35 years ago when China began its economic reforms, it was a big deal to own a wrist watch and a single speed bicycle. Today, the allure of the $4.4 trillion that will be spent by urban Chinese by 2022 has created the fiercest consumer market on the planet.
Hundreds of new products and promotions are launched every day in China. Consumers have gotten used to, and almost expect, a constant stream of new offerings. In addition, Chinese consumers themselves are also evolving.
As recently as 2012, KFC was the foreign business success story that everyone was talking about in China – it had localised its menu while retaining its Westerness – and Chinese consumers were lapping it up. However, KFC fell out of favour last year. The fast food giant is hoping to win back Chinese consumers by performing its biggest menu makeover in 27-years. KFC is also promising changes to the menu at least every 12 months to ensure it keeps up with the China market.
Mondelez of Oreo Cookies fame, was another Western success story in China. Yet it has had to launch a healthy line to counter recent disappointing growth for Oreo as consumer tastes shift. Another example in changing preferences is premium milk, which accounted for 26% of the market in 2011, but grew to 38% in 2013. Increasingly, luxury consumers now value craftmanship and innate quality over the brash logos that were all the rage up to 2012. There’s no shortage of examples of the constant swings in Chinese consumer trends.
In most instances, Western businesses coming to China have learnt that they can’t simply replicate their strategy from other countries, and many do research and localisation before entering the market. Unfortunately much of that research may only be relevant for a year or two, and needs to be regularly refreshed.
It’s not easy keeping with China’s dynamic consumers, China Skinny knows firsthand as we work with many clients to do so. However, the reality of doing business is China is that you have to constantly innovate to keep up with the trends, and for those who do, there’s no question that it will be rewarding. We hope you find a few articles below that will help you do just that. Enjoy!
Winning in China’s Competitive Marketplace: China Skinny’s Mark Tanner talks on Australia’s ABC News about standing out in China’s crowded Internet space, what consumers are looking for online and having integrated online and offline campaigns.
How Young, Upwardly Mobile Consumers are Shaping China: Guangzhou is the only city in Mainland China where retail consumption has contributed more to GDP than fixed-asset investment for the past 12 years. More cities will follow though, with consumption expected to account for 60% of GDP by 2020. Spending by China’s urban households is expected to increase from ¥10 trillion ($1.6 trillion) in 2012 to nearly ¥27 trillion ($4.4 trillion) in 2022 according to McKinsey.
Growing Upper Middle Class Creates Attractive Market: As recently as 2000 just 4% of China’s households were middle class. By 2012, it was 68%. China’s expanding urban upper middle class are more likely to favour imported products, with 34% likely to buy foreign-branded food and beverage, versus 24% of all city dwellers.
A Map of China, By Stereotype: Baidu provides insights into how Chinese view one another, from Guangdong folk eating monkeys, to Sichuanese having good skin. Similarly, there are also some common searches about foreign countries.
Consumer Complaints Surge in China: Consumer complaints lodged to the Government-sponsored hotline and online platform broke one million in 2013, up 13.9% from 2012.
Food & Beverage
McDonald’s, Yum Focus on China: Will Consumers Eat Up the Attention?: KFC is making its biggest menu makeover over its 27 years in China with two new chicken sandwiches, three new rice dishes and a number new drinks and desserts. The company plans to update its menu at least once a year to keep up with constantly changing Chinese consumer tastes.
Chinese Shoppers Desire Premium Fast-Moving Consumer Goods: Fast moving consumer goods volume is growing at a slower rate than value in China. For example, just 26% of milk products were categorised as ‘Premium’ in 2011, versus 38% in 2013. Likewise, ‘Premium’ biscuits grew from 15% to 23% – all great news for foreign producers.
U.S. Cheddar Cheese Costs Most Ever as Demand From China Doubles: Chinese consumers’ demand for food is pushing up prices globally. World food prices posted their biggest gain in 19 months in February, with dairy costs reaching a record level.
Internet, eCommerce, Mobile & Social Media
Weibo And WeChat, Is There Room For Both?: Weibo is a public and aggregated social media platform that allows for the timely distribution of information, whereas WeChat is still primarily known as a messaging platform for more personal and intimate interactions.
Lenovo, Xioami, Huawei in Price Wars: China’s social media was abuzz with three of China’s gadget giants selling highly-specced mobile devices for under ¥1,000 ($160).
Baidu’s Autofill Reveals the Soul of the Average Chinese Web Surfer: Physical appearance is a common source of anxiety for Baidu searchers in China. Men search for ways to “grow taller” and “cure baldness,” while women ask how to “make my skin white,” “make my legs thinner,” and “make my face thinner.”
