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If you were driving a Mazda in China in 2012, you would have had to be careful where you parked it. Virtually overnight, Japan became the villain to many Chinese, fuelled by a territorial spat over the Diaoyu/Senkaku Islands. In two waves of protests, hundreds of Japanese-branded cars were smashed and overturned, rocks were thrown at Japanese restaurants, Japanese factories were set ablaze, Japanese buildings were broken into and ransacked, and stores selling Japanese goods were vandalised, causing more than $100 million of damages.

By 2013, things were back on the mend, and it wasn’t long before Chinese couldn’t get enough of Japan and Japanese products. Within five years Chinese visitors to Japan more than quadrupled from 1.4 million to 7.4 million a year, stuffing their suitcases with so many Japanese goods that a new term was coined meaning “buying explosion.” The number of Japanese restaurants in China grew from about 10,600 to 40,800 in 2017 alone.

Similarly in 2011, Nike was called out by the CCTV’s 315 Consumer Rights show for its Hyperdunk sneakers not having air cushions. The show had much more sway back then, and the negative press contributed to a flat performance for Nike in the period that followed. But savvy marketing saw Nike return to explosive growth quarter after quarter – even with another showing on the 315 show in 2017 and Chinese New Year Blunders. The most recent Xinjiang cotton challenge is unlikely to dampen growth for long.

Apple has faced arguably worse press than Nike in China, slandered on CCTV’s 315 for ‘unparalleled arrogance‘ in 2013. This impacted sales. It has had its share of other challenges since, including formidable competition from China’s domestic smartphone brands, but in its most recent March quarter, Apple’s Greater China revenue almost doubled year-on-year, setting an all-time record for the company.

After being slammed for quoting the Dalai Lama on its Instagram account outside of China in 2018, Mercedes performance in China continues to impress, growing 60% in the last quarter. The NBA has seen strong growth on social media for both followers and engagement although it still isn’t back to the full CCTV coverage it had before the HK Tweet. P&G, KFC, Starbucks and many others are on the list of foreign MNCs and geographies that have been denounced in China, but they followed with strong growth.

Tesla is the latest big foreign brand to face a PR storm in China, labelled ‘arrogant’ – similar to Apple in 2013 – due to the way it dealt with customer complaints and perceived quality issues. To address the challenge Tesla issued the mandatory apology. It has also followed the approach of China’s big tech firms like Tencent, contacting Chinese bloggers with threats of defamation suits, leading to more positive posts. But to add to the challenge, Tesla faces more complex geopolitical issues with bans in government complexes due to security concerns. Tesla’s sales took a hit in April, and although it isn’t out of the woods yet, there are positive signs that it is back on the road to recovery.

Despite the examples above, Chinese consumers are not so quick to forgive and forget every foreign brand that does something that offends them. Dolce & Gabbana’s gaffe from 2018, which followed their insensitive advertising in 2017, is likely to haunt the brand for some time yet, as Hong Kong pop star Karen Mok discovered after donning D&G in her latest music video.

While every big, successful foreign brand slandered in China fuels nationalism a little more, in many cases consumers will quickly move on and the brands’ fortunes will bounce back. We can learn from those who do. They all have three things in common: a strong crisis management plan, consistently great products, supported by Chinese-resonant marketing. It sounds easy doesn’t it? Contact China Skinny to discuss how your brand can be best placed to deal with headwinds in China.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

Design Shanghai: Lessons from Trade Shows in China: 8 min video: We visited Asia’s biggest design event this month to discover how trade shows have evolved in a post-covid world.

Why it is No Longer Cool to be a Crazy Rich Asian in China: For years, China’s glamorous rich have been known to be ostentatious, showing off their luxury cars and handbags online – often to the envy of their followers. But increasingly, any kind of wealth flaunting – intentional or otherwise – is being met with hostility and disdain. The most likely targets are celebrities as well as the so-called fuerdai – second generation rich kids – because they are simply not deserving of their sky-high incomes.

China’s Covid-19 Border Restrictions ‘Could Drive Away Foreign Talent’: Three-quarters of European companies operating in China said they still had foreign workers stranded outside the country because of Covid travel restrictions. In the survey, 35% of companies reported a decrease in the number of foreign workers in the past five years, while only 18% said they had increased their foreign headcount. The number of foreign workers in China has been “nosediving” in the past five years, even before the coronavirus pandemic, with the exodus potentially undermining diversity of views in decision-making and harming corporate culture.

Online: Digital China

China’s Livestream Queen Makes Nice With Beijing: Not so long ago, internet celebrities in China belonged to a marginalized subculture. But since 2016, livestreaming ecommerce has become a hallmark of Chinese tech innovation and generated countless billions of dollars: Social commerce sales in China are projected to reach $363 billion in 2021, more than tripling the 2018 spend. In 2020, Viya sold $31 billion worth of goods, including a rocket-launch service, on her livestream show. She has a net worth of $1.25 billion. Her persona also fits into China’s mainstream (if frequently unrealistic) political typology: She’s married with a child, but she’s also a hard-working career woman. And she has become increasingly interlinked with Beijing and its ideals.

Premium Food & Beverage

Modern Farming: Coronavirus Outbreak Spurs High-Tech Greenhouse Boom in China: Dozens of massive green houses are sprouting up on the outskirts of China’s megacities that utilise high-end technology to manage irrigation, temperature and lighting systems to grow vegetables within easy reach of a large and affluent consumer base. Since Covid there has been huge acceleration for fresh produce produced at the spot where it’s consumed. A growing affluent middle class, willing to pay more for higher quality food produced with less pesticides, is also fuelling the trend.

Bubble Tea Chain Nayuki Obtains Go-Ahead for $500 Million Hong Kong IPO: Premium bubble tea chain Nayuki Holdings is looking to become the first publicly-listed Chinese high-end beverage brand. Well-known for its refreshing fruit tea, foamy bubble tea and fancy baked goods, Nayuki currently operates 556 stores across mainland China, Hong Kong, Singapore, Japan and the US. It plans to open 300 new stores in 2021 and 350 next year in higher-tier Chinese cities, of which around 70% will be a new type of plush teahouses, “Nayuki Pro”. Almost 70% of current orders are made online, while 70% of the company’s consumers are Gen-Z and millennials. The Chinese tea beverage market is twice as big as the Chinese coffee market, valued at ¥442 billion ($69 billion) in 2020.

Overseas Chinese Tourists

Travel Sites Cashing in On ‘Blind Box’ Craze: Blind boxes containing ‘lucky dips’ for toys have been hugely popular in China recently. In recent months, China’s travel platforms have been jumping on the craze, with Tongcheng-Elong launching an air ticket blind box product priced at ¥98 ($15) in April, attracting more than 20 million buyers. Trip.com offered hotel blind boxes for ¥699 ($109) and ¥999 ($156), and a ¥99 ($15) airline blind box with more than 100 domestic destinations. Fliggy’s ¥66 ($10) blind box feature, helped boost flight sales by 260% from May 31 to June 2, the long weekend after the gaokao exams. 89 million trips were taken during last weekend’s Dragon Boat Festival, up 94.1% from last year, with spending increasing 140%.

Overall Beauty

China’s ‘Elf Ear’ Cosmetic Surgery Increasingly Sought by Young People Seeking a Thinner, Slimmer Face: An “elf ear” usually refers to a birth defect that results in a pointed ear shape, but it’s now the latest fad among young Chinese females and males amid a rapidly growing cosmetic surgery market. The ears are believed to be able to make their faces look slimmer, and even younger. “I dare to say that after this ‘elf ear’ frenzy, there would be an army of beauty seekers requesting to get their original ears back, just like those ‘online celebrity nose’, ‘European-style double-fold eyelids’, etc that once were very popular,” says a cosmetic surgeon from Zhengzhou.

Chinese sport Sport

China Bans Extreme Sports in Wake of Gansu Ultramarathon Tragedy: China has indefinitely suspended extreme sports events, including ultramarathons, trail running and wingsuit flying, in response to the deaths of 21 long-distance runners in Gansu last month. It defined them as “high-risk sports events with unclear management responsibilities, imperfect rules and unclear safety protection standards.” 27 government officials have been punished over the deaths, including at least five arrests. The party chief in Jingtai county, where the race was held, has committed suicide as a result.

Video & Entertainment

Sleepless in Chengdu: Chengdu has become the heartland for Chinese electronic music. During the New Year holiday break especially, the Sichuan capital can feel like the Ibiza of the East, popping off with music events, world-class DJs, and jampacked nightclubs for the entirety of the break. Since Covid, instead of bringing in international DJs, Chengdu clubs and promoters relied on China-based talent, of which there is no shortage.

