. Offenses included producing fake beef and mutton made from rat and fox, water-injected meat, chemically processed products and selling diseased & fake meat. Delightful.

Chicken Brands Scramble To Reassure Consumers As Chickpocolypse Hits China: Buy a chicken for less than a $1. Chinese chicken sellers report that prices have dropped to a quarter of the price post-bird flu. High end hotels have stopped serving chicken, live chooks have been unavailable on taobao and you can’t even get a chicken meal on Chinese airlines. KFC’s March sales dropped 16%. Within the first week of birdflu China’s poultry industry lost $1.6 billion.

Gaia Gaja: On Chinese Wine Consumers, Italian Imports, Auctions & More: Chinese wine consumers understand lightness, delicacy, elegance according to an Italian wine expert. Italy is behind the French and Spanish wines in China due to a lack of a national program for promotion.

Cypriot Ice Cream Maker Expands To Chinese Market: Cypriot ice cream maker Papaphilippou is finding its lactose-free ice cream made from fresh milk is selling well in China given 95% of Chinese consumers are lactose intolerant.

Chinese Internet Internet, Social Media & Devices

WeChat Marketing: Another Way To Reach China’s Affluent Consumers: WeChat / Weixin, that mobile messaging service everyone is talking about in China. Some marketing advice about connecting with the 360m affluent consumers using it, including case studies from those doing it well. Our view.

The Great Leap Online: PWCs latest report on Chinese consumer’s online shopping habits: deals are the top reasons Chinese consumers shop online. 1/3rd use smartphones and 39% use a tablet to shop online at least once a month.

China’s Savvy Consumers Push e-Commerce To The Next Level: Vigilant online shoppers in China are driving the evolution of eCommerce retailers and state consumer laws as China looks to become the world’s largest online retail market this year. More than 40% of Chinese online consumers post product reviews online – in the US it’s around 20%.

China’s E-reading Revolution: 40% of online Chinese visit an online literature site, with Shanda Literature containing 85% of Chinese literacy resources on the net. Authors publish their own work on the site, where readers pay ¥2-¥5 per 1,000 characters, until they are popular enough to sell to Shanda and share the profits. Publishers can also have their own ‘shop front’ on the site, much like Taobao. The company also producers highly successful eReaders and software. An estimated 30% of Shanda’s clicks come from outside of China.

Apple Shares 72% Of 4Q12 Chinese Consumer Tablet Sales: Apple still dominates China’s tablet market with 72% market share. Lenovo, the next biggest, comes in at 10%. An estimated 100 million units will be shipped this year in China, with another 100 million entry-level ‘tablets’ costing less than $100 a pop.

Large Companies ‘Slow To Use Weibo To Respond To Bad News’: Large companies in China are slow to use Weibo to respond to bad news, with less responding than core Government agencies. Few used spokesman to address it. 30% of negative news stays on Weibo more than 10 days, longer than the 17% on traditional media.

Chinese tourists Chinese Tourism

More Chinese Travel Overseas, Study Reveals: 2nd and 3rd Tier City Chinese increasingly travelling abroad. Singapore, for example, last year saw 28% more tourists from 2nd Tier cities, and 18% from 1st Tier. Chinese tourists are only “adequately satisfied” with outbound tourism, citing a lack of ways to lodge complaints and insufficient Chinese signs and indications when overseas.

Fears Surface After Hippo Kills Tourist From Shanghai: On the subject of signs for tourists, a Shanghai woman has been killed by a hippo in Kenya. She apparently received insufficient warnings from her hotel. As many Chinese tourists are used to having the tour group do everything for them, they are often not prepared for dangerous adventure tourism. Many warning signs are still in English, French or other languages, not Chinese. 40,000 Chinese visited Kenya last year, up 43% from 2010. Tourism operators claim their business to Kenya hasn’t been affected in China from the accident.

Chinese art Art

Zhou Chunya Ranked Best-Selling Chinese Artist: Oil painter Zhou Chunya is on top of the Hurun Art List. At 58, he’s the youngest artist to ever top the list. The value of his work more than doubled last year, with sales of his auctioned works hitting $75 million. 91-year-old Chen Peiqiu turned over $22.4 million, ranking her at 11th. She was one of 6 women in the top-100.

Chinese auto Auto

Chinese Auto Market Shifts Toward Larger Cars: Many Chinese consumers are no longer content with a compact car, they’re going for bigger wagons with SUV sales growing 49% in the past year, versus 13% for the auto industry overall, and demand is picked to double by 2015. Great, more pollution in Chinese cities.

Changing Rules Of The Road For China’s Auto Industry: Increasingly sophisticated Chinese car buyers are looking past exterior styling, to safety features and the overall driving experience. They’re also placing a big emphasis on customer service – in the showroom and after purchase. Anti-lock braking systems and leather seats are now standard with most China-branded budget cars, so consumers in that segment often don’t place a lot of value on them. Local manufacturers are failing to do adequate research to understand what their target market actually values.

