Few markets have experienced changes in the way that China has over the past few decades.
Just 35 years ago, more than four in five Chinese were living in the countryside, typically tending small, family-sized plots with animals and crops. Now around half of the population live in city apartments, surrounded by conveniences that they could have only dreamt of a generation ago, and earning over three times what they would if they still lived rurally. Since 1990, China’s average incomes have grown more than 10-fold, and those extra earnings usually only need to support one child, unlike the large families a few decades earlier.
China’s social changes are almost matched by its market transformation. There were no foreign FMCG brands in China until 1979 when Coca Cola launched in the Middle Kingdom, although it was only allowed to sell to tourists. Nowadays, China has truly become internationalised with products from Italy’s Moleskine stationary, to New Zealand apples, to Belgian beer all vying for China’s lucrative consumers’ wallets. More than 500 new products launch every day on average in China.
How Chinese learn about products and services has also transformed. Until recently, propaganda messages made up the lion’s share of marketing in China. Most consumers learnt about things through the traditional state-run media channels such as radio, newspapers and later, television. Now the average urban Chinese consumer is bombarded by advertising messages across a wide range of mediums, unrivalled in other markets.
China’s 668 million Internet users have become the most rampant users of social media and ecommerce globally, using online channels more than any other medium for research before and after buying things. In addition, over 100 million Chinese travel and study abroad each year, and together with the networks they influence, have created a massive consumer population that is more aware, astute and internationally-minded than ever before.
Such remarkable social, economic and market changes have created a unique consumer class. Their consumer journey and retail market are unlike the West and other Asian markets. But there are also a number of fads, social habits, fashion trends and food that are a result of this dramatic change and China’s unique culture and history. We’ve listed a few to give you a taste of just how different some Chinese consumer trends are. We hope you enjoy this week’s Skinny.
Buzzwords: Unique Chinese Consumer Trends: Those unique fads, social habits, fashion trends and food that all make China a little more interesting.
4 Strategies For Reaching The Chinese Consumer: As consumerism becomes more entrenched in China, companies will have to 1) segment more and more precisely; 2) extend modern trade channels and distribution networks to reach consumers outside the biggest cities; 3) communicate benefits of products that are unfamiliar to consumers; and 4) develop the products and services that are underpinning increases in consumer spending, and which remain relatively scarce in China.
Italy’s Luxury Firms Set Their Sights On China: On the back of a 44.7% increase in net income for the first half of 2015, high end notebook maker Moleskine will open most of its new stores in China in the second semester, a market it describes as “very interesting”.
19,470 Firms Sign Up For Three New FTZs: Three months since free trade pilot zones were launched in Tianjin, Guangdong and Fujian in April, almost 20,000 firms had signed up.
Big Brands Like Michael Jordan Are Still Losing Trademark Battles In China; Here’s How to Win: If you’re planning to launch a legal challenge against a trademark squatter in China, don’t delay, and register your Chinese brand name if you have one.
Internet & Ecommerce
PayPal Aims to Connect More US Merchants with Chinese Consumers: One of two pieces of research by Paypal studied how Chinese consumers learn about products they purchase cross border. Search engines were the most common way, followed by word of mouth and social media. Alibaba has just recruited a former vice chairman at Goldman Sacks to lead its cross border drive. The company has partnered with Kobe Bryant to sell his documentary and products on Tmall.
Apple Loses Top Market Share In China As Xiaomi And Huawei Take Over: After leading for two quarters, Apple has been beaten out of the top spot for market share in China by Xiaomi at 15.9% and Huawei at 15.7%. Apple’s share was estimated at 12.2%.
Food & Beverage
What’s Going Wrong With Chinese Juice?: After accounting for 61% of global juice volume growth between 2009-2014, the volume of juice sales declined last year, with value only slightly growing. A few big safety scandals didn’t help. There has also been an overall shift to healthier beverage options with better ingredients such as fortified/functional juices and reduced sugar juice.
China’s Top Wine And Beer E-Tailer Nabs $80M Funding To Get Everyone Drunk: Jiuxian adds $80 million funding to take its total funding to $225 million since 2011. It comes at a time when China overtook Japan to be the top consumer of Belgium beers in Asia, with imports growing 140% last year and 850% since 2008.
