Chinese Valentine’s Day Qixi fell on Monday with the usual barrage of schmaltzy ads and online deals. Yet not everyone was out spending a month’s wages on heart-themed handbags or posting romantic dinner snaps on WeChat.
There are more than 200 million singles in China, with the number of Chinese adults living alone growing 16% since 2012 to reach 77 million. By 2021, they’re set to rise to 92 million according to Euromonitor. China’s much-publicised shortage of 30 million females has been exacerbated by ‘left over’ women in urban areas whose evaluation of Mr. Right has become more rigorous, while careers are increasingly more important and eligible bachelors get distracted with gaming (although girls do find love on Honour of Kings and other games).
China’s singledom trend is being led by higher tier cities: Women in Shanghai average 30 years old when they first marry, up from 27 in 2011. They’re also twice as likely to get divorced than a decade ago. In universities – where many Chinese traditionally meet their spouse – 70% remain single, with 68% of them wishing they weren’t.
For a large share of high-spending urban millennials, Me is the new We. Brands are showing ever-more love to appeal to the valuable single demographic’s functional and emotional needs. The best-known example is Tmall’s Single’s Day but on a smaller scale, there are a host of examples brands can learn from to ensure their products and services are relevant to this lucrative segment.
Hot pot chain Haidilao offers solo diners a choice of large, cuddly soft toys to join them for dinner to help them feel less lonely. Qixi saw legendary snack brand Three Squirrels target China’s “single dogs” by crafting a promotional campaign to let their voices be heard. Japanese chain Muji has introduced smaller rice cookers, ovens and kettles aimed at Chinese singles. Food & beverage brands are increasingly offering single-serve formats for dinner and other meals and the explosive rise of food delivery has been largely driven by singles with 65% of food delivery orders on Meituan-Dianping going to unmarried folk.
Tourism is a segment that stands to benefit from having single-focused offerings for Chinese travellers. Solo travellers are much more likely to prefer sightseeing and experience local culture than groups, and safety is more important than ever. Accommodation and activities that strike a chord with this are likely to experience the greatest growth.
With China’s consumer market now the world’s most contested, brands that take a broad brush approach to appeal to everyone are likely to appeal to few. More targeted marketing to specific segments such as singles is likely to have a greater impact. Agencies such as China Skinny can assist with that.
For our readers in Southern California, the esteemed Ann Bierbower will be sharing valuable China marketing tips and insights at the Export 101 workshop in Los Angeles next Wednesday September 6 organised by the CalAsian Chamber, US Department of Commerce and DHL Express. For more information and to register, tap/click here. Go to Page 2 to see this week’s China news and highlights.
A quick Google image search for ‘dogs in China’ will return row after row of horrifying snaps that you wouldn’t show your kids. Yet the reality is quite different in most of China’s cities.
Wandering through urban Chinese streets it is hard for even the most macho of men not to find China’s pets adorable. Poodles sporting puffer jackets jostle for pavement space with pugs wearing penny loafers. China’s immaculately groomed pooches would leave many folk in Western cities for dead on the fashion stakes, representative of just how much Chinese dote on their pets.
China’s pets, numbering more than 100 million, have become the centre of one of the country’s fastest growing retail categories. Last year Chinese consumers spent ¥122 billion ($18 billion) on pets and related purchases, with spending expected to rise on average 20.5% each year between 2017 and 2020 – around double retail growth overall. It is no surprise given 99.8% are prepared to spend on their pets; 40.9% take their dogs to a beauty salon, 25% pay someone to wash their pets and 4.5% have had professional photos with them. Although the hounds have more profile, average spending on felines is even higher.
China’s pet industry has a lot of similarities to other categories. For a start, the majority of owners aren’t empty nesting oldies with a lot of time on their hands, but the urban female millennials who are driving China’s overall retail sector. Two thirds of pet owners are female and 73.2% are aged 20-35 according to Goumin.
It’s little wonder pets are pampered so much in China. 41.4% of owners are single and 23.8% are married without kids, so in many ways the bichon frises and shih tzus are the child of the house. China Skinny sees pet owners showing much of the same buyer behaviour as Chinese parents do with their precious child. Pet food is a good example, where many owners have a strong resistance to additives with natural food accounting for quarter of the market and growing at 55% a year. The need for quality sees foreign brands account for the majority of the market.