That’s the skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a stack of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

Apple is again in the dog box in China, this time for having ‘obscene’ content in its App Store. It was just last month Apple was being slammed for poor customer service and substandard warranty policies. The company that was once elevated to hero status in China, is increasingly being labelled as the villain.

Although many Chinese consumers have limited trust in State-run media such as TV, radio and print, it’s still human nature to be swayed by what they are constantly seeing and hearing. Even the Weibo microblogs, the voice of ‘everyday’ Chinese, are becoming crowded with 176,700 Government organs and official accounts, helping influence opinion in the social spheres. Although Apple has it’s army of tireless advocates in China, the majority of consumers without rock-solid ties to the brand, are starting to be swayed by the media rhetoric. A survey of Chinese consumers found 60% would rather a Samsung Galaxy S4 to an iPhone 5. Influenced by the bad press? Highly likely.

Many Japanese brands have taken a similar hammering of late, with Japan’s share of the auto market in particular, sinking like a stone. Many Japanese brands, scrambling to turn things around in China, are following the lead of brands like Uniqlo. By adapting their products and marketing to appeal to the younger demographic, they’re pinning their hopes on consumers who are more confident, independently-minded and less influenced by Government sentiment than older generations.

No matter who you’re targeting in China, if you’re selling on a large scale, you need to have a presence in Beijing doing everything you can to keep the Government on side. And keep humble. Arrogance is the nicotine habit of China’s business world – it will likely harm your health, even the odd social puff. For the majority of foreign businesses in China, who aren’t yet at that scale, this week’s skinny has plenty of other marketing views and news to focus on. Enjoy!

Chinese consumers Chinese Consumers

Luring Chinese Consumers Needs Direct Engagement: Focusing marketing dollars on distributors, agents and importers isn’t the best use of budget as savvy Chinese consumers seek more than one source of information for purchase decisions. Web & social media are increasingly influencing choices. Marketing support for distributors is essential, but as they may have their own agendas, speaking directly to Chinese consumers is the best bet.

Shanghai Target’s Hong Kong Art Market With License For Christie’s: Christie’s plans to hold an art auction in Shanghai this autumn after becoming the first foreign firm to win a wholy-owned subsidiary license to auction art in China. Prior to this, Sotheby’s partnered with a state firm and could only run auctions in the Mainland through the JV. It’s a sign of the Chinese Government liberalising certain markets and welcoming foreign competitors on a more even playing field.

Chinese Internet Internet, Mobile & Social Media

Apple Ordered To Remove Obscene Content From China Store: The Chinese Bureau tracking porn and illegalities has ordered Apple to remove obscene content from it’s App store. Is this the first step for Apple getting a stunted app store in China, following down the path of Google’s Android marketplace?

Chinese Consumers Prefer S4 To iPhone 5: A better product, better marketing, or influenced by the recent anti-Apple rhetoric? A survey of 5,000 Chinese consumers discovered that 60% would prefer a Samsung Galaxy S4 to an iPhone 5.

Twittering For Attention: Japanese newspaper Asahi Shimbun’s Weibo account has resonated with Chinese consumers, attracting 340,000 followers and posts forwarded tens of thousands of times. It uses creative ways of story-telling, a funny and friendly tone, and covers topics that attract widespread discussion. Other foreign media such as WSJ, take a more serious approach to engage with a slightly difference audience, although with 1.4 million followers, WSJ’s strategy is also working. Many media firms have two Weibo accounts – one in Chinese, one in English. Some organizations whose websites are blocked, use Weibo as a way to reach more Chinese people.

Marijuana Being Sold Online in China, Report Says: First porn on Apple’s App Store, now North Korean ox gallstones, cattle gall bladder bile and marijuana by the gram are being sold online in China.

Why China loves ‘The Daily Show’ : Fifty times more Chinese watch “The Daily Show” online than Americans, as the interest in U.S. issues, affairs and popular culture, and accompanying humour, prove popular with young Chinese Internet users.

Mobile Advertising: Tailor-Made In China: The average Chinese consumer is ahead of the west in terms of smartphone adoption as well as app downloads and continued usage, helped by less stringent privacy laws for contacting consumers on their mobile, according to an Associate Professor at NYU.

WeiboPay: Sina’s Foray Into China’s Online Payments Market: Weibo’s recently launched WeiboPay is providing another eCommerce channel for Chinese consumers, allowing partnering businesses to sell their products directly on the Weibo platform, similar to recent trials from Mercedes and Xiaomi smartphones.

Chinese fashion Fashion

New Generation Of Chinese Consumers Keep Japan’s Uniqlo Alive: Fashion retailer Uniqlo is bucking trends of Chinese consumers going cold on Japanese brands as the store’s results have exceeded expectations. Uniqlo’s clientele are young middle-upper class Chinese, who are more internationally-minded as less influenced by anti-Japanese rhetoric. Uniqlo stores also seem more western than Japanese, with European models in a lot of advertising, and many customers may not be aware that Uniqlo is Japanese.