Ctrip Goes On A Round The World Trip: China’s largest online travel agent faces challenges in expanding globally, in addition to more aggressive domestic competitors backed by the big boys such as Tencent and Baidu. 53% of Chinese travelling internationally book on websites or over apps.
Fakes Are Costing Europe’s Fashion Industry 10% Of Its Sales And Thousands Of Jobs: Two thirds of the worlds fakes are said to originate in China, with Chinese counterfeits are estimated to cost European fashion brands €17.5 billion ($19.2 billion) a year and result in 242,000 lost jobs according to OHIM. Italy is the hardest hit, followed by Spain, the UK, Germany and France.
Chinese Consumers Most Satisfied With Their Looks Among Asians: 9.8% of Chinese consumers are completely satisfied with their looks, while 44% are fairly satisfied, making them the most contented among the AsiaPac countries surveyed by GfK.
China’s Once High-Flying Internet Money Market Funds Are Now Barely Better Than Traditional Banks: Interest rates on Internet funds are less than half what they have been since 2013. In early 2014, Chinese International Capital Corp estimated that online money-market funds could soak up 8% of total consumer deposits in three years. Jack Ma’s Yu’ebao, is the market leader with more than $98 billion in assets and 200 million users to date.
Chinese Consumers More Upbeat On Buying Cars: Despite the slowdown of car sales in China, 20.7% of respondents in an MNI Indicator survey said they were planning to buy a car in the next 12 months – the highest rate since the series began in March 2012.
Luxury Consumer Price Index Falls For First Time In Eight Years: Price declines in luxury properties, overseas trips and products drove the overall luxury price index down 1.8% this year according to Hurun. Yachts and private jets witnessed the largest price drops of 10.5%, as a result of foreign exchange differences.
The impact of the spectacular rise and fall of China’s stocks is anyone’s guess. It would appear that China is imploding if you read some news reports – stories of a weaking China attracts readers in some countries. Discuss it with Chinese consumers buying food for their kids in high end supermarkets, and they will shrug it off, unphased; China has made it through bigger economic challenges.
Of course some consumers will be feeling less confident, but it is unlikely to have the same impact on consumer spending as a crash would in markets like America. In January this year, following a 122% rise in the Shanghai Composite Index over 12-months, retail sales grew at their slowest rate in five years. At the time, just 6% of Chinese households owned stocks versus 55% of Americans. The latest spike would have drawn a few more in with Beijing’s encouragement, but as a whole, fewer Chinese consumers gamble on stocks – China’s reputation for being conservative with their high savings is well deserved. Although consumer investors make up a large portion of the owners of China’s stocks, their share of the overall market value is estimated to be 5% or less.
China needs healthy capital markets to finance the ongoing development of its economy, and will need a different approach to what we have seen recently. Nevertheless, the biggest impact on consumption growth in both the US and China is wage growth, which has been rising faster than GDP in China. IMF is keeping its pre-crash China GDP forecasts from April, as it believes China’s stock exchanges are so disconnected to the wider economy, and are small relative to the overall economy.
The rate of growth across many categories is slowing in China, but that was happening before the market meltdown. We expect Chinese consumers, particularly those born post-80s and 90s, will carry on in the consumer groove. Consumption will continue increasing in areas such as premium food and beverage, tourism and experiences, health and wellbeing, affordable and some niche fashion, overseas investments and anything to do with the precious only child – food, clothing and education – just look at the 50% growth that Lego has experienced in China over the past two years, despite counterfeits costing a quarter of the price.
China’s affluent and middle class base will continue to grow -an extra million USD millionaires came on board in China last year, despite the reports of doom and gloom. One loser will be state media who have been cheerleading the stock market, further eroding trust in traditional media and driving even more consumers to objective digital channels. We hope you enjoy this week’s Skinny.
The Chinese Stock Market and the Chinese Economy Have Literally Nothing To Do With Each Other: “We don’t see it as a major macroeconomic issue,” said IMF’s research chief Olivier Blanchard referring to China’s recent market meltdown, citing many examples of the disconnect between China’s stocks and its wider economy. Despite the recent drop, Shanghai stocks are still up more than 80% over the past year, and the Chinese stock market is small compared to the overall economy, the world’s second biggest.