Like every category, Chinese do their research to get the best product for their furry friends. 46.9% actively search for product information, with product quality and what others say about the products being what owners care about most, ahead of price.
One recent development in the pet industry is relevant across most industries in China. An online pet food vendor in China has been successfully sued by Alibaba for selling fake Royal Canin cat food on its Taobao platform. It is the first ruling of its kind and, whilst only a spit in the sea, it will hopefully be followed by many more, possibly making counterfeiters think twice before selling fakes online. Go to Page 2 to see this week’s China news and highlights.
Chinese love property. 90% of families in the country own their home, giving China one of the highest home ownership rates in the world. The majority of Chinese investors’ portfolios are dominated by property.
Few things influence the consumer confidence like house prices in China and prices are soaring – in Shanghai they climbed 31.7% year-on-year in December 2016 for example. With house prices varying city by city, recent home purchases will have spent a lot more in cities like Beijing and Shanghai than Xi’an and Changsha, which can alter their spending on other consumer goods.
Few things polarise the disparity among Chinese cities quite like house prices, as the following infographic will illustrate…
When a Chinese consumer makes a decision – from picking a bottle of water, to choosing which country will best educate their child – the influence of KOLs (Key Opinion Leaders) can be dramatic. A feature of Chinese thought since the days of Chairman Mao, the KOL economy is set to boom; 2016’s value of ¥53 billion ($7.8 billion) is estimated to near double to ¥102 billion ($15.1 billion) next year. To bring some perspective, that is three times the forecasted value of China’s newspaper and magazine advertising in 2018.
Chinese consumers are well aware that influencers are rewarded for endorsing brands (in addition to ‘tips’ from fans). Despite this, their social media broadcasts have become some of the most authoritative and trusted sources for information.
One of the reasons for this can be traced back to 2011 when two of China’s new fast trains crashed, killing 40 people. While state media attempted to cover it up, consumers posted about it as it happened on Weibo, which was the primary social channel at the time. This had two notable consequences: 1. Chinese began to trust what they read from reliable sources on social media much more than traditional state-run media channels like TV, radio and print; and 2. Beijing, having already lost a lot of face from the Weibo reports of the train crash and subsequent citizen exposés and protests, saw the need to wrestle back influence from the people.
In 2013 legislation was passed threatening jail to those who created viral social posts that weren’t aligned with the Government mandate. This fundamentally altered the way influential Chinese posted on social media. With several celebrity social media accounts shut down in recent weeks, Beijing continues to tighten control on what KOLs actually say. In short, any KOL who doesn’t toe the party line will be shut down and in most cases, lose their livelihood.
The reality of operating in China on any scale, whether you are a celebrity, brand, or any type of business, you need to play by Beijing’s rules. Notwithstanding, although some would say KOLs are increasingly becoming state cheerleaders, their attraction certainly isn’t waning.
40% of food & beverage advertising in China is fronted by a KOL, versus around 10% in the US and UK. Luxury brands are among the most prevalent users of KOLs with watchmaker Jaeger-LeCoultre paying Papi Jiang over ¥5 million ($740K) for a campaign which saw their awareness more than double. Michael Kors threw a birthday party for actress Yang Mi. Brands are also using lesser known individuals, but who are well respected in their fields to appeal to an increasingly discerning Chinese consumer who are looking deeper into KOL endorsements. An example of this is Giorgio Armani supporting Chinese designer Xuzhi Chen.
KOLs can help break through the extraordinary clutter in China and amplify messages at a time when just 28% of 12-14 million official WeChat accounts saw an increase in content readership last year. But much like WeChat, a relevant and smart KOL strategy is imperative to ensure brands aren’t throwing good money after bad. Agencies such as China Skinny can help devising such a strategy.
On the subject of marketing strategies for China, our US-based readers in the Bay Area should consider attending the Export 101 Series on Thursday July 20 in San Jose. China Skinny’s Ann Bierbower will be sharing wisdom, joining the US Department of Commerce, DHL Express and the CalAsian Chamber at the event. Register here. Go to Page 2 to see this week’s China news and highlights.
Last week Alibaba hosted their first conference outside of China – Gateway 17 in Detroit. China Skinny was there.