Chinese auto Auto

Japanese Auto Makers Target Chinese Youth: The Japanese car companies are pinning their hopes on China’s consumers born post-1980, who are more concerned with quality, safety and sustainability, and less swayed by Government relationships with a brand’s origin. Sales of Japanese cars in China fell 14.3% in March from a year earlier. US & German automakers increased by 31.1% and 24.6% respectively .

Bird flu Not Scaring Off Chinese Car Lovers: H7N9 seems to have been sidelined by the masses attending the Shanghai Motor Show, with barely a face mask in sight. A few photos from the trenches amongst the sea of consumers. Our view.

Chinese food and beverage Food and Beverage

Dining Giants Look To Transform Amid Frugality Campaign: China’s corruption crackdown has driven upscale restaurants’ revenues to drop by 35% in Beijing and 20% in Shanghai year on year in January. The slide is seeing some high end restaurants scrap high price dishes and promote cheaper plates.

Oreo Goes Local To Appeal To Chinese Consumers: Oreo signs up one of China’s most popular film directors, Feng Xiaogang, as its new China spokesman. Ironically, one of Feng’s most famous movies Back to 1942, was about the horrific famine in Henan, during the 2nd Sino-Japanese War. The Feng campaign centers around Father-son moments as Chinese consumers “respond better to tearjerker elements than spectacle” and the “Oreo campaign is just another step in that direction.”

Kiwi Cookies For Chinese Tastes: Kiwi Cookies is adapting NZ cookies to appeal to Chinese tastes, such as including less sugar. Oatmeal, raisin & apricot flavoured cookies are the top sellers, although they may be trumped by savoury cookies in development such as mushroom, sun-dried tomato and herb, Parmesan oregano and sesame pecan. Yum!

Chinese tourists Chinese Tourism

Chinese Spend Less On Hotels, Still Flash The Cash: Chinese travellers spend an average of $172 a night on hotel rooms; less than the Japanese, Australians, Americans and Swiss. Much of the savings go towards their shopping extravaganzas. Many overseas trips are to nearby Asian destinations, with HK being the top destination, although the US is the most popular destination outside of Asia, growing 25% in 2012. Paris was number 1 in Europe. The average overseas Chinese holiday costs $1,000 including flights, accommodation and shopping. 57% of travellers expect to spend more on tourism this year than last.

Chinese education Education

Nearly 80% Of Pupils Have Weibo Accounts: Survey: 78% of children in elementary school and 90% in middle school have weibo accounts, according to a Sina survey. Many students use an alias and 72% claim their parents are unaware they’re on Weibo. Their common posts include bullying teachers and homework complaints, homework answer sharing and celebs.

Chinese health and beauty Health & Beauty

L’Oréal Targets China: L’Oreal expects China to be its number 1 customer in two years, with as many as 250 million customers in 10-15 years. Customers are being driven by under-30s, lower-tier cities and many touchpoints for customers including eCommerce, boutiques, airports and railway stations. Chinese travelling internationally are also big contributors.

Yves Saint Laurent Beauty Expanding To China: YSL cosmetics are launching their first beauty counter in China next month, in a high end Japanese department store in Shanghai. It will build on owners, L’Oreal Luxe’s success, market intel and channels in China. L’Oreal currently sells in 972 department stores, 140 Sephora stores & 68 airport shops.

Chinese luxury Luxury Goods

China Retailers Shift From Ostentatious: China’s Government corruption clampdown is affecting everything from flower sellers to luxury watches. Year on year retail sales for Q1 grew 12.4%, down from 14.9% in Q412. Restaurants and catering grew just 8.5%. Ferrari, Pernod Ricard and a slew of other luxury brands actually saw negative growth. In brighter news, China retail sales overall grew 10.3% in March, up from Jan and Feb’s 9.5%.

That’s the skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

Online shopping in China is the new black. Almost 250 million Chinese consumers shop online, together shelling out 55% more in 2012 than in 2011. That’s pretty good growth even by Chinese standards. With Internet-connected smartphones costing less than $100, coupled with pollution and Bird Flu outbreaks keeping shoppers in their apartments, the rise of Chinese eCommerce is showing no signs of abating.

There aren’t many successful western brands in China without a strong online and eCommerce presence. We’re increasingly seeing retailers such as Walmart pulling back on their bricks & mortar expansion plans, to focus on their eCommerce. Many businesses, from Costco, Macy’s and Top Shop to small and boutique brands, are entering the Chinese market through online channels first, and testing the market without the expense and risk of physical stores. A recent McKinsey study found online retailers in China enjoy higher margins than their high street equivalents. The same study concluded that online retailing isn’t just replacing brick & mortar store sales, but actually creating 40% more consumption.

A smart online marketing strategy is one of the most cost effective ways to get results in China and adapt to the ever-changing market, especially for smaller businesses without Fortune-500 budgets. Nevertheless, offline marketing strategies shouldn’t be discounted. Even if your main focus is online, offline initiatives can help build brand awareness to be recognised in China’s crowded online marketplaces. In this week’s skinny, you’ll find some tips, views and news that should help with your online and offline strategies. We hope it helps!