Landmark Trademark Victory for Menswear Designer Michael Bastian in China: A trademark squatter has lost its ability to use the Michael Bastian brand that it registered in China. It is the first time a trademark registration application has been rejected in China in favour of a non-Chinese individual or entity. Nice work Foley & Lardner!
Megalopolis: the Future of Urban Planning in China: A massive new economic area encompassing 100 million people living Beijing, Tianjin and the province of Hebei is likely to become a model for China’s future urbanisation. One joint plan will cover economic and social development; urban and rural planning; and land use for the area larger than Uruguay, with a population roughly the size of Japan.
Uber Said to Seek Up to $1 Billion Funds for China Carveout: Uber has been claiming a $7 to $8 billion valuation for its Chinese unit, which has been marred by police shutdowns and volatile regulations. Investments from local, Beijing-connected firms such as Baidu will help their cause.
Foreign Brands Losing Lustre in China: Local FMCG brands gained more ground than foreign brands last year, with local market share growth strongest in skincare, fabric softener, colour cosmetics and infant formula, juice and biscuits. Foreign brands increased their share in the toilet tissue, beer, chewing gum, hair conditioner and chocolate segments.
Lego Builds on Strong Success in China as Playful Children Discover Their Creative Side: Lego’s Mainland sales have surged more than 50% over the past two years as parents recognise that playing with interlocking plastic bricks boosts inventiveness.
Internet, eCommerce & Mobile
A Significant Group of Consumers is Ditching Android for the iPhone: 53% of Chinese who own an iPhone switched from an Android according to a CLSA survey. 32% of Android users who plan to buy a new phone in the next 12 months will switch to the iPhone. This is representative of Chinese consumers upgrading their products across a number of categories. It comes at a time when Android-based Samsung is facing more bad news in China, with lawsuits for loading its mobiles with unneeded and unwanted apps.
Chinese E-Commerce Loophole Set to Close: Many Western companies have been avoiding strict Chinese consumer laws, such as the requirements for animal testing, by selling to consumers for “personal use” directly via e-commerce. This loophole is likely to be closed by the Chinese Government.
Food & Beverage
McDonald’s, KFC Go High-Tech In China With Customization, E-Payments: KFC is hoping to resonate more with China’s lucrative youth segment by accepting Alipay, rolling out Wifi and launching a menu app. Likewise, McDonald’s is piloting its “Create Your Taste” burger customisation in three Shanghai stores.
Top Chinese Wines Have Gone From Bad to Good. Will They Become Great?: China now has more acres of vineyards than France. Locally grown wines are getting more impressive too.
Xu Jinglei Being Sued for Making False Health Claims About Cookies: Actress and director Xu Jinglei is being sued for endorsing “river monkey mushroom stomach cookies,” claiming they are good for the stomach, when they are no different from other cookies.
JD.com’s Richard Liu Buys Into Australia’s Biggest Milk Processor Murray Goulburn: JD.com snapped up 4.6% of Australia’s dairy cooperative trust for A$20 million, not long after launching an “Australian Mall” on the platform while CEO Richard Liu was in Australia.
U.S. Tops Chinese Tourists’ Satisfaction List in Q2: Chinese travellers are most satisfied in the United States – 3.1 points higher than the average rating of 77.86 for 24 countries, according to a China Tourism Academy survey. Singapore topped Asia, with Mongolia and India reaching record highs. Complaints mainly focused on public services and travel agency services, such as a lack of Chinese translations of public information and poor transportation.
Opportunities for Growth In Challenging China Market: Chinese consumers expect to spend more on children’s clothing, women’s casual, shoes, men’s casual and health, beauty & accessories over the next 90 days according to analysis by Prosper China.
Have Chinese Consumers Started to Look Beyond Beauty Products?: By 2013, only 5 million Chinese women had some form of cosmetic surgery. By the end of this year, an estimated 7 million will have, and 11 million by 2018. 15% of Chinese women are considering using plastic surgery for anti-aging, with the highest rates in Tier 1 & 2 cities.
Eight Surprising Facts About The Chinese Luxury Consumer: Eight characteristics about Chinese luxury consumers: 1. They’re younger than you think; 2. They’re not as well off as you’d expect; 3. Most are married and have children; 4. They’re mobile natives; 5. They all have WeChat; 6. They prefer Chinese brand names; 7. They like to shop at retail; and 8. Alipay is an important method of purchase.
