What do you think of when it comes to property in China? Gleaming skyscrapers, “quaint” replica European towns, property tycoons, struggling migrants living in crowded squalor or abandoned ‘ghost cities’? China’s property market is home to its fair share of fascinating contradictions, however with residential real estate and construction accounting for over 10% of China’s GDP, taking the time to cut through the complexity and understand this dynamic market is a great investment. Get a head start with these buzzwords!
Ghost Cities – gui cheng 鬼城
China is renowned for its huge population and bustling cities, so it may come as a surprise to many that 1 in 5 urban homes are unoccupied, and deserted “ghost cities” are springing up across the country. These cities are products of China’s rapid development and rush towards urbanisation, with the country’s municipalities receiving substantial financial rewards for reclaiming and urbanising rural land (or in the case of coastal regions – the sea). The highly centralised power of the CCP further accelerates the rolling out of these ambitious urban development projects, with China’s cities currently expanding by an estimated 700 square kilometres per year – an area larger than Singapore!
This phenomenon only looks set to grow, with over 90% of local-level cities planning the construction of new districts. Often the breakneck construction of these cities is completed before surrounding infrastructure and migration have had the chance to catch up, leaving behind barely inhabited shells of cities. Resistance to this relentless top-down tide of property development has given rise to the phenomenon of China’s so-called nail houses (dingzihu 钉子户); whereby property owners refuse to accept the relocation compensation offered to them by developers – leaving homes and families stranded in the midst of gleaming new developments.
China’s ghost cities have often been dismissed as evidence of China’s poor urban planning and the overreaching of the state when it comes to urban development. International onlookers have even creatively suggested that the empty cities could be used as a solution to Europe’s migrant crisis. However, is this negative perception of China’s ghost cities really accurate? In reality, perhaps it is better to look at China’s empty cities as the blueprints for China’s future urban landscape. Whilst at present, many of the properties stand unoccupied, new developments are never short of investors and buyers, with an estimated 39% of individual wealth in China being stored in housing and 21% of urban households owning more than one home. Therefore, although China’s ghost cities may stand empty for many years to come, they are far from devoid of purpose, and indeed serve a powerful economic function for both their investors and the future generations that will come to inhabit them.
International Property Investment – zhong guo mai fang tuan 中国买房团
Who should we look to for the next movers and shakers of the international property market? Look no further than the Middle Kingdom! According to international real estate firm, Knight Frank, Chinese real estate investment into the global market climbed to US $16.9 billion in 2014, a huge increase of 205% from 2012. Whilst in the first quarter of 2015 Chinese property investors have already racked up over US$5.5 billion in investments. The US tops the list of Chinese investors favoured locations for international property investment, followed by Australia, Canada, the UK and New Zealand. Looking ahead, ‘exotic’ locations including, Johannesburg, Dubai and Lisbon are also gaining traction with increasingly internationally confident Chinese investors.
International property investment by Mainland Chinese investors is driven by a myriad of factors, often going hand-in-hand with migration. The most significant factor driving Chinese to buy property abroad is education, with Chinese parents viewing overseas property as a keystone investment in their children’s education. This is reflected in strong Chinese interest in cities which are home to prestigious universities and schools, such as Palo Alto. Other factors include pollution and food safety. With Chinese consumers deemed the world’s most health-conscious, those financially able to leave China are often eager to invest in a refuge from these concerns abroad. Financial returns are another key factor; China’s wealthiest invest on average 16% of their total wealth abroad, with real estate the investment of choice. For these high net-worth individuals, an international property portfolio safely stores financial assets outside of China, sets the stage for the “purchase” of foreign citizenship, and of course, is a much aspired status symbol.
As Chinese investors have grown to become a progressively influential force in the global property circuit, international companies and real estate firms savvy in the use of Chinese social media are seeing the pay offs. One notable example can be found in last year’s news story of a New York based realtor who brokered a $13 million property deal with a little help from China’s social media giant, WeChat. Companies such as Juwai – a leading online real estate portal targeting Chinese buyers looking for properties abroad – have also sprung up to bridge the gap between Chinese buyers and international real estate marketers. In this context, Chinese social media acts as a catalyst connecting investors in China and overseas agents, functioning to smooth high-stake transactions by engaging Chinese investors on a digital playing field with which they are already intimate.
Ant Tribe (yizu 蚁族) and Rat Tribe (shu zu 鼠族)
On the opposite end of the spectrum to China’s globe-trotting elite, the plight of the Ant (yi zu 蚁族) and Rat Tribes (shu zu 鼠族) reveals the darker side of China’s economic miracle – with many Chinese excluded from the Chinese dream (Zhongguo meng 中国梦) and facing abject poverty and desperately poor housing conditions.
The term Ant Tribe refers to graduates who have migrated to large cities with the goal of pursuing their professional and personal development. In order to stay in large cities with the best opportunities, these highly skilled graduates are forced to settle for accommodation in poor and deprived areas on the outskirts of large cities. Beijing alone is estimated to have over 160,000 Ant Tribe members, with around a third having graduated from China’s most prestigious universities. However without guanxi 关系, Ants often struggle to gain a foothold in China’s competitive job market, losing out to their better connected urban peers who earn on average 20% more than their rural counterparts. The Ant Tribe is nicknamed so as they live in crowded ‘colonies’, are highly intelligent and hardworking, yet their skills and talents are not utilised, with members of the tribe enduring an anonymous existence in large cities already saturated with migrant labour.
The Rat Tribe, on the other hand, is largely composed of unskilled service workers who have migrated from rural to urban areas in search of work. As a result of soaring housing prices and bureaucratic obstacles, these workers rent cheap underground basement accommodation so as to save money and live close to their workplaces. Mazes of underground properties, which previously functioned as bomb shelters in the Mao era, are common in many Chinese cities, following privatisation and conversion, these properties have since become part of an officially illegal but highly lucrative property market. Whilst the existence of the Rat Tribe may be invisible to casual onlookers, the practice is surprisingly widespread – for example it is estimated that 5% of Beijingers live in underground properties.
Both the Ant and Rat Tribes are victims of China’s urban-rural divide, the maleffects of which have been inflamed by the Hukou 户口 system which undercuts the social security benefits offered to China’s 260 million migrants. As China’s economy has boomed, deeply entrenched inequalities within Chinese society have become increasingly ingrained and are experienced by both skilled and unskilled workers. However, there are signs that this traditional migrant paradigm is undergoing a transformation. As housing prices in China’s mega-metropolises have soared, and China’s second and third tier cities have emerged to offer increasingly dynamic economic prospects, many of China’s rural migrants are choosing to forego China’s large cities in favour of their home provinces. It will be fascinating to observe how this ‘tide of return’, hui xiang chao 回乡潮, will reshape China’s consumer culture and geography should it continue to grow.
Since the introduction of Deng Xiaoping’s Open Door policy in 1978, China has evolved to become both a powerful projector of global influence, as well as a sponge soaking up international trends and cultures. Chinese citizens’ national identity, their perception of the world around them and where international brands fit into all of this, are all essential points to consider should you wish to craft a truly global marketing strategy in the Middle Kingdom (zhong guo中国).
Hallyu – 韩流 – 한류 –
Hallyu – 韩流 (Korean – 한류), which literally translates as the ‘flow of Korea’, refers to the influence and ‘soft power’ of South Korean culture, which has progressively grown in China since the establishment of trade relations in the early ‘90s. Hallyu is considered by many to be the successor of Japan’s pop-culture influence in China, and with two-way trade between South Korea and China valued at an impressive $274.2 billion in 2013, Hallyu has been acknowledged by political leaders of both states as a useful tool from which to promote bilateral relations.
The ‘wave’ has taken on many forms; from the popularity of South Korean soap operas, to K-Pop (think Gangnam Style), to K-Beauty (the popularity of Korean beauty products and trends amongst Chinese consumers – with Korean beauty leader, Amore Pacific, holding a 2.1% stake in China’s 131.4 billion-yuan skin care market in 2013, the 12th-biggest share).
In particular, South Korean entertainment shows in China act as a powerful platform from which South Korean products and brands can be promoted amongst Chinese consumers. A great example of this can be found in the phenomenal success of South Korean soap opera ‘My Love from the Star’, which has racked up a massive 2.5 billion online views in China. Following an episode in which the show’s heroine enjoys a traditional South Korean meal of Chimaek (치맥) – fried chicken and beer – Chimaek fever gripped China, with Chinese imports of Korean imported beer hitting $1.04 million in March 2014, an estimated increase of 200% from the previous year. China’s sudden craving for Chimaek is a great demonstrator of the power entertainment holds in shaping consumer behaviour in China.