Chinese consumers Chinese Consumers

How To Engage Chinese Consumers: With Partnership And Respect: Western brands in China are increasingly respecting the target market through partnering with and acknowledging Chinese people in their communications. Nike’s sponsorship of champion hurdler Liu Xiang, GAP’s fusion of key Chinese and foreign influencers in their “Let’s GAP together” campaign and Sprite’s NBA legend Kobe Bryant versus local pop star Jay Chou, are all good examples.

Pricing Retail Right To Win Chinese Consumers: It’s Complicated: Many Chinese shoppers make a direct connection between price and quality, however they still love love discounts and freebies in certain product categories, especially those they’re familiar with.

Chinese Internet Internet & Social Media

China’s E-tail Revolution: McKinsey’s report on eTailing in China, where marketplace platforms such as Taobao & Tmall account for 90% of sales. The market is not dominated by big retail chains, unlike in the US. Margins are still high at 8-10%, slightly higher than the average brick & mortar store. Rather than replacing offline retail, online is actually spurring shopping overall, with every $1 spent online only cannibalising 60c of offline retail. That’s creating 40% incremental purchasing overall, with less developed cities seeing consumption increasing 57%.

Costco, Macy’s Eye China E-Commerce: Costco & Macy’s Chinese market entry strategy is reportedly through eCommerce, in an increasing trend that’s seeing Western businesses enter and test the market through a lower-cost & risk digital channels.

Surging Costs and E-Commerce Prod Foreign Retailers Into Slower China Expansion: Walmart are slowing down their China store expansion plans as they focus on eCommerce. 10-15 year rent concessions are now running out, so they know they have to get smarter about growing profits in China, and realise eCommerce is the most obvious route. Walmart’s eCommerce sales grew 65% last year to 6.3% of total sales, up from 4.4% in 2011.

5 Reasons You Should Sell Online in China and How Best to Do It: If you are looking for reasons to sell online in China, this should see you right, with some good tips on how to do it; late-2012. Our view.

Marketers Heed China’s Social Media Explosion: A good overview into Chinese social media’s key opinion leaders – celebs, commercial accounts, everyday Chinese building a name for themselves and industry experts. When determining who to show love, look at the type of followers, not just the numbers.

CKGSB’s Professor Sun Sheds Light On Chinese Consumers: According to Professor Sun, just 6% of Western MNCs in China use social media in their sales strategy compared to 50% of local companies.

Chinese health and beauty Health & Beauty

China’s Bird Flu H7N9: The Winners and Losers: China’s Bird Flu H7N9 has led to changes in consumer behaviour which has it’s share of winners and losers. Our view.

L’Oréal Tailors New Cosmetics for China’s Beauty Market: L’Oreal is tapping into fast growing men’s grooming products, set to grow 13.4% this year; faster than China’s overall $34b personal-care market. It’s Shanghai-based R&D centre has developed a cosmetic balm from traditional mushroom remedies for Chinese males to mask face blemishes & skin serums.

Chinese food and beverage Food and Beverage

New-To-China Wines Struggle To Make Themselves Known To Domestic Consumers: Newcomers to the Chinese wine market such as Georgia, Austria, Greece, Moldova and India are struggling as Chinese consumers are opting for more familiar markets. There aren’t enough distributors willing to or capable of offering wine education about them, meaning they are predominantly sold in hotels and restaurants, not stores and supermarkets.

A Recipe For Food Safety In China: An interesting view into food safety in China: 106,000 regulatory staff in China’s Food Safety Department of the Ministry of Health may be an army, but it’s quite a battle monitoring 10 million registered businesses (not including unlicensed businesses and street vendors), and they’re only 1 of 7 agencies tasked to deal food safety.

Chinese fashion Fashion

China’s Online Clothing Sales Hit $50 Billion: China’s online fashion sales hit $50 billion in 2012, yet just 41% of luxury fashion brands have their own eCommerce sites. Fashion brand’s own sites account for 22% of sales, up from 6% in 2011. Weibo is the most popular social platform, with 85% of fashion brands having a presence, Youku is next popular with 56% present.

CFDA Partners with Chinese E-Tailer to Promote U.S. Fashion in China: US Fashion designers have one less hurdle entering the Chinese market, with data insights, marketing and PR assistance in a deal penned by Shangpin.com and the Council of Fashion Designers of America.

Zippo To Light Up Men’s Apparel Market In China: Zippo is hoping to capitalise on it’s strong brand recognition by launching a fashion brand targeting Chinese men 25-34, earning more than $1,000/month. It’s kicking off by launching 5-8 flagship stores in Beijing and Shanghai, with 50 in lower tier cities by 2015.