In a country where more than 500 new products launch every day, celebrities can help your brand get noticed in China. They can also give your products credibility, when many other goods go untrusted.
Chinese have long looked to the voice of a few to reinforce their decisions. A little over a generation ago, framed portraits of Chairman Mao hung in many homes where residents studied the leader’s quotations in their Little Red Book. Nowadays, residents look to video downloads and social media accounts of their idols on Xiaomi smartphones.
Chinese tennis star Li Na became the world’s second highest paid female athlete in 2011 after winning just one major tournament, as brands swarmed for the positive association in China. A Yao Ming-led campaign to stop the slaughtering of sharks helped sink demand for shark fin soup 82% in a couple of years. Tasmania’s Lavender Bears became an overnight sensation after celebrity Zhang Xinyu posted pictures on social media, and actress Yao Chen’s endorsement of New Zealand and subsequent wedding there, helped the country become one of the most aspirational destinations for Chinese tourists.
Local celebrities aren’t the only ones with sway in China. Louis Vuitton invested $80 million in a Korean artist management agency last year, given K-Pop’s influence in China. When Kobe Bryant visited China, 15,000 fans were already at the venue seven hours before his scheduled appearance.
David Beckham is another celebrity who is worshipped in China, further fuelled by his Chinese tattoo. So it’s no surprise that he is cashing in, launching a line of Beckham-branded products in China. He has some catching up to do – David Bickham inflatable adult dolls have been selling on Taobao for some time now.
For products without a huge budget to attract A-list celebrity associations, all is not lost. Chinese consumers are becoming more and more sophisticated and will often see through such endorsements, and smarter marketing campaigns will resonate more than those who’ve just thrown a lot of cash at a famous person.
Many of the greatest celebrity endorsement success stories happened over Weibo, spreading like wildfire to the tens of millions. But with consumers sidelining Weibo for the less-viral WeChat, the celeb multiplier-effect has lost some of its mojo.
Whether you use celebrities or not to promote your wares in China, like anything, it will be greatly enhanced with some insights-based tactics and creativity. We hope you enjoy this week’s Skinny.
How David Beckham Plans to Become an Even Bigger Star in China: Beckham-branded products such as sportswear, footwear, casual wear, high-tech and skincare will be available in China this year in partnership with HK-based Global Brands Group. He may be playing catchup, with David ‘Bickham’ blow-up dolls are already being sold on Taobao for ¥480 ($77).
Watch OK Go’s Crazy Commercial for a Chinese Furniture Store: Chinese furniture retailer Red Star Macalline has enlisted Grammy Award winning American alternative rock band OK Go for its latest ad – another high standard commercial to come out of China.
Internet, Social Media & Mobile
Marketers in China Lag Behind Consumer Mobile Adoption: Mobile has completely shifted expectations with consumers now wanting to get anything they need immediately, in context. Chinese consumers average mobile expectation score of 62 is much higher the 39 in U.S. according to Forrester research.
WeChat Tests Out Banner Ads and Promoted App Installs in Article View: Readers of WeChat articles are likely to see more ads, with WeChat testing banner ads on the service with promoters able to select from a list of categories to make their ad relevant.
Food & Beverage
COFCO Adjusts Fine Wine Message to Target ‘Mass Consumers’ at China Food and Drinks Fair: State-owned food and drinks giant COFCO showed 100 ‘accessible, reliable and good value’ ¥80-¥200 ($13-$32) wines from nearly 20 international producers to the China Food and Drinks Fair in Chengdu last week, amid a period of market adjustment.
Paying the Price For Rice: Chinese experts are claiming that local rice is just as good as the Japanese stuff, yet Chinese are prepared to pay up to sixty times as much for the safe, imported alternative. Chinese brought in 160 tons of Japanese rice in 2014, roughly triple the 2013 figure.
Disney in Fruit e-Retail First: Disney has recognised the growing importance of online food and beverage sales in China through its first partnership with an online seller of fresh produce. The company has teamed up with Fruitday to offer Chinese consumers Cinderella-themed oranges online as part of the movie promotions.
Chinese Tourists Shun Package Trips in Favour of Independent Travel: 71% of China’s 109 million outbound tourists travelled independently in 2014, versus 65% in 2013 – an increase of 13 million tourists overall according to Qyer.com. Europe was the ‘favourite’ destination that 29% of independent travellers want to visit, with the U.S. at 10%. Women accounted for 62% of overseas travellers overall last year.