Premium and Luxury

41% of Chinese Consumers Want to Increase Luxury Spending: 41% of consumers in Mainland China said that they would spend more on luxury goods this year and 9% said they would spend less. They are most willing to increase or maintain spending on beauty and cosmetics, followed by clothing and shoes. Over 30% are willing to buy niche luxury brands in all luxury categories except watches. Official brand websites have become the first choice for online shopping accounting for 54% of online purchases. 36% actually spent more on luxury goods in 2020 than they previously had planned, with 41% in third-tier cities saying they did.

Will Fosun Fashion Group Be China’s LVMH? China’s Fosun Fashion Group is acquiring 100% of luxury Italian shoemaker Sergio Rossi, pledging to maintain its current leadership. The brand bolster’s Fosun’s portfolio which includes Caruso, St. John, Wolford, and Lanvin.

Hong Kong Star Karen Mok Comes Under Fire in China for Wearing Dolce & Gabbana in Music Video: Hong Kong pop singer Karen Mok has been forced to issue an apology after she prompted controversy on Chinese social media for wearing Dolce & Gabbana in her latest music video.

Autos and Cars

Tesla’s China-Made Vehicle Sales Surge 29% in May: Tesla sold 33,463 China-made electric cars in May, including 11,527 exports – a 29% jump from April. Although it was still below the near-36,000 it shipped in its record March, it was its third-best month on record. China’s new electric vehicle sales surged 177% to 185,000 cars in May from a year earlier. Overall passenger vehicle sales rose just 1.1% to 1.66 million cars.

 

 

 

The 618 mid-year shopping festival is now in full swing and is breaking more records, which seems to happen with every subsequent online shopping festival these days in China. Yet one of the traditionally least-sexy components of ecommerce – delivery – has come to the fore this festival and captured our imagination.

Cheap delivery has been foundational to the success of online shopping in China. Parcels dispatched have proliferated from consumer goods to lunches in the office, chilled wines to parks, to one-hour dispatch of ‘sexual wellness products’ in the middle of the night. Free to ¥9 ($1.40) delivery is why Chinese consumers are comfortable ordering a coffee to the desk from the cafe downstairs. It’s how the effortless 30 minute delivery from new retail, has altered consumption behaviour.

Delivery has been kept cheap in China largely due to the mostly unskilled domestic migrant labour, prepared to work hard for a fraction of their white collars peers having $6 cups of coffee delivered. AI-algorithms are also squeezing efficiencies out of the deliverers, optimising their routes and pickups and allowing them to maximise their earnings. Yet the joyous land of cheap delivery is facing some headwinds.

Since late last year, China’s overburdened delivery workers have been getting more airtime. Their gruelling routines: 12-hour days, six days a week, delivering hundreds of packages a day under the automated and watchful eye of mobile apps, give “light” rewards and “heavy” punishments. One delivery worker even set himself on fire in protest. Beijing has taken notice and has pledged to improve conditions for delivery workers.

Regulations are set to improve conditions for delivery workers. This, coupled with rising wages and a shrinking working population will all push delivery costs northwards, challenging the core structure of a lot of commerce in China. That takes us back to our opening paragraph of the exciting innovations in delivery that have been in the spotlight this 618 festival.

The original founder of the 618 festival, JD, has been at the forefront of delivery innovation globally. In 2016 it launched its first autonomous delivery vehicle and drone delivery. Then in 2019 it became the world’s first company to apply Level-4 autonomous driving technology on public roads without any human interaction. These came into their own during the lockdown in Wuhan last year delivering 13,000 packages to hospitals and residential compounds where contactless delivery was imperative. But it was in April this year that JD really started to move the dial, putting its autonomous delivery vehicles into daily use in over 20 cities in China for the last-mile delivery of e-commerce parcels.

The user experience is quite simple. A customer will automatically receive a call and a message with a pick-up code once the vehicle arrives at the pick-up point. They enter the code on the vehicle screen and can collect their parcel.

At 12:04am on 1 June – the start of JD’s 618 Festival, just four minutes after paying the remaining balance on her pre-sale order, a customer in Changshu, Jiangsu province received the skin care set she ordered. The cosmetics were delivered by JD’s autonomous delivery robot, part of JD’s 618 “delivery-in-minutes” service covering over 200 cities.

It’s unlikely the autonomous vehicles will be replacing China’s 3 million delivery workers any time soon, but as their costs come down and labour costs increase, expect to see a shift. In the meantime, the robots will also work in with delivery workers, allowing them to deliver 50% more orders during peak sales periods like 618. For most brands selling in China, delivery is an increasingly important part of the puzzle. Stay tuned for the innovation that is happening as it may help in optimising your strategy for the market.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

China Likely Reopens to World in First Half of 2022; COVID-19 Jabs May Need to be Given Annually, Just Like Flu: Top Experts: Chinese experts believe that China will be able to reopen to countries with good inoculation and low infection rates in the first half of 2022, but that will still depend on how many people in the country have been inoculated. Countries with a higher inoculation rate such as Israel, the US and the UK will make deals to resume people-to-people exchanges in the second half of this year.

Daigou Trade Drives Up Average Foreigner Spend in Korean Duty Free to US$26,370: Duty free sales in South Korea – the world’s biggest duty free market – rose by 8.6% month-on-month in April to US$1.39 billion – 72% up from last April. The market was dominated by foreigners (mostly daigou traders), who accounted for 95% of sales. Sales to small-scale Chinese merchants, the main customers of domestic duty free shops, have been on a steady growth track.

Online: Digital China

Why, How and When About Autonomous Delivery Vehicles: Info, specs, charts and policies about the evolution of JD’s Autonomous Vehicles.

JD 618 Mid-Year Shopping Festival Statistics: JD.com’s 618 Grand Promotion (Jun. 1-18) officially began at midnight on Jun 1. In the first five minutes after midnight, JD Super, JD’s online supermarket, saw sales of coffee beverages, oat milk, fruit wine and other new products increase over 15 times. Cosmetic medicine increased 15 times in the first 15 minutes. Sales of smart pet products increased 300 times and pet snacks and treats increased 28 times. In 10 minutes, products from 900 international brands from over 100 different countries more than doubled. Nutrition and health care products intended to relieve fatigue increased by 500% YOY while probiotics increased more than 300%. Tmall said that 250,000 brands on the marketplace participated in the event, 2.5 times more than last year.

Asia Dominates on Internet Front: US, EU Way Behind; India Minuscule: China’s mobile payment penetration accounted for 24% of total retail sales in 2019, compared with 9% in Germany, and 11% in the US. China is the world’s largest ecommerce market, accounting for about 45% of global retail e-commerce transaction value in 2018. In 2019, China’s internet market was worth $1.5 trillion, while USA was $600 billion and India’s was $40 billion. Here are the 15-biggest ecommerce companies in China.

Tencent Bans Nose Picking, Spanking and Other ‘Violations’ on its WeChat Livestreaming Service: Tencent published a list of dozens of common “violations” on its WeChat livestreaming service in a bid to clean up the app. Fortune telling, picking your nose, putting underwear over your head and any actions with sexual provocation such as “seductive lip licking” and focusing the camera on “sensitive” parts of the body are among the prohibited actions. Fishnet stockings can’t be worn, broadcasts can’t be in a bikini or wrapped in bed sheets or bath towels.

Designers and Fashion

‘No Sale’: Patagonia Defies Shopping Festival Fervour in China: ‘Buy less, demand more’, the outdoor brand has proclaimed, in a contrarian tactic that has drawn attention amid the frantic discounting during the country’s 618 ecommerce festival. Patagonia was recently ranked as the third most conscious brand in China behind Huawei and Microsoft.

Premium Food & Beverage

Membership-Based Markets Gaining Popularity: The success of Sam’s Club membership program in China is pioneering a path for programs from other grocery chains including Hema, Suning Carrefour, Costco and Metro. Metro has seen consumers demand more quality, diversified goods, consumer-centric retailing approaches, and emphasis on health and the environment. Private label brands are becoming more common, particularly for categories without established leaders.

The Small Businesses Trampled in Big Tech’s Groceries Tug-of-War: Shop owners in Wuhan thought community group buying would help them earn more money. Instead, it’s putting them out of business. Residents say that they eventually switched back to fresh markets for their vegetables, but continued to order everything from toilet paper to eggs, dairy, and fruit via community group buying.