Jack Ma has long had a personal dream of cracking the US and with plenty of cash in the coffers, Alibaba was out to dazzle the audience. Jack Ma was joined by Martha Stewart, Lisa Ling, Charlie Rose and robots, backed up with an arsenal of big statistics and some sage advice to entice more American businesses to export to China.
The focus of Gateway 17 was to sell the Alibaba dream, yet exporters would be wise to consider the multitude of other options when planning a market entry into China. For big brands, a presence on Alibaba is an essential hygiene factor for both sales and marketing. Marketing on Alibaba’s platforms is becoming more powerful with new tools such as the Uni Marketing system offering features such as personalised and targeted communications.
Whilst there are great success stories on Tmall and Tmall Global, the platforms aren’t right for every brand. It is not cheap to set up and operate, and new stores are competing with over 10 million other vendors who are often well established. Smaller brands may also have difficulty being accepted by Alibaba.
Alibaba has a finely tuned sales machine attracting foreign brands to its platforms. It has set up offices across North America, Europe and Australasia, has shiny campus tours for visiting delegations and now hosts overseas events to woo Western brands to its cross border channels. Yet with all the good news stories, there are some cautionary factors. For example, Tmall Global’s sales drive saw the number of brands selling on the platform grow 169% last year, with sales growing just 30% – a similar rate to ecommerce overall. In short, there are many more foreign brands competing for a smaller piece of pie.
Cross border commerce is also much more fragmented than Mainland based commerce. Alibaba commands around 80% of overall ecommerce sales in China and 57% of B2C commerce. Whereas Tmall Global accounts for just 18.9% of the cross border market and Taobao Global 15.4%.
There are a host of smaller cross border platforms that are often more targeted to specific segments such as food, wine, cosmetics, mum & baby, health and fashion. They may only have 10 or 20 million shoppers, but they are generally qualified for your segment, often more affluent, and the competition is less fierce.
Alibaba is China’s most popular ecommerce platform and a great option for many brands, however China is a large market with a number of online and offline sales channels, so take some time to consider them. Agencies like China Skinny can help you work through your options. Go to Page 2 to see this week’s China news and highlights.
If “The Belt and Road” still sounds unfamiliar, it won’t be for long. A colossal trade network is currently taking shape, weaving through continents with China at its core powering the expansion. Officially denoted the Silk Road Economic Belt and the 21st Century Maritime Silk Road, this project’s ambition is unparalleled. Xi Jinping’s pet legacy project aims to revitalize the trade routes which formerly shrouded the country in glory.
$100 billion worth of deals with 61 countries have already been inked, with a further $4-$8 trillion expected to be invested over the project’s unspecified lifetime. The development strategy signifies immense investment into infrastructure. Whether it be rail, port or road, capabilities are surging to connect and heighten cooperation between China, Asia, Europe, East Africa and Oceania.
For many recipients of this investment, new infrastructure will increase both China and global trade. Greater wealth will flow to these countries and the global economy will boost as a result. We’re already starting to see an improved flow of goods across Eurasia; trains now link 12 European cities to 16 Chinese cities, creating trade connections that are far faster than ship, and much cheaper than air. Rail freight leaving London can be in Beijing 18 days later. Even then there are still train swaps along the way due to different track gauges, leaving room for greater expediency.
However the project has not been all smooth sailing with some trade routes passing through volatile regions. Notably, investment and cooperation hasn’t always been welcomed either. Last month Australia rejected a deal to align a $5 billion AUD state infrastructure fund with China’s Belt and Road initiative over fears it could damage relations with the US and induce a domestic political backlash to growing Chinese clout.
As an integral trading partner for many regions and the biggest export market for 43 countries (including Australia) China has much to gain from these initiatives. Reliance breeds compliance and The Belt and Road will only make more countries reliant on China for trade.
We are increasingly seeing the entanglement of China’s growing trade and its political goals. K-Pop celebs, Korean cosmetic brands and workers at Hyundai have seen their sales in China halve surely must be weighing the benefits of the THAAD defence installation. The Japanese saw the geopolitical effects on trade in 2012 and we may even see it with Trump, although the meeting with Xi Jinping in Florida over the weekend may have tempered that somewhat. One of the few concrete notions stemming from the ‘Citrus Summit’, a 100-day plan was agreed upon to help lessen the widening US trade deficit with China.