The popularity of South Korean culture in China has occasionally provoked some head-scratching among Chinese Party officials. With officials putting aside time in the 2014 annual National People’s Congress to ponder the success of ‘My Love from The Star’. Party members mulled the reasons China’s state media has failed to replicate the show’s success. With one political advisory board member remarking; “It’s more than just a Korean soap opera, it hurts our cultural dignity.” Never the less, the Hallyu wave in China looks set to keep growing.
Friend or foe? China’s relationship with the West is a complex affair. Although the pull of Western culture and brands remains influential in China, Chinese consumers should not be perceived as rushing to become Westernised, but rather as aspiring to a global identity, with distinctly Chinese characteristics.
One interesting area in which the crossroads between East and West is apparent is the minefield of etiquette. China’s rapid development and the increased mobility of Chinese tourists worldwide has led rise to concerns amongst Chinese policy makers that the behaviour of the country’s 109 million outbound tourists is tarnishing China’s reputation abroad. In response to well-publicised embarrassments, the Chinese government published its ‘Guide to Civilized Tourism and Travel’ which includes gems such as ‘don’t leave footprints on the toilet seat’. The CCP even took things one step further with the drawing up of a ‘Tourism Blacklist’ whereby tourists caught in the act of behaving badly are stripped of their right to travel.
Within the Mainland, etiquette schools have sprung up catering to wealthy Chinese wishing to distance themselves from the Fuerdai stereotype, and develop a truly global etiquette skill-set. Beyond lessons in the use of a fish fork and the correct pronunciation of luxury brand names, demand for these schools and their services is revealing of the increasingly global mind-set among privileged Chinese, who are seeking to achieve confidence in international etiquette as a basis from which to internationalise their business and personal interests.
On the flipside, international players interested in entering the China market would do well to start with gaining insight into Chinese etiquette and cultural norms. Many of the blunders international brands make in China stem from cross-cultural misunderstandings, or simply result from brands failing to localise their products and services, instead, attempting to project Western values and tastes onto Chinese consumers.
Haitao – 海淘 –
What do you get when you combine thirst for high quality international products with the world’s most dynamic ecommerce market? – Haitao 海淘! The term – which translates as ‘searching abroad’ – describes the phenomenon of Chinese consumers buying international products via overseas online shopping platforms. Haitao has evolved to become a powerful phenomenon in China, with a recent report from Nielsen estimating that 18 million Chinese spent 216 billion yuan via Haitao in 2013 – a value predicted to reach 1 trillion yuan in 2018.
The most popular Haitao products can be split roughly into two categories; those which are of high-stake importance to consumers’ health and wellbeing – examples include baby milk, baby products and foreign medicines – and secondly luxury goods, with many Chinese shoppers hiring Daigou 代购 agents to purchase products abroad on their behalf.
Daigou -‘buying on behalf of’ – is a popular means of purchasing foreign products – with a 2013 survey finding that at least 60% of Chinese luxury consumers have used Daigou agents to purchase luxury products from overseas. However, using Daigou is not without its setbacks, with many agents evading Chinese custom fees to import goods illegally, and others supplying shoppers with fakes. Shoppers wishing to cut out the Daigou middle man also face obstacles in terms of language barriers, payment methods and prolonged delivery times.
In response to this gap in the market, a number of organisations have stepped into the Haitao fray. Among them, the Chinese government – concerned with the flouting of international tax laws by Daigou agents, and wishing to increase luxury goods revenues in the Mainland market – has established a number of e-commerce pilot zones, whereby Chinese consumers can purchase goods on foreign websites and have their orders shipped under the supervision of Chinese customs. Meanwhile international players have also begun to catch on to the Haitao opportunity. Amazon, for example, has recently launched an international shopping feature, allowing Chinese shoppers access to a number of the store’s international market places, and streamlining international purchases.
Bustling marriage markets, extravagant weddings and honeymoons, love online – what springs to mind when you think of romance in China? China’s love and dating ‘market’ is a powerful entity with strong connections spanning areas as diverse as retail, fashion, jewellery, tourism and real estate. Scratch the surface of China’s relationship and love trends, and many valuable insights into Chinese consumer culture can be gleaned. So read on to learn how to win over both Chinese consumers’ hearts and minds!
Single’s Day – Guanggun Jie 光棍节
A novel concept to foreign observers, China’s fast looming Single’s Day is an annual one-day celebration of Chinese singletons. Guanggun光棍, which literally translates as “bare branches” is symbolised by the four number ones in the date of 11th of November. The date has been celebrated since the ‘90s, however in 2009 was commercialised by China’s online retail giant, Alibaba, with the launch of huge online shopping sales and discounts on the company’s online shopping site, Tmall.
The date was chosen to coincide with the consumer spending lull between National Day and Chinese New Year, and has now been trademarked by Alibaba. Since its creation Singles Day has grown to become the largest online shopping day in the world, with sales on Alibaba’s online platforms soaring from US$5.8 billion in 2013 to an enormous US$9.3 billion in 2014.
Alibaba’s massive success with Singles Day has not gone unnoticed by international retailers, many of whom have started to push similar promotions with the hope that some of Alibaba’s magic will rub off on them. For example, this year Amazon launched ‘Prime Day’–widely touted as a Singles Day spin-off, and on the domestic front, Jingdong has ambitious plans to compete with Alibaba by utilising data from WeChat.
The Singles Day phenomenon demonstrates the authoritative role that ecommerce plays in shaping Chinese consumer culture. However, it is also indicative of the intense scrutiny Chinese society places on love and relationships. Chinese consumers’ reactions to this pressure; ranging from kicking back and engaging in self-mockery, to rushing to the alter, are fascinating to watch.
Tradition vs. Modernity – chuantong 传统 vs. xiandaixing 现代性
Modern China is alive with contrasts, with interplay between tradition and modernity at the heart of consumer choices when it comes to love and dating. Nowhere is this contrast more apparent than with the Chinese wedding. China’s wedding industry is estimated to bring in revenues of $80billion in 2015, 40% more than in 2011. With 10 million couples getting hitched annually, and each couple spending an average of 76,141 RMB ($12,000) on their big day, China’s wedding market is huge business.
Traditional Chinese customs including receiving Hong Bao 红包 from guests, setting off celebratory firecrackers, and barring the groom from seeing his bride until he pays “bribes” to her family remain influential across China. Whilst Western customs – such as the bride wearing white, Western style wedding rings and the couple hiring a wedding planner – are steadily gaining in popularity. Uniquely Chinese twists on Western customs include couples investing vast amounts in lavish photoshoots prior to their wedding day (the wedding photography market in China is valued at a whopping $30 billion) are also popular. This hybridity of many Chinese weddings demonstrates the aptitude of Chinese consumers to localise foreign traditions, and create a uniquely Chinese consumer culture.
The commercial potential of the Chinese wedding was experienced first-hand by New Zealand’s tourism bureau when actress, Yao Chen, held her 2012 wedding ceremony in Queenstown. Yao Chen’s wedding generated a massive social media buzz in China (with an estimated 40 million posts and comments surrounding the ceremony on discussion forums, as well as 7,000 news articles). The wedding gave New Zealand previously unheard of exposure in the Chinese market, and demonstrates the authority Key Opinion Leaders exercise in influencing Chinese consumers’ decisions and aspirations.
Mobile Lover- shou ji lian ren 手机恋人
What do you get when you combine China’s lonely hearts with technology? One bizarre outcome is the craze of ‘Mobile Lovers’ – shou ji lian ren 手机恋人. The term refers to a service offered by China’s ecommerce giant Taobao where customers can pay 20RMB (US$3.26) per day to hire someone to act as a virtual “girlfriend” or “boyfriend”, who will send them romantic messages and texts, creating an illusion of intimacy.
More adventurous Taobao shoppers can choose to step it up a gear with the “rent-a-boyfriend” service, through which singletons can hire a real-life fake boyfriend (or occasionally girlfriend). The popularity of this service spikes around Chinese New Year, when many young Chinese make the annual return journey home. Fake boyfriends prove a useful distraction at family gatherings, satisfying pushy parents and warding off awkward questions about marriage and grandchildren.
China’s ‘Mobile Lovers’ and rentable boyfriends are just the tip of the iceberg when it comes to the vast online dating market in China. A market which has been predicted to hit a net-value of 10 billion RMB ($1.6 billion) by the end of 2016 – an increase of 17% from 2014. Strong contenders in the sector include Momo, perhaps China’s most influential dating app of the moment with an estimated 69 million users. Momo has evolved beyond a dating service to become an entire social network in its own right. Another one to watch is recent start-up Tantan – which uses a Tinder inspired swipe format – and has racked up an estimated 10 million users helped by a large venture capital.