Over 1 Billion Chinese People Still Have No Dairy Consuming Habits: The number of Chinese people who keep a daily intake of dairy products is only about 360 million. More than one billion people have not yet formed a dairy consuming habit. Dairy foods (products containing milk, including cream biscuits and cream cakes) accounted for 25.4% of increased dairy intake, followed by yogurt (20.5%), liquid milk (15.7%), milk powder (14.1%) and cheese (14.1%). 37% of people recognise that lactoferrin in dairy products helps boost immunity, up 7.7% from last year – 53% of parents of children aged 0-3 recognised this.

Overall Beauty

China’s CBD Crackdown Deals Blow to Emerging Market Using Cannabis-Derivative in Cosmetics: Late last month China officially banned the use of CBD in all cosmetics, also banning three other popular cannabis plant derivatives – cannabis sativa fruit, cannabis sativa seed oil and cannabis sativa leaf extract – all of which have a growing global following for their “wonder drug” ability to lift depression, cure acne or relieve pain.

Chinese sport Sport

Football’s relentless search for the ‘Asian fan’: For many years, Asian fans of European football have had an almost mythical status in the globalisation of the sport. They are often complacently viewed as a single block and their potential has often been overestimated. Some fans in Asia are already fiercely devoted to one club, like their counterparts in Europe, while others are far more promiscuous, supporting teams across different leagues; some view the sport purely through the lens of gambling, others through status and branding; some follow particular superstars such as Ronaldo and Lionel Messi and will change club loyalties as their heroes roam. Between 2018 and 2020, European teams increased their followings on Weibo from 60m to 93.3m and from 2.5m to 19.2m on Douyin. If clubs want to convert this kind of fan into a long-term supporter, and also keep the other kind engaged, they still have a lot of work to do to demonstrate that they respect and value them as supporters, not as an abstract source of revenue. [paywall]

Banking &  Finance

China’s Digital Currency Trials Accelerate, But Will Users of Alipay, WeChat Pay Switch to the New e-Yuan?: China’s e-yuan is one of the most advanced central bank digital currency initiatives in the world, with over ¥2 billion ($314 million) spent so far. But China already has an established digital payment system dominated by Alipay and WeChat Pay, potentially slowing its wider adoption.

Premium and Luxury

These 4 Types of People Buy Fake Luxury Goods: Why Even Rich Chinese Consumers Choose Counterfeit Brands, and How to Stop Them: Brands like Gucci and Louis Vuitton lose millions to counterfeits – bought by four main consumer profiles: “Dreamitators”, face savers, smart fakers and fraudsters.

A trip to a public hospital in China can be a jostle to get the ear of a doctor, reminiscent of students vying for the attention of a university professor at the end of a fascinating lecture. The crowds and chaos highlight the shortage of doctors in the country, which number half-to-a-third per capita of those in most developed countries. The situation has become more acute as the population ages and lifestyles change stemming from pollution, sedentary lifestyles, altering diets and rising wealth; driving up obesity, diabetes, strokes, heart disease and lung and liver cancers.

Since ancient times, Chinese have been proactive about their health. They have exercised this through traditional Chinese medicine (TCM) such as using the warming and cooling nature of foods to balance the body’s yin and yang. Avoiding crowded public hospitals has added further incentive to look after one’s health and avoid illness.

Concerns around health and immunity have only become more important as a result of Covid, driving health products and healthy claims for consumers in many categories. As a result, Chinese consumers are applying many of the balancing principles of TCM with natural healthy food, health supplements and popular western approaches such as fitness. Over the past decade, the number of official marathons has grown from 22 to almost 2,000. Gyms, yoga studios and other sports venues have seen similar rises, each creating massive industries and interest groups which can provide opportunities for marketers in both sales and connecting with target markets.

Yet even with Chinese consumers’ proactive approach to health, hospitals continue to creak under the enormous demand of the sick and needy. China’s tech giants have been quick to improve the situation. Many of the biggest names have developed telemedicine platforms to provide more efficient services to the masses, allowing patients to avoid the unwell mobs at the traditional facilities through convenient online consultations 24 hours a day, with a little AI thrown in. The platforms have also provided a route for doctors to top up their relatively low salaries or even avoid being mobbed altogether.

2020 was a bumper year for the telemedicine platforms. Not only did they attract patients – Alibaba Health counted 520 million users for the year ended March 2021 – but they also increased the much-needed doctor count to give consultations. About 10% of China’s 3.86 million doctors are thought to be on platforms, and that number is only expected to rise. Last year, JD.com raised the number of doctors registered on its platform to about 110,000, up by roughly 12 times from the year prior. Ping An’s Good Doctor app increased the number of doctors on its platform by 240% to about 23,000 to service its 370 million customers. Tencent’s WeDoctor has over 270,000 doctors.

The amount consumers pay for the services depends on the doctor, but a 15-minute video appointment usually costs around ¥50 ($7.80) – about the top range of what you’d pay at a public hospital. Many of the services provided by the platforms really don’t need a long painful visit to a GP or hospital, with similar outcomes achieved through a video call.

There are a couple of big takeouts from the rise of telemedicine platforms in China. The platforms are businesses, and are looking to further monetise their platforms, which is likely to increasingly provide marketing and sales opportunities for products and services related to health. From a wider view, the platforms provide many lessons for almost every other country whose health systems are straining and are in dire need of a new way of providing solutions on scale. Something to think about.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

There’s More to China’s Post-Pandemic Boom than Meets the Eye, Economists Say: China is “already in another mindset compared to the rest of the world,” says Alexis Garatti, head of macroeconomics at Euler Hermes. The US and China – the two biggest economies in the world are bouncing back strongly, driving demand for resources and consumer goods, with luxury soaring in China. This has contributed to Bernard Arnault, CEO of LVMH, briefly edging out Amazon’s Jeff Bezos as the world’s richest person last week. Globally, luxury good sales are expected to return to 2019 levels this year.

Chinese Shoppers, Stuck in China, Revive Local Malls: Retail sales in China grew 34% in the first quarter, over the same quarter last year. Ground-floor shopping mall rents increased 0.2% from a year ago. Numerous shopping complexes are seeing sales above 2019 levels, particularly those with luxury stores.

Three-Child Policy: China Lifts Cap on Births in Major Policy Shift: Married Chinese couples may have up to three children, China announced on Monday. The policy change will come with “supportive measures” including lower educational costs for families, stepped up tax and housing support, guaranteeing the legal interests of working women and clamping down on “sky-high” dowries. It would also look to educate young people “on marriage and love”. 29,000 of 31,000 respondents in a Xinhua poll said they would “never think of it.”

Online: Digital China

ByteDance Rival Kuaishou Posts 37% Quarterly Sales Growth: Kuaishou’s revenue surged to $2.65 billion for the three months to March. But the company is now grappling with an influx of new rivals, from up-and-comers like Bilibili to super app WeChat. Advertising surpassed virtual gifts or tips during live-streaming videos to become Kuaishou’s biggest earnings driver last year, while GMV on its nascent online marketplace grew 300% to ¥118.6 billion ($18.6 billion). Monthly active users expanded slower to 520 million, up from the 495 million a year earlier.

Premium Food & Beverage

Pandemic Gives Boost to Dairy Consumption: This year, the average daily dairy intake reached 260ml, versus 237mls in 2019 according to a study by the China Dairy Industry Association and Royal FrieslandCampina. 30.7% say they have increased dairy intakes since the pandemic. 11.1% increased their dairy intake types, with more people having dairy snacks and yogurt, in addition to liquid milk, milk powder and cheese. For much deeper, real-time analysis, see our Dairy Tracker.

China’s Pork Prices Fall as Consumers Tuck Into Poultry, Other Meats: Pork’s share in the total of pork, beef, mutton and poultry produced shrank from 63.3% to 53.8% between 2017 and 2020, while poultry rose from 22.5% to 30.9%.

Spotlight on snacking: Occasions and food rituals evolve amid COVID-19, says Glanbia: The top trends in Chinese snacking are “Snack Cravings,” “Crunchy Textures” and “Health-Focused,” according to Glanbia. Texture preferences are typically crunchy and crispy snacks. Healthy ingredients providing protein, vitamin, and mineral fortification will give consumers a better-for-you option that they can feel good about.

Staying Health

China’s Telemedicine Boom Sparks Mad Rush for Doctors: About 10% of China’s 3.86 million doctors are thought to be on telemedicine apps, and the figure is only expected to rise. China’s digital health care market grew 44% to ¥314 billion ($49.3 billion) in 2020, and could hit ¥4.2 trillion ($659 billion) by 2030.

China’s Women Reject Ad Telling Them How to Dispose of Their Pads: By including an adhesive strip for sealing pads after rolling them up and using outdated euphemisms to describe menstrual products, domestic company Sofy’s latest campaign only contributes to period shaming, women say.

