China Skinny attended the debut of ITB China, the latest B2B trade show specifically for the Chinese Travel Market. Growing on the success of the travel industry’s largest trade show ITB Berlin as well as ITB Singapore, ITB China looked to service growing demand for the world’s most important tourism market with its inaugural year in Shanghai. Below are our takeaways among the Chinese travel market.
Strength of Europe
With the inaugural year celebrating Europe as the first partner destination of ITB China, European presence at the event was strong. Approximately 40% of the exhibitors were from Europe, 10% from the Middle East and 10% from the Americas. Germany, Austria, Portugal, Turkey and Ukraine were among participants that were not only marketing their country but also the unique regions within each. This reflects the move towards Chinese travellers going further afield than the regular hot spots. These efforts are likely to support the EU-China Tourism Year in 2018, which is expected to bring more focus and Chinese visitors to various destinations throughout Europe.
Finland made a good showing, with the Finnish participants celebrating 100 years of independence. Attendees were suggested to “Party like a Finn” at the evening affair organized by Visit Finland, Finavia, and Finnair. And no Finnish party is complete without Old St. Nick in the house which provided the all important opportunity for attendees to take selfies and spread the word on China’s social networks.
Middle Eastern Might
Europe wasn’t the only locale making their destinations known. The presence among Middle Eastern countries reflects the efforts by specific countries and the growing interest of the destination among Chinese tourists. In 2016 Abu Dhabi received over 226,000 Chinese travellers and have plans to attract 600,000 by 2021, a 265% increase. Dubai received 83% more Chinese tourists in 2016 compared to 2015 as they started allowing visa on arrival for Chinese tourists in late 2016.
A Small Presence from the Americas
The Americas presence was smaller than expected, but had reps from places such as Los Angeles, Las Vegas, Georgia, Bolivia, the Dominican Republic and Argentina present. The small presence among U.S. destinations was surprising as the U.S. saw a record number of 2.6 million Chinese visitors in 2015 according to China’s National Tourism Administration.
Along with Las Vegas and L.A., a surprising discovery was the Myrtle Beach contingent, who is looking to attract and accommodate Chinese travellers with tailored itineraries for both FITs and groups.
Clever B2B Activation
A notable aspect was the increased efforts to attract and engage buyers and attendees at the show. Typically trade fairs exhibitors pay a few bucks to minions to translate materials and represent the brand to Chinese speakers. These representatives typically lack the knowledge and skills to fully display a company’s offering. In the past it would be common to approach an exhibitor and receive little more than a name card and brochure. This did happen but not as often. Exhibitors at ITB China were more engaged and interactive, with several using VR in their displays. Notably WeChat was seamlessly incorporated into a handful of brands’ presence with lucky draws and free picture printing. This can be a highly effective engagement strategy, as 83% of WeChat users use the app for work.
It is great to see how destinations are positioning themselves for the Chinese travel market and their initiatives to attract the number of Chinese tourists. Chinese travellers have more options than ever with many new flight connections launched monthly and over 60 regions and countries offering visa-free travel for Chinese. Whilst many travellers are still relatively unsophisticated they are increasingly going further, taking more trips and exhibiting much more sophisticated traits. Like much else, the Chinese travel market is competitive and only going to get more so. With the right branding and approach destinations big and small can participate. Get in touch if China Skinny can assist you in understanding and reaching Chinese travellers.
A cute little penguin with a scarf, a curious pussycat and a floppy-eared pooch. Not the beginnings of a children’s story but the iconic logos of three gargantuan powerhouses in the Chinese market. A brief survey of China’s top brands and the gulf in branding ideology from the West is clear. Where some may argue for Apple, the realm of cutesy logos remains confined to the Middle Kingdom.
With China’s rising horde of shoppers spending increasingly at home and abroad, it is best not to underestimate the contribution that China funnels to a brand’s value. Baijiu exemplifies this. Barely consumed outside of China, 37.5% of the world’s top-50 spirits brands are Baijiu brands. For the first time the value of Baijiu brands eclipsed that of Whiskey on the list.
Of course building a successful brand goes beyond mere words and symbols. Yet the name and logo make up the company flag that flies atop the mast, forever present across a brand’s dealings and communications – so its success is imperative. Having a Chinese brand name is crucial. For those foreign business yet to lock one in, there’s a good chance your distributor/s have adopted one, probably trademarked it and are trying to establish it as the accepted reference point. If they haven’t trademarked it, someone else may have, which can lead to all sorts of problems down the line.
Chinese brand names will generally roll off the tongue more naturally than foreign ones and be easier to share on social media and other digital platforms. Whilst it shouldn’t replace your recognisable foreign brand and in most cases not be displayed on the original packaging (otherwise consumers will question if your products are authentically foreign) it should be used on the Chinese label and in communications.
With its plethora of characters Chinese is a beautiful language presenting plenty of opportunities to develop a name with a clever meaning that resonates with Chinese consumers. However it can also go pear-shaped if taken out of context. AirBnB learned of the importance of getting your Chinese name right last month, launching a name that was both hard to pronounce and sounded like a love shop.
As part of developing a Chinese name, brands should be tested with consumers, ideally verbally as well as written, across different regions to account for cultural, slang and dialect differences. Agencies like China Skinny can assist with every step of the process. Go to Page 2 to see this week’s China news and highlights.
Every day this year, an average of more than 120,000 new Chinese consumers signed up to the Internet. Most of them on their smartphones, and many of them using it to run a big part of their lives.
Growth in internet users coupled with an evermore online savvy population has contributed to an impressive rise of Chinese who are active online. In the past year, 18% more consumers shopped on Alibaba platforms, 65% more bought on JD and Weibo’s active social media users surged by 36%. Yet the most interesting growth story is the convergence of commerce and social media on WeChat.
Although WeChat sales are small relative to traditional ecommerce channels, its growth potential is enormous. Every official and personal account has the ability to sell to their followers and friends. This has prompted tens of millions of enterprising WeChat users to try and pry a few bucks out of their WeChat networks – a subtle version of Amway if you like.
There are now more than five times more stores on WeChat than there are on Taobao, Tmall and JD combined. Although individuals make up the majority of stores, brands such as Dior – who don’t even have their own ecommerce store yet – are dipping their toes into social commerce. WeChat’s all-in-one nature is creating a whole new level of commerce-related sharing opportunities that is unrivalled globally.
On top of trading products on WeChat, app usage rates for services such as ride sharing, food delivery, cinema, massage booking and health, to name a few, are among the highest globally.
The phenomenal uptake and usage rates of smartphone commerce has been driven by massive sweeteners – for example Meituan Dianping was estimated to have provided ¥58 billion ($9 billion) worth of discounts and subsidies for restaurants and movies in 2015. Such incentives have been enabled by countless sums of investment cash utilised to grow users, often with little regard for profits. Last year over $20 billion dollars was invested in Chinese internet businesses – quadruple that of 2012.
