Sleep deprivation, oh how horrible. It’s the giveaway sign of new parents or someone trying to juggle a demanding job with study or other extracurriculars. It’s also increasingly likely to affect Chinese consumers.
On the surface, many Chinese appear to be among the most capable sleepers on the planet – where else do people manage to nap while standing on the subway, or within seconds on a seat anywhere, even with the lights and noise of Chinese cities around them. Yet for 300 million Chinese people – almost a quarter of the population – sleep disorders are a genuine issue according to a recent study from the Chinese Sleep Research Society. Overall, the sleep quality of 94.1% of the Chinese public does not meet the recommended healthy standard.
It’s little surprise that many Chinese don’t get enough sleep: Chinese are working longer hours than before, and there are ever-more distractions in and out of the home. A recent Accenture study found 43% of Chinese spend less time at home than they did five years ago, versus just 15% on average from the 13 countries studied. Even at home, the smartphone screen and its alluring ecommerce deals, short videos, WeChat feeds and gaming are keeping Chinese consumers from the land of nod.
China’s lack of sleep has supported the rise of related industries. Sleep-aid supplements on Tmall increased by 300% last year, for example. However, like most things in China it is far from a one-size-fits-all, with data giving us an insight into how segments approach their issues overall. Consumers aged over 40 are more likely to favour treatment-based remedies such as natural foods and supplements, while those born in the 80s aim to optimise their sleeping environment, spending large on high-end mattresses, bedding and pillows. Folk from the 90s tend to buy products such as eye masks and sprays.
The steep growth in sleep-related products and services indicates that Chinese consumers are increasingly recognising their sleep issues, which has translated to an increase in resonant sleep-assisted marketing claims. Nevertheless, many consumers are unaware of the far-reaching downstream effects of a lack of sleep such as weight gain, heart disease, diabetes, strokes, cognitive function, lack of sex drive and even family harmony – all directly and indirectly related to family, success and health which are among the most important for goals for many Chinese consumers.
Brands should consider related sleep-related components when determining their product development, positioning and messaging hierarchy. Even categories that seem a little disconnected would be wise to consider it. We only need to look at Chinese tourists who claim the top reason for travelling overseas is to relax. As a hotel or airline, sleep-assisting pillows, seats or other features may increase your allure. China Skinny can assist to ensure you make the most of the opportunities. Go to Page 2 to see this week’s China news and highlights.
Last week, a man surnamed Cheng burst onto the stage at Baidu’s AI conference and upended a bottle of water over Baidu’s CEO Robin Li. Cheng’s bold act was applauded by many online patrons and was representative of how many Chinese consumers have become frustrated with the performance, ethics and privacy from China’s leading search engine; particularly as the Googles of the world are shut out.
In 2016, Baidu was slammed by consumers and the authorities after a university student died of cancer following subpar treatment from a hospital that had paid for an elevated listing in the search engine’s results. Just last month, Baidu was again censured for promoting fraudulent college application services. A state education department warned students to avoid using search engines when seeking the official university application website as they may be misdirected to an unofficial website which leaks personal information, while not even providing valid applications.
Yet it isn’t just Baidu who is untrusted. Highly trafficked search engine 360 Search was also summoned by China’s Ministry of Education and Ministry of Public Security for linking to the dodgy application services from paid advertising. Just last month, popular search engine Sogou was fined $4.37 Million for ‘unfair competition’ after directing users to its own site using suggested search pop-ups on its keyboard, even when users were trying to input keywords into rival search engines.
These are just a few misdemeanours contributing to why search engines are not nearly as relevant in China as they are in other countries. Last year Google topped the BrandZ Most Valuable Global Brands and YouGov Global Brand Health Rankings, among many others. On the other hand, Baidu’s market has dropped from 86% in August 2015 to 64% in May this year. Baidu reported its first net loss in Q1: nearly ¥330 million ($48 million). Following its worst performance since listing in 2005, Baidu’s CEO Robin Li began restructuring its management team. At least seven top executives have left Baidu this year including president of new business Zhang Yaqin and senior vice president of the search business Xiang Hailong.