Chinese art Art

Falling Sales Paint A Bleak Picture For China’s Art Market: In 2012, almost every sector of the Chinese art market fell to around 50% of the 2011 value according to Artron (Arts Economics estimated a 24% drop overall). Traditional Chinese paintings and calligraphy are still most popular accounting for 50% of China’s market turnover. 2011 saw 26 items hit the ¥100m ($16m) market, while just 5 did in 2012. The lack of confidence is hurting sales, although ‘exhaustion’ of art sources is said to have contributed.

Chinese banking and finance Chinese Banking & Finance

Apple Pursuit Lures Students Into High-Interest Loans: 20,000 students in Wuhan have opted for $25.7m of loans, of which 90% are using to buy Apple iPhones and iPads

Chinese luxury Luxury Goods

Most Luxury Fashion Brands Struggling To Engage Chinese Audience: Many luxury fashion brands are missing the mark engaging Chinese consumers. Android Apps, Chinese language comms and mobile sites are all seriously lacking. Few brands are taking simple steps to capitalise on luxury Chinese consumers traveling abroad. Only Louis Vuitton has a simple feature offering prices in RMB on website for outbound tourists to compare prices before traveling.

On the bright side, Burberry has found success on social media, giving away a Burberry Body sample at a local Burberry boutique for Weibo user registers, on Jiepang (the Foursquare-type site) it encouraged users to check in, get badges (which were shared on social media) and gave winners perfume signed by Christopher Bailey. It’s Youku channel has had 3.5 million views. Louis Vuitton Express: From Paris to Shanghai and L’Invitation Au Voyage got more than 12 million views on Youku and Dior teamed up with media personality Hung Huang to live-tweet their DiorMag and racked up good likes, shares and comments.

China’s Luxury Market All About “Stealth Wealth” In 2013: Luxury brands that speak to the individualism of the buyer and focus on heritage, durability, and tastefulness are seeing the most success in China. Discreet but high-quality brands like Bottega Veneta and Loewe are good examples. Consumers are getting savvier and are less likely to believe what they read online than in the past.

That’s the skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

More and more Chinese consumers are taking trips abroad. China’s outbound tourism has grown almost 500% in the past decade, and 100 million are expected to travel this year. According to Global Blue, their overseas spending climbed 30% in 2012 alone. That’s fantastic for airlines, hotels, tourism operators and souvenir shops. But it’s also a great opportunity for other brands to win over a captive audience who could grow your market both at home and in China. The Chinese who travel are the affluent ones. They’re generally fond of foreign goods and are more likely to be key influencers. They’ll buy, recommend and even gift your wares to their family, friends and colleagues. They may even praise them on Weibo.

Chinese tourists, foreign students and business visitors are all potential brand ambassadors. There are numerous quick wins to take advantage of that, from having Mandarin pages on your website and accepting Chinese payment methods, to teaching customer-facing staff some basic Chinese etiquette and greetings. Even a Chinese information flier to slip into the bag wouldn’t do any harm. As you’ll read below, there is plenty of opportunity for luxury brands to up their game by better catering for them in markets outside of China; much of applies to other segments. For food and beverage, you may be interested to see how Treasury Wines is educating Asian tourists at duty free shops. The Chinese market now spans far beyond the skyscrapers and food scares of the Middle Kingdom and there are plenty of opportunities for you to take advantage of that. Some you may read about today. As always, we hope you find something helpful and forward it onto a friend who may as well. Enjoy!

Chinese consumers Chinese Consumers

Where Chinese Consumers Are Spending Their Cash: Big city dwellers in China spend 18 percent of their disposable income online, and in smaller cities like Wuzhou, it’s 27 percent. 40 percent of online shoppers wouldn’t have bought anything if it wasn’t for eCommerce according to McKinsey.

Apple Apologizes To Chinese Consumers For Seeming ‘Arrogant,’ Promises Warranty Changes: The last couple of weeks have been rather interesting in China, following Apple’s bad press on CCTV. While the State-controlled media and some consumers have been on an Apple-slating rampage, the power of Apple’s brand has become increasingly evident with the flurry of support from Chinese consumers who praise the innovator and know Apple’s service far exceeds local State-run brands not targeted by the Government. However this is China, where you just don’t try and take on the Government, and Apple knew it was right to apologise to Chinese consumers and promise warranty changes.

Discrimination Against Chinese Consumers. Or Not?: Interesting commentary on how businesses are treating Chinese consumers differently, in good ways and bad – when does adapting to the Chinese market become discrimination?

Product Woes: Telecommunications were the top product for Chinese consumer complaints, followed by apparel then food. Top services for complaints are shopping via TV/Internet/Mobile, then mobile, then Internet access. In related news, Chinese consumers may soon be able to file class action lawsuits against large corporations.

What Chinese Consumers Intend To Buy In 2013: 70% of Chinese consumers plan to spend more in 2013 than 2012. Electronics sees the biggest gain at 43%, with smartphones being the product most intend on purchasing.

Chinese Internet Internet & Social Media

Luxury Carmakers In China Digital Drive: Luxury car makers are using the web and social media to sell cars as digital appeals to younger consumers – under 45 year olds make up 80% of high net individuals in China. Audi is opening up an interactive showroom in a Beijing shopping mall and Daimler’s special Year of the Snake 666 edition sold out in 8 hours on a Weibo special.