Report from IHG Unveils Scale of China Outbound Opportunity: IHG and Oxford Economics research found 62% of outbound Chinese will be leisure travellers by 2023. Over 85% will be visiting major global cities, accounting for 92.5% of spending. The study forecasts that Hong Kong and Macau will account for almost half of all spending, although they may not have factored in the recent dive in spending in the two regions.
Airlines Unveil New Deals, Services: Five new start-up and low-cost carriers entered China last year with new Boeing planes as more airlines compete for the lucrative Chinese tourist market. Delta is trying to appeal to Chinese needs, becoming the first U.S. airline letting Chinese travellers use Alipay when booking flights on their website.
Alibaba, Other e-Retailers May Foray into Rx Drugs in China: The China Food and Drug Administration could approve Internet sales of prescription drugs by the end of the year breaking Chinese hospital’s virtual monopoly of China’s $149 billion prescription drug market.
Xbox Boasts its Education Function: Xbox has teamed up with education provider New Oriental to develop preschool education products. The tools will help children aged 2-8 learn English in an entertaining way, as many Chinese parents place focus on education in purchases for their children. China’s preschool education market is valued at around ¥100 billion ($16.1 billion) a year.
Alibaba-Affiliated Money Market Fund Yu’ebao Users Hit 185 Million For 2014: 185 million Chinese were using Yu’ebao by the end of 2014, 430% more than 2013. After shrinking last autumn, the fund’s asset base bounced back to grow 200% from a year earlier to ¥579 billion ($93 billion).
China Relaxes Mortgage Rules for Second Home Buyers: To help kick some life into China’s slumping house market, the Government has dropped downpayment levels for general second home buyers to 40% from the current 60 to 70%.
Tesla to Localize Production in China in 3 Years: Tesla Motors plans to localize production and engineering in China as soon as 2017. The company is still committed to China after having excessive stock due to speculators and scalpers misleading the company about “extremely high” demand.
If China’s polluted air and water supply wasn’t doing enough to bring on heart disease and other illnesses, there’s a another scourge that’s stepping in – the bulge.
More than a quarter of China’s adult population, around 350 million, are now considered overweight. Those classified as obese number more than 60 million, rising 20% over the past four years in the 20-39 age group.
Busy lives in China’s cities are driving demand for convenient, processed, oily and sugary food. That, coupled with more sedentary lifestyles, is fattening up the average urban dweller. However even with consumers in cities spending twice as much on food as their rural counterparts, obesity rates are growing faster in the countryside.
China’s growing waistlines present plenty of opportunities. Sales of weight management health products and services grew 15.4% annually between 2007 and 2012 and are likely to surpass ¥8 billion ($1.3 billion) this year, spurning everything from fat-fighting bloggers to weight loss camps for kids.
Weight Management is part of a bigger subset of an increasingly health-conscious Chinese consumer spanning pharmaceuticals, health care, food and beverage, fitness, beauty, tourism and more. Three of the top-five reasons wealthy Chinese emigrate are health-related. Overall, 73% of Chinese consumers pay a premium for products that they consider healthier – something to think about with your products and positioning.
We hope you enjoy this week’s Skinny.
Chinese Customers’ Lack of Loyalty Puts Pressure on Brands: Baby milk has the highest rate of loyalty among consumers across China’s FMCG segments. The top-5 brands in all other segments have 40%-80% of their customers as newbie’s each year. Chocolate, skincare and shampoo have the least loyal customers.
Boost in Chinese household consumption by 2020: China’s Household consumption could grow from today’s 35% of GDP to between 45% and 50% by 2020 according to Nielsen – a rise of as much as ¥26.9 trillion ($4.3 trillion) on 2012 levels. Just 13% of Chinese have ever held a loan. 38% of consumers in Tier 2 cities and 37% in Tier 3 cities said they’d buy more premium products, versus 28% in Tier 1 cities.
Customer Service ‘Leaves Shoppers Cold’: As many as 75% of Chinese consumers are not satisfied with their customer experience through multiple channels. This is contributed to by processes that aren’t integrated such as inconsistent promotional info across channels and sales staff unaware of policies and offers on social media.