It will be a long time, if ever, before China holds the soft power that the US does. Hollywood, music and sport fuel powerful influence over ideals and brand preferences. And yet unlike superpowers before them, China hasn’t implemented its rule through war – a tough feat in today’s interconnected world. Their near unfathomable trajectory to the top of the world stage stems from the much more passive, yet equally as powerful approach of becoming the integral cog of global trade. The resulting effect has seen countries quick to appease China, from dropping their territorial disputes to avoiding hosting the Dalai Lama.
Love it or hate it there is no denying China’s influence in the world will only grow, especially in the wake of The Belt and Road initiatives. The ability of brands exporting to China to alter this is minimal, yet it is a good idea to be aware and plan for situations where it may influence trade issues in your country. Go to Page 2 to see this week’s China news and highlights.
With over a month since inauguration day, we can all agree that the Donald Trump administration has been anything but routine. Although threats of tariffs and the ensuing trade war remain unrealised, the ripples of Trump’s tumultuous tenure have reached Chinese shores. As history tells us, when fluctuations in Chinese consumer sentiment materialise, the resultant effect on trade can be “yuge”.
Chinese consumers’ sensitivity to geopolitical issues cannot be understated. In the wake of the Diaoyu Islands dispute in September 2012 Japanese brands felt the full force of this phenomenon. Japan’s top three auto companies saw their sales plummet 35%-49% y.o.y. in a market that was growing overall. South Korea is currently dealing with a similar backlash. With news of the THAAD missile deployment reverberating throughout China, state media has called for a boycott of South Korean goods, with Lotte hit particularly hard.
America’s soft power has long been its greatest asset for many of its exporters, so China Skinny teamed up with Findoout in a joint study to quantify how this has been impacted by Trump after his first month as President. The survey of 2,000 consumers across China found that 41.2% of Chinese had a more negative view of America than before he was president with 8.1% more positive and 50.7% neutral.
The categories most negatively impacted were investing in U.S. property and stocks, travelling to America, and studying there, with a net 17.7%, 13.9% and 10.0% of consumers respectively. Whilst the U.S. education industry benefitted from the 329,000 Chinese students who studied in America last academic year, and the travel industry from the 3 million Chinese tourists, countless other exporters benefitted from food to fashion to Fords. Many Chinese students and visitors develop an affinity with US brands; sharing them on social media, giving them as gifts, promoting them through the daigou trade and buying them after returning to the Mainland. It’s in America’s interest to ensure they hold favour with Chinese students and tourists.
Nevertheless, Trump hasn’t been all bad news for American exporters. Of the 15 categories we evaluated, Chinese were more positive about four of them: movies (11.8%), music (5.4%), media (3.5%) and sport (1.5%). It appears Trump has piqued curiosity among Chinese consumers and increased interest in American culture overall.
In an obscure way, this could help American brands who understand these motivations and can tailor their marketing mix to them. Hyatt did great job of tapping into Chinese consumers’ interest in Hollywood. Utilising commercial breaks during the Oscars they launched their 12-month campaign all-the-while cleverly highlighting that they don’t agree with some of Trump’s policies – hence the theme song, “What the world needs now is love”. China is a main focus of the campaign. Agencies such as China Skinny can ensure that you understand and appeal to Chinese consumers too. Go to Page 2 to see this week’s China news and highlights.
Happy Year of the Rooster. Welcome back from what was a consumption-driven Lunar New Year break with spending up 48.1% from last year.
Much of the crowing leading into the Rooster was about China taking the lead in driving global trade as other major economies speak of regressive trade policies.
“Pursuing protectionism is just like locking oneself in a dark room. Wind and rain might be kept outside but so are light and air,” noted Xi Jinping at Davos. Whilst President Xi’s speech and much of the subsequent media commentary is cheerleading China’s stance on trade, it should be tempered with some facts and developments illustrating that China may be coming to the party, but the punch could still do with more fruit.
While the much-heralded Free Trade Agreements can be a boon for exporters, many non-tariff measures such as regulatory barriers, inconsistent application of import rules between different ports, and lengthy, uncertain processes to register products and export facilities still throttle trade. Exporters also commonly get caught up in political differences, as South Korean brands recently discovered. Regulations often favour local players. Take the cosmetics industry for example – foreign brands have to test on animals to sell in China, while local brands don’t. The all-present state media propaganda also regularly advantages domestic companies.