At China Skinny, we still hear from numerous brands seeking a plan for Baidu as the key pillar of their China marketing strategy. Whilst Baidu can be an important touchpoint in the customer journey for many categories, in most cases, it is secondary to other digital channels such as WeChat, ecommerce and even relative newcomers such as Douyin.
Digital ad spending is forecast to grow 22% in 2019. While Baidu’s share is shrinking, Alibaba’s ad revenue is forecast to be $27.3 billion – 63% greater than total ad spending on TV. According to emarketer, digital ad spending is expected to account for 69.5% of total media ad spend this year, and Alibaba’s digital advertising revenue will be more than double that of Baidu’s.
Why is Alibaba’s ad revenue more than twice the value of China’s biggest search engine? One reason is context. When you are searching on an ecommerce platform, your target market is typically much closer to the point of purchase, so your ad spend is more likely to result in a sale. Secondly, as well as purchases, Chinese consumers use ecommerce platforms for research – often instead of search engines. This is because Chinese ecommerce pages contain so much valuable information, results contain user generated reviews, and are more organic than the paid placements on Baidu. In short, they are more trusted. In China’s inherently untrusting society, whether it be ecommerce search results or KOL endorsements (even though most are dishonest), Chinese consumers are more likely to respond to sources that they can trust. Brands should aim to understand those trusted touch points and have a strong presence across them – something China Skinny can assist with.
On the subject of untrusted online sources, we have heard from a few people who have registered for the 2019 China Digital Conference advertised in Melbourne on 31 July. The site claims that China Skinny’s Mark Tanner is the conference chair and the esteemed Matt McKenzie and Benjamin Sun will also be speaking. We can confirm that Matt, Ben or Mark were unaware of the conference and the advertised venue does not have a booking on the said date. We’re sorry for those who purchased tickets, and hope there is a path of recourse to get your money back. China Skinny is lined up to be back speaking in Melbourne in September, so hopefully we can share some of our insights and views on the China market then. Go to Page 2 to see this week’s China news and highlights.
On the surface, Chinese consumers appear to be some of the most environmentally-conscious consumers in the world. For years, high profile studies have praised Chinese consumer’s sustainability habits, such as the National Geographic’s 2014 Greendex which ranked China second globally for its consumers’ environmental behaviour, applauding their high public transport and scooter use, and consumption of locally grown food.
More recently, China’s Electric Vehicle (EV) adoption has been the envy of every environmentally-focused government, accounting for 49.5% of EV sales globally. Yet with annual EV sales growth plummeting from 126% to 2% over the past 12 months, largely due to the reduction of Government incentives, it is fair to say the purchases were more motivated by wallets and license plate quotas than sustainability concerns.
At China Skinny, we’ve been following consumer attitudes towards sustainability for many years now. Whilst there have been some hopeful green-shoots, overall behaviour is still at its nascent stage relative to most Western markets. This is reflected in the 10+ billion plastic-loaded meal deliveries a year, or the nearly three-quarters of residents in top-tier cities who couldn’t identify how to properly sort their rubbish for recycling.
Chai Jing’s raw 2015 documentary Under the Dome showed great hope for educating a population hungry for answers about China’s toxic environment, but its runaway popularity ironically saw every trace of it removed in China less than a week after airing. This stole the opportunity to corral the population into more sustainable behaviour.
On virtually every related research project China Skinny has done, we’ve found consumer responses are supportive of sustainable brands and products at a surface level, yet delving deeper into actual behavioural has found limited individual accountability for environmentally-friendly behaviour. Most consumers have expected Beijing to be the main driver for fixing the environment. As of Monday, we’ve seen the most significant step from Beijing to shift the onus onto consumers to act more sustainably.
From July 1, Shanghai residents must sort their garbage into four classifications – household food or kitchen waste, hazardous waste, recyclable waste and residual waste. Failure to do so will see individuals face fines of up to ¥200 ($29). Businesses face fines of up to ¥50,000 ($7,282). Shanghai has installed more than 13,000 waste stations, so far covering 75% of the city, and has replaced more than 40,000 streetside bins for different types of waste. The city currently generates more than 9 million metric tons of garbage every year – the equivalent of 1.5 million African bush elephants. In its quest to reduce this and make sense of the new recycling rules, it has used gags, memes and events with “performers striking forceful beats on tall garbage cans.”