Online dating and apps are an increasingly attractive means of finding romance for young Chinese consumers – who feel the pressure to wed before 30 in fear of being labeled “leftover” The digitalisation of dating is also well-suited to the Chinese market, with users able to connect with potential partners across different cities and geographies and seek a partner away from the prying eyes of their parents. In particular, due to China’s gender imbalance – a by-product of the one child policy and traditional preferences towards having a son – dating apps can be used by Chinese men in rural areas to find women in cities or other provinces. With roughly 122 men born for every 100 women, and predictions that by 2020 there will be 35 million more men than women in China, the appetite for online dating only looks set to grow.
Family forms the foundation of China’s society and is therefore a great place to start when seeking to understand Chinese consumers. From the One Child Policy, to the “Granny State,” to the 4-2-1 Generation, the Chinese family unit is characterised by its complexity and is constantly evolving to keep pace with the country’s social and demographic changes, rapid economic growth, and the challenges and opportunities they present. So if you’re seeking to make an impact in the Chinese consumer market, understanding the Chinese family is a great place to start!
One child policy- Jihua shengyu – 计划生育
Few policies have had such a profound effect in shaping Chinese society, consumer culture and international perceptions of China, as the ‘One Child Policy’ (Jihua shengyu – 计划生育). First implemented in 1979 by the Communist Party in response to fears of overpopulation, the policy’s governance has ebbed and flowed over the years, and its enforcement varies greatly across China. In 2013, the CCP officially relaxed the policy to allow couples to have two children (provided one of the parents is an only child).
Many experts predict the introduction of this ‘Two Child Policy’ will catalyse a desperately needed mini baby boom, which will also have an interesting impact on Chinese consumer culture. With nearly 150 million single-child households throughout China, the One Child Policy has cultivated a child-centered consumer culture, with families investing a significant proportion of their disposable income in their ‘single family treasure’. Chinese parents have even begun to nickname themselves ‘child slaves’ (hai nu 孩奴) – placing their child’s needs above their own and working hard to ensure their child’s economic comfort and success. According to a recent report by a leading Chinese toy retailer, Chinese parents spent ¥1.15 trillion ($180 billion) on products for children under 12 years old in 2012, with this figure expected to rise to ¥2 trillion ($320 billion) this year. China Skinny’s research has found child categories among the fastest growing segments for everything from food to fashion.
However, so far there has been only a lackluster response to the policy’s overhaul. After decades of propaganda promoting the virtue of a single child, combined with soaring living and childcare expenses; having a second child is an unattractive option to many urban couples. For example, in the 10 months following the policy reversal, only 6.7% of eligible couples in Beijing applied for permission to have a second child; whilst across China the rate is slightly higher, fewer than 1 million couples applied for a permit to have a second child. It seems – at least for the near future – China’s Little Emperors and Empresses look set to retain their clutch on the family purse-strings.
Childcare by Grandparents: “Granny State”
Childcare provided by grandparents is a growing trend in China – with 8.1% (an estimated 22.6 million) of China’s children being cared for exclusively by their grandparents. According to Confucian culture grandparents have always played an important role in the upbringing of their grandchildren, and the phenomenon has a surprisingly wide ripple effect on Chinese consumer culture and society.
Many Chinese grandparents act as the primary carers of young grandchildren whose parents migrate from rural areas to cities in search of economic opportunities – parting from China’s so called – ‘Left-behind’ children (留守儿童). Others provide care for their grandchildren whilst their middle class offspring work long hours pursuing demanding white collar careers.
The latter category provides a particularly interesting glimpse into the changes the Chinese family unit has undergone in recent years. With Chinese women more educated than ever before, childcare provided by grandparents has played an influential role in facilitating women’s participation in the Chinese economy. Whilst women in other countries often struggle to balance childcare (for which they are traditionally held responsible) alongside career development, China’s “Granny State” has worked alongside other factors to enable women to fill 51 % of senior management positions in China (over double the global average rate of 24%). Women are subsequently a powerful consumer demographic in China, with China’s ‘female economy’ predicted to reach a net worth of $4 trillion in 2020.
Perhaps a less welcome consequence of grandparents acting as their grandchildren’s main caregivers has been unearthed by a recent study by the University of Birmingham, which found children in China who are mainly cared for by grandparents are twice as likely to be overweight or obese. With many grandparents experiencing poverty and hardship within their own childhoods, they are often over-enthusiastic in spoiling and fattening up their grandchildren. An estimated 23% of Chinese boys and 14% of girls under the age 20 are now overweight or obese driving demand for obesity prevention and weight loss products. Sales of weight loss products are predicted to reach almost $1.4 billion in 2016 according to market analysis by Canada’s AAFC.
4-2-1 Generation (4-2-1时代)
Filial piety, respect and reverence for one’s elders are ideals central to China’s Confucian culture. However, the traditional model of children caring for their parents in their old age is under threat as a result of China’s looming demographic crisis, in the form of a rapidly aging population. By 2050 China’s elderly are expected to soar to 437 million in number – over a third of the population.
The country’s rapidly aging population is one of the greatest issues facing China’s growth and development, and is also a problem keenly felt by many families. China’s One Child Policy has given rise to the 4-2-1 phenomenon, whereby the typical Chinese family consists of 4 grandparents, 2 parents and 1 child. This model predicts that China’s Only Children will ultimately become responsible for the old-age care of both sets of grandparents and their parents. The question of how this can be realistically achieved in the context of limited state welfare for the elderly and an undeveloped aged care market, remains unanswered for many Chinese families.
However, despite presenting many challenges, the 4-2-1 phenomenon also signifies the rapid evolution of the typical Chinese family unit, and heralds a wealth of commercial opportunities for marketers. The elderly look set to become an increasingly influential consumer demographic – with 8% of Chinese consumer’s consumption currently related to products and services for older people. By 2050, this proportion of gross domestic product is predicted to rise to one third.
In targeting China’s elderly consumers, marketers must also take note to interact with younger generations, as well as their target elderly demographic. Younger consumers often play a pivotal role in purchasing for, and shaping the consumer decisions of their ageing relatives, and are often significantly more accessible to marketers via social media and digital marketing.
Reactions to China’s 2009 and 2012 first-place scores in the OECD’s PISA (Programme for International Student Assessment) test revealed the diversity of international perceptions of education in China. Responses ranged from foul play, bias and derision to awe and admiration – British politicians and educators even suggested importing Shanghai’s teachers to boost Britain’s ailing maths scores.
One thing is clear: With its Confucian heritage, education is central to Chinese society and subsequently has a huge influence on China’s consumer dynamics. Chinese consumers spend an average of 13% of their household income on education, and understanding education in China therefore presents a wealth of opportunities to educators and marketers.
Sea Turtles (haigui -海归, 海龟) or Seaweed (haidai -海待, 海带)?
Studying abroad has never been more attractive to the Chinese, with 459,800 Chinese students estimated to have studied in destinations such as the US, Australia and Western Europe in 2014. Chinese students are highly valuable for Western education institutions –accounting for 22% of fee-paying international students at Australian universities for example. Many international universities are also adapting their entry requirements specifically to cater to Chinese students, with an increasing number accepting the Gaokao, the make or break national college entrance exam, as a means of entrance.
Upon their return to China, these foreign-educated students are colloquially nicknamed Sea Turtles, playing upon the Chinese homophone – “returnees from overseas”. Since the opening-up of China in 1978, 3.5 million Chinese have studied abroad, with 1.8 million of them returning home after finishing their studies. The rate of return has steadily increased over recent years. Traditionally, Sea Turtles have been in high demand amongst employers in China for their international education and fluent language skills, which were rarities amongst Chinese graduates until recently. However, some would argue that increasing sophistication of the Chinese higher education sector is seeing Sea Turtles’ market value erode.
Many Westernised Sea Turtles face challenges whilst integrating into a Chinese work culture shaped by personal relationships (guanxi关系) and a professional culture which is worlds apart from their experiences in the West. A proportion of Chinese employers perceive an international education as conveying no tangible benefit to their companies. Sea Turtles and their families have often incurred significant expenses from their overseas education and, combined with low graduate salaries in China (the average graduate with a Bachelor’s degree earned the equivalent of $590 USD per month in 2014), creating a significant financial disincentive to study abroad.
These factors have led to Sea Turtles being given the unfortunate nickname of “Seaweed” (haidai海待, 海带); with Chinese students who have studied overseas being depicted as “washed up” in China with little advantage over their domestic educated counterparts.
However, this dismissal of foreign educated Chinese as “washed up” can be seen as premature, with an increasingly globalised professional environment leading many Chinese parents, students and employers to continue to favour an international skill set. Perhaps a more balanced stance to adopt would be to recognise that ambitious Chinese students are enjoying better higher educational options than ever before within China, and that the Sea Turtle – although by no means obsolete – is facing healthy domestic competition.