In ‘Involuted’ China, Eating Disorders Are a Hidden Epidemic: Just a few decades ago, eating disorders were extremely rare in China. But in recent years, cases of anorexia, bulimia, and binge-eating disorder have skyrocketed, with health experts placing blame on China’s social “involution” — or intense social competition — and toxic beauty standards that encourage extreme weight loss.

Overseas Chinese Tourists

Nation Leads Way for Overseas Travel Resumption: Destination risk levels, pandemic control policies and friendliness toward travellers from China are the top concerns for Chinese selecting a destination. 43% would be more confident about travelling overseas after being fully vaccinated; 56% said lifting quarantine would have a bigger influence on their foreign travel plans, while the same proportion said zero confirmed cases would be the key factor. Some 45% said the resumption of international flights would influence them the most.

Video & Entertainment

Tencent’s Silent Pursuit of Global Gaming Domination: The world’s largest games company Tencent has a 43% share of China’s domestic games market. 21% of its games revenue comes from outside of China. It is continuing to grow organically as well as through investments and acquisitions. In 2019, it closed 10 games related deals, 31 in 2020 and already this year, it has completed 51 – one deal every 2.5 days in 2021 on average.

Chinese sport Sport

China Shelves Dozens of Races After Deadly Ultramarathon: At least 60 marathons and cross-country races have been cancelled or postponed in China after 21 runners died when extreme weather hit an ultramarathon in late May.

Banking, Investments

Wall Street’s New Love Affair with China: Goldman Sachs, an emblem of the globally dominant American finance industry, has unveiled a wealth partnership with the state-owned ICBC. Earlier last month, BlackRock received approval for a wealth management partnership with China Construction Bank, while JPMorgan Asset Management has announced plans to invest $415m in China Merchants Bank’s wealth unit. From Europe, Amundi and Schroders have gained approvals for majority-owned partnerships in wealth management. Goldman Sachs estimates 60% of all Chinese household assets were in property in 2020, and a further 24% were in cash and deposits. In an era that is increasingly defined by geopolitical competition and a push towards economic “decoupling”, American finance has never been closer to Chinese wealth. [paywall]

Earlier in May, after a month-long delay, China released much of the population statistics from its once-a-decade census. Whilst there were no real surprises, the data quantified many trends that can help shape China marketing strategies. At a personal level, tracking the changes from the 2010 and 2020 censuses gave us a reason to look back and trace the past 10+ years that China Skinny has been consulting in the market, and provided another reminder of the dynamism of China. Below are some of the snippets that we found interesting…

Peaking Population that’s Ageing, Driven by Falling Birth Rates
After a supposed leak to the FT revealed that China’s population may have already started its decline, followed by the delayed release of census data, and questions about 14 million ‘mystery children’, official data shows that China’s population continues to grow – 72 million since 2010 – although at its slowest rate in fifty years. The population grew by an average of 0.53% a year over the decade since the last census and rose from 1.40 to 1.41 billion between 2019 and 2020. The well-known elephant in the room was the 7 percentage point decline in the working age population as China gets greyer. Over-60s rose 5 percentage points to 18.7% since 2010 while births have seen a steady decline from the 18 million in 2016 to 12 million last year.

What does this mean for marketers?
China’s falling birth rates have long been known and will obviously have an impact on mum and baby products and almost everything else as those kids age. Cushioning the decline is rising affluence and a stronger-than-ever desire to care for the precious child. This has increased spending more per mother, but brands will need to work harder for a piece of the pie, particularly as Chinese mums warm to domestic brands. Similarly, demand for elderly-focused products and experiences will rise, presenting new opportunities for brands. Elderly have become easier to reach through digital channels with people over-60 accounting for 11.2% of internet users in December, up from 6.3% in March 2020. One of the big influencers in their purchases – their kids – are more educated and freer spending than ever.

As we noted last month, shrinking extended families will see individual tribes and interest groups influencing purchase behaviour more. We’ll also see family substitutes such as pets getting a larger share of spending.

The Great Geographical Shifts
One of the most staggering changes in China since opening up in 1979 has been the shift in people living in rural areas to the cities. Between 2010 and 2020 more than 200 million left the countryside for the bright lights of cities, taking the urbanisation count to 902 million – or 63.9%. That urbanisation has been driven by migrant workers – people living in a city that’s not their home – who swelled 88.5% over the past decade to 493 million. The big shifts extend beyond just the country-city balance, but also the regions people are choosing to live. The share of those living in central and northeast regions fell to 25.8% and 7% respectively, with the populations of Heilongjiang, Jilin and Liaoning dropping 30% since 2010. On the other hand, people flocked to south and east China for better jobs, living conditions and weather.

What does this mean for marketers?
The wealth between Chinese cities will continue to diverge, not just in wages, but also in areas such as house price appreciation, which influences spending. This will obviously impact price sensitivity and the types of products and services that consumers buy. Not only do lifestyles differ between cities, but also the psyche and day-to-day challenges. The type of messaging that resonates with a consumer in a city that is declining is likely to be different that those dealing with ever-more traffic and rising property prices. Localisation by city has never been more important in China. Migrant workers have also become an enormous market in themselves. They have unique needs and drivers, and emotional buttons such as long absences from close family, which can help brands to connect in their communications.

Smaller Households & Singledom
One of the lesser-published drivers of consumption in China has been the growth of households. Over the past decade, the number of households grew by almost a quarter from 402 to 494 million. That’s a lot more places needing a fridge, sofas, and everything else than 10 years ago. The size of those households has become a lot smaller, from 3.1 to 2.6 people per household, driven by less children, more childless couples and singles living alone. This hasn’t been helped by the gender imbalance growing to 34.9 million more males than females. As Chinese consumers get more educated, they are placing greater focus on careers than marriage and are also less likely to settle. 218 million now have a university degree – 15% of the population, versus 9% in 2010.

What does this mean for marketers?
Smaller households bring different needs – from portion sizes to the need to get out more for that basic human need of social contact. China’s ‘singles’ economy’ has long delivered opportunities for adaptable companies. Brands who offer single-sized products and services, to messaging that resonates with consumers bucking the traditional wedded path, have been warmly received by a large and affluent sect of Chinese consumers. With education, also comes discernment and brand and product education needs to be smart and resonant with increasingly open-minded consumers for everything from sustainability to authenticity.

The above are some of the takeouts we got from the census data. As ever, we’ll keep an eye on how things are tracking in China so you don’t need to wait another decade for updates. Get in touch with China Skinny to learn more about how we can identify and translate the stats into relevant recommendations specific to your brand in China.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

China’s Population, Demographics and Facts: Charts and graphs showing the high level numbers from China’s 2020 census results.

Aging of Beijing, Shanghai Populations More Serious than National Average: Beijingers aged 60 or above stands at 4.29 million, or 19.6% of the total, versus the national average of 18.7%. Shanghai is even greyer with 5.82 million aged over 60, or 23.4%, 4.68 percentage points higher than the national average. Shenzhen and Guangzhou are much younger by comparison, with 5.36% and 11.41% over 60 respectively.

Average Annual Wages in China’s Cities Jumped 7.7% Last Year to $8,965 USD: The average gross annual salary of China’s urban employees in the private sector rose 7.7% last year from the previous year to ¥57,727 ($8,965). Those in the non-private sector grew 7.6% to a mean of ¥97,379 ($15,123). Workers in the tech and finance sector earned the most, whereas those employed in the transportation, catering, hotel and tourism industries experienced a drop in earnings due to the adverse effect of the Covid-19 pandemic.

Survey: Chinese Consumer Sentiment During the Coronavirus Crisis: Around 60% of Chinese consumers are optimistic about an economic recovery post-COVID-19; Half of consumers expect to spend extra in 2021 to reward themselves; 64% have made changes in their work or study locations; and 84% of consumers have changed stores, brands or the way they shop according to a McKinsey survey.

China’s “Involuted” Generation: A new word has entered the popular lexicon to describe feelings of burnout, ennui, and despair. Involution is “the experience of being locked in competition that one ultimately knows is meaningless.” The concept gathered momentum in China’s elite universities last spring when students felt anxious, stressed, overworked, and trapped in a status race. It is an ideal that leads college students to work inhumane hours and drives young migrant workers to hustle in the gig economy, with promises that it will propel China into a future of wealth and ease.