A result of the investments are some significant mergers and consolidations, including ride hailing apps Didi-Kuaidi-Uber, group buying and food apps Meituan-Dianping, classified ads Ganji-58.com and online travel Ctrip-Qunar. The mergers have created virtual monopolies and, by proxy, less incentives to subsidise and discount. The most recent example is the Didi-Uber merger which has seen a typical ride that cost ¥8 in May, now costing ¥13.
Fewer subsidies may slightly slow down the adoption rate of many apps, but Chinese consumers will continue their deeply-embedded habits of using smartphone apps in most facets of life. Brands should factor this into their marketing strategies and creative tactics as a powerful way to engage Chinese consumers. 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.
The act of shopping has spread across different countries in unique ways, and each market has adopted its own local habits, trends, influences and behaviours. China is a country where shopping plays a huge role in daily life, as consumers regard shopping a higher priority in their lives compared to other markets. The graphic below illustrates to what extent shopping shapes Chinese’ lifestyles.
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.
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.
It’s easy to spot grim news about China with a quick scan of the headlines these days. News of plummeting stocks, slowing GDP and sales growth could be interpreted as the end of China’s golden run.
However, there’s been plenty of headlines to smile about in the past week or so. Last Wednesday, Westpac Bank announced the results from their latest monthly consumer sentiment index, which closely monitors consumer confidence in the Mainland. July’s survey was taken at the height of the stock market turmoil, but found consumer confidence was actually 1.9% higher than the previous month. The results reflect just how disconnected China’s stock markets are to the average consumer on Main Street China, who still have plenty of wind in their sails.
Similarly, Nielsen’s Consumer Confidence Index for the second quarter found Chinese consumer’s desire to spend was increasing, with China’s massive consumer base rating the seventh most confident globally.
One of the more interesting pieces of news, was that LVMH sales to Chinese consumers increased 10% globally in the first half of 2015, amid all of the ‘doom and gloom’ of China’s luxury sector downturn. Of particular note was that sales of its iconic ‘monogram’ items – often reported being shunned for being too flashy – were “strong.”
China is a challenging market, but it is also abound with opportunities. It’s where there is a large – and growing – affluent demographic who are prepared to drop $11/litre for safe milk and almost $450/kg for Wagyu Beef at the supermarket. It’s where new opportunities arise every day, such as the anticipated rise in skiing, snow fashion, accessories and mountain culture, as the Government actively promotes winter sports after being awarded the Winter Olympics in 2022. It’s also where brands who adapt their positioning to the constantly changing market, such as BMW, are likely to come out on top. China Skinny can assist with that. We hope you enjoy this week’s Skinny.
Most Chinese Consumers ‘Laughed Off’ Stock Rout: McKay: 6 minute vid: Westpac’s latest consumer sentiment survey taken at the height of the stock market turmoil found consumer confidence rose 1.9% from a month earlier. The results indicate how little impact stock prices have on most mainstream consumers, unlike the housing market which is the key investment most Chinese have.
Global Consumer Sentiment Is Souring, Except Where You’d Expect: China and Europe are two regions showing improving consumer sentiment according to Nielsen’s global survey. Chinese consumers’ desire to spend is growing, especially in the lower-tier cities and in the rural parts of the country, with the seventh highest willingness to spend of the 60 countries surveyed.
What Stock Market Slump? Louis Vuitton Sales Are Thriving Among Chinese Shoppers: Louis Vuitton’s sales were up about 10% among Chinese consumers, who were doing more buying in Japan and Europe, with revenue accelerating over the second quarter.
Internet & Mobile
Chinese Consumers Go Online To Slake Their Thirst For Imported Goods: 26% of Chinese online consumers buy imported goods on foreign sites according to Paypal research. A further 17% plan to in the coming year, with 35% saying they’ll do it more often. They often consolidate their orders to minimize the impact of shipping costs, with the average order for clothing $485, consumer electronics $1,229 and cosmetics $512. USA, Hong Kong and the UK are the top-3 destinations.
WeChat Censorship Report: 1.5% Of Posts Get Censored: University of Toronto’s Citizen Lab tracked 36,000 Official Account posts on WeChat and found 1.48% of accounts were suspended and 1.55% of posts were censored by the system.
You What, Guv? Cortana Gets A Regional Makeover: Microsoft is localising its personal assistant with its Windows 10 launch. Research in China found consumer preference for a personal assistant who sounded like she was smiling, and tracked air pollution data.
Buzzwords: China’s Tech Trends: Making sense of those tech buzzwords we’re increasingly hearing, and their relation to China.
Some Chinese Grandparents Are Making Their Grandkids Fat: Chinese children who are primarily cared for by grandparents are twice as likely to be overweight or obese. Those who had two or more grandparents living with them are 70% more likely to be.
Tourists From China Empty Japanese Pharmacies: “Miracle medicines” made in Japan have been widely discussed online in China. Kobayashi Pharmaceutical sales have grown 5-fold in the last year. Products such as cooling patches for fevers, mosquito bite ointments and other vitamins have all sold out largely due to Chinese tourists.
Food & Beverage
Danone Gives Up China Formula Brand For Larger Mengniu Stake: Danone has sold its local Dumex infant formula, as locally-produced brands struggle to compete with safer imported brands. The market is increasingly challenging, particularly as China’s “mini baby boom” between 2008-2014 has ended because of lower numbers of women of childbearing age, and a decreasing or delayed willingness to have children despite the government’s easing of its one-child policy.
Tmall.com Promotes Same-Day Grocery Delivery in China: Tmall’s supermarket has launched a ¥1 billion ($161 million) online grocery promotional campaign targeted at Beijing users, offering same day delivery in the city. 40% of Chinese consumers have bought food online according to McKinsey.
Thinking Beyond Drinking: Blending Wine Into Chinese Consumers’ Daily Life: Four in five Chinese wine drinkers agree that drinking wine can better reflect their taste compared with other types of alcoholic drinks according to Mintel. Food pairing could be a good way to promote wine, with 91% of drinkers having drunk alcohol while dining out, and nearly three-quarters of out-of-home drinkers agreeing that it is important.
Delta To Buy 3.55% Stake Of China Eastern For $450m: Delta and China Eastern plan to invest in making a seamless experience on the airlines, which share flight codes on 80 routes. The deal comes as China is announced as the second-biggest source of foreign-tourist spending within the US, spending an average of $10,800 each.
How The UK Can Capitalise On The Growing Wealth Of Chinese Consumers: Research found three quarters of Chinese tourists to the UK bought luxury items worth at least £500 in the past year, with 46% planning to spend more next year. Almost half of those surveyed plan to spend 75% or more of their luxury budget in the UK next year, although this isn’t representative of the Chinese traveller overall. Oxford Street was the top destination for Chinese shoppers, with 64% wanting to visit the West End, followed by Bicester Village and Heathrow Airport.