One of the more curious recent developments was last month’s announcement that China would be making it even harder to use a VPN to access websites outside the Great Firewall. China has its reasons for its Internet policies, but its timing around President Xi’s Davos address was interesting. As Jack Ma will profess, few things assist international trade more than unobstructed Internet access.
One category that is likely to see less trade is residential property investments overseas. New policies aimed at slowing China’s capital flight appear to be taking effect – in the short term at least – much to the relief of first home buyers in cities like Vancouver, Los Angeles, London, Sydney, Melbourne and Auckland.
Nevertheless, Chinese trade has come forward in leaps and bounds since opening up in 1979 and is generally moving in the right direction. Countless foreign brands from wagons to wine have enjoyed its benefits. With the number of Chinese earning more than $35,000 a year set to quadruple over the next decade, many more brands are likely to benefit too, particularly those who understand their target market and the tools available to reach them. Agencies like China Skinny can assist with that. Go to Page 2 to see this week’s China news and highlights.
Online shopping in China is immense. If you were unaware of that, there’s a good chance that your thoughts of China conjure scenes of Mao-suited men emotionlessly sorting screws in a crowded assembly line.
To get an appreciation of the scale of ecommerce in China, we only need to look at the 9.9 billion cardboard boxes and 8.3 billion plastic sleeves packing online purchases in 2015. To keep those boxes intact, over 12 metres of adhesive tape was used for every woman, man and child in China – almost 17 billion metres of it – enough to tape up the equator 425 times.
If you’re still not impressed, try honing in on one day in particular – November 11. Over 3% of the value of products sold on Alibaba’s retail platforms last year were concentrated into that 24 hour period.
Singles’ Day, Double-11 or 11-11 is the lion in China’s online jungle – a lion that keeps growing bigger and roaring loader. Last year, many predicted the world’s biggest online shopping day had reached saturation point, with previous mouth-watering growth rates too high to be sustained. Alibaba proved them wrong, transacting sales of $14.3 billion over the day – 55% more than 2014.
Alibaba’s secret sauce has been to continue to make their big day more innovative and exciting than the last, keeping it engaging for a Chinese population who tend to bore quickly. Last year they created a carnival atmosphere much akin to the Lunar New Year Festival, reaching an even wider audience through a TV gala preceding the shopping festival. Celebrities such as Daniel Craig (of James Bond fame) and a host of local stars drew 100 million viewers to their TVs.
This year’s gala makes last year’s look blah. As the strike of midnight inches closer, who better than Katy Perry, China’s favourite basketballer Kobe Bryant, US pop-rock band OneRepublic, and other sports stars, musicians and actors to power a four-hour gala counting down to November 11. It will be put together by Hollywood producer David Hill, known for his work on the Oscars, NFL Super Bowls and American Idol. The international line up of stars stays true to previous Singles’ Day’s global focus, with an expected 40,000 international merchants participating this year.
Yet the TV/streaming extravaganza goes far beyond a few stars on the tube. There’ll be interactive spots encouraging the audience shake their phones to win prizes, and a “choose your own adventure” feature where viewers can vote to decide how some segments of the gala play out.
Pokemon Go-inspired augmented reality will encourage consumers to chase Tmall’s cat mascot around online and offline environments to win prizes from merchants such as Shanghai Disneyland and Starbucks. 150,000 VR headsets have been available for ¥0.01 (well under 1 cent) each to allow virtual shopping in stores. 60,000 real-life retailers are integrating an o2o shopping experience in stores such as Uniqlo, Gap and Alibaba’s own Suning and Intime. Interestingly, that’s just a third of the 180,000 who participated last year.
So will Singles’ Day ’16 be even bigger than last year? We think there’s no doubt – but with a small footnote. Although sales could soar into the twenties-of-billions-of-dollars, it is a bit of a stretch to claim the sales are all happening over a 24-hour period as consumers have been able to ‘reserve’ products since October 21. Clothing and accessories bought at the interactive “See Now Buy Now” live streamed fashion show as part of the Shanghai Fashion Festival on October 23 will also feed into the Singles’ Day figures. Regardless, it is bringing a new level of excitement to online shopping.