Online: Digital China

Cross-Border Ecommerce Overperforming: A study from the Amazon Global Store and Baidu found searches related to “cross-border e-commerce” in 2020 jumped 20% from 2019. Nearly one-third of Amazon Global Store users in China are from first-tier cities, led by Beijing, then Shanghai. 32% of users who buy overseas goods are from fourth-tier cities in 2020, up from 28% in 2019. 41% of Chinese cross-border online shoppers were born in the 1990s, and more than 11% in the 2000s. Those aged around 25 mainly shop to satisfy their interest, preferring trendy items such as game consoles, sneakers and snacks, while those around 30 shop for necessities like coffee makers, razors and appliances.

Premium Food & Beverage

Chicecream is Very Expensive Chinese Ice Cream and the Startup Behind it Just Bagged $30 Million in Series A Funding: Chicecream (Zhong Xue Gao) – “authentic” Chinese ice cream – became the most searched item on China’s Little Red Book in 2019. Promoting itself as low sugar and low fat at a time when young Chinese are becoming more health conscious, its ice cream is priced at three to four times the average ice cream bar.

Protein, Traditional Flavours Driving Yoghurt in China: Prices of new yoghurt flavours have increased sharply over the past year with the arrival of fancier flavours. One of the latest launches is avocado yoghurt with oat flakes. High protein yoghurt has also been popular in the premium space. Traditionally linked with health, black yoghurt is increasingly common, with ingredients like chives, garlic, shrimp and rice vinegar.

True Italian Taste at the Masterclass Guangzhou 2021: The China-Italy Chamber of Commerce held a masterclass ‘True Italian Taste.’ The event was opened to experts in the F&B sector, media, influencers, journalists, KOLs, bloggers, nutritionists and Italian food buyers. It was aimed to value authentic Italian food by introducing their quality to the audience; increase the perception of Chinese consumers on authentic Italian products and enhance the visibility of Italian companies in the F&B field in China.

Pepsi’s Peachy Tune With Li Xian Takes Off On Weibo: Pepsi jumped onto China’s recent Peach Oolong flavour train and launched its own ‘White Peach Oolong Flavour Cola’ exclusively for the Chinese market. With an eye-catching video that featured two popular celebrities and a carefully curated Weibo campaign, Pepsi appealed to classical Chinese cultural themes.

Parents and Kids

Milk Powder Pushers Persuading Rural Mothers Not to Breastfeed: A program from the Lianci foundation in China has been accused of spreading incorrect information and containing brand and product marketing, promoting milk powder as being more nutritious than breast milk. Grassroots health care workers receive money for every tub they help distribute, creating a potential conflict of interest. [paywall]

Overseas Chinese Tourists

International Travel from China to be back to pre-Covid Levels by 2023: China has already opened its borders to 36 European and 13 Asian countries. A total of 105 airlines including 19 Chinese carriers, are now flying to 55 different countries, culminating in 294 round trip flights per week. China is due to reach its pre-Covid outbound travel levels in 2023, when traffic is forecast to reach 88 million following 108% growth in 2022 and a further 44% in 2023.

Video & Entertainment

NetEase-Sony Deal Is Newest Blow to Tencent’s Grip on Music: NetEase has struck a deal to license music directly from Sony Music Entertainment for the first time, ending Tencent’s exclusive deal with Sony for Chinese music streaming. It follows similar arrangements between Universal Music Group and the two Chinese platforms unveiled in August last year and aligns with Beijing’s antimonopoly drive.

Autos and Cars

Chinese Automaker Chang’an Ford Apologizes for Raunchy Ad: Chang’an Ford has apologised for a video on social media that many critics say objectifies women. The now-deleted video, meant to show off the acceleration of a new model, features a young woman in a white dress struggling to hold down her skirt as the car zooms past. Chanel is also under fire in China after it continued to work with long-term partner Michel Gaubert who apologised for a video he posted showcasing racist masks with guests screaming “Wuhan girls, wahoo.”

Premium and Luxury

China’s Data Privacy Crackdown: What Luxury Marketers Needs to Know: China’s upcoming Personal Information Protection Law will restrict brands’ ability to use data to market to Chinese consumers. The law stipulates that Chinese consumers should give informed consent before personal information is collected, should be informed of why it is collected and how it is used, and be entitled to rescind consent at any stage.

Besides Covid, the three terms that cemented themselves in the Chinese vernacular last year were PPE (个人防护), lockdowns (隔离) and livestreaming (直播). Over this time, there have been few articles talking about marketing in China that didn’t praise the wonders of livestreaming. The buzz around livestreaming has been infectious for both consumers and brands, with 30,000 new Taobao Live accounts opened by merchants in February 2020 alone.

There are many well-publicised success stories supporting the livestream craze at its peak last year, such as the $6.6 billion in livestreaming sales over the 2020 Singles’ Day festival. Last October, Adidas amassed over 2.2 million users and sold ¥200 million ($31 million) worth of gear in a single livestream. The restaurant-supplier-come-retail-brand Xinliangji sold ¥20 million ($3.1 million) of crayfish during a short stream last April. There is a god-like gravitas of super-streamers like Viya and Austin Li, each who sold a small country’s GDP-worth of sales in 2020.

Yet riding every successful wave in China, there will inevitably be the scammers capitalising on the mad rush to be a part of it. Just as fake sales have skewed ecommerce data for years, and 70% of KOLs fake their fans or engagement, there are increasing reports of the streaming swindlers preying on unsuspecting brands.

Brands typically engage with livestreamers through multi-channel network (MCN) agencies – the companies who manage livestream talent and negotiate deals with brands. There are over 28,000 MCN agencies in China but there are only a handful of livestreamers who have the pulling power to bring in millions of sales in one sitting. A few dozen more second-tier livestreamers, can draw material crowds and sales. The large majority of those 28,000 MCNs are bottom feeders, peddling their ‘rising stars’, ‘niche influences’ and even the odd household name to brands wanting to get on the livestreaming wagon. With few genuine credentials to promote, many of the MCNs hire click farms to artificially inflate their stars’ sales and viewing figures.

In a Skinny in June last year, we cautioned brands to be wary of the fake data jacking up livestream results, but with livestreaming now passed its peak, MCNs are faking more than ever to keep the dream alive. This Sixth Tone article quantifies the extent of user and fan shams, noting that even well-known celebs such as TV presenters and judges from reality TV shows are seeing around 80% of the sales on their livestreams bought and then returned in what is clearly a scam. Similarly, Li Xueqing, a stand-up comedian, co-hosted a livestream that attracted 3.11 million views – but investigations found that only the number after the decimal point was real.

These incidences are not uncommon. A single WeChat group of livestream scam victims counted dozens of members representing brands who’ve experienced losses over ¥100K ($15.5K), with one skincare seller duped of ¥3 million ($466K).

Although the livestream buzz is fading and tarnished by scammers, the channel can still provide a strong channel to build awareness, encourage trial, boost sales or shift surplus stock, particularly if it is executed in a smart way that will create stickiness with customers. But brands should be aware that many MCNs may not be as wholesome as they appear. Livestreaming isn’t cheap, so it is worth checking the followers and engagement for meaningless comments, and even talking to other brands who have used them. Tread carefully.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

China’s Households Shrink to Fewer Than Three People for First Time: Households have dropped to 2.62 people on average – the first time it has been below three. The average has fallen from 4.43 in 1964 to 3.96 in 1990 and 3.1 in 2010, according to official data. Numbers declined most sharply between 1990 and 2005.

Five Chinese University Students Sentenced to up to 2.5 Years in Jail for Swindling Free KFC Meals: A group of university students from Jiangsu Province were given prison sentences of up to two-and-a-half years for fraud after they took advantage of loopholes in KFC’s mobile application and WeChat account to obtain free meals and make profits, and caused over ¥200,000 ($31,174) losses to the company. Since April 2018, a student not only ordered free meals for himself but also sold the meals and coupons to others to make a profit. He also taught four other students how to beat the system.

China’s Retail Sales up 17.7% in April: In the first four months of 2021, China’s retail sales of consumer goods grew 29.6% year-on-year to reach ¥13.84 trillion ($2.15 trillion), with online sales up 27.6% – not as fast as retail overall, largely due to the lockdown skewing ecommerce sales last year, particularly during February and March. Analysts were expecting April retail growth to be a quarter higher. Imports in April rose 43.1% year-on-year.

China’s FDI Inflow Surges Nearly 40% in Jan-April: Foreign Direct Investment into Mainland China in the first four months of 2021, increased 38.6% year on year to ¥397 billion yuan ($61.5 billion). Investment from ASEAN countries grew 65.2%, countries along the Belt and Road invested 62.8% more and the European Union was up 9.2%. Investment in Eastern China (the area which includes Shanghai) grew fastest at 39.1%, followed by central China at 37.5%.