Beijing Wins Winter Olympics Despite Lack of Snow, Human Rights Protections: Beijing will become the first city to ever host both the Summer and Winter Olympic Games, narrowly beating Kazakhstan to host the 2022 Winter Games. It is hoped the games will help promote skiing and other winter sports to hundreds of millions of Chinese consumers.
BMW Revamps China Marketing To Focus Less On Status: BMW will increase spending on online marketing in China and emphasize its technology as part of its efforts to target younger buyers, who care more about a car’s latest features than its emblem as a status symbol.
If you’re looking for a jaw-dropping illustration of China’s growing presence in the world, go no further than the United Nations World Tourism Organisation’s outbound tourism expenditure chart from the world’s largest economies over the past 20 years.
Between 1995-2007, Chinese tourists’ total spending was similar to countries like Italy and Canada. But over the past eight years, China’s growth projectile has been almost vertical relative to the rest of the world, leaving every other country behind. This growth is set to continue for some time yet.
China’s tourism growth is almost matched by the rate of change of the tourists themselves. For example, last year 53% planned or booked their overseas travel online. 80% did this year. Over the same 12-month period, the number researching and booking on a smartphone app grew from 17% to 50% of all travellers according to Hotels.com research. Consequently, the number who phoned or visited a travel agent dropped from 34% to 13%.
Changing traveller habits are being supported by improving experience from suppliers. New visa offices for European countries, 10-year visas from the U.S., and more recently Australia, are some examples of how the whole experience is improving for tourists and enabling them to travel without relying on agents to source visas.
With experiences improving, so are expectations – at an equally swift rate. Tourism destinations and operators who implement Chinese customer-focused initiatives are most likely to have satisfied visitors and best capitalise on Chinese tourism’s growth – China Skinny can help with that. We hope you enjoy this week’s Skinny.
China Retail Sales Up 10.4% In H1: China’s consumption continues to play a bigger role in the economy with retail sales for the first half of 2015 up 10.4% compared to last year – almost 50% higher than the 7% Q2 GDP growth rate. Consumption contributed 51.2% to GDP growth in 2014, three percentage points more than 2013.
Calibrating Chinese Creativity: China as a whole may not be at the cutting edge of technology innovation, but it is now taking a global lead in two areas of innovation: improving consumer products and the business models used to sell them. It is making manufacturing processes cheaper, quicker and better. As a result, Chinese firms now outsell foreign rivals in household appliances, Internet software and consumer electronics, to name a few. Chinese firms are inventing new business models, demonstrated by firms like Tencent who had an average revenue of $16 per user in 2014 – $6 more than Facebook.
How Brands Rode Out Uniqlo’s Sex Tape Scandal On Weibo: China’s latest social media sensation has inspired a slew of brands and users to jump on the bandwagon and produce cheeky content.
The Explosive Growth In Chinese Spending On Tourism, In One Stunning Chart: Look out world, here we come!
Half Of New Asian Hotel Rooms To Rise In China: Not only are Chinese tourists making their mark globally, but also in their own country. 56% of all hotels under construction in the fast growing Asia-Pacific region, are in China. That’s 452 new hotels with 145,167 rooms.
Tech-Savvy Chinese Travellers Use Mobile Devices To Book Half Of All Trips Abroad: Half of all Chinese travellers use smartphone apps to book and plan travel – up from 17% a year ago.
Disney Unveils Tomorrowland for Chinese in $5.5 Billion Park: Shanghai Disney – the largest foreign investment from world’s biggest entertainment company – will be “authentically Disney, distinctly Chinese,” trying to include as much local content as possible to appeal to Chinese consumers and avoid complaints of cultural imperialism that greeted its resort in France.
Internet & Mobile
Third Of Chinese Media Time Is On Mobile: Chinese consumers are expected to spend 3 hours 5 minutes daily on digital media this year – about half overall time spent consuming media. Over two hours will be spent on smartphones and tablets. Daily time on digital media grew 6.8% versus 3% for media overall.
China Mobile Nears 200 Million 4G Subscribers: China Mobile broke through 190 million 4G subscribers in late June. The mobile operator has more than 900,00 4G nodes across China – about 40% of the world’s total. There are close to 700 million 3G and 4G mobile users in China now, allowing richer mobile marketing initiatives.
Food & Beverage
Younger And More Sophisticated Drinkers Mark A New Era For Wine In China: Over 40% of imported wine drinkers in China are now 18-29 year-olds, and they are increasingly moving away from the ‘mainstream’ French or Spanish wines to new regions and styles, according to Wine Intelligence.
Australian Wine Exports To China Rise In Value: Wine exports to China grew 32.1% in the past year, helping pull the country’s overall wine exports to its first growth in value since 2007.
Burberry Sales Growth Sapped By Asian Shoppers’ Shift: Burberry’s Chinese customers globally are growing in all markets except Hong Kong and Macau, which dragged the company’s Asia-Pacific sales into negative growth over the past quarter. About 80% of the Burberry’s sales in Hong Kong come from tourists, most of whom are Chinese.
Survey Says More Chinese Moviegoers Buy Tickets Online; Low Ticket Prices A Win-Win To Consumers: More than half of Chinese movie goers bought tickets online in the first half of the year. Of the $4.77 billion spent on movie tickets in China last year, about $2.2 billion were online transactions.
Self-Protection Investment Exacerbates Air Pollution Exposure Inequality In Urban China: Chinese consumers bought 4.5 million anti-smog products online in 2013, totalling ¥870 million ($143 million). The highest 25% income earners bought 31.9% of masks and 47.9% of air filters sold.
Changing Chinese Habits Help Mazda Outstrip Rivals In Slowing Market: Mazda’s sporty design philosophy has clicked with an emerging class of Chinese drivers, pushing revenue up 17% in the first half of the year, smashing sluggish overall car growth of 1.4%. Mazda’s China-focused features include air-conditioning vents for the backseat and double horns given the heavy usage in the country.
In 2013, there were 2.9 million U.S. Dollar millionaires in China. They were 38 years old on average. 12-months later, following a year of slowing GDP growth, low to negative house price movements in most cities, and the end of double digit growth for most luxury brands, more than one million Chinese millionaires have joined the ranks. It is another indicator of the continued growing affluence of individual Chinese.
China’s rising wealth is apparent across almost all demographics, not just its millionaires. Significantly more consumers have enough spending power to happily drop $20 on going to the cinema, buy imported products, travel abroad, and for many, invest overseas. And invest they are. In the space of a year, Chinese have overtaken Canadians to become the top international buyer of U.S. residential property, shelling out two and half times more on U.S. houses and condos than the Canucks. With Chinese stocks’ recent free fall and the sluggish domestic property market, increasingly sophisticated Chinese investors will look to further diversify their portfolios abroad.
There’s been no shortage of coverage about the stronger RMB making handbags cheaper in Paris, but the average Vancouverite, Aucklander and residents in almost any major city in the Western world are probably more aware that the rising currency is making their property look even more attractive to Chinese buyers.