Talking about Alibaba being the Amazon and eBay of China is like that naïve vision of Mao suits and screw sorters. The way Alibaba has transformed online shopping and the hubbub that follows is representative of just how far China has come.
For brands participating in Singles’ Day, it can cost a lot without any real results. But done well, it can reach a legion of new customers who could be with you for years. China Skinny can assist with that. For those participating in the Singles’ Day festivities, we hope you enjoy the show and find yourself some good deals! Go to Page 2 to see this week’s China news and highlights.
The average consumer in Shanghai is bombarded with 3-4 times more advertising than consumers in most Western countries. With so much noise, it can be difficult for even the most established brands to be noticed.
If the competition and clutter hasn’t made it hard enough already, keeping up with constantly evolving marketing channels and understanding how to best utilise them also adds to the pickle.
WeChat is a good example. Many brands know that it is a powerful marketing tool, but many only use a small portion of its capabilities. WPP’s China CEO Bessie Lee recently summed up some of the challenges foreign brands face. She noted that “when more and more Chinese brands are using WeChat as a distribution platform to sell products, most multinational companies are just using the messaging app as a content-marketing tool.”
In addition to the limited awareness of the marketing opportunities, some foreign brands rigidly stick to marketing mandates and mindsets from their home markets. These directives rarely work and often aren’t even relevant in China’s unique marketing environment.
Some of the most rewarding things about working in China’s market are the exciting, world-leading innovations constantly launching. There are the well known channels, such as WeChat taking social media to a whole new level and China’s o2o leadership. Yet there are also many new marketing channels that are currently underutilised and not optimised to target markets’ needs.
One of the most exciting new marketing platforms we’ve seen at China Skinny is Tmall Live – Alibaba’s innovative take on the popular TV shopping, which is likely to help it wrestle back some social commerce from their WeChat foe. We recently worked with Comvita and their Chinese distributor to deliver an engaging Tmall Live campaign to build brand awareness, engagement and education around the usage and benefits of their products. Here’s more info about it.
Next week marks the long-anticipated October Golden Week holiday, which will see the China Skinny HQ closed for the break. There will be no newsletter next Wednesday, but we’ll be back on 12 October. For our China-based readers, have a great break – we hope you are doing something nice and find somewhere that isn’t too crowded! Go to Page 2 to see this week’s China news and highlights.
Online-to-Offline (O2O) is one of the most used buzzwords in China today, and with good reason. In most Western markets, O2O refers to ‘click-and-collect’ items – goods bought online and picked up at a brick & mortar store. Whilst retailers such as Ikea and Walmart are dabbling with it in China, cheap delivery and low car ownership means that click-and-collect hasn’t taken off here like other countries. Nevertheless, China is leading the world in O2O adoption.
Physical and digital objects are far more intertwined in the Middle Kingdom than in the West. This leads to a much broader definition of O2O, including services that are ordered online and delivered in the physical world. O2O covers everything from ride sharing and travel to in-home massage and dry cleaning pickup. The value of China’s O2O ecommerce sales is picked to grow from $335 million in 2015 to $626 million in 2018 according to iResearch.
Although most O2O forecasts are based on ‘Online-to-Offline’, ‘Offline-to-Online’ is equally important, particularly for marketers. Chinese consumers are increasingly interacting with brands online, with 72% online throughout the day according to Epsilon. However, 40% of consumers prefer to interact with a brand in a store – making it the most popular channel and one of the most effective touch points to connect online to build a sustainable and engaging relationship. Stores that integrate online channels backed up with great service, can take advantage of the 63% of consumers who follow brands on WeChat after a good experience.
Shopping centre operator Intime is one retailer starting to tap into O2O opportunities to drive foot traffic and sales to its stores, growing revenue at a time when offline sales at China’s top-50 retailers declined 3.1%.
Although most Chinese consumers use O2O services, it is the all-important females who are embracing it like no one else; 73% of women have used O2O restaurant and dining/food delivery services in the past 12-months versus 49% of men. Females are also 38% more likely to have used O2O travel services than males.
China’s leadership in the O2O space can be attributed to factors such as high smartphone usage, an eagerness for new technology including online payment platforms AliPay and WeChat Pay, QR code adoption, cashed-up tech startups constantly offering deals to win market share, convenience for busy urbanites, and Government policy encouraging Chinese innovation and leadership in the area. Having an understanding of Chinese consumers’ rational and emotional drivers means that O2O services can be best integrated into channel initiatives to ensure the greatest chance of success. China Skinny can assist with that. Go to Page 2 to see this week’s China news and highlights.