China’s increasingly tech savvy 668 million internet users, combined with China’s seemingly never-ending thirst for education, have created an explosion in the popularity of education technology and e-learning in recent years. There were over 1,000 new online education companies opened for business in 2013 and an estimated 100 million eLearning users in China in 2014. More than 70,000 education apps are now available to Chinese consumers (representing 10% of the app marketplace in China). With China’s online education market predicted to surge in value to $5.9 billion by 2018, Edutech’s influence only looks set to grow.
A major component of this trend towards online education is the MOOC (Massive Open Online Course). MOOCs have been adopted as part of the Chinese government’s education agenda to reduce urban-rural inequalities in access to education. The Chinese Ministry of Education is working to build the ‘Open University of China’ and encouraging China’s top universities to offer online courses, with the promise of subsidies should they do so. China’s MOOCs are characterised by their diversity; from state-sponsored initiatives from Peking University and Alibaba – to small unaccredited grassroots start-ups such as Wanmen University. Opportunities in online education are not confined to university students, with online applications available to pre-school and school-age students, as well as specialised applications and programmes for test preparations and professional development. Leading apps include; Wanxue, XiaozhanJiaoyu and Genshuixue. China’s vast extracurricular tutoring market is worth a whopping 200 billion RMB ($31.4 billion) in total.
For now, the pull of Chinese traditional institutions remains strong, however proponents of MOOCs and online learning programmes argue that these courses can offer a viable and highly accessible alternative to what they see as China’s bureaucratic and rigid education system. Whether Edutech can make a meaningful contribution to social equality in education is yet to be seen, as an estimated 80% of MOOCs students in China are from the wealthiest 6% of households.
Edutech also presents a plethora of commercial opportunities, providing online advertisers with access to large, centralised and technologically astute online communities. In many ways the online education market shares parallels with ecommerce, with the potential to seamlessly deliver high quality and easily accessible educational services across China.
Gaokao Economy – Gaokao Jingji 高考经济
Renowned worldwide for being insanely stressful and high stakes, China’s Higher Education entrance exam, the Gaokao高考, is of such integral importance to success, that it has even generated its own ‘mini-economy’ – the so called, ‘Gaokao Economy’高考经济. In the lead up to this future-defining exam, many businesses cash in on student and parent anxieties to create Gaokao product promotions. For example, in order to save precious study time, students and their parents can search on China’s online booking service, Ctrip, for a “Gaokao Hotel” which is close to the exam venue. 2013 media reports claim that parents in Shanghai would fork out as much as 5,000 RMB ($785) per night to stay in hotels close to their child’s Gaokao test centre.
Education materials, lucky charms, and ‘brain foods’ such as fish oil also soar in popularity in the lead up to the Gaokao, with retailers promoting these products as means to improve frazzled students’ performance and to ensure they have good luck in the exam.
The intense pressure of the Gaokao exam has also led to many students and their parents taking extreme measures to ensure success in the exam; some of the most publicised examples of which include students becoming “Gaokao immigrants”, and travelling to less developed regions in order to sit exams with lower passing grades, although the practice is illegal. Inner Mongolian authorities identified and disqualified 1,465 students last year who were sitting the exam fraudulently. Other schools have resorted to measures such as deploying drones to scan for radio signals in order to identify those students who have become increasingly ingenious in their attempts to cheat the system. Some students and their parents are so desperate that they enter “Gaokao Sweatshops” – highly priced boarding schools which put students through grueling boot-camp style exam preparation, with the promise of ensuring success in the exam.
In response to the pressures of the Gaokao and its toll upon both students and parents, many upper and middle class Chinese are increasingly favoring a Western-style education over the Chinese traditional system. A recent survey by China’s Industrial Bank and the Hurun Report revealed that 90% of China’s super-rich intend to send their children abroad to study. International schools and qualifications such as SATs, A-Levels and the International Baccalaureate are also growing steadily in popularity –over 40,000 Mainland Chinese students took the SAT in Hong Kong in 2012.
The digital economy has completely revolutionized retail business, especially in China, where offline-online transitions have been adopted particularly swiftly. China’s ecommerce spending craze growth is slowing, but still clocked an impressive 26.8% growth in the first half of 2015, when Ecommerce consumers in China spent US$253 billions about 10% of total retail sales in the nation. The following buzzwords will help you understand the latest ecommerce dynamics and the popular digital means of payments used in China.
O2O (Online to Offline) commerce identifies a business strategy that incorporates element of both online and offline commerce in order to maximize the quality and consistency of customer experience. More precisely, this strategy aims at tempting potential customers from online channels to physical stores using a variety of tools belonging to both online and brick-and-mortar marketing.
This kind of strategy was successfully intiatied by China’s largest website ad alliance, Panshi Network and has become increasingly popular in China since 2013. In August 2014 three of China’s biggest businesses –Tencent, Baidu and Wanda – teamed up in a RMB 5 million ($814 million) partnership that will focus on O2O. The aim is creating an interconnected platform to compete for Chinese customers against Alibaba.
Chinese companies are increasingly understanding the importance of making online services more engaging by mixing them with offline elements. A simple example is the incredibly fast diffusion of QR codes in China, a widely scorned tool in most Western countries, which has taken over Chinese business operations of all sorts, thanks to its ease of use. In 2014 the number of QR codes scanned in China increased by 350% from 2013 to an monthly average of 156 million.
O2O is an ‘umbrella concept’ which may well contain different kinds of business strategies and tools, including click-and-collect and digital wallet software.
Alipay is an online payment platform launched in 2004 by Alibaba in China. The platform has more than 300 million active users and controls approximately 54% of the online payment made throughout China.
Alipay wallet can easily be linked to individuals’ bank accounts given its compatibility with more than 65 financial institution and credit circuits, including Visa and Mastercard. In 2014, Alipay processed more than 80 million transactions per day on average, thanks not only to payments made on online marketplaces but also to brick-and-mortar retailers that offer Alipay as a mean of payment. Alipay is integral part of the Alibaba ecosystem and has gained popularity thanks to the ease of use and security of online payment on Taobao and T-mall marketplaces. Since 2009, Alipay’s expansion included various offline services, handling online and offline payments, including utility bills, ticket booking, restaurant meals, taxi rides and purchases in many participating retailers in China and increasingly abroad.
Alibaba’s plans for Alipay included investing in financial services. Since 2013, Alipay wallet can be connected to Yu’e’bao, allowing Alipay users to invest in a money-market fund and gain interest on deposited money. The popularity of Alipay in China is nowadays undeniable and it is crucial for Western companies to adapt to this trend in order not to lag behind.
WeChat has more than 600 million monthly active users. Tencent, the holding company of WeChat imputes the huge success of the app in China to the investments made to create a whole ecosystem around it. Unlike its Western counterparts, WeChat incorporates several services and more than 10 million third-party apps.
WeChat’s complex architecture combines a messaging app , social media, subscription and service accounts and WeChat payment/wallet, among other services. The wallet can be used in a similar fashion to Alipay by connecting it to a bank account and allowing for fast payment among WeChat wallet users, as well as purchases of related services such as taxi, movie tickets, bill splitting and others.
In order to insure users against fraud and theft, WeChat partnered with PICC, the largest insurance company in China to realize its wallet service. This move has made it easier for subscribers of WeChat to feel confident in their transactions. This move has been clever both domestically and internationally, given that WeChat may become a straightforward substitute to credit cards, especially in areas where the latter are not yet widely used.
Wechat payment has also revolutionized one of the traditional customs of Chinese New Year. On Feb 18 2015, more than 1 billion red envelopes filled with cash, hongbaos, a traditional form of gifting, have been exchanged among Chinese citizens. Of this 1 billion, Chinese ‘netizens’ has sent more than 20 million “WEnvelopes” through WeChat wallet exchanges.
Even though the world of retail is moving towards a constantly higher degree of dematerialization, a new trend is bridging online and offline shopping experience of customers. Click-and-collect is a process by which the consumer orders goods online and collects his merchandise at a local store. It is literally a compromise between online and in-store shopping, a way to maintain the physical shopping experience while allowing the customer to choose among a wider variety of products and streamline the purchasing process.
The main benefits of click-and-collect for the consumer are saving delivery or shipping delays, costs and better fitting into customer’s schedules who maybe unsure if they can be present when the delivery arrives. It also saves time since it prevents shopping in congested stores. Click-and-collect may also enable consumer who are cautious in using the online payment at the collecting point.
This solution is advantageous not only to customers, but also to retailers, whom are able to process orders more efficiently and keep their product offer wide and varied.