As recently as October 2014, the U.S. Treasury issued a report stating that the RMB was significantly undervalued, artificially lowering the price of Chinese exports. However, over the past 12-months the RMB has appreciated 18% on the Euro, 22% on the Kiwi Dollar, 18% the Aussie, 13% Canadian, 8% GB Pound and 0.3% U.S. Dollar.
The rising RMB will assist the current structural shift happening in China’s economy – moving from just producing cheap goods to further up the value chain, as well as encouraging consumerism. An appreciating currency helps makes the acquisition of foreign IP and brands more affordable. If we look at how many millionaires are being created in China, and how fast sovereign funds are growing and looking internationally, we can expect to see more Club Med, House of Fraser, Volvo and Lenovo-style acquisitions happening, in addition to a rise in foreign real estate purchases. Likewise, foreign products and services will also become cheaper for consumers, increasing consumption, which will bode well for imported products that are marketed well. China Skinny can assist with that. We hope you enjoy this week’s Skinny.
Can You Understand the Chinese Consumer in Just One Hour?: 23-minute podcast from McKinsey covering three themes about the Chinese market: 1) its complexity; 2) it’s the world’s most competitive market; and 3) the state’s decisive role in shaping the environment is as far reaching as the beer and art market.
‘Why Do Chinese Lack Creativity?’: A popular online essay touched on the reasons for Chinese lack of creativity and innovation, but urged Chinese to “not sell themselves short”. The anonymous essay received many comments and resonated widely with Chinese.
Starting From the Bottom: China Finally Embraces Entrepreneurs: China may not strike many people as a “start-up nation”. However, with a generation of ambitious young Chinese, increased government support, the rise of angel investors, and the loosening of the educational system, China’s start-up scene is on the rise.
Alipay’s US Chief Talks Expansion, Uber China Partnership and More: Unlike Paypal, Alipay helps you in every day life including buying goods in physical stores, paying utility bills and catching cabs offline. American retailers are increasingly allowing Chinese shoppers to buy with Alipay, including businesses such as Macy’s, Saks Fifth Avenue, Carter’s, Jewelry.com, and Walgreen’s Skin Store.
Chinese Consumers Deserve Better Service: On the surface, Chinese consumer savings rates indicate a reluctance to spend. To increase spending, a lot could be done to improve service – just look at the cinema, there are plenty of cheap/free alternatives but the service and experience is good enough for millions of Chinese to shell out $20 a pop to see a film every week.
Investment & Migration
Growth Continues, But Skies Are Not All Blue For Wealth Managers: Private financial wealth globally grew by nearly 12% in 2014, with China’s 38% growth in the equity market playing a big part in the Asia Pacific region (excluding Japan) surpassing Europe for the first time according to BCG. At the end of 2014 there were 17 million millionaires worldwide; China had four million millionaires – a million more than last year, but still behind the U.S.’s seven million.
Vancouver’s Housing Crisis: No, Not Like Before, And Not Like Anywhere Else: Since 2005, Vancouver’s housing prices have turned into a ‘freak show’, with the unaffordability index growing by 100%. Over the same period, San Francisco’s unaffordability grew by just 16%, Sydney 11% and New York actually became 14% more affordable. From 2005 to 2012, Vancouver attracted about 45,000 rich migrants under wealth-determined schemes, more than any other city in the world – the large majority were from China. Auckland, New Zealand has the next worst unaffordability growth in the Western world at 39%. Chinese have also become the top international buyer of U.S. residential property, investing more than two and a half times what second placed Canadians spent for the year ended March 2015.
More Urban Chinese Consumers Plan to Buy Homes: 14.7% of urban Chinese residents were prepared to buy a house within the next three months according to a People’s Bank of China survey, up from 13.8% in the first quarter. 18.2% expected house prices to rise in the coming quarter, versus 15.6% three months ago. House prices in May grew 0.06% – the first rise in 13 months.
Internet & Ecommerce
China’s Taobao Shoppers Like Surprises, Sales: Why Chinese have adopted Taobao into their everyday life: personalisation, mobile shopping, person to person, window shopping and Single’s Day.
Even Fancy British Prep Schools Like Eton Are Getting In On China’s Online Education Boom: Eton’s online learning subsidiary has announced that it will be launching EtonX, to “partner with leading schools in China to deliver courses built on Eton’s style of education.”
Food & Beverage
Over-Aged: Chinese Authorities Seize Decades-Old Meat: Chinese customs have seized over 100,000 tons of chicken wings, beef and pork worth an estimated $480 million. The meat poses serious health risks, with some of it more than 40 years old. Chinese authorities dealt with 18,556 commodity smuggling cases last year.
Study Maps Concentrations of Antibiotics in Chinese Waterways: China accounts for almost half of the world’s antibiotic usage, with 52% being used on animals increasing the likelihood of drug-resistant bacteria. The drugs are entering China’s waterways through human and animal excretion, with the worst affected areas in Beijing and nearby provinces, Shanghai and surrounds, and Guangdong – China’s three wealthiest areas.
Chinese Respond to ‘Rude’ Stereotype: An American retail worker posted a question on Reddit asking ‘Why do Chinese people have a poor reputation as tourists?”. The question received more than 2,000 replies from Chinese and expats in China.
Easier Access to Europe for Chinese: Under a new pilot visa service, a single visit to a UK visa application centre will allow Chinese visitors to submit a visa application for both the UK and Belgium. With a Belgium visa, they will also be able to visit the 25 European countries in the Schengen area. Chinese have surpassed India as the top country for visa applications to the UK.
VW Pays the Price For Failing to Respond to Evolving Customer Needs in China: After outperforming the market for almost a decade, VW has begun to lose market share in China with sales dipping 3.7%. Newly prosperous car buyers have migrated from sedans and microvans to SUVs and multipurpose vehicles, and VW has not responded as quickly as some of its competitors.
Samsonite Makes Move Downmarket to Protect China Sales: Samsonite’s prospects are improving in China since the luggage-maker moved downmarket. “Earlier you wanted to display the highest-priced goods at the front of the store so the consumer feels good about your brand and comes in to shop,” said the company’s CEO. “Now you want to display the mid-price of your offering so the customer is not getting scared.”
Earlier this month, Apple’s Tim Cook and Indian Prime Minister Narendra Modi opened accounts on Weibo. Modi’s selfie with Premier Li Keqiang and Tim Cook’s chronicles of his four day trip to China, helped attract almost a million followers between them, providing further validation of Weibo’s relevance in China.
While WeChat hogs the spotlight in most commentary about social media in China these days, Weibo is still an influential marketing tool. This is reflected in the 11% growth in its active users over the last quarter.
Before purchasing goods and services, Chinese consumers do significantly more research than Westerners, across a greater number of channels. Understanding how each of these channels tie into the customer journey can help you optimise your marketing at each touch point to increase engagement, sales and advocacy.