How Many Users Can You Really Reach On Sina Weibo: Interesting findings that just 13.1% of Weibo users write original posts and just 43% write any posts at all. Notwithstanding, many not writing posts, are still influenced a lot from those 13.1%, as alluded to in the 6 reasons why Weibo is powerful.

Chinese social responsibility Social Responsibility

Chinese Feel Power For Change Through Consumer Choice: 7 slides hitting home the importance of businesses being socially responsible in China, where 65.4% of consumers considered being a responsible customer important, more than any other major AsiaPac market. The Havas study also discovered: – 79% are more interested today in where products are made; – 80% would like their favourite brands to play a bigger role in their community; – 84% felt obliged to support global interests; – Chinese consumers feel Social Media has had the biggest significance on their influence of major AsiaPac markets; – Chinese consumers have some of the highest trust in NGOs and non-profits; – 81% of Chinese consumers believe change is good, and 84% things will improve.

Chinese food and beverage Food and Beverage

Treasury Wine Opening Wine Bars In China: Sales of wine in China hit $US41 billion in 2012, up 20% from 2011. Hoping to tap into that growth and following extensive research into the market, Australia’s Treasury wines is increasing its presence at duty-free shops where it is does tastings targeted at Asian tourists to teach them more about their premium brands. They’re also looking at opening wine bars, restaurants and entertainment venues, following the lead of Diageo who opened its second flagship bar in China – Johnnie Walker Houses which provide a good way to identify its VIP consumers while bolstering the brand and profits from the region.

Chinese Consumers Aware of Food Safety: Chinese consumers have a high awareness of safe food and are prepared to pay a premium for it. However, they have limited knowledge about the concept of safe food, low recognition of relevant labels and limited ability to identify safe food.

Most ‘Beef’ Sold At Hangzhou Market Is Pork: First it was mutton pumped fill of chemicals to resemble duck, now almost 2/3rds of ‘beef’ products at a Hangzhou market is said to be pork (hopefully not fished out of the Huangpu River).

Chinese fashion Fashion

Chinese Consumers’ Demand For Fur Coats Sends Pelt Prices Skyrocketing: Chinese account for more than half of fur coats sold globally, pushing up pelt prices 129% in 3 years. Much of the fur is imported as locals furs are low quality from in-breeding and poor nutrition.

Chinese health and beauty Health & Beauty

The 10 Key Success Factors For A Cosmetic Brand In China: 10 key elements from businesses who are tapping into China’s cosmetics double-digital growth: distribution, social media, website, eCommerce, traditional advertising, opinion leaders, celebs & Chinese models, positioning, adaption to the Chinese market and interaction with consumers.

Chinese babies Little Buddhas

Lego’s Asian Building Block: Lego uses brand extensions, online games, fan collaboration portals, Legoland stores and branding itself as ‘better’ to grow 45% from 2009-2011, and an estimated 80% in 2012. China Toy Association Toy Consumption Survey found it one of the top-5 highest regarded brands. Their first China factory is expected to be running in 2014, let’s hope they can retain the high regard for their brand.

Chinese art Art

Chinese Slump Dents Global Art Market In 2012: Chinese spending on art and antiques fell 24% in 2012 to 10.6 billion euros, with auction sales dropping 30%, slipping China to the number 2 market behind the USA. A slowdown in Chinese economic growth and liquidity, less speculative investors and a clampdown on luxury goods, in addition to a lack of quality, high priced supply contributed to the drop. “Blue chip” artists are increasingly the focus of collectors, with post-war and contemporary art faring the best.

Chinese luxury Luxury Goods

Global Brands, Meet Your Global Chinese Customers: Many luxury brands are under-investing in home markets and missing out on a bigger share of the overseas purchases that account for 60% of Chinese luxury spend. Key improvements include cross-border collaboration, ensuring the shopping experience is spot-on (everywhere), segmenting Chinese groups and capitalising on Chinese travellers to give them a unique experience in a brand’s home market.

Hermes, Chinese Consumers Accounted For 30% Of Worldwide Sales: Further reinforcement for a ‘global’ strategy when selling to Chinese luxury consumers. Chinese consumers accounted for 30% of Hermes worldwide sales, although Mainland China sales were 10%, with HK/Macau/Taiwan another 10% and Chinese tourists further afield buying the remaining 10%.

Weird and wonderful in China Weird & Wonderful

Now You Can Use Your Phone To ‘Call’ The Dead: Nice creative use of QR Codes – a Chinese cemetery is plastering graves with QR codes so visitors can scan and find out about the deceased on their smartphone.

That’s the skinny for the week!