Given the fact that Chinese consumers are more ‘digital-friendly’ than their western counterparts, the relatively low cost and speed of delivery services, and lower car usage, click-and-collect has been slow to catch on in China relative to the US and Europe. However, some big retailer chains are betting on this trend to take off in China. Since 2013,Amazon has been offering pick-up points in China’s main cities, reporting more than 50,000 packages have been collected in Shanghai Amazon points. Walmart also offersclick-and-collect purchases in its main stores in Shanghai, Beijing and Shenzhen, by leveraging the knowledge accrued in other markets. Customers can use a dedicated app to check the availability of products, pay through online wallets and collect their orders in-store avoiding queues.
One alternative twist on click-and-collect that is developing in China are smartphone-linked pick up lockers run by companies such as Gooday and Sposter. By the end of March, Sposter’s 19,558 locations had handled 116 billion packages since the service was launched in late 2012.
Despite slowing GDP growth in China, continued income growth is seeing more Mainlanders reaching the necessary standards of living to engage in travel. In 2012, Mainland China surpassed both Germany and the U.S. to become the largest spenders on international tourism. The United Nations World Tourism Organization released a report on Chinese traveller habits counting more than 83.2 million Chinese citizens travelling abroad, a 395.7% increase since 2002. The following buzzwords will help you understand the changes and massive influx of Chinese travellers, their habits and the latest trends going on in China’s travel market.
Chinese FIT (Free and Independent travellers)
For years, one could only imagine Chinese travellers as red-hat wearing masses following the umbrella adorned with the typical gold stars. The stereotype of Chinese tourists pouring out of packed tour buses is progressively becoming outdated with Chinese travellers becoming more inclined to travel independently and opting for tailor-made itineraries.
A study conducted in 2013 by the Chinese International Travel Monitor (CITM) revealed that around 70% of Chinese travellers abroad are travelling independently. The following are several reasons for this behavioural shift.
First of all, the average age of outbound travellers has steadily declined in the last decade with tourists under 45 years old composing more than 90% of China’s overall outbound travellers. Younger generations perceive group travel as old-fashioned and prefer to organize their trips independently.
Secondly, there has been a cultural shift towards freedom and authenticity while travelling mainly incentivised by social media. China’s obsession with sharing, rating and recommending online has made it possible for travellers to have a larger quantity of information in order to make travel decisions independently. In addition, social media has spread the idea that group travel is something “for dummies”, for first-timers and for 乡下人 (xiangxiaren), namely peasants, thus making it even more unattractive.
The blossoming of online travel websites has played a factor for these independent tourists. Travel websites like Qunar, Ctrip and Kuxun makes it easier to bypass agencies and organise journeys online and independently. Additionally, the easier availability of tourist visas, once only obtainable by joining a travel group, has further paved the way for this shift to happen.
中国生态游－ Chinese eco-tourism
The original definition of eco-tourism is “responsible travel to natural areas that conserves the environment and improves the well-being of local people” but the term has acquired broader connotations in China, including tourism directed to undiscovered natural areas.
Given the fact that China is the world’s largest emitter of CO2 gases and 70% of China’s rivers and lakes are contaminated, Chinese tourists are increasingly developing an interest in eco-tourism, both domestically – in the few unspoiled reserves left – and abroad.
As displayed by a survey conducted by the popular travel platform Agoda, 79% of surveyed Chinese consumers are willing to pay a premium of $5-10 a night more, to stay in a hotel which engages in environmentally responsible practices. The top four characteristics that Chinese travellers value in order to assess the degree of green responsibility of a hotel are: 1) The use of environmentally friendly cleaning products (37.3%); 2) Recycling (36.8%); 3) Environmentally conscious construction and design (36.1%); and 4.Waste reduction (35.7%).
The most popular destinations for eco-tourism are New Zealand, Northern European countries and various countries in Africa (identified by the more adventurous of Chinese travellers). In Africa, eco-lodges have popped up in Tanzania, Kenya and Namibia along with organised eco-safaris to go along with the stay, all targeting Chinese travellers because of their current inclination towards this kind of leisure activity. The typical Chinese client’s age ranges from 30 to 65 years old, with a 40/60% split between male and female. Roughly 60% of them are business professionals, and 40% of them are entrepreneurs.
Given the increased attractiveness of eco-tourism, many Chinese entrepreneurs have heavily invested in green resorts located in remote areas to attract visitors. Eco-tourism spots in Zhejiang province – easily reachable from Shanghai, and spots in Yunnan province are the top-visited at the moment. These resorts feature top-tree wooden villas (ranging from ¥4000-¥5000 ($625-$780 per night), which allow travellers to enjoy eco-luxury escapes from their polluted cities.
China Super Travellers
Chinese super travellers are high-net-worth individuals spending a large portion of their income on travelling every year. Conventionally, spending more than $30,000 per year on travelling earns them this status. Super travellers are mainly resident in 1st tier cities (55%), are 40 years old on average, with a median spending of $58,000 per year on travelling.
The distinctive characteristic of this group of high-end travellers is that they prefer to spend money on customized services (62%) and exotic destinations in order to show they are able to afford offthe well-beaten track and undiscovered locations.
An interesting trend that is happening is the desire to experience the frozen lands at top and bottom of the globe. In 2014, 32% of super travellers chose Artic or Antarctica, with the South Pole being more popular than the North. When interviewed about the “most memorable” travels, 28% of super travellers identify North and South Poles. This type of experience has been valued much more than the typical journey to the US (10% considered it memorable) or to Europe (only 8% considered it memorable).
太空游 － tai kong you – Space tourism
Being a country that is home to more than four million millionaires, China is also full of crazy 富二代, second generation millionaires who would spend astonishing sums in order to be perceived as rich, powerful and exotic. This is another reason why the most bizarre and expensive trends are often registered in China first.
Space travel is a niche market, with commercialisation envisioned by Richard Branson, who decided to pour money into a venture called Virgin Galactic in 2004. Ten years later, The New York Times has described China as the world’s largest market for the incipient space tourism industry.
A survey conducted in 2014 by Hurun, highlighted that around 7% hope to engage in space travel within the next three years. This is a high percentage, given the currently low awareness of this niche market. In December 2014, XCOR Aerospace and Virgin Galactic, both owned by Branson, started pre-selling tickets for the upcoming initial thermosphere journey which will take place in 2016. Sheng Tianxing, a successful tea trader from Zhejiang, paid $100,000 or about a third of his annual income with a single click online for a seat on a rocket that will carry him into space. The long journey will eventually cost him three times as much. Tianxing, who has an extremely appropriate name literally meaning “sky walker”, said that his passion for space began when he watched Neil Armstrong land on the moon. Today many Chinese share this passion, helped by China’s heavy investment in its space programme, contributing to the curiosity and national pride.
Regarding the journey, the shuttle will bring passengers to the lower edge of space thermosphere (110km high). During the flight, passengers will be able to appreciate the space protean beauty, more than 1,000 kilometers of earth’s arc, space sunrise and sunset, and be able to experience a short weightless float. Above all, tourists can see moon craters clearly and the landing point of “Apollo 13”.
Even as the experience is designed for ‘ordinary people’, participants are required to take part in a specialised training that, only if passed, will make them eligible for the trip.
《星星》游 – xing xing you – “Star”-themed tour
Since the end of 2013 China has officially become the largest online video streaming market, with over 433 million viewers in 2014. Thanks to popular online streaming platforms such as iQiYi and Youku, American, British and Korean TV shows have become extremely popular, with the main stars gaining a lot of recognition from the Chinese public.
“Star-themed tours” are a specific type of travel tour particularly popular among young and rich Chinese fans. These tours typically involve visiting the sets of movies or TV series and often include meeting celebrities.
The first mover offering these type of tour trips were places featuring the madly popular South Korean soap opera来自星星的你（My Love from the Star). These tours banked on the craze of fans who religiously followed the hit TV series.
The National People’s Congress (NPC) gets together as a full committee twice a year for its plenary session. These meetings are called 两会 (Lianghui) and are the most watched political events in China. During the meetings, China’s premier leads the discussion of the main economic, social and political topics of the year, sets important targets and releases an annual report containing the main statistics, figures and economic indicators regarding growth and development. If you did not have the chance to follow this year’s March Lianghui, the following list of buzzwords is a great opportunity to catch up!
Made In China 2025 – 中国制造2025
Being one of the central issues covered during the Lianghui, “Made in China 2025” (MC25) is a comprehensive campaign that aims at upgrading the Chinese manufacturing industry. Even though the first drafts of this project were presented in 2013, the subject is still really fluid. The central focus of Lianghui 2015 was using technology for manufacturing to increase productivity and automation.