Online: Digital China

China’s Hottest Livestream Trend: Fraud: Scams appear to be becoming more common as the commercial livestreaming boom triggered by China’s COVID-19 outbreak begins to lose steam.

WeChat to Stop Mini-Programs That Jump Onto Other Platforms: WeChat, China’s most popular social media application, will disable mini-programs that lead to other mobile apps this week.

Premium Food & Beverage

Sam’s Club China Enters New City and Announces Major Expansion Plan: Walmart’s Sam’s Club opened its first store in Huizhou, Guangdong at the end of April, raising the total number of Sam’s Club China stores to 32. The company plans to continue adding 4-5 new Sam’s Club stores a year in China over the next few years. Sam’s Club presently covers 23 cities and has more than 3 million members in China, 80% of which have been members for at least two years. Its main difference to Walmart are its membership model, discounts on bulk purchases, relatively upscale offerings and attraction of their Member’s Mark private label products.

Disgraced Luckin Coffee Founder Lu Zhengyao Cooks Up New Business: Luckin Coffee founder Lu Zhengyao is preparing to launch a noodle restaurant chain after he was removed from his chairmanship of Luckin in July 2020. The noodle chain is expected to be called Xiaomian Riji, or Noodle Diary. Luckin’s former CEO as well as two vice presidents have joined Lu’s new venture, which is anticipated to involve 500 noodle restaurants.

Overall Beauty

Why Clean Beauty Brands are Heading for China: Expect a surge of activity as beauty brands sense new opportunities in China over the next 12 to 24 months as animal testing requirements are removed from imported cosmetics into China. Aesop and The Body Shop plan to open physical stores in China by 2022. Brands in the SuperOrdinary portfolio, which includes Drunk Elephant and The Ordinary, are expected to open physical flagships in China next year. Days before the new regulations came into place, Australian clean beauty brand Frank Body welcomed a closed investment from China-based private equity firm EverYi Capital. The investment, values the brand at AUD $100 million ($77.4 million). New York-based beauty and fragrance brand incubator Perfumarie will open the first Perfumarie Asia digital store in China in 2021, followed by flagship locations in Shanghai and Beijing in early 2022.

Staying Health

Why China Is Running Out of Lab Monkeys: Trade restrictions and an increase in biomedical research, including into COVID-19 vaccines, have driven the price of animals used in experiments to new heights with the price of lab monkeys increasing 4-fold since late-2016. The number of lab monkeys sold and used in China grew from 7,000-8,000 in 2013, to almost 30,000 in 2019. The US used more than 74,000 in 2017.

Video & Entertainment

Tencent is Paying Users to Try its New Classic TV Streaming App in Effort to Quickly Grow Elderly, Rural User Base: Offering entire seasons of popular classic TV series ad-free, Tencent’s Pianduoduo gives users digital coins in exchange for watching. Paying users is an increasingly common tactic among China’s internet companies to quickly grow their user base, especially those who are less tech-savvy and have more free time like the elderly and rural. More than 100 million Chinese consumers aged above 50 use the mobile internet, spending an average of 136 hours a month on their smart devices.

Autos and Cars

All the Electric Car Companies in China — a Guide to the 31 Top players in the Chinese EV industry: Beijing plans to reach 20% penetration of new energy vehicles by 2025. By 2035 EVs will become the dominant new vehicles sold in China. Every Chinese company wants to make EVs – here at the top-22 manufacturers in China and nine tech giants including Alibaba, Baidu, ByteDance, Didi Chuxing, DJI, Huawei, JD, Meituan and Tencent. 360 and OPPO also want to be China’s next big electric vehicle maker, even if they don’t make cars yet. China’s April auto sales rose 8.6%, the 13th straight month of growth.

Premium and Luxury

Global Luxury Brands Stand a Better Chance of Weathering China’s Nationalistic Consumer Fervour, says Credit Suisse: International luxury brands are less likely to be affected by the “China Pride” phenomenon that is gripping the country’s consumer market, as they tend to be well established and produce better quality goods. “Domestic brands are more down to earth, especially in how they leverage the online short-form video platform. They are able to react quicker to consumers,” says Credit Suisse. “More local brands manage to express their own personality as well.”

Why Hainan is a Luxury Hotspot: Some 600 foreign exhibitors exhibited at the Hainan Consumer Products Expo earlier this month, adding up to 1,365 brands from 69 different countries. During China’s five-day May holiday, duty-free sales in Hainan surged 248% year-on-year to reach ¥993 million ($153 million). But Hainan’s transformation from travel retail hotspot to true luxury shopping destination on a par with other international tourism destinations in Europe, Japan and South Korea still presents challenges, with the retail luxury on offer still in need of rapid upgrades.

This week’s news and trends in China:

Consumers,  Chinese Consumers

What the West Gets Wrong About China: Many people have wrongly assumed that political freedom would follow new economic freedoms in China and that its economic growth would have to be built on the same foundations as in the West. These assumptions are rooted in three essentially false beliefs about modern China: (1) Economics and democracy are two sides of the same coin; (2) authoritarian political systems can’t be legitimate; and (3) the Chinese live, work, and invest like Westerners.

Number of Unhappy Wives in China More than Doubled Since 2012: One in five women in China said last year that they regret getting married. Divorces as a percentage of marriages, was slightly above 20% in 2009. In 2019 it hit 50%. Meanwhile the number of women in rural areas and small cities are nowhere near as eager to jump into marriage as men – 60% of men are prepared to settle whereas 65% of women would only marry if they were in a “high-quality relationship.”

Pollution and Environment

China’s Greenhouse Gas Emissions Exceed Those of US and Developed Countries Combined: China’s greenhouse gas emissions in 2019 exceeded those of the US and other developed nations combined according to Rhodium Group. China is now responsible for more than 27% of total global emissions. The US, the world’s second-highest emitter, accounts for 11% of the global total. India is responsible for 6.6% of global emissions, edging out the 27 nations in the EU, which account for 6.4%. The findings come after a climate summit President Joe Biden hosted last month, during which Chinese President Xi Jinping reiterated a pledge to make sure the nation’s emissions peak by 2030.

How Brands Should Approach Sustainability in China: Sustainable issues are rising up the agenda for Chinese consumers, but they have different priorities. They also don’t want to listen to lectures.

Online: Digital China

Everything You Need to Know About the Ximalaya IPO: Ximalaya’s podcasts, audiobooks, audio drama shows, livestreaming, education programs and audio comics make up 75% of total mobile listening time across audio platforms in China. It has 250 million average monthly users and 5.2 million content producers who shared their work, paid or free, in 2020. Despite the large user base, audio monthly active users only counted for 16.1% of China’s total mobile internet users in 2020, a penetration rate far below the 47% in the US.

Premium Food & Beverage

Hit Variety Show Suspended After Competition Causes Tons of Bottled Milk to be Wasted: Season 3 of hit Chinese variety show Youth With You was suspended after being accused of wasting large amounts of milk, amid the country’s strengthened efforts in eradicating food wastage. Viewers were encouraged to scan QR codes inside Mengniu milk caps to vote for their favourite trainee idols on the show, but many young fans reportedly purchased large amounts of the milk, scanned the codes and then ‘poured the milk into sewers’.

Fizzy Beer Stocks Are Due for a Bar Fight in China: Budweiser said its revenue in China last quarter grew 93% year on year while its earnings more than tripled, with both measures above 2019 levels. Tsingtao Brewery also saw revenue and profit above 2019 levels. On-premise consumption of premium beer accounts for 63% of sales in China further validating that consumers are back at the bars. China’s beer market by value expanded 21% from 2016 to 2019 even though sales by volume only grew 0.6% indicating that consumers are getting pickier and trading up. [paywall]

Competition Brewing Up in China’s RTD Coffee Market: Black coffee, premium and multiple flavours are driving the rapid growth of RTD coffee in the Chinese market. In March, Nestle’s Nescafe launched a new RTD coffee product Sakura Souffle SmoovLatte developed in its China R&D centre, following its popular Sakura Plum Latte RTD which launched last spring. Coke-owned Costa Coffee’s RTD products are available in more than 150,000 retail locations including supermarkets and convenience stores in the country.

Who Really Buys Fine Wine?: In the US and UK about 75% of buyers of fine wine are men, whereas males account for just half of buyers in Mainland China and Hong Kong. Chinese are most likely to prize ageworthiness, but are least likely to care about a complex taste and regional typicity. Two-thirds of mainland Chinese wine drinkers sometimes spend more than the equivalent of $75 on a bottle of wine, versus 10% in Britain and 7% in the US. Chinese consumers listed China as the top source of fine wines. Bordeaux was tied with Australia.