We often talk about China’s Millennials as the most important consumer group in the world, and the impetus behind China’s consumption-driven growth. Yet, there is a subsection of those Millennials who drive more than half of sales, and an even greater share of foreign products and services: women.
Chinese women assume the role of CFO in most households and have the ultimate say for most purchases.
Although Chinese women do 2.5 times more unpaid care work than men do, China’s one-child families and culture of grandparents caring for children means Chinese women’s careers are usually less impacted by childbearing than they are in other countries.
Chinese women account for 41% of China’s GDP, the highest portion of any region in the world according to McKinsey. They hold a higher percentage of senior management positions than American and European females. Their contribution to household income has jumped from 20% when China opened up in 1979 to 50% in 2013. Although they are under-represented in Beijing’s highest ranks, they are finding success at the highest level in business, with eight of the top-10 richest self made women globally hailing from China. And they have contributed significantly more than men to China’s trophy cabinets for international sports in everything from tennis to football and even rugby.
Females are the primary decision makers in categories where imported brands are traditionally stronger, such as premium food and beverage, health, baby products and luxury goods and services. Two-thirds of Chinese cross-border shoppers on Tmall Global are women. Some have estimated that women travellers accounted for as much as 64% of China’s international tourists in the first half of last year. Even Chinese ladies who drink beer consume a proportionately higher amount of foreign brands than their male counterparts.
Yet, not all of China’s statistics about females are so positive. Last week, Rebecca Kanthor wrote an interesting piece exploring feminism in China, profiling six women and how old habits die hard, particularly in China’s rural and elderly generations.
Like any consumer segment in China, understanding China’s female consumers, where they have come from and their aspirations, will mean the greatest likelihood of resonating with them on their purchase journey. China Skinny can assist with that. Go to Page 2 to see this week’s China news and highlights.
Last week, WeChat’s owner Tencent agreed to pay $8.6 billion to gain control of Finnish mobile games maker Supercel. This was less than two weeks after the game-to-movie adaption Warcraft stormed the Chinese box office with a record-breaking $156 million in just five days – more than Star Wars: The Force Awakens total haul of $125.4 million in China.
Tencent had also invested in the Warcraft. Following the Supercel purchase, we are likely to see the company backing more film adaptions of games and the corresponding Marvel-type merchandise, theme parks and everything else they can make a buck on.
Chinese love gaming; Tencent alone made $9 billion in gaming revenue last year. Chinese gamers account for more than half of the 5 million World of Warcraft players globally. You’ve got a winning formula when you can couple that with China’s growing affection for cinema, which soared around 50% last year and is expected to be the biggest market globally by 2017. 15 new cinemas open a day in China providing more and more consumers with an accessible and affordable experience.
What is interesting about the Warcraft in China, is that it bombed in the US, earning just $24.4 million on opening weekend, and receiving a rating of just 4.2/10 on Rotten Tomatoes. It is another sign that success in the US is becoming less crucial for the overall triumph of blockbusters worldwide.
The increasing importance of wooing Chinese cinema-goers is already changing the face of film, but this is just the beginning. Tencent, like Alibaba, is scrambling to invest billions in the entertainment and film industries.
With China’s middle classes being so active online, its big Internet companies have immeasurable insights into consumer preferences. Take Tencent, they have an enormous bank of user insights – of Chinese likes and dislikes, just from WeChat Moments, messages and games. This is likely to factor into themes and paraphernalia for film and game development. Alibaba’s customers’ ecommerce, Youku and other preferences will also help shape the direction of movies.
What does that mean for brands? It should reemphasise the popularity of gaming with Chinese consumers, and urge brands to incorporate this into marketing initiatives where relevant. There are also increasing opportunities with film associations and product placements. On a deeper level, it is likely that companies like Tencent and Alibaba will increasingly integrate their gaming and movie assets into their platforms such as WeChat and Tmall, allowing a new suite of targeted and engaging marketing opportunities on digital channels. Stay tuned! Go to Page 2 to see this week’s China news and highlights.