During the last couple of decades, China has based its fortune on cheap labor and low cost manufacturing. However, as the country has rapidly developed, macroeconomic conditions have put upward pressure on labour costs. The MC25 campaign is a way to address various issues altogether. First of all, the focus on innovation in manufacturing is a way to keep China competitive in this field, making the country able to maintain its cost advantage even with surging labor costs. Furthermore, MC25 is a response to the main drawback of the China low cost strategy, namely the huge impoverishment of the “Made in China” brand which is nowadays associated with poor quality and labor exploitation.
Increasing incentives, subsidies and investment in the field of manufacturing is also a way to climb up the global value chain thus concentrating on higher-value-added activities. China’s plan is to increase the percentage of Made-in-China materials and components of final goods to 40% in 2020 and 70% in 2025.
The role of the state will be crucial for the successful implementation of MC25, providing an overall framework, utilising financial and fiscal tools and supporting the creation of manufacturing innovation centers (15 by 2020 and 40 by 2025). However, the plan will also strongly rely on the market, strengthening intellectual property rights protection for small and medium-sized enterprises and making the use of intellectual property (IP) more effective in business strategy. This campaign will directly affect Chinese consumers. Given the low perception of the “Made in China” brand, Western companies have enjoyed over the past decade an “ex-ante competitive advantage”, meaning that, especially in some fields like luxury and automotive, Chinese brands were not taken into consideration by Chinese consumers.
MC25, by attempting to revamp Chinese manufacturing, will increase the level of competition in some fields, making marketing strategy more important for non-Chinese companies to maintain market share.
Maker Culture: 创客 chuangke
The maker culture is a contemporary urban subculture originated in the United States that represents an extension of the DIY (Do It Yourself) culture, with a particular focus on technology and engineering. The Lianghui has refered to this as 创客 chuangke (the maker), a term that features the Chinese character chuang, meaning “to generate” and emphasises a creative and passionate approach to making things. As part of a greater plan of rekindling the “Made in China Brand”, the Lianghui underlined the importance of fostering this kind of approach in order to move away from the common stereotype of Chinese people as “cheap copycats” and reach a status where products are not only made but created in China.
In order to incentivise a more creative and proactive way of life, the Chinese government has directed investment into two main areas. On the one hand, since 2013 the government has started financing “innovation-houses”, spaces in community centres set aside for teaching people to use post-digital tools. There are now more than 75 innovation-houses concentrated in the areas of Shanghai and Beijing. On the other hand, a more ambitious campaign involved the 2013 construction of a 16,000 square metre “makerspace” in China’s most famous engineering school, Tsinghua University in which students are allowed to make experiments with open hardware as part of their degree.
Since 2013, when the Chinese President Xi Jinping came to power, a massive anti-corruption campaign has been initiated with the aim of netting hundreds of corrupted government officials and company executives. The central concern of 2014 Lianghui was the “Operation Foxhunt” by which the NPC decided to start the negotiations for an extradition policy with the United States to punish rich Chinese suspected to have fled abroad to launder money earned illegally in China. This problem has been underlined also at this year’s meeting, with particular emphasis on “smash the tigers and the flies” concern (要坚持老虎苍蝇一起打) stressing the importance of eradicating corruption both from high level members and lower level ones. This campaign is reinvigorating Xi’s reputation as a strong but fair leader among Chinese electors even though international observers point out that the targets of the campaign might be political enemies and opponents.
Regarding the Chinese Market, the anti-corruption crackdown has had profound consequences on markets which were mostly attractive for high net worth individuals. The gambling market has suffered the most, with gaming’s share of revenue in Macau dropping 17.4% in January, extending the run of consecutive monthly falls to eight. Obviously the Chinese luxury market has been strongly affected, experiencing a slow down for the first time in 2014 (-1% growth), a loss of approximately RMB ￥115 billion. Tourism, exotic markets and real estate have all experienced a slow down given the higher prudence of Chinese consumers coming from the fear of becoming suspects.
The Lianghui received extra attention as 2015 is the last year of the 12th Five-Year Plan and the government meeting was a chance for the government to unveil the new 13th Five-Year Plan. Even though the actual 13th Five-Year Plan has not been released yet, the main concerns were obviously economic factors, employment and environment.
Regarding general Chinese economy, the GDP target has been set at around 7%. Furthermore, policies for the implementation of the new normal policy have been spelled out, including relaxation of the fixed exchange rate policy, the removal of some tariffs and the critical reduction of the industries in which foreign investment is restricted.
With respect to employment, the Lianghui has declared the will to create 10 million additional jobs in urban areas and to avoid an unemployment rate above 4.5%. With the same purpose, the budget allocated to military spending will be increased by 10%.
In conclusion, Lianghui’s considerations regarding environmental issues concentrated on cutting energy intensity by 3.1%, bringing coal consumption to a zero-growth equilibrium and replacing the “green charges” with actual “green taxes” and “green tariffs” in order to further incentivise energy saving habits.
Marketing strategies in China will be mainly affected by environmental considerations. These policies will push Chinese consumers to be more environmentally aware and perceive companies that are “more green” as more valuable. This is a great chance for companies to increase corporate social and environmental responsibility in their marketing schemes.
China is famous worldwide for its unique consumer trends. From ‘Face-Kinis’, to the ‘Belly Button Challenge’, to weird and wacky fashion fads, Chinese consumer culture is always throwing up new ideas and products which can prove puzzling to the outside observer. But what can these unusual trends teach us about China’s rapidly evolving consumer dynamics? – It turns out a lot! Read on to learn more…
“The Belly Button Challenge” – fan shou mo duqi – 反手摸肚脐
One of the biggest fads on Chinese social media this year has been the Belly Button Challenge. Chinese social media users are dared to reach behind their backs and touch their belly buttons to determine if they had the “ideal” figure and don’t need to lose weight by some questionable logic. In less than two months, the craze had received almost 300 million views on Weibo. Although the challenged is based on no scientific evidence and accused of encouraging unhealthy body image and eating disorders, it continues to attract social media hits from women aspiring to be baifumei (白富美) – pale-skinned, rich, and beautiful.
The fad has been followed by the “Collarbone Challenge” (锁骨放硬币 – suo gu fang ying bi). In an equally peculiar vain, women measure their slimness by stacking coins within the gap of their collarbone. China’s obsession with beauty carried on with the “Taylor Swift Leg Challenge” (Taylor Swift：你的腿可以横跨几个人- ni de tui ke yi heng kua ji ge ren). Inspired by Swift’s long legs, Chinese women posted pictures of themselves stretching their legs across as many people as possible to show off the longness of their own pins.
The appeal of these campaigns lies in their simple and accessible “do-it-yourself” nature, and all of them showcase the power and influence of Weibo as a viral marketing tool.
Crush Crush Tribe – nie nie zu – 捏捏族
First emerging in the summer of 2009, this strange phenomenon quickly spread from China’s mega cities to second and third tier cities. The Crush Crush Tribe are typically white collar workers who, in an effort to release stress from busy urban lives, go to shops and take out their frustration by secretly crushing and stomping on food products. Popular groceries include dried noodles, soda drinks, and cookies.
The phenomenon has proved a popular topic on social media. There is an account dedicated to the “art” of crushing on the popular QQ messaging service, providing a central discussion point for tribe members. The page discusses the psychological benefits of crushing products, with users describing the satisfaction they feel as they destroy items. Many “crushers” tout the craze as a valuable form of catharsis and stress release.
Most attribute the Crush Crush Tribe’s origins to the increasingly pressurised professional and social lives of modern urban China. Many “crushers” identify as Diaosi; white collar workers with dim professional or romantic prospects. For example, one member of the QQ account explains his passion for crushing dried supermarket noodles as driven by solitude, claiming: “It’s not instant noodles that I’m crushing, it is loneliness”. However, the Crush Crush Tribe’s actions have been deemed an irresponsible fad by many; not least shop keepers, who claim the trend is “immoral” and reflective of a “sheep-like” mentality amongst Chinese consumers.
Since peaking in 2009,the Crush Crush Tribe’s ranks have depleted considerably in recent years, with “crushers” splintering off in favour of other kooky forms of tension relief. Amongst them are the “Rip Rip Tribe” (拆拆族) who split open packages of socks and underwear, and the “Switch-Switch Tribe” (调包族) who take out their frustrations by mixing and matching different products in similar sized packages. Nevertheless, there’s no shortage of evidence of continuing frustration of shoppers’ mischief within supermarkets aisles across China.