Chinese Consumers Like Socially Responsible Firms, Study Finds: 69% of Chinese online consumers said they will pay more for companies that are socially or environmentally active, 14 percentage points higher than the global average and 10 percentage points more than last year.
Chubby Little Emperors: About 350 million Chinese consumers are considered overweight or worse, with the obese count the same as the entire UK population. More than a third of Chinese die from heart disease. Meals in China now contain more than twice as much oil and meats than in the 1980s, although Chinese aren’t eating more as they get richer with the average daily calorie intake dropping around 5% since 2002, pointing to more sedentary lifestyles.
Immigration and the Chinese High Net Worth Individuals: 64% of China’s high net worth individuals have emigrated or want to do so in 2013, up from 60% in 2012 according to Hurun. Three of the top five reasons Chinese are emigrating abroad are related to health including pollution, food safety and the standard of medical care.
How Eating Broccoli Can Help Your Body Cope With Air Pollution: An international study in Jiangsu province has found a tea made from boiled broccoli sprouts helps the body to more speedily eliminate some ingested air pollutants. The potion is said to taste pretty bad, cause mild stomach complaints and possibly have a high concentration of pesticides when grown locally.
Internet, Mobile & eCommerce
Alibaba’s New Filing Shows Mobile Growth, But Also Challenges: In Q1 this year, 27.4% of Taobao and Tmall’s transactions happened on mobile, up from 10.7% a year earlier. During the quarter, the number of active mobile shoppers grew from 136 million to 163 million.
These 7 US Startups Show That Your Business Can Survive in China: Whilst many of America’s Internet behemoths have been blocked or failed in China, there are some making good inroads – here’s a brief summary of seven who are, with a common theme of self-censorship.
Food & Beverage
Coffee May Not Dethrone Tea, But China Could Be the Largest Coffee Consuming Market By 2020: Although Chinese consumers drink just five cups of coffee a year on average, consumption is rising at 15% a year. At current growth rates, China is poised to become the top coffee drinking nation by the end of the decade.
China Unveils Plan to Consolidate Dairy Industry: Beijing has vowed to form ten strong domestic dairy companies by the end of 2018 which will account for more than 80% of China’s total market share.
Alibaba Promotes a Mobile Marketing System with Pepsi and Tsingtao Beer: Taobao’s mobile app has a new feature allowing consumers to scan QR codes on Pepsi and Tsingdao beer bottles to win prizes. Consumers can also use the scan feature to get product info and sales support from 300,000 online and offline merchants.
Winning Today’s Globe Hopping and Shopping Chinese Luxury Consumers: More than two thirds of Chinese tourists are under 35 years old – 25 years younger on average than American tourist. In 2012, nearly three-quarters of the traveling Chinese consumers surveyed by McKinsey bought a luxury product while abroad in the past 12 months. 95% of Chinese visitors to Louis Vuitton shops in Paris were on organized tours.
Property & Finance
Q&A: What does London’s China currency deal actually mean?: The China Construction Bank has been appointed as a renminbi clearing house in London – the first outside of Asia. European firms will be able to receive and pay China’s currency in the western time zone, allowing easier, quicker and cheaper transactions.
Chinese Property Firms’ Overseas Expansion: Chinese institutional investors’ offshore property investments in Q1 2014 rose 25% year-on-year to $2.1 billion, with investments in residential property growing by 80% according to JLL. Savills analysis suggests that Chinese consumers invested $13.5 billion in the overseas market during 2013, almost double the 2012 figure.
Weibo Lights Up with First Kick of the World Cup: Brazilian defender Marcelo became the top-trending term on Weibo after scoring an own-goal . Within 6-hours of the opening match, there had been 1.3 billion posts related to the Football World Cup on the network. CCTV’s post sparked 220,000 discussions, of which 65% of the interactions came from users aged less than 25 years and one third by women.
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 firstname.lastname@example.org or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.
If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.
Welcome to this week's skinny on China. China has long been as a cash society; large wads of red bills changed hands, counted with spectacularly fast fingers. But those Chinese who stash their savings under their mattresses are becoming less and less common.