Following Shanghai, another 45 mainland cities will introduce similar regulations, including Beijing, Shenzhen and Guangzhou. By the end of 2020, the 46 cities will invest ¥21.3 billion ($3.11 billion) to build waste sorting and recycling systems.
We only need to look across the Strait to Taiwan to see what an impact this could have. In the first 10 months of last year, nearly 60% of Taiwan’s waste was recycled. The daily amount of garbage during than period was 0.41kg, down from 1.14kg in 1997. When you’re looking at China’s scale, similar savings won’t just have a massive impact on its cities, but the world as a whole.
Like many things in China, Government-led initiatives are among some of the most persuasive drivers and shapers of behaviour. As consumers are forced to sort and recycle, sustainability will be brought to the forefront of consumers’ consciousness. Expect sustainability to be one of the most talked-about and thought-about factors of consumption in the foreseeable future – something worth factoring into your marketing strategy.
On the topic of trends shaping marketing in China, China Skinny’s Mark Tanner is joining CBBC for the webinar What’s Hot and What’s Not in a Slowing Chinese Economy on 17 July to share insights on trends and categories currently shaping consumer behaviour. Non-CBBC members are welcome to join. More information here. Go to Page 2 to see this week’s China news and highlights.
If you were peddling your products in Los Angeles and Chicago, there’s a good chance that you’d need to tweak the marketing strategy to account for differing lifestyles, varying tastes, disparate climates, different sales channels and varied cultural and emotional needs. In China, variations between cities are typically even greater. Many Chinese cities’ characteristics have been evolving since long before Columbus was leading expeditions to the Americas. These historic differences have helped shape regionalised consumer behaviour. More recent Beijing policies have further moulded differing consumer profiles. For example, residents in first tier cities have been able to travel abroad with more flexibility for longer than their lower tier peers, impacting their sophistication and maturity when travelling abroad, and their exposure to foreign lifestyles and products.
There’s no city that better illustrates the diversity of China’s megalopolis’ than the boomtown of Chengdu in China’s southwest. On the surface, it could be any Mainland city; thousands of grey apartment blocks sprawled across a flat grid of streets, dotted with adventurous modern commercial towers and restored ancient constructions, dissected by a winding river and heaving highways, obscured by a soupy smog more days that it isn’t. But filling those towers are a population arguably more independently-minded than consumers in other parts of China – with personalities as spirited as the peppers that are such as big part of the local Sichuan cuisine.
Chengdu is located some distance from Beijing’s policy makers. The mountains that encircle the city have provided a natural barrier for traders, invaders and legislators for centuries, isolating the city from the outside influences that have impacted other Chinese cities. Chengdu’s fertile soil and natural resources have seen it stay isolated for much of its history, allowing it to stay largely self-sufficient, with an attitude that’s both “mind your own business” and “anything goes.”
With the wealthy, sophisticated city of 16 million people increasingly on brand’s radars, China Skinny has delivered a number of research projects that include the Chengdu market. Their tastes and preferences are often the most disparate from other consumers in other cities we have investigated. One of our recent studies into the customer journeys of consumers in six mainland cities found the research and sales channels used in Chendgu were by far the most distinct.
Chengdu’s relatively lower rents have lured young, independently-minded migrants from across China, cultivating a hip, progressive culture that’s spawned San Francisco-style cafes filled with millennials. The many miles and mountains between Chengdu and Beijing has seen regressive policies about homosexuality hold less clout in the city, which has become a haven for the LGBT community, whose members are drawn to the relaxed, open vibe. Chengdu was voted the gay capital of China in a recent poll by gay dating app Blued.
Beyond sexual liberation, Chengdu also leads China for many genres of music, its underground scene and youth culture. Much of China’s Hiphop and Trap has spawned from the city, with many of China’s biggest hiphop hits dispersed with the Sichuan dialect.