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

Although the Chinese New Year and Spring Festival has been the talk of the town in China this month, another celebration is getting it’s share of observers. Valentine’s Day is becoming increasingly fashionable with Chinese consumers; especially the young, urban and affluent. While romantics aren’t yet spoiling their loved ones with chocolates, jewelry appears to have become a popular gift. During the Spring Festival period from February 9-15, bank card transactions in jewelry shops increased 119% from the 2012 Festival period. That compares to a 43% increase for overall card usage in China and 33% overseas.

Valentines Day is another example of Chinese consumers embracing western traditions – with Chinese characteristics, as chocolate sellers have discovered. Below you’ll find the usual weekly roundup of news, views and stats to help you better understand and appeal to those characteristics; hopefully you find it useful. Enjoy!

Chinese consumers Chinese Consumers

Three Things You Need to Know When Building Your Brand in China: Three essential pieces of advice for building a western brand in China, with some best practice from those finding success; our view.

Elderly Chinese Consumers have Money to Burn – And Nowhere To Spend It: Chinese elderly consumers not feeling loved by marketers and retailers. Given 34% say they have no worries about their financial future, you may want to reconsider that. Entertainment, value-for-money and sensitivity are key ingredients for marketing to the elderly.

China Consumer Mood to Gather Pace in 2013: Chinese consumer sentiment to improve in 2013 according to Nielsen. Rural consumers are most optimistic, then consumers from 2nd & 4th Tier cities.

Infographic: Why Do Chinese Consumers Pay So Much for Foreign Brands?: A widely-circulated infographic translated into English, comparing the high costs Chinese consumers pay for goods compared to other countries – such as 4 times as much for milk powder as Holland. The reasons for the higher prices: higher distribution fees, higher taxes and established brands. The infographic overlooked one key element of marketing to Chinese – many consumers are more likely to buy an expensive product over a mid-priced equivalent, so a lot of brands intentionally charge a premium.

What’s Next for China?: McKinsey’s predictions about the shift in the Chinese economy. Consumerism will account for 51% of GDP growth from 2020-2030, versus 41% this decade. Cities with current populations of less than 1.5 million will make up 40% of GDP growth, more than the 35% from megacities. Their advice for businesses selling to Chinese: (1) Embrace new trends in urban development – have city-specific products, marketing and operating models; (2) Focus on the growing demand for services and consumer goods – demand stemming from growing incomes. Business services opportunities will also grow; and (3) Foster new skills and innovation capabilities – training, automation, flexible production and increased staff loyalty will take place.

Chinese food and beverage Food and Beverage

Chocolate Not Yet China’s Cup of Tea: It’ll take more than a chocolate Terracotta Army to tempt Chinese consumers to chocolate. Although consumption has grown 17% a year for the past 5 years, Chinese eat just 100 grams a year on average – that’s two snicker bars each, or 1/82nd of the Germans.

Consumer Goods in China, Moving Fast: Nice chart illustrating market share of the top 5-players in the Chinese beauty, packaged food & soft drinks in 2007 & 2012. Interestingly, there are 3 new big players in the food and beverage categories, indicating late-comers still have a good chance of succeeding in China.

Chinese Farmers Now Growing More Corn Than Rice: Chinese farmers are set to grow more corn than rice for the first time. Chinese consumers are demanding more meat, which needs to be fed. In the past 20 years, poultry has increased 300%, pork 87% and beef 155%. Will corn syrup in everything be next?

Chinese jewelry Jewelry

More Counting the Cost of True Love in China: Chinese romantics who bought jewelry on Valentines Day spent an average of $350 each. For those splashing out for dinner, it was $40 according to a Home Credit survey.

Chinese Internet Internet & Mobile

Online Video Revenues Surge in China: Online Video revenue surges 50% in China, with big brands like Pepsi, Nescafe and GM finding much success. Pepsi, for example, premiered a 30-minute film “Bring Love Home” and related music videos with celebs on online video leaders Youku and Tudou and got 71m views and 72,000 comments in the first day of being online.

Global Multi-Channel Consumer Survey 2012: Findings from PWC international online shopping survey including some interesting statistics on China: 36% of Chinese consumers shop online several times per week and 56% of Chinese online consumers have already shopped via a social media platform, versus the global average of 24%.

It Won’t Be Long Till The Chinese Are More Important To Apple Than Americans: Although Apple didn’t end 2012 as well as they started in China, the numbers would indicate that China will contribute more revenue for the company than it’s home market within a few years.

Chinese tourists Chinese Tourism

Chinese Consumers are Increasingly Purchasing Overseas: 71% of Chinese consumers in a KPMG survey say they travel overseas, up from 53% in 2008. While there, 72% are purchasing luxury goods, which is making luxury brands (especially cosmetics, watches and bags) around the world refine their strategy. The survey reiterated the importance of a digital strategy with 70% of those consumers searching for luxury items at least one a month online. 40% of those intend on purchasing luxury goods online, up from 22% in 2011. 56% prefer to purchase well-known luxury brands, with 69% paying a premium for them. Consumers distinguish country of origin, with European countries popular for heritage brands, particularly Switzerland for watches, France for cosmetics, perfumes, clothes and bags, and Germany for cars.