“Face-Kinis” – liǎnjīní – 脸基尼
Coming to a beach near you! Since their invention in Qingdao in 2006, the slightly creepy design of Face-Kinis (脸基尼) has attracted attention around the world. The latex masks cover the wearer’s entire face and neck, aside from small holes for the nose, mouth and eyes, withthe added bonus of protecting wearers against jelly-fish stings..More than 30,000 of the masks sold in 2014.
The popularity of Face-Kinis is consistent with the traditional idea that dark skin is unattractive in China. Those with a dark complexion are often associated with poor rural laborers who work long days in the sun, whilst pale skin is seen as a mark of high social class and refined culture. The Face-Kini is just one of a long line of weapons available to Chinese consumers including the ever-popular sun umbrella – tai yang san 太阳伞.
Face-Kinis are worn by Chinese women beach-goers of all ages. Even men occasionally don the mask. However the typical Face-Kini wearer is a mature woman – a powerful consumer demographic which marketers often overlook, or find difficult to successfully access. By 2050, it is estimated that one third of China’s citizens will be over 60, over twice the current proportion, so it’s clear that businesses that are able to successfully understand and tap into this demographic will reap significant rewards.
International visitors to China are often fascinated at the diversity of unusual food and drinks available to them. Flavours, textures, and tastes, as well as the development, packaging and promotion of products all take on a unique twist within the Middle Kingdom. Many Western companies have adapted their products to local tastes in China. PepsiCo markets its Lay’s potato crisps in flavours ranging from cucumber to the Sichuan classic ‘Numb & Spicy Hot Pot’ to ‘Hot & Sour Fish Soup’. While Mondelez has adapted the universally popular Oreo cookie to Chinese consumers’ tastes with flavours such as green tea, and ‘Birthday Cake’. Other products deemed peculiar to Western tastes are Quaker’s beetroot and sun-dried tomato flavoured instant porridge. McDonalds’ metallic grey-coloured ‘Black Sesame Soft Serve’ ice cream and matching silver cone is a popular choice amongst Chinese consumers.
Within China, consumer taste buds vary massively, with consumers in different regions preferring a wide spectrum of flavours and different styles of products. For example, Shanghainese are famous for enjoying sweeter food, while consumers in Chongqing are obsessed with all things spicy.
These unique quirks, combined with the complexity of the Chinese market, necessitate that brands interested in marketing to Chinese consumers get serious about ‘localising’ their products to suit Chinese consumers’ tastes and preferences. Consumer-led market research and product trials are a great way to do this.
China’s “Vampires” and their ‘Blood Bag’ Drinks
The “Vampire Craze” has been a growing trend in Chinese youth culture for the past few years, however the popularity of this trend has recently picked up speed with the popularity of American TV drama, ‘Vampire Diaries’.
Within China a small teenage sub-culture of “vampires” has emerged, creating an increasing demand for quirky Gothic products, merchandise and vampire themed activities. This demand has seen the creation of products such as ‘Blood Energy Potion’; drinks which are decanted into, and consumed from plastic IV bags. The goriest version is the “Blood B-Type” drink. Pitched as the world’s first blood substitute beverage, “Blood B-Type” is designed to mimic the nutrients, colour and texture of real blood.
However, these creepy Gothic drinks have not gone unnoticed by the Chinese Government. Last July, China’s Food and Drug Administration (the CFDA) banned the drinks – citing concerns about the product’s safety and their impact on young adults in China. The CDFA claims the drinks, and their provocative marketing strategy “violates social integrity and moral principles”. The ban demonstrates the need for marketers in China to toe the official line.
Despite this ban, aspiring vampires can continue to stock up on their favourite drinks via China’s largest online platform Taobao as well as enjoy their favourite blood beverages in vampire themed cafes across China.
Shamate – 杀马特
Shamate are a subculture of young Chinese rural migrants. Typically with little formal education, stuck in low-skilled jobs and living in overcrowded apartments, Shamate can be considered the polar opposite of xiaoqingxin (小清新) – China’s well-travelled, educated, and privileged youth. The group’s distinctive fashion sense is a mix of Goth, glam and anime fashion, with heavy eye make-up and hair bleached in bright colours a Shamate style staple.
The term is a Chinese transliteration of the word smart, and the insult “Idiot Shamate” (“脑残杀马特”) is a popular put-down bounded around on Chinese social media channels with the purpose of describing anything considered tacky or coarse. Shamate are popularly perceived to be backwards hicks who don’t belong in the city and are therefore seen as fair game for mockery. Popular disgust directed towards Shamate is a reflection of China’s rapid development, and the class strains that this has created. The discrimination facing Shamate is part and parcel of a wider societal and institutional bias against rural migrants in China.
Yet whilst social media is widely used to ridicule the Shamate, it is also a platform from which this urban sub-group can make friends in the unfamiliar cities they move to, express their identity and escape the urban alienation they encounter. The plight of the Shamate is another example of the power of social media in China and the ability of different consumer groups and “tribes” to carve out their identity via the internet.
Canned Fresh Air – guan zhuang yang qi -罐装氧气
It is no secret that alongside China’s rapid economic development, the country has experienced widespread environmental degradation and pollution. This degradation poses a serious threat to China’s growth and stability; costing the country roughly 9% of its gross national income, and causing between 350,000 and 500,000 people to die prematurely each year as a result of air pollution.
In order to minimise their exposure to these dangerous pollution levels, health-conscious Chinese consumers are resorting to extreme, and sometimes weird, strategies. The market for environmental health products is thriving–sales of air purifiers hit ¥3.5 billion ($560 million) in 2013, 80-100% more than 2012. Consumer demand for environmental products only looks set to continue growing.
One of the more unusual of these environmental products which recently hit international headlines is canned fresh air. In 2013 a Chinese millionaire, Chen Guangbiao, launched an initiative to sell cans of fresh air which is bottled in China’s countryside at 5 Yuan a pop (80c). With the proceeds going to charitable causes, the initiative was intended as a tongue-in-cheek reminder of the value of environmental protection and the priceless commodity that is clean, unpolluted air. The campaign proved a big hit amongst environmentally anxious Chinese consumers with a claimed 10 million cans sold in just 10 days.
It’s indisputable that the incredible growth path experienced by China in the last 30 years is to be linked to low cost manufacturing, which has attracted foreign investment from all over the world. In order to maintain the country competitive notwithstanding the rising labor costs, China has incentivised investments in technology and infrastructure. The following buzzwords will help you familiarise with the new tech trends that will characterise China in the near future and that are already revolutionising consumer experience and marketing strategies.
Internet of things
The Internet of Things (IoT) is a network of physical objects or “things” such as vehicles, robots, home systems and appliances, traffic lights and so forth. They are embedded with electronics, software, sensors, and connectivity that enable them to exchange data with the manufacturer, operator and/or other devices (Machine to Machine – M2M) connected to the same network. The IoT involves a technological revolution, which will impact everything we do and will have deep consequences for marketers. More connected “things”, will enable the collection of more integrated information about customers’ behaviour and preferences. The huge amount of new data coming from these interconnected devices will give marketers the opportunity to deliver smarter and more relevant advertising, with dramatic improvements in CRM (Customer Relationship Management).
Growing by 20.4% annually, the IoT market is expected to reach a total value of US $4.6 trillion in 2018. In 2014, China had more than 50 million M2M connections — compared to the US’ 32 million and Japan’s 9.3 million according to the GSMA.
5G (5th Generation Wireless Technology)
The coming fifth-generation wireless broadband technology will replace the 4G technology by 2020 for business and consumer use. 5G connection will be 40 times faster than 4G (up to 1 Gb/s) and include a double-layer infrastructure in order to give a preferential space for data flowing “M2M” (“Machine to Machine”) rather than human to human . This will further pave the way for the development of the Internet of Things by increasing the productivity and interconnection among different “things”. Thanks to faster download speeds, it will be possible to stream HD videos with no buffering or waiting time. This will accommodate the need of Chinese consumers to enjoy TV shows and branded videos from everywhere without necessarily download the videos from a WiFi spot. Higher speed and connectivity with machines will have positive spillovers towards many industries, as well as foster the introduction of new types of marketing strategies, while enhancing others such as gamification and interactive digital communications.
China and South Korea are taking the lead in 5G investments with Chinese telecommunication giant Huawei spending RMB 3.72 billion (US $600 million) in 5G-related R&D.
Augmented Reality Technology (AR) consists in integrating High Definition images, videos and views coming from the real world with digital content. By superimposing real with digital content, AR technology completely changes user experience allowing a more immersive interaction between user, environment and software. In the field of retail, AR has been used to make customer experience more interactive and informative. AR can be used to enhance product previews by allowing a customer to view what is inside a product’s packaging without opening it. AR is also useful aid consumers in selecting products from a catalogue or through a kiosk. Scanned images of products can activate views of additional content such as customisation options. Retailers such as American Apparel with their Colour-Changing App or online supermarket Yihaodian use the technology to improve their customer’s shopping experience. In particular, Yihaodian has opened more than 1,000 augmented reality stores in Shanghai in 2014.