China is waking up to cashless commerce, adopting bank cards and credit cards en masse. Last quarter, almost half [official] retail activity was with plastic, growing over 6%. It's been helped along by increasing trust in banks, lifestyle changes, convenience and new ways to pay. Alipay, the online payment platform, has taken ecommerce to the masses, and mobiles are an increasingly popular method to pay. Almost $2 billion worth of transactions were made on smartphones last year, growing 416% from 2010. With soaring smartphone adoption in China, some pundits are picking mobile commerce could account for half of Chinese retail by 2020.
Although cash is still a large part of many Chinese shopper's lives, the other methods are catching up as you'll read below. Make sure you've got your payment bases covered if you're selling to Chinese consumers. But before they pull out the cash, card or phone, you need to woo them first, which some of this week's other articles may assist. As always, we hope you find this week's skinny helpful and a joy to read!
Content Marketing Trends, Challenges and New Media Adoption by Companies in China: In the past 12 months, 60% of Chinese companies said they'd adjusted or changed their products, services or marketing strategies at least once as a result of comments or feedback from their followers on social media sites, up 10% from last year.
The Line Between Rural and Urban Consumers is Beginning to Blur: Some interesting macro stats, but we don't agree with this author of $10 Trillion Prize that there's only room for the 1st and 2nd players in the China market – there are countless examples of niches being carved out in China.
Shifting China Consumer Tastes Show in Brand Sales: KFC, the darling of adapting to China's market is losing its shine with Chinese consumers – you can't stand still in this market and need to constantly evolve with the dynamic consumers themselves.
Green Buying Behaviour: What Counts Most for Chinese Shoppers?: As the Global Carbon Project announced China's carbon dioxide pollution grew 10% in 2011 to 10 billion tons, Chinese consumers were most interested in the green aspects of an offer from a global survey. “Fair trade” (82%), “green/environmentally friendly” (81%) and “organic” (72%) mattered the most. Those aged 30-59 deemed green/environmentally friendly to be the most important.
Regeneration Consumer Study Finds Consumers Buying Less and Buying Better: Consumers in developing markets (China, India & Brazil) are twice as likely to feel a sense of responsibility to buy products that are good for environment. But the products should perform as well or better than what they're currently using (75% would buy if they did), shouldn't cost much more (70%), and should have believable claims (64%).
Payment & Banking
Bank Card Payment Seen Rising: Cash's dominance in China is fading. China's bank card usage is increasing, accounting for 46.3% of all retail for July-Sep – up 6.1% (usage in developed markets is around 70%). 800 million Chinese are picked to have a bank card by the end of 2012. 318 million credit cards have been issued.
Chinese Spending Promise Pushes ASX Debut : Chinese consumers are expected to spend 20 trillion RMB on plastic this year, up from 11.2 trillion in 2010. That's good news for a Sydney-listed, China-based provider of online and offline purchasing technology.
Chinese Consumers Remain Fiscally Conservative: MasterCard Survey : 80% of Chinese consumers still planning to save at least 26% of their income in the next 6 months.
Internet & Gadgets
8 Tips on Optimizing Your Website in China: Our view on some quick wins to ensure your website is making the most of the online opportunity in China.
Chinese E-Commerce Site Xiu.com Caught Up In Counterfeiting Scandal: Less than a month after eBay announced its new partnership with Xiu.com, Xiu has been accused of knowingly selling fake luxury goods. Further reinforcement to choose your Chinese partners wisely.
Chinese Smartphones Upset the Apple Cart: Chinese brands have taken over half of China's smartphone market this year, and they'll continue to take more of the world's largest market according to Gartner.
The Tablet Market is Growing Fast in China: China's tablet market grew 62.5% for the year with 2.6 million tablets sold in Q3 alone. Apple's iPad still dominates with 71.4% of sales.
Food & Beverage
Foreign Cheese Firms Eye Big Slice of China's Market: Chinese cheese imports have doubled in 2 years as Chinese get the cheap feeling of a westernized lifestyle. New Zealand dominates with 42% of imports.
Making Cognac Cool: Remy Martin Chases China’s Younger Drinkers: Taiwanese pop stars, dancing competitions and China's 20-something crowd: how they've booster Remy Martin's fortunes in China. Asiapac now accounts for 60% of Remy's sales globally.
Selling Mercedes-Benz in China: Mercedes' placement as a 'youth' brand is paying off in China. Association with fashion, culture, arts and high profile sporting events has seen sales grow 77% in 2010 and 59% in 2011.