2015 was a good year to be an aspiring billionaire in China. It was when the country added 90 new tycoons, passing the USA to top the billionaire count at 568. It was also the year Beijing pipped New York to become the billionaire capital of the world, and the first city to ever house 100 billionaires. Greater China now accounts for half of the world’s top-10 cities that billionaires call home, with 10 of the top-15 being in Asia.
While Beijing’s fat cats are gleefully backstroking through their cauldrons of cash, the good news may be tarnished by the results of a recent Duke University-led study into the effects of Beijing’s pollution.
It’s well-known that China’s pollution has devastating effects on the rates of asthma and other respiratory diseases and, more horrifyingly, cancer. The World Health Organisation went as far as declaring air pollution as carcinogenic in 2013. But it seems the tentacles of China’s pollution span much further.
The Duke study found that rats exposed to Beijing’s polluted air, gained more weight than rats breathing the good clean stuff. Levels of cholesterol increased, as did triglycerides – a type of fat found in blood that raises the risk coronary artery disease when at high levels. Even the likelihood of developing Type 2 diabetes was higher.
Add increasingly sedentary lifestyles to China’s pollution, stir in a pinch of stressful urban living and more processed food, and it should come as no surprise that Chinese health rates are worsening and obesity rates are climbing. It’s also no revelation that consumption of healthy food and beverage is soaring in China, Western medicine sales grew 12.3% last year, bumper demand for vitamins and supplements has been a boon for businesses such as Blackmores, whose stock price rose more than 600% last year, and China’s sportswear market is poised to surpass the domestic luxury market by 2020.
One of the few things that we can be certain about China in the years ahead, is that demand for health-related products and services are only going to increase, providing numerous opportunities for brands who understand and engage Chinese consumers. China Skinny can assist with that.
For our Shanghai-based readers, next Thursday evening 10 March, China Skinny’s Mark Tanner will be discussing the opportunities, challenges and new features of WeChat to reach Chinese consumers, sharing some realistic and actionable advice. Click here for more information. Go to Page 2 to see this week’s China news and highlights.
As recently as 2012, most Chinese consumers considered international labels categorically better than local alternatives. KFC was a good example: although consumers knew deep-fried drumsticks weren’t a super-food, they were from an American company so must be safer, and therefore healthier, than Chinese options that could be cooked in gutter oil, with additives like melamine. That perception helped fuel more than two new KFC restaurant openings a day in China that year.
Things took a turn in late 2012 when state media accused a KFC supplier of pumping toxic chemicals into chicken. Subsequent scandals such as meat on the floor and altered expiry dates have shown Chinese consumers that even foreign brands with local supply chains can’t be completely trusted.
This has seen the monumental rise of unadulterated imported food into China. It’s why Carrefour just opened their biggest supermarket in Asia in Beijing, with a strong focus on imported food. It’s why the big ecommerce platforms are putting so much effort behind promoting imported food and cross border commerce, and a large reason why Alibaba just opened offices in France and Germany.
Yet, just as Chinese consumers won’t blindly purchase a foreign brand with supply chains in China, they won’t indiscriminately purchase products just because they appear to be imported. In 2013, a CCTV journalist travelled to New Zealand to find the source of a so-called New Zealand baby formula brand. The address on the can turned out to be a panel beater’s yard in Auckland whose staff had never heard of the dairy company. The exposé further fuelled Chinese consumers’ lack of trust and reinforced their need to do extensive research before making a purchase.
In a related event on Single’s Day this year, Weidendorf milk made headlines for selling out of 250,000 cases within 24 hours. The celebrations were short lived when local media and social networks were ablaze with reports that Weidendorf was not a German brand, and unavailable in German shops. The brand was in fact, owned by a Shanghai company. It turned out that the local company sourced the raw material, manufactured and packaged in Germany, apparently to EU standards, yet many Chinese consumers were still enraged about being misled and didn’t consider it truly German milk.
With more than 600 million Chinese now armed with a smartphone at all times, it is easy for them to do a background check on a brand, and most do. There are typically more than ten online and offline touch points on a Chinese consumer’s journey before they make a purchase, so deception doesn’t go unnoticed for long, and will spread like wildfire on social media. Consumers need more than just a foreign flag or pretty foreign scene on packaging to be convinced of its authenticity. China Skinny can assist with that. Go to Page 2 to see this week’s China news and highlights.