Consumers are most likely to personally engage with a brand on WeChat; but before engaging, they will often do research on platforms such as Weibo. Weibo is the most open channel in China. If a brand, product or service is on Weibo, it can be praised or panned by anyone, providing a level of transparency that untrusting Chinese consumers crave. For that reason, 95% of online Chinese trust a brand more if they have seen it on social media such as Weibo. Traditional state-run media doesn’t instil even half of that level of trust.
Weibo is also the first port of call for Chinese seeking breaking news. Whether it is finding out about what Tim Cook or another celebrity is doing, or the latest food scandal, Weibo has become the de facto news source for many of its 198 million active users, and the friends and colleagues who they influence. If consumers have a complaint or compliment about a brand, they will often say it on Weibo for all to see, so it is a vital channel for fire fighting and steering customer sentiment about your brand and wares.
Weibo’s viral nature also makes it a great channel for promotions and contests. Tmall’s brillantly-executed Apple promotion this month, is case in point.
So instead of choosing either WeChat or Weibo, it’s a good idea to look at each channel’s unique benefits and how they are complimentary, and where they fit with other marketing and sales channels too. We hope you enjoy this week’s Skinny.
Why China’s Consumers Will Continue to Surprise the World: Although China’s consumption rates have decreased over recent decades, absolute consumption has soared, from $650 billion in 2000 to almost $1.4 trillion in 2010. Spending on non-essentials is forecast to grow at a faster rate than necessities, with the share spent on recreation, culture and education expected to rise from 13% in 2013 to 21% in 2030 according to McKinsey.
Alibaba Unveils a Mobile App that Enables Physical Stores to Market to Shoppers: Alibaba’s new app, Miao Street, is free for brick & mortar stores who accept Alipay. The app enables shops to send out personal messages and coupons to shoppers based on their location and demographic. A McDonalds pilot sent 2 million free sundae coupons to 18-35 year old women within 3km of a McDonald’s restaurant and had a 32% redemption rate within 20 days. Alibaba plans to roll it out to 500 shopping malls in 15 cities this year.
Playboy Hopes China Can Help Rev Up Its Brand: Playboy magazines have never been sold in China, but the brand has an estimated 97% brand recognition with Chinese consumers. Playboy is increasing its distribution to 3,500 outlets across China to sell bunny luggage, belts, wallets and casual wear.
Internet, Social Media, Mobile & eCommerce
Apple’s Tim Cook Becomes Latest Celebrity to Join China’s Weibo: Within 24-hours of opening his Weibo account, Tim Cook had more than 400,000 followers. His first post received almost 50,000 comments, 66,000 likes and was forwarded 40,000 times. Lei Jun, Xiaomi’s chairman, and Yu Chengdong, Deputy Senior Executive of Huawei Technologies both retweeted Cook’s first post.
Weibo Kicks Off 2015 With Renewed Growth: In the past three months, Weibo’s monthly active users grew 11.2% to 198 million. 89 million are active every day, 34% more than a year ago.
Apple Top In China As Smartphone Market Dips: 98.8 million smartphones were shipped in China in Q1 this year, 4% less than the same quarter 2014 and the first contraction in the market since 2009 according to IDC. Apple led the pack with a 14.7% share (8.7% in Q1 2014), followed by Xiaomi on 13.7% (9.2%), Huawei at 11.2% (7.8%) and Samsung at 9.7%, less than half of last year’s 19.9%.
Tencent Profit Rises to Record as Games Lure Users to Spend: Active monthly users on Tencent’s WeChat have grown to 549 million, helping Tencent’s mobile online gaming revenue grow 82% in the last quarter, accounting for 20% of all revenue. Online advertising revenue rose 12%. Mcommerce still doesn’t appear to be making an impact on Tencent’s income statement.
Alibaba Seeks International Expansion, Hitches With ‘Avengers’ in China: Alibaba’s new CEO, Daniel Zhang, says international expansion is the company’s top priority. Meanwhile, the company teamed up with Walt Disney to handle marketing and merchandise sales on “Avengers: Age of Ultron”, aligned with the film’s record opening this month.
Anger as Racy International Nurses Day Promotion Misfires in China: On the day that is meant to honour the hard work of the often unsung profession of nursing, JD’s promotion of racy nurse outfits and lingerie, vibrators and condoms unleashed a storm of criticism. One Weibo post from a doctor mocking the campaign received more than 14,000 reposts.
Food & Beverage
Tmall’s Clever Apple Campaign Sells Out of 60,000 Units in Two Hours: Tmall’s beautifully-executed and low budget Weibo campaign sold out of 60,000 units of New Zealand imports.
Chinese Consumers Shifting Towards Mainstream Wine: Wine Intelligence’s 2015 report has found there are less ‘adventurous connoisseurs’ and ‘prestige-seeking traditionalists’ than before among China’s 38 million wine drinkers. A new classification of ‘developing drinkers’ accounts for 19% of the market. Consumers in this category are typically in their late 20s and early 30s, university educated and in high earning professions. They’ve usually picked up the wine habit through business dinners but are now branching out on their own, drinking wine as part of their personal life.
Consumer Trends Driving Innovation on Show at SIAL China : Asia’s biggest food and beverage show SIAL China saw a 20% increase in attendance this year from 2014. Health, wellness, organic, convenience and Westernized food and snacks were out in force. Dairy’s presence increased, following the 50.7% growth in imports between 2013 and 2014.
Farmers Markets with Chinese Characteristics: Farmers’ markets may be considered ‘progressive’ and fashionable in the U.S. and other Western countries, but in China they are increasingly viewed as problematic and ‘backward.’ A survey found consumers trusted dried goods, oil, and processed foods more in supermarkets, but prefer farmers’ (wet) markets to buy fresh produce.
Strawberries and the Hype Over Unsafe Food: Anhui’s Changfeng County Strawberry Growers’ Association is one of the groups planning to file a lawsuit against China Central Television following losses of more than ¥150 million ($24.17 million) in their county. A report on CCTV in April found eight random samples of strawberries in Beijing contained excessive amounts of the carcinogenic herbicide Acetochlor. Subsequent tests from Beijing agricultural authorities found no traces of the herbicide, however strawberry sales have not yet recovered.
As Chinese Tourists Spread Their Wings, the Benefits Fall to All: French officials went the extra mile to tempt a Chinese billionaire to bring 6,400 of his employees to visit. The Louvre museum was closed for them to have a private tour, and luxury department store Galeries Lafayette shut for a morning so that they could shop uninterrupted. The French also helped with travel arrangements such as booking 140 four and five star hotels in Paris and 79 in Cannes and Monaco.
Health & Beauty
China’s Vitamin Market Harder to Crack for Western Companies: China’s market for vitamins and supplements almost doubled between 2008 and 2014 to ¥101.7 billion ($16.4 billion), with 49.8% of consumers regularly buying them. While Pfizer’s Centrum brand is the most popular in Tier 1 cities, Amway’s Nutrilite tops the Tier 2 and 3 cities. Local brands such as By-Health are catching up thanks to high profile marketing campaigns and expansive distribution networks. Revisions to China’s food safety laws on October 1 should simplify the approval process for new health and wellness products, opening up more competition.