Top 10 Overseas Travel Destinations for Chinese Richest: Australia is the most preferred destination for China’s wealthy, with France taking the number two spot according to Hurun. Wealthy Chinese took an average of 7.5 days on vacation a year, excluding national holidays.
Air NZ Romance Campaign ‘Huge Success in China’: Air New Zealand launched “Love is a Journey,” in the latest phase of promoting NZ as the ideal destination for a romantic getaway. Its “Romance Class” safety video received 889,000 views last year in China.
Britain Seeks More Chinese Tourists: Britain aims to welcome 650,000 Chinese tourists a year by 2020, adding $1.8 billion to the economy a year. Chinese tourist numbers broke 200,000 for the first time in 2013.
Great Wad of China: Adidas Hits Ground Running, Grows Footprint: China will have ten cities of the scale of New York today by 2025. With that kind of opportunity, comes a lot of competition, many of whom are just copying and producing like-minded products. To differentiate, it’s about brand experience.
Fast-Fashion Brands Face Backlash for Poor Quality: As brands such as Zara and H&M strive to keep costs down in China’s hyper-competitive fast fashion market, quality issues are a common concern for both China’s quality control watchdogs and consumers on social media. H&M’s revenue was up 23% for 2013 in China.
Wealthy Chinese Value Luxury Craft Over Bling: Almost two thirds of Chinese luxury consumers consider ‘craftsmanship’ more important than ‘expensive’ and ‘status’ as luxury consumption for enjoyment becomes increasingly important. The wealthier a consumer gets, the more they appreciate innate quality and value according to Mintel research.
China’s Swiss Watch Searches Surge 59% Despite Sales Slump: While sales of Swiss watches dropped 12.5% in 2013, online searches for them grew 59.4%, with mobile searches growing 120%.
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 email@example.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.
The past week has seen a flurry of statistics circulated about food safety in China, which has a silver lining for anyone exporting food and beverage to China. The most eye-opening statistic is that 61% of Chinese consumers are less confident about local food and beverage than they were last year (more below). Perceptions appear to be getting worse, not better, since the Asian Development Bank estimated in 2007 that as many as 300 million Chinese are affected by foodborne diseases annually.
But opportunities in China obviously span far wider than just feed and water, and this week’s skinny has the usual scoops, pointers and recommendations to help you tap into them. As always, please share the love and pass this onto anyone who may find it useful, as James M. Barrie once said, “Those who bring sunshine into the lives of others, cannot keep it from themselves.”
Understanding Chinese Consumers
Meet The New Consumers: 43% of Chinese consumers willing to try new and untested products (the global average is 32%), this and some other good insights into the new Chinese consumers.
Asia’s Shopping Passion Cools: Asia’s shopping obsession may be softening, but China growth still up 13% for July from last year – and leading the growth
Branding in China
The Values Behind Brand Value: A good perspective on how what motivates Chinese to buy brands, and how it differs from the West.
Foreign brands retain status in China: Many consumers in China continue to regard foreign brands as being more premium than their local competitors.
Remaking ‘Made-In-China’: 83 slides, but worth a read for a good perspective on how Chinese brands can rise to take on the worlds best – there’s a big emphasis on Corporate Social Responsibility in there.
Food & Beverage
Chinese Consumers Turn Toward Imported Food: As above, 61% of Chinese consumers are less confident about local food and beverage than they were last year, and 28% plan to buy more imported stuff. Dairy is the most purchased import at 77%.
Wine Imports Give Chinese Firms A Hangover: Anyone who’s drunken Great Wall probably won’t be surprised by this: wine imports now 25% of the market, up 12% in volume and 24.1% in value for the year.
Chinese Wine Market Still Reliant On ‘Business Purchases’: A big portion of wine purchases in China are still for gifts. A third of wine purchasers account for 60% of sales.
Internet & eCommerce
5 Lessons On How A Business Can Get a Stronger Web Presence In China: Our view on why your website is so important in China and some valuable lessons for it.
Chinese Online Fashion Retailers Revive the Global Fashion Industry : Is it China’s online fashion retailers keeping European designers and sewers in business? Some good insights into Chinese eCommerce in there.
5 Things Every Mobile Game Developer Should Know About Chinese Players: Mobile apps/games are a great way to reach Chinese consumers and here are some good insights into developing them and the Chinese using them.
Chinese Luxury Consumers Than American Consumers 25 years Younger: The average luxury consumer in China doesn’t have silver hair – they’re 25 years younger than in the US and 15 years than Europeans.
Chinese Consumers Of Luxury: A high level outline on the Chinese consumer segments purchasing luxury goods.
Chinese cyclists in high-end gear change: A good example of another category Chinese consumers are going upmarket. Here’s hoping this is a taste of things to come and more Chinese get out of cars and onto bikes.
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.