Although AR is closely linked to the digital world, it is one of the tools brick & mortar retailers are using to improve the overall physical shopping experience in China – particularly when they are up against increasingly attractive online shopping alternatives.
Overall, this market is expected to be worth $1.06 billion in 2018 growing at CAGR (compounded annual growth rate) of 15.18%.
China’s healthcare system is under pressure – The formerly rudimentary system has undergone extensive Government-led reforms to keep pace with China’s rapid economic development and rising expectations and now services 98% of the population. Public demand for high quality medical treatment have never been higher.
However, China’s healthcare system continues to face significant challenges. Inefficiencies in health care management, high patient-doctor mistrust, and vast regional discrepancies in quality and supply of health care are all forcing change. With a rapidly ageing population these pressures will only increase – by 2050 almost one third of China’s population, or 438 million is estimated to be over 60. These factors, combined with China’s strong ecommerce sector, rapidly expanding number of mobile users, and increased innovation and investment in healthcare, make the Middle Kingdom a fertile ground for the expansion of eHealth. Examples of interesting innovations include; Guahao – the largest online healthcare appointment platform in China – its value lies in streamlining accessibility to healthcare, and cutting down on administration and bureaucracy. Another interesting innovation is Alibaba Future Hospital – an ambitious platform designed to facilitate eHealthcare by allowing patients to make online appointments, pay for treatments and medicines, check lab results and settle medical insurance bills online. Lastly, Xingshulin is a great example of an eHealth platform which empowers patients to access health records and enables physicians to easily access information and medical resources on the go.
The explosive growth of China’s economy has led to the rise of a thriving consumer culture. With Chinese consumers now able to choose from more products and brands than ever before – they are also able to reinvent themselves and identify with a vast array of different consumer-led movements and groups. This dynamic consumer culture is reflected in the creation of popular buzzwords which capture the characteristics and quirks of different niche consumer groups. So if you are seeking to understand Chinese consumers, these buzzwords are a great place to start!
Referring to social and moral problems associated with contemporary Chinese society, Fuerdai can be translated as “the second generation of the rich”. Fuerdai are typically portrayed as arrogant and rebellious by the media, a spoilt generation lacking social responsibility and basic values. Being born “with a silver spoon in their mouths” Fuerdai are said to be “impulsive” buyers, especially receptive to luxury brands, imports and exclusive products.
Similar are ‘Tuhao’ 土豪 – Chinese who “have the cash, but lack the class to go with it”. The term originally referred to “local lords”, and is now used to mock China’s “new money”. Apple’s 5s gold coloured iPhone subsequently became popularly known as a symbol of the Tuhao’s ostentatious spending habits; nicknamed ‘Tuhao jin’土豪金(Tuhao gold). Popularity of the term has spread across China sparked by a Weibo craze – “make friends with Tuhao” – whereby Weibo users created poems and cartoons satirising Tuhao culture.
Slightly pejorative slang, Xiangjiaoren refers to a “Westernised Asian” – yellow outside, white inside. The term is usually used to refer to assimilated Asian Americans, and in 2011 was added to China’s market-leading Xinhua Dictionary (新华字典).
The term Xiangjiaoren can be seen as reflective of China’s complex perception of the West. Whilst the West is an aspired destination of study and work for many Chinese, assimilation into Western culture also poses multiple questions of identity.
Western popular culture remains fashionable in China. Studying abroad has never been more attractive, with an estimated 459,800 Chinese students studying in destinations such as the US, Australia and Western Europe in 2014 – an increase of 11.1% from the previous year. After spending time abroad many young Chinese will return home influenced by Western culture and ideas.
The tide also flows the opposite way. With the after-effects of the Global Financial Crisis still being felt in the West, increasing numbers of ABC’s (American Born Chinese) are returning to China in pursuit of economic opportunities. These migrants with their mix of foreign and Chinese characteristics are often labeled, or identify as, Xiangjiaoren.
A popular term online in 2014, “renxing” translates as willful or unrestrained – often negatively referring to China’s “new rich” who use their money to do whatever they want. With his statement, “It goes without saying, having power doesn’t mean you can renxing”, Prime Minister Li Keqiang signaled the government’s increasingly tough line on corruption.
Official use of this popular and accessible Internet buzzword indicates the Party’s increasing recognition of the power and influence of China’s internet and social media platforms, and a desire to harness these channels.
Due to China’s One Child policy, many Chinese parents pin their hopes, dreams and expectations for a comfortable retirement on their only child. This “Little Emperor” or “Little Empress” enjoys the undivided attention and indulgence from his or her family, but also experiences intense pressure to conform to expectations, and achieve their parents’ idea of success.
Many businesses have sprung up to cater to the needs and wants of Little Emperors and Empresses, and their demanding parents – from education, to play, fashion, extra-curricular activities, and nutrition – creating some of the least price sensitive and fastest growing marketing categories in China.
For example, Lego has successfully tapped into the “Little Emperor” market with sales surging 50% in the past 2 years. Lego’s toys with their potential for “creative play” are attractive to middle class parents eager to secure the best development opportunities for their children.
A 2015 analysis of consumer trends also confirms the importance of children in Chinese parents’ purchasing decisions, with concern over food safety and a growing willingness to spend on children making organic or fresh food produce, and baby-related products top spending priorities for 2015.
Whilst China’s soaring prosperity and economic growth hogs the headlines, one of its less reported consequences has been a decline in social mobility. This has led to a rise in Diaosi or “losers”.
Diaosi are typically men who have risen from humble backgrounds to join China’s burgeoning middle class. Once they reach the middle class, a lack of cash or connections means they struggle to progress any further. Those who identify as Diaosi predominately work in the IT, media and service industries.
Diaosi literally translates as male pubic hair, and is a popular topic for ridicule in China; for example online sketch show – “Diaosi Man” – which ridicules the “socially inept” Diaosi, has hit 1.5 billion views since its 2012 launch.
However, despite the term’s negative connotations, an increasing number of people are self-identifying as Diaosi. According to a 2013 survey 529 million young Chinese considered themselves Diaosi, with 76 percent of Shanghainese respondents identifying with the term. The label originally only applied to men, but increasingly Chinese women are joining the Diaosi tribe, known as Nu Diaosi (女屌丝).
Some commentators have observed that those who identify as Diaosi “losers” are far from it. With an average monthly income of 6000-8000 RMB for men, and 3000-6000 RMB for women it is clear many middle class Chinese are scrambling to appropriate the term. In the context of popular frustration over corruption, social stratification and an ever-widening wealth gap, identifying as Diaosi has become a way for many Chinese to express their frustration with society, and their disappointment in the persistence of stubborn class barriers. For others, identifying as Diaosi is a self-depreciating rejection of increasingly status-driven society and popular aspiration to be gaofushuai 高富帅 (“Mr Perfect”) or baifumei白富美 (“Ms. Perfect”).
Diaosi are an interesting consumer demographic for marketers interested in China. Typically single, with higher than average salaries, and a lack of financial obligations and commitments freeing up their disposable income, Diaosi have strong purchasing power. Brands such as Nike, Puma, Lenovo and Nescafe have been quick to tap into the Diaosi trend by collaborating with famous Diaosi comedian Mike Sui or “Diaosi Mike” to add a touch of “Diaosi appeal” to their products. Diaosi are “rational” consumers – seeking longevity and value for money over flashy, “quick-fix” purchases.
In 2014 China was recorded as having 649 million Internet users, with Chinese netizens spending an average of 25.9 hours online per week – a significant rise from the average of 20.5 hours per week recorded two years earlier in 2012. With so many Chinese becoming increasingly reliant on the internet, the phenomenon of – zhai nan/nu (宅男/女) – has become a prevalent buzzword across China. The term describes a man or a woman who prefers to stay at home, rather than go out, to service their Internet addiction.
China was one of the first countries in the world to label “Internet addiction” as a clinical disorder, with the National People’s Congress previously estimating that 10% of China’s Internet users under 18 are addicted. The Chinese government has built as many as 250 boot camps to treat the problem. It is argued that young Chinese are increasingly looking to the Internet as a source of escape from the educational and societal demands placed upon them, as well as a source of friendship.
China is tipped to overtake the US to become the world leader in the consumption of computer games, with Chinese consumers predicted to contribute $22.2 billion to the global gaming industry in 2015. In particular, the Chinese mobile games market, with a 2014 turnover of $4.4 billion is forecast to record high growth – with an estimated turnover of $9.3 billion in 2017.