Overseas Chinese Tourists

China Tourist Trips Top Pre-Pandemic Levels Over May Day Break, Revenues Still Lower: Chinese tourists made around 230 million trips over the extended May Day holiday as domestic travel surpassed pre-coronavirus pandemic levels by 3%, and was 120% up on 2020. But consumers spent less on their holidays, with domestic tourism revenues only 77% of pre-virus levels at ¥113.2 billion ($17.5 billion). Many travellers used express-delivery services to mail out their luggage to popular travel destinations ahead of their journeys. Luggage was able to arrive as fast as the next day. Very sustainable.

Video & Entertainment

China Box Office Sets Another Record With $258 Million Across May Day Holiday As 2021 Tops $3.4 Billion: China’s box office across the five-day May Day holiday hit a record high of ¥1.67 billion ($258 million). This is up from the ¥1.53 billion grossed during the similar 2019 holiday which lasted four days. Total takings since the beginning of the year have now surpassed all of 2020 with domestic films most popular. China fantasy fans have flocked to cinemas for The Lord of the Rings trilogy return.

Overall Beauty

Why So Many Young Chinese Seek Plastic Surgery: In 2019 the Chinese “medical-aesthetics” industry (which includes surgery, injections and skin treatments) had revenue of $27 billion, growing at 29% p.a. on average between 2015 and 2019. Figures can be vague due to a huge hidden market. For example, Dongguan city has over 6,000 unlicensed clinics but only 43 licensed ones. In 2020 61% of patients were aged 16-25, up from 48% two years earlier. Men accounted for 30% of the market. In America, 81% of cosmetic-surgery patients are over 30 and nearly one-quarter are over 55. It’s believed part of the reason young people have surgery is the influence of Confucian parenting, which means that children grow up without unconditional approval. This normally leads to academic pressure, she says, but it can also be internalised so that children feel the need to improve their appearance from a young age. Double-eyelid surgery accounts for half of all treatments. [paywall]

Designers and Fashion

Adidas Reports 150% Sales Hike in China Despite Local Boycott Over Human Rights: Adidas said sales in China grew by 156% over the first three months of the year – although this period was mostly before the Xinjiang cotton issues started in late March. Adidas still maintains a 17% share of brand preference among young Chinese in the sportswear category and Nike reigns supreme at 27% according to Riwi research, but immediate sales on Tmall slumped 78% for Adidas and 57% for Nike on Tmall in April. Anta sales grew 59% and Li Ning 92%.

Cute, Fluffy Pets

Chinese Netizens Infuriated by “Live Animal Mystery Box” Industry: The business of live animals being sold online as pet lucky dips transported through regular courier services, has caused outrage online in China. The packages are offered at prices as low as ¥9.9 yuan ($1.50) for a mystery live animal.

2003 was the year that China surpassed the EU for greenhouse emissions. By 2019, emissions from China were more than four times that of the EU’s 27 member states combined, and over 30% more per capita. In 2019 China accounted for 27% of global emissions, exceeding the entire emissions from the Developed World for the first time.

China has pledged peak emissions by 2030 and carbon neutrality by 2060. For the sake of the world, it can’t come soon enough. Although the country continues to invest in coal-powered energy generation, Beijing is driving numerous carbon-reducing initiatives that will hopefully shift the dial on the planet’s global carbon footprint.

You’d think the tangible signs of pollution that choke Chinese cities would make their consumers among the world’s most active environmentalists. But few Chinese consumers make genuinely active decisions to reduce their carbon footprints. For older generations, decades of change and uncertainty has caused many to be quite short-term focused in their decision making, as thoughtfully explained in this HBR article. The fact that most sustainable behaviour yields few immediate benefits, along with a mindset of how can one of 1.4 billion people make a difference, bodes poorly for sustainable behaviour. Instead, consumers leave long term planning to the Government and their five/20+ year plans to fix China’s pollution woes. It has mainly been government initiatives that have driven change in consumer behaviour, from punitive recycling laws to EV incentives.

Nevertheless, Chinese consumers’ are starting to place more importance on sustainability – particularly the young. They have faced less uncertainty in their lifetimes and although they’re still influenced by their elders’ attitudes, they are starting to take a longer-term view to personal accountability and behaviour. As a result, they’re paying more attention to how their values align with a brand’s purpose, including sustainability.

On top of this, many Chinese believe that Covid is the result of environmental mismanagement, which is also helping tilt preferences towards the environment. We’ve seen this in both China Skinny’s Trackers and various projects we’ve worked on since the pandemic struck. Although behaviour around sustainability isn’t yet as mature as most Western countries, the importance that consumers place on it has grown at a faster rate than we’ve seen before.

Many brands in China already count sustainability as a key pillar in their positioning and communications, but a good share are not connecting it in a meaningful way with consumers. Most Chinese consumers see through greenwashing and expose it to the masses on social media. Broadcasting CSR policies rarely gets cut-through, but brands who educate consumers while entertaining and interacting with them are most effective. The gamification approach from the long-running Ant Forest is a good example.

Sustainability programs that directly impact consumers will usually have the greatest impact on shifting behaviour. This could include demonstrating and tracing how products are safe, such as being grown or produced with environmentally-friendly practices, free from pollution or chemicals like formaldehyde. Similarly, using packaging that is both safe and convenient to dispose of, while remaining sustainable.

Many foreign brands have the advantage that sustainability has been part of their DNA for many years now, adding to its authenticity. But even well-versed sustainable brands need to understand that resonating elements will often be different in China than other markets, and how we communicate those elements. Contact China Skinny to learn how we can assist you in getting that right for China.

Click/tap here to see this week’s most important China market and marketing news.

This week’s news and trends in China:

Consumers,  Chinese Consumers

China Set to Report First Population Decline in Five Decades: China is set to report its first population decline since the famine that accompanied the Great Leap Forward from 1959-1961. The latest Chinese census, which was completed in December but has yet to be made public, is expected to report the total population of the country at less than 1.4 billion. In 2019, China’s population was reported to have exceeded the 1.4 billion mark. “The pace and scale of China’s demographic crisis are faster and bigger than we imagined,” says Huang Wenzheng, a fellow at the Center for China and Globalization. “That could have a disastrous impact on the country.” [paywall]

The Big Short: How Height Discrimination Hurts Chinese Men: Chinese are getting taller: The generation born after 2000 is already the tallest in East Asia, with the average height of 19-year-old males in China in 2019 being 175.7cm. Over the past 30 years, the average height of 19-year-old males has risen by 7.5cm. For those born after 1995, height is more important than even their finances, family background, or education level when being screened by women. The world ranking of Chinese male heights rose from 150th in 1985 to 65th in 2019.

Blackmores Boss Says Borders a Bigger Headache than Belt and Road Stoush: Blackmores boss Alastair Symington says the country’s closed borders are a bigger headache for the vitamins maker than the potential for rising trade tensions between China and Australia after the axing of Victoria’s Belt and Road agreement with Beijing.

Cracks Emerge in U.S.-Led Intelligence Pact Over China Approach: “The Five Eyes arrangement is about a security and intelligence framework,” Foreign Minister Nanaia Mahuta said at a news conference with her Australian counterpart Marise Payne in Wellington. “It’s not necessary, all the time on every issue, to invoke Five Eyes as your first port of call in terms of creating a coalition of support around particular issues in the human-rights space.” New Zealand’s Five Eyes position reflected its history of taking independent stances sometimes at odds with its US ally – such as its nuclear-free declaration in 1984 and refusal to join the Iraq war two decades later.

Online: Digital China

China Doubles Down on Regulation of Livestream Ecommerce: China has issued new rules to bring order to the increasingly crowded livestream space dogged by growing consumer complaints, starting May 25. Beijing is also set to tighten copyright on use of movie clips, in potential blow to short video apps such as Douyin and Kuaishou.

How the Chinese Shop Online – Re-commerce: 2:44 vid: In China, ‘re-commerce’ super apps have made it easy to buy, rent or even recycle second-hand items with integration with the main ecommerce apps and even price estimations. Over 300 million people use Alibaba’s Idle Fish app. Whilst second-hand shopping apps in the West are typically transactional, in China they are social with micro-communities based on common hobbies. There’s even a separate channel to buy pre-used items from celebrities.