Investment & Migration
Chinese Prefer Fiji to Australia for Expensive Property: Although Australia is the second most popular destination for Chinese second home buyers, it doesn’t feature in the top-10 list of highest average prices according to Juwai. The average price Chinese paid for an Australian property was US$444,000 versus the overall average Australian house price of $358,000. Saint Kitts and Nevis in the Caribbean has the highest average of $9.7 million. Indonesia, Monaco, Saint Barts, Fiji and Jamaica were also in the top-10.
New Balance has done some great work positioning itself as an aspirational, but affordable fashion brand in China. It’s hard to walk a block in China’s hipper urban suburbs without seeing young fashionistas sporting NB shoes. But for those sitting in the Boston HQ, that success would have been slightly tarnished by the recent ruling that New Balance’s Chinese brand name, XīnBǎiLún, was violating a Guangdong businessman’s trademark.
The ¥98 million ($16 million) fine and order to stop using the brand name is another stark reminder of the importance of trademarking in China. Last year, after failing to trademark its Chinese name, Australia’s rock star wine brand Penfolds found itself locked in a legal battle with a trademark squatter, which saw them lose sales of at least 5,000 cases a year and valuable exposure in premium IHG hotels. Even Pfizer was beaten to trademark the most commonly used Chinese name for its Viagra, “WěiGē”.
One of the more interesting examples of brand theft was from California’s In-N-Out Burger, who had no immediate plans to expand to China. Four California-educated law graduates trademarked the chain’s legendary menu items throughout Asia and Europe. Opening their restaurant Caliburger in Shanghai, they promised many of the well-known In-N-Out staples such as Double-Double, Animal Style, and Protein Style burgers and fries, and even an iteration of the iconic palm tree on their branding. Following a confidential settlement – rumoured to involve a significant sum of money – Caliburger changed their burger names and decor.
China has a “first to file” policy for trademarking, meaning little emphasis is placed on the rightful owner of a brand. The cost to trademark in China can be surprisingly inexpensive. Even foreign brands who are unsure if they will ever launch in China, should consider taking the simple steps to register their trademark here.
When China Skinny localises branding for a client, in addition to creating something that resonates and is relevant to the target market, we also ensure that the proposed trademark is available and filed before investing in the brand. In addition to brand trademarks, regional branding for food and beverage can be protected, and even shapes such as Toblerone’s triangle chocolate. Best get onto it if you haven’t already. Go to Page 2 to see this week’s China news and highlights.
109 million Chinese tourists travelled ‘abroad’ last year – a particularly impressive number given just 31 million did so in 2005. Yet, what many reports don’t highlight is that more than two thirds of those travellers were visiting Hong Kong, Macau and Taiwan.
Nevertheless, those travellers staying close to home are part of the normal tourist life cycle, which sees them whetting their appetites in Greater China and travelling further afield in the future. This is represented in the rising trend of long haul travel such as the 25-30% growth in Chinese tourists expected in the U.S. this year.
Long haul travellers influence their peers in many ways. Chinese consumers are inherently curious, and are interested in learning about other countries. Those who visit exotic locations are often closely followed by family, friends and colleagues back in the Mainland, helped by the 84% of travellers who share their experiences on social media during and after their trip according to Hotels.com research.
Holiday moments shared on social media aren’t just the hotel foyers, trips to the zoo and bungy jumping, but a slew of local experiences and products from food to fashion to fancy apartments. With shopping still accounting for the largest share of Chinese spending abroad, retailers and brands who cater well to Chinese tourists can raise awareness of products back in China.
China’s tourism growth can be mainly attributed to rising affluence, more confident travellers and fewer visa restrictions. This is most noticeable in China’s fast rising tier 2 and 3 cities, especially its lesser-known mega cities. Whereas many of their Tier-1 cousins have had the ability to travel for years, hundreds of millions of potential travellers from lower tier cities are coming on stream for the first time, supported by dozens of airlines flying them direct to foreign locations.
With more and more cities now genuine tourism markets, travel operators are expanding across China. Yet tourist needs vary from region to region, requiring marketing to be targeted and localised to be most effective. China Skinny can assist you with this. We hope you enjoy this week’s Skinny.
China Has Even More Megacities Than You Thought: The UN counts six Chinese cities as ‘megacities’, however a new OECD study calculated 15 cities with more than 10 million people. The bigger city in China, the higher its average GDP per capita, however cities with a population of 1.5-5 million have the fastest growth rates.
China60: Assessing Real Estate Dynamics and Opportunities in China’s 60 Secondary and Tertiary Cities: Infograph summarising JLL’s report on China’s 60 most important Tier 2 and 3 cities. Of the top ten forces for change, five are new to the list this year including: (1) slower, but smarter economic growth; (4) the digital revolution; (5) rising city regions; (6) a new era of city competition; (7) growth of private domestic competition; and (9) anti-corruption measures.
Segway’s Second Chance in China: Segway has a second chance to revolutionise transport after its purchase by Chinese competitor Ninebot, who sees it as a solution to China’s much-needed urban transportation problems. A 2011 UBS study into the average speed of traffic in five Chinese cities found Wuhan’s average speed of 12.7km/h was the only city to exceed Segway’s basic model’s top speed of 12.5km. Beijing was 7.5km/h.
5 Ways Entrepreneurs Get It Wrong With China-Expansion Strategy: Some good basics to remember in China: (1) understand China’s culture and history; (2) Localising strategies from other markets; (3) resolve conflicts effectively; (4) ensure the Chinese Government is a friend; and (5) realise change starts at the top.
Chinese Tourists’ Luxury Spending Soars: The weaker Euro has helped spending by Chinese tourists soar by 122% in March after a 52% rise in February, bringing the increase for the first quarter to 67% according to Global Blue.
Budget Airlines See Booming Business from China: 94% of potential travellers in the Asia Pacific region would consider budget airlines according to Expedia, with the number of budget airline flights growing 9.5% in the past year. Airlines such as TigerAir are expanding to second and third tier cities, where they face less competition and receptive consumers.
IHG Targets Chinese Guests With New Service Initiative: IHG has trained more than 10,000 employees globally to be ready for Chinese tourists, with the programme expected to be rolled out in 250 hotels by the end of 2015.
Internet & Social Media
This Chart Explains Everything You Need to Know About Chinese Internet Censorship: A nice illustration of what trips up the 13%-16% of online content that’s removed in China. Fame has a different price in China.
Daily Reading Time Over 40 Minutes on WeChat in China in 2014: 72.9% of WeChat users read articles shared on WeChat Moments and 67.1% read articles published by WeChat Official Accounts. Of those reading articles, they read twice a day for more than 40 minutes on average each day.