Chinese VIP Tourists’ High Expectations in Europe: VIP Chinese tourists and their high expectations when shopping abroad: (1) Shopping is a key part of the trip, but VIPs prefer the service and choice from boutiques, not department stores; (2) Have high expectations and expect tickets to big fashion shows, etc; (3) Are not very imaginative and generally want the same big brands, Hermes, Chanel, Louis Vuitton and locations; (4) Expect even further discounted prices; (5) Prefer in-store presentations than visiting manufacturing sites, as they don’t want to lose shopping time; (6) Men often like to meet brand managers and often recommend locations they’d like to see the goods sold; and (7) Love to take pictures from the store and post on Weibo.

Chinese auto Auto

China’s Green Drivers: Electric cars and renewables have a bright future ahead in China as the Govt aims for renewables to account for 20% of energy consumption by 2015 – a lot of incentives when you can see the effects of pollution out the window, just read the Weibo posts.

More Than 1 Million Vehicles Imported, But Growth Slows: China auto imports broke 1m last year, although they only grew 9%. More than half of dealers trading imports faced a loss due to high operating costs and lowering margins.

Coming of Age: China’s Used Car Market Outpaces New Sales Growth: Not all Chinese are buying shiny & new everything – used cars growth was more than new car growth in China for the second year running – although new cars still outsold used by 3 to 1.

Chinese art Art

The Chinese Art Market Slowdown Is Great News: Auction houses are reporting sales of Chinese art are half of last year, but some believe this is a good thing as it will reduce the speculation and leave room for art lovers to develop a healthy market based on increasingly sophisticated tastes.

Chinese luxury Luxury Goods

Chinese Brands Struggle in Luxury Market: Chinese luxury brands aren’t faring well against foreign brands, not helped by high retail rents pushing the local brands out. Just 10% of Shanghai’s traditional brands are making a healthy profits.

That's the skinny for the week!

If you've missed earlier news or need to learn more, there's a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.

There's been a lot of talk this week, and for many weeks now, about China's slowing economy and how it translates to doom and gloom for businesses exporting to China.  While a number of brands have lowered sales forecasts in China, there are still many businesses seeing runaway growth in China.   To name a few, Nestle sales grew 20% last year, and they're expecting double-digit growth in 2013, Pernod Ricard's sales of wine and spirits have increased 15% in Asia for the year, with China being the shining star for the region, and General Motors had a record August in China, growing 7.3% from last year. 

Like every market, China will have boom and bust cycles.  But with many product segments and geographies still relatively untapped, a well planned and executed strategy presents significant opportunities for growth in China, even when overall spending slows.   This week has the usual Chinese marketing news, insights and opinions that may contribute to that strategy.  Hopefully some of it helps you…

Chinese consumers Chinese Consumers

In Chinese Culture, Consumers Seek Brands That Allow Them To Stand Out By Fitting In: More insights and a video with What Chinese Want author Tom Doctoroff and his take on China's Confucian society and how it translates for marketing.

Gap Campaign's New 'Thought-Provoking Pairing' May Not Sync With Chinese Consumers : Let's Gap Together – analysis of Gap's latest advertising campaign in China. They may need a little more to change their fortunes in the Middle Kingdom.

Chinese Internet Internet & Mobile

China's Low-Trust Ethos May Slowly Be Changing: The creation of globally trusted business frameworks like Alibaba is giving a trustworthy environment online for Chinese consumers and enabling a new generation of Chinese innovators.

Chinese Internet Lukewarm On iPhone 5: Does the iPhone 5 have enough new bells & whistles to help Apple gain ground on Samsung in the smartphone market in China? Posts of Weibo have been lukewarm.

Chinese food and beverage Food & Beverage

China Beer Market Insights 2012: Ganbei! The Chinese Beer Market Insights report is out. A short overview of the 188 page, $12K report with highlights and key market issues.

Chinese entertainment Entertainment

Chinese Pay For Product Placement In Hollywood Movies: Chinese firms use product placement in Hollywood movies to woo Chinese consumers.

Chinese art Art

Fires Dim On Chinese Art Market: Although the slowdown is accompanied with increasing sophistication.

Chinese travel Travel

ACP Leverages Chinese Consumers With Chinese Harper's Bazaar: Sydney launches a magazine targeted solely at the more than 500K Chinese tourists visiting the city a year.

Chinese luxury goods Luxury Goods

Let’s Be Real: This Is Not The End Of China’s Luxury Market: Burberry's slowdown in China doesn't mean the end of China's luxury market- its another sign to tone down the bling Burberry.

Chinese shoppers make more than half their luxury purchases outside of China: Chinese consumers buy more luxury goods outside of China than within it according to HSBC. Why? It's cheaper, increasingly easier to travel and the prestige that comes with buying something abroad.

Chinese Market Slowdown Impacts Global Brands: A roundup of news about sliding fortunes for global luxury brands in China.

That's the skinny for the week!

If you've missed earlier news or need to learn more, there's a trove of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.