Volkswagen Crowdsources Auto Design: VW is crowdsourcing in China, hoping Chinese will contribute to design in 'The People's Car Project'. So far 11 million Chinese have registered on their site with 160,000 designs submitted.
That's the skinny for the week!
If you've missed earlier news or need to learn more, there's a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.
Welcome to this week's skinny on China. Legend has it, about 1200 years ago, a goat herder in the Ethiopian Highlands noticed his animals getting frisky after eating berries from a coffee plant. Intrigued, the herder picked some fruit and took them to a nearby holy man, who wanted nothing of it, tossing the berries into a fire. But the sweet scent of the roasting coffee soon became irresistible, and the men raked up the embers, grounded and dissolved them in hot water, creating the first cup of coffee. By the 17th century, the good drink had spread up the Nile to north Africa and across to the Arabian Peninsula, before making it’s way to Europe and then much of the world. But not to China.
China has long been a steadfast nation of tea drinkers. But over the past few years that has changed with Chinese increasingly drinking coffee. Starbucks are picking China to be the 2nd largest coffee market outside of the US in two years. That’s great for the coffee industry, but it also represents a shift in Chinese attitudes towards western lifestyles and products that were not even considered a generation ago. Below you’ll find a few articles about how coffee and cafes have been adapted to appeal to Chinese tastes as well as the usual spread of news and views on how to woo more Chinese consumers.
If you have any friends or colleagues looking to grow their coffee business, tourism revenue or exporting anything to China, please lend them a helping hand and pass this newsletter onto them. After that, grab yourself a coffee and enjoy the news…
Understanding Chinese Consumers
A Letter to China, from America: How Starbucks, KFC & McDonalds represent the first step for Chinese consumers into western products and the opportunities it brings for exporters. Some good data on American exports to China.
China's Middle Class Muscles In On Luxury Class: What Chinese consumers are spending their money on these days.
Social Responsibility Could Be Key To Deeper Connections With Chinese Consumers : Will social responsibility be the key for brands to evolve in China as consumers get over their bling fixation and become a bit more sophisticated?
Food & Beverage – Coffee
Nestle to Battle Starbucks Over Chinese Portioned Coffee Market: The average Chinese consumer drinks just three cups of coffee a year, less than 1/200 of the cups the French do, but its growing 19% p.a. and Nestle hoping to tap into that.
China’s Coffee Industry is Starting to Stir: How Coffee's big boys (& girls) Starbucks and Nestle have made big bucks in China. Getting China's tea drinkers to sip coffee has many their lessons for other industries pioneering in China.
Tips for Marketing to Affluent Chinese Consumers: Great article with advice to woo the 60m Chinese travelling overseas annually, much which can be applied to other industries.
How Can Brands Use China’s Media Landscape To Their Advantage?: Some advice on tapping into the media in China to attract Chinese tourists, students, investors and shoppers.
Internet & Mobiles
Chinese Consumers Favor HTC Smartphones Less in September: Chinese mobile brands eroding the territory of some of the more established smartphone manufacturers in China – further signs that Chinese brands are becoming acceptable to Chinese consumers for certain categories.
How Luxury Brands Can Reach The Online Shopper in China: Good summary of Forrester research on online purchasing habits by Chinese consumers. An interesting outtake is that 79% of low income online consumers claim to buy some sort of luxury good on the Internet. It doesn't elaborate whether that includes fakes, however one third of online Chinese consumers are very concerned about buying fake goods online.
Chinese Shoppers Power Global Luxury Sales: Insights into the global market for luxury goods: Tourists account for 40% of luxury purchases with Chinese tourists making one-third of purchases in Europe. Overall, China accounts for 25% of the global market.
Luxury Goods to Slow as Chinese Spend Less: Carrying on from the last article, Mainland China growth on luxury goods is expected to be 18% this year – not bad until you compare it with the 30% and 35% over the past two years
Hidden European Fashion Billionaires Undressed on China: In the middle of dire economic times in their own countries, a few European fashion manufacturers are doing very well out of China's appetite for their rags.
Growing Popularity of Wealth Management Products in China: China's high savings are increasingly being invested in wealth management products – up 15.7% for the 1st half of 2012 from a year earlier, although nothing like the 123% growth in the 12 months before.
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.