Food & Beverage
China’s Growing Appetite for Luxury Seafood Will Push Up Prices: Rising demand for premium seafood in China is seeing significant increases of aquaculture in countries such as Ireland, Scotland and Norway, and across Africa, Latin America and Australasia. China’s advantages as the world’s largest producer of seafood are diminishing.
Maps That Tell You When It’s Safe to Breathe: China’s three biggest Internet companies, Baidu, Alibaba and Tencent are innovating to attract users to their free mapping tools to draw larger mobile users and the data they provide. Local pollution readings allow users to plot cleaner routes inside about 2,000 commercial buildings, with Baidu Maps experimenting with indoor routes by mapping shopping malls. Real-time traffic patterns and public-transit alerts are available too.
Chinese Consumers Among the Most Environmentally Conscious in the World: 72% of Chinese consumers claim they only buy products which match their values, beliefs and ideals, with 80% feeling that brands and companies have to be environmentally responsible according to GfK. With that in mind, there is no evidence of consumers paying more for an environmentally friendly product like they do for safe or healthy products.
Volkswagen Is No. 1 Brand for China’s Auto Buyers: Volkswagen is the top pick for Chinese consumers considering buying a vehicle, followed by BMW and Buick according to MNI. Price and safety are the most important factors for choosing a car.
Alibaba Makes an Advanced Move in China by Partnering with Shanghai General Motors: Alibaba is spreading its net wider by inking a deal with GM to sell and offer financing for its vehicles through Tmall, and using big data to better target Chinese buyers.
Last week in Beijing, free Wifi was rolled out across 12,000 of the city’s buses. It’s great news for the millions of Internet-obsessed commuters in the capital, but also relevant for tourism operators in the West.
Imagine you were a tourist arriving at a hotel in say, Boston or Brisbane, having just come from China where free Wifi is the standard in hotels and even free on bus rides which cost less than 50c. The smiling clerk at the check-in desk tells you that Wifi costs $15 for one hour to $30 for 24 hours. As a value-focused Chinese tourist, your first impression of the hotel may not be great. And once you’ve cooled down, even if you did like the view from your room or the food at the restaurant, you’d be much less likely to share it with your friends given the extortionate cost of doing so. That’s a big opportunity missed.
One of the most powerful way hotels and tourist attractions can promote their services to Chinese is through user advocacy on WeChat and Weibo. 84% of Chinese travelling internationally share the good and bad experiences from their trip on social media. For the under-35s, who account for two-thirds of outbound tourists, 42% consult social media when planning a trip away.
Hotels around the world are upping their game to woo the lucrative Chinese traveller. Slippers and kettles, Chinese TV beamed in, Mandarin speakers and Chinese porridge are important to offer, but that’s where most stop.
As a tourism business, by understanding a Chinese visitor’s journey – from planning to reminiscing, the role online channels play – and how best to utilise them, you can win the hearts and wallets of Chinese tourists, and create an army of authentic marketers for your services. We hope you enjoy this week’s Skinny.
Transparent Brands, Demanding Consumers: 22 min vid: 79% of Chinese consumers view transparency and honesty as important, versus 65% who think price is key, according to Cohn and Wolfe. Chinese consumers are more likely to follow brand issues and news than their Western equivalents, and are much less cynical of those brands. Chinese rate Western brands highly, whereas consumers in other developing markets typically trust local brands more.
Australia and China’s FTA: The Long Game: There has been much celebration in the media about the Australia-China Free Trade Agreement, but it is no panacea. What does it mean for you?
China Just Knocked Off The Range Rover Evoque: Chinese auto maker Land Wind revealed its X7 at the Guangzhou Auto Show – a spitting image off the popular Range Rover Evoque. The X7 is expected to retail for ¥135,000 ($22,000) versus $80-109,000 for the original in China. In other fake news, the Chinese Government is lending its hand to certify authentic Buddhist and Taoist temples due to the proliferation of fake temples and monks trying to pry cash out of tourists.
UK Rolls Out Red Carpet for China’s Tourists: The UK’s Great China Welcome initiative has attracted almost 200 hotels, restaurants, attractions and other hospitality businesses to become “China-ready” since launching this year – we’re surprised more haven’t signed up given it is free. Tourism Great Britain has also just launched a $2.5 million campaign asking Chinese to name 101 British landmarks. Similarly, the USA is wooing Chinese tourists with social media, fried dough fritters and a quiz.
Tourism Australia’s Plan to Whet China’s Appetite: Australia is spending $10 million on a marketing campaign to woo Chinese tourists. Food and beverage is central to the campaign, projected on big screens in subways and shopping malls, with 86 food bloggers, writers and critics coming to Australia. 28% of Chinese consumers who have not visited the country think Australia offers good food, wine, local cuisine and produce, whereas 76% who have visited the country think it has great food and wine, ranking Australia top for culinary experience.
China Online Travel Market Grows to ¥72 Billion in Q3: Between July and September, Chinese travellers spent ¥72.6 billion ($11.8 billion) online buying products such as air tickets, hotels and vacation tours – 20% more than in Q3 2013. Ctrip accounted for 55.9% of the OTA market, followed by eLong at 9.7% and TongCheng 6.3%. Ctrip’s mobile app downloads grew 75% in the last quarter to 350 million.
Internet, eCommerce & Mobile
Four Reasons Why Chinese Consumers Go Online: 98% of Chinese use the Internet to explore new subjects such as brands, products and services. 88% use it to connect with family and friends and 89% to express opinions and be heard (versus 38% in the USA).
How Companies Use Wechat Official Accounts: There are now 5.8 million official WeChat accounts, with ecommerce, catering, finance, auto, real estate and hotels being the top industries.
Consumers Find Delayed Gratification Of Ecommerce More Rewarding: 82% of Chinese consumers are more excited about online purchases than in-store buys.
Food & Beverage
Sprouts and More – China’s Food Unsafety: The latest food scandal to hit China – 20 tonnes of toxic bean sprouts uncovered in Beijing containing poisons that can cause premature puberty, disrupted menstrual cycles and osteoporosis. Similarly, more than three quarters of the rice fields in central Hunan province have been contaminated with excessive levels of heavy metals or chemical waste.
Heinz Opens State-of-the-Art Infant Cereal Factory in China: To coincide with its 30th anniversary of having a presence in China, Heinz is opening its largest infant cereal production plant in the world in Guangdong.
Chinese Demand for Dairy Products Spurs U.S. Exports: U.S. milk exports to China were up 35% in January from a year earlier. Tetra Pak’s analysis found China to be the world’s largest flavoured milk market. UHT makes up 76% of milk sales, with lactose-free products filling an important need given such high levels of lactose intolerance. Most milk in China is sold in single serve packs.
Companies Take Note: Consumers Trust Climate Change Warnings : 82% of Chinese believe that the world’s climate is changing due to human activities – the highest rate of 18 countries surveyed by National Geographic. 53% of Americans agree – the lowest rate in the world.