Premium Food & Beverage

China’s Swine Fever Lockdown Reshapes $300 Billion Pig Industry: China’s plan to control the transport of live hogs to rein in the spread of African swine fever is set to reshape the market and create regional price differences in the world’s biggest consumer and producer of pork, with lower prices in the main producing areas in the north and higher prices in the south. Some 20% of China’s pigs, or about 140 million live animals, are transported each year, mainly from the northeast to the south to meet demand for fresh meat.

Oatly’s US IPO Prospectus Highlights Risks to its Chinese Backer: Swedish plant-based milk alternative Oatly is pushing for a $10 billion valuation in its Nasdaq IPO. Three years since launching in China, Oatly’s products are now sold in more than 9,500 shops thanks to its 30% ownership from China Resources. As part of its listing prospectus, Oatly has cited the possibility that the US government could make it hard for the group to share information with a state-owned company and might prevent China Resources from placing its representatives on the Oatly board, or even force it to divest. [paywall]

GM Labelling: Chinese Consumers Willing to Pay for Traceability Codes and Allergen Presence for Soybean Oil – Survey: 62% of consumers are in favour of enhanced mandatory labelling of GM soybean oil, and they were willing to pay for traceability codes, followed by allergen presence, and nutrient and compositional change.

Designers and Fashion

Anta Bets Chinese Shopping Nationalism Won’t Last: The Ding family, which controls Anta, have rarely cut stakes since listing 14 years ago, but last week cashed out of $1.5 billion of shares. Sales of its branded products jumped as much as 45% in the first quarter following the Xingjiang Cotton-driven nationalism, pushing Anta shares up 30%. Fellow Chinese shoe brand Li Ning saw sales grow twice as fast as Anta’s in Q1.

Non-Kids Stuff & Adult

Sex Sells: China Farm Area Becomes ‘Lingerie Capital’: Chinese online sales of sex-related products grew 50% in 2019 to $7 billion according to iiMedia. It predicted 35% growth last year, despite fallout from the COVID-19 pandemic. Most buyers are aged 22 to 25.

Schooling and Education

‘Chinese Traditional Culture University’ Turns Out to Be Fake: The ‘China Traditional Culture University’ was found to have forged official documents and registration certificates. Besides its main location in Beijing, the institute has 70 branches in various cities across China, including in Tianjin, Guangzhou, Guangdong, and Shenzhen. It had been operating since 2009.

Autos and Cars

Tesla Assures Chinese Car Owners After Auto Show Protest: Tesla told customers in China that problems with how the company addresses customer issues will be solved after a social media storm caused by a protest at the Shanghai auto show last week. An unhappy customer clambered atop a Tesla at the show to protest the company’s handling of her complaints about malfunctioning brakes involved with a car accident.

Premium and Luxury

China’s Demand for Luxury Goods Gets Own Cargo Route: Cainiao expects to open direct cargo routes to link Singapore, Japan, South Korea, Australia and New Zealand to Hainan this year to bolster the supply of luxury goods for voracious Chinese shoppers after the pandemic halted global travel. The company is also considering flights to Europe as a longer-term goal, depending on consumer demand and the pandemic.

Digital advertising has dominated media spend for some time in China. By 2019, brands were spending more than one and half times of their advertising budget on Alibaba platforms than they spent on television commercials. Once Covid hit, ad spending shifted further to online platforms, with digital ad revenue growing 23% last year in China, against an overall 15% fall in media spend in the 9-months to September.

Yet even with more Chinese consumers online, the increased competition from advertisers has made it more challenging and expensive to reach consumers. Brands are having to get more creative to stand out from the crowds. In the increasingly digital world, some of the most innovative initiatives we’ve seen have been in the physical world – although many have a digital twist.

This time last month, the sky above Shanghai’s famous skyline was lit up by 3,281 computer-driven drones to promote the China launch of Hyundai’s new premium brand Genesis. The drones danced like fairies to form images of the new car models and Genesis’ logo. The promotion provided the wow-factor to gain the attention of Chinese consumers, helped by a Guinness World Record for “The Most Unmanned Aerial Vehicles (UAVs) airborne simultaneously.”

The display was followed by similar aerial formations from Bvlgari, who lit up the skyline with images of serpents, luxury watches and the brand’s logo.  A similar promotion followed from local video platform Bilibili, who celebrated the first anniversary of the China release of the computer game Princess Connect! Re:Dive. The multi-coloured display dazzled the audience for two minutes with an in-game battle and elaborate images of the characters.

What made the Bilibili drone display stand out was that the drones formed a massive QR code at the end of the show, providing an avenue for viewers to download the game. Although each of the drone promotions went viral across China and undoubtedly built brand equity, the QR Code managed to squeeze in a good old call to action. This will allow Bilibili to capitalise on the big expense of the promotion long after it is usurped by the next mind-boggling advertisement that will inevitably follow. It’s another reminder of how powerful it can be to incorporate online elements into offline ads and take advantage of Chinese consumers’ ever-present smart phones.

Although Genesis and Bvlgari are foreign brands, and even Princess Connect originally came from Japan, Chinese consumers have enthusiastically embraced them like their own. World records set against a backdrop of the Shanghai skyline, using Chinese technology – almost all of the world’s drones are from China, including DJI which makes 70%-80% of the world’s commercial drones – is a smart way to resonate with an increasingly China-proud consumer, while doing nothing to take away from your brand’s unique DNA.

China’s advertising sphere will only become more crowded forcing brands to be more innovative to stand out. Get in touch with China Skinny to learn how we can help you with that. There’ll be no Skinny next week due to May Day holiday – we’ll be back again in your inbox on 12 May. Have a great holiday if you are taking one.

Click/tap here to see this week’s most important China market and marketing news.

Not long after the People’s Republic of China was established in 1949, Chairman Mao declared motherhood to be a patriot duty to build manpower. Whilst there was no official policy, government propaganda rallied couples to reproduce. It condemned contraceptives and even banned the import of some. By the 1960s the average Chinese woman had six children.

Just 30 years after Mao Zedong initiated the baby boom, the population had almost doubled to close to one billion. To curb the growth, China introduced a two-child cap in the 1970s, followed by the One Child Policy in 1979 which persisted until 2016. The policy wasn’t as restrictive as the name would suggest, with about half of all Chinese parents – particularly those living in the countryside – allowed to have a second child for 30 of the 36 years that the policy was enacted. Nevertheless, the world’s most extreme family planning exercise systematically altered the Chinese family structure forever.

When Beijing ended the One Child Policy in 2016, there was a small bump in fertility – partially helped that it happened after the undesirable Year of the Goat which rises always follow. But it soon became clear that another baby boom wasn’t going to happen. In 2019, China’s birth rate was its lowest since the founding of the People’s Republic including when the One Child Policy was in full force. Last year, Covid contributed to the number of registered births in China falling again by 15%.

Whilst Chinese parents can now have multiple children, it has become socially acceptable to have one. The expense of raising a child in China: ensuring they have premium, safe food; an education that may give them a chance in China’s hyper-competitive workplace, among other things, has been a potent contraceptive for many Chinese. A large share of couples are opting to have no kids at all, some are substituting babies with pets.

Families have had only-children for two generations now, yet most have still been blessed with large extended families as a result of the enormous families pre-1979. Family-based decision making has extended to aunties, uncles and the generations before. However, by 2050, nearly a sixth of China’s children and teenagers will have no brothers, sisters, uncles, or aunts. As eloquently put by Nicholas Eberstadt and Ashton Verdery in their Foreign Affairs’ article, “Many tens of millions of people will traverse life from school through work and on into retirement with little or no first-hand experience of the traditional extended family so integral to Chinese culture. Theirs will be the generation that in effect finds 2,500 years of Confucian tradition coming to an end.”

Although Chinese are inherently pragmatic people who adapt to anything that comes their way, having no extended family networks will inevitably have an impact on individual consumers and the wider society.

The demographic changes will undoubtedly accelerate some trends that we are currently seeing. We expect consumers to look to their individual tribes and interest groups where they may have sought support from their families a generation earlier. They will find brotherhoods and sisterhoods from gaming communities, sporting groups, education cliques and other interest groups further than before. For people thinking that KOLs and KOCs may diminish in importance, the smaller pool of role models in a family will see consumers seeking more direction from societal figures. The importance of social networks as a place to connect will accelerate further in importance, and with it, social and community commerce. Mental health will become more prevalent, and more accepted and supported. Parents are also likely to provide pets as companions for their kids and themselves, further fuelling China’s pet economy.

The drastic shifts in Chinese demographics will be yet another factor driving the dramatic change of Chinese consumers. China Skinny can assist you to ensure that your strategy considers these relevant changes. Contact us today to learn more.

Click/tap here to see this week’s most important China market and marketing news.