China’s Rich Want to Send Children Abroad for Education: 80% of China’s wealthy plan to send their children abroad for education according to Hurun. Just 1% of Japanese do. The U.S. and UK are the top spots, with Australia, Canada, Switzerland, New Zealand, Singapore, France and Germany attracting most of the rest.
China Motorists Exceed 300 Million as Cities Struggle: China now has as many drivers as there are people in the U.S. It took just four years to add 100 million new drivers in China, and 35 of its cities now have more than 1 million vehicles.
Group travel has been losing its shine for some time with Chinese tourists. Research by TNS last August found that 62% of Chinese tourists would prefer to travel independently. This has been backed up by countless anecdotes from tourism operators, and recent spending analysis from Union Pay which points to a healthy rise of independent Chinese travel abroad.
Whilst many less experienced tourists still prefer the security of travelling in tour groups, Chinese consumers, especially the younger ones, are becoming more confident with their journeys. A slew of online information and tools are helping them get by on their own in faraway lands. It’s also becoming easier as local operators increasingly cater to Chinese language and cultural differences – although there’s still plenty of room for improvement.
One of the promising signs from the Union Pay data is the 65% average annual increase on dining expenditure abroad between 2010 and 2013. In the past, travellers in tour groups would often be shuttled between restaurants serving poor quality Chinese food. The rise in spending on dining indicates that travellers are becoming less likely to be eating at restaurants as part of their “all-inclusive travel package”, instead paying for their own meals elsewhere.
More varied dining, means there’s a good chance Chinese tourists are eating at restaurants that give a snapshot of the local cuisine and culture. In most cases, they’ll have a richer experience, and potentially acquire a taste for local food which may see them buy it when they return to the Mainland. That’s great news for food and beverage exporters.
Spending on recreation has also seen a significant rise in spending, at more than 60% a year, indicating Chinese tourists are becoming ever more adventurous and not just focused on shopping. This is positive for overseas destinations. Although independent Chinese tourists still travel with somewhat of a ‘pack mentality’, and are most likely to visit places marketed well and endorsed by their peers, they are going beyond the few stops serviced by tour groups, meaning their spending funnels down across a wider range of tourism operators.
With Chinese consumers’ wealth increasing and visas becoming easier to obtain, the high portion of independent travellers making up the 200 million Chinese expected to travel abroad by 2017 will change the landscape of global tourism forever.
For our Shanghai readers, China Skinny’s founder Mark Tanner will be joining the panel talking about China’s mega trends next Thursday 29 May, as part of the Austcham Shanghai Business Forum and All Star Lunch – it should be a great afternoon if you can make it. In the meantime, we hope you enjoy this week’s Skinny.
4 Unique Characteristics of Chinese Shopping Habits: 68% of Chinese consumers enjoy shopping versus 48% in the USA and 41% in the UK. Chinese consumers are more inspired and want to learn something when shopping, with digital channels being significantly more important components of their shopping experience, and instore being less so than in the USA and UK. Chinese also consider themselves much more likely to be an opinion former than a follower.
China’s Luxury Market Set For Good Times: Over one third of Chinese households will earn more than $50,000 a year by 2030. 10.3 million will make more than $150,000 according to the Economist Intelligence Unit.
The New Buzzword for Wealthy Chinese – Balance: 63% of young professionals in China think that their lives were “getting really busy” and 44% are worried that they weren’t taking good enough care of themselves because of it. 22% percent of China’s total population believe in separating work and leisure.
Travel Boom Reshapes Spending: 70% of China’s international travellers are from outside of the Tier 1 cities Beijing, Shanghai, Guangzhou and Shenzhen. Between 2010 and 2013, recreation and dining were the fastest growing categories for Chinese tourists, with spending up around 65% annually for both.
Here Are Top 12 Most Interested Topics of Chinese Online Travellers: More than a third of travel searches on Baidu are for destination, followed by locations at 29%, transportation maps at 13% and travel guide at 10%. Special local products were number 7, price at number 9 and travel agencies number 12.
Could UK Do More to Attract Chinese Tourists?: France has nearly ten times more Chinese tourists than the UK and numbers are growing faster – over 23% in 2012, and expected to continue at a similar rate over the next few years. One of the biggest barriers for Chinese travelling to the UK are the difficult visa processes.
Internet, Mobile, Social Media & eCommerce
WeChat Grows to 396 Million Active Users: WeChat’s active monthly users grew 11.6% in Q1 2014 to 396 million. Not quite the 30.6% the quarter before, but as WeChat changed its measurement techniques at the end of Q3, the two figures can’t be compared like for like. The number of users paying for WeChat games doubled in Q1.
China Top B2C Websites Market Share in Q1 2014: Tmall and JD.com accounted for around three quarters of B2C eCommerce in China.
Electronic Word-of-Mouth Significantly Influences UK and Chinese Consumers: UK respondents are more cynical toward a positive review that follows a negative review online than their Chinese counterparts. Neither Chinese nor UK respondents’ initial purchase intentions improve when first exposed to a positive comment, while they drop significantly when first exposed to a negative one.
Top Ways to Maximize Your Online Brand Presence in China: 80% of Weibo users followed an average of 18 company accounts, but less than 20% reported paying much attention to information from them.
Chinese Find Number URLs Easier Than Letters: Website addresses with numbers that loosely represent Chinese spoken words are often easier for Chinese to remember than Roman characters.
Food & Beverage
Food Categories Lead Slowdown in Retail Growth: Biscuits followed an overall trend of slowing growth in China, yet premium segments, including gift cookies and innovative bite-size snacks, still enjoyed double-digit growth. Chocolate was another fast grower. The anti-corruption crackdown has reduced the cost of eating out, reducing spending on cooking by 6.6%, although premium ingredients such as oyster sauce and olive oil showed strong growth.
How Burberry Has Fared in its First Days on Tmall: News of Burberry’s new Tmall store had 1,500 reposts on Weibo within the first few hours. In 18 days, 132 items had sold, although 32 were returned – more than three times the average rate for similar items on the platform. Feedback was 60% higher than average.
China Has 100 Million Brain-Damaged Online Gamers: Study: An estimated 100 million gamers in the mainland have lost self control and developed an irrational dependence on games. There is a particularly high concentration in the northeastern provinces.
New Government Report Shows China’s Air Pollution Worries Going from Bad to Worse: A new Government report has found the average PM2.5 reading across China’s 74 main cities is 72, with just three cities meeting Government standards of 35. The report was published at a similar time to the World Health Organization raising its estimates of China’s premature deaths caused by air pollution from 3.2 million to 7 million.
Weird & Wonderful
Fake Government Busted in China: Just when you thought you’d heard it all in China, a fake Government was set up in Dengzhou, Henan, complete with an HQ, fake government seals and issue papers, and even advertisements for staff.
That’s The Skinny for the week! We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities. Just email us at email@example.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.
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