For brands hoping to connect with independently-minded consumers in the city, you’d by wise to ensure that your product, messaging, channels, KOLs and most importantly, your brand’s purpose, are resonant with the target market in the city because just transposing a successful strategy from Shanghai or Beijing won’t always work.
For most brands in China, it can be impractical to have an independent marketing strategy for each target city, however there can be consistent elements by city tier and/or regional city clusters which can be incorporated to make marketing more targeted and resonant. We’ve found that understanding the consumers in a specific city usually highlights some quick wins that can make your brand and product connect with local consumers and break through the clutter. China Skinny has a lot of knowledge and experience to help you with that. Go to Page 2 to see this week’s China news and highlights.
It doesn’t have the sexiness of livestreaming, or the sizzle of Singles’ Day, but one of the most important components of China’s ecommerce and New Retail boom is the thankless task of making it all happen behind the scenes. China’s logistics infrastructure is experiencing some of the biggest, yet behind-the-scenes, changes in the country’s retail industry. Chinese logistics are evolving from fragmented and rudimentary systems, to consolidated ones driven by the internet-connected smart devices, robots and real-time end-to-end tracking and traceability.
Chinese consumer expectations around delivery have become some of the highest in the world. Many purchases are expected to be delivered in less than 30 minutes. And for other goods, if they don’t arrive within 1-2 days, most consumers will go somewhere else, with the exception of some customized products and goods coming from afar. Yet even expectations for delivery times for cross border products are increasingly short, with bonded warehouses bringing them closer to the consumer.
1.88 billion parcels were delivered just in the 10 days starting on Double-11 (Singles’ Day) last year. This gives China the scale to invest in technology and systems. The increase in New Retail and social commerce is driving both shopping and delivery to become a 24/7 business. Investment is also being propelled by lower tier cities, whose logistics infrastructure is behind high tier cities. Tier-3 cities and lower accounted for more than 70% of the growth of Alibaba’s 102 million new customers over the last 12-months, in addition to apps such as Pinduoduo and WeChat which are driving online shopping in the hinterland. The focus is also being driven by fast growth ecommerce categories like food and beverage delivery, which requires improvements in areas such as cold chain.
Logistics is big business in China. In 2017, SF Express IPOed to become the Shenzhen Stock Exchange’s most valuable company, while pushing founder Wang Wei’s net worth up to $16 billion. Alibaba’s partner logistics company Cainiao – which accounts for one in every 10 packages sold on Taobao and Tmall – was valued at ¥100 billion ($14.5 billion) a year ago, and like all of China’s logistics giants, is investing in exciting advancements.
Cainiao is evolving from just digitally managing the flow of parcels through e-shipping labels, to digitalising all components of the logistics value chain. This will see 100 million smart devices connected to its IoT (Internet of Things) technologies in three years, including partners such as warehouses, warehouse pickers, equipment, transportation vehicles, robots and management systems. It will also connect the anticipated 100,000 pick up stations such as schools and residential complexes, convenience stores and China’s ubiquitous fruit shops to cut down last-mile delivery costs. To complement this, Ciaoniao will enhance and leverage its Guoguo app which it hopes to serve consumers more than a billion times a year by 2022.
A digitalised end-to-end supply chain enables much more transparency and accountability, which is ever-important for China’s untrusting consumers. Such transparency is a key selling point allowing 17.5° oranges to sell for twice the price of similar brands of oranges that originate from the same region for example.
We expect domestic players’ investment, connections and local know-how will continue to see the Chinese logistics brands dominate the China market, and likely expand beyond its borders utilising the developing systems and technology. Foreign players won’t be helped by the recent trade war-related scandal which saw Huawei packages ‘misrouted’ in China by Fedex, whether proven to be intentional or not.
For brands selling in China, ensure you are dialled into the optimal logistics providers and their systems to guarantee customers will have the best possible experience. It will be difficult to compete otherwise. Go to Page 2 to see this week’s China news and highlights.
WeChat now boasts 1.1 billion active users, with most being in China. That’s great news for Tencent who have prodigious insights into the online, offline and commerce behaviour of a large swath of Chinese consumers. Yet its almost-100% saturation of China’s online population also presents challenges to Tencent, who is having to shift its strategy from growth by acquisition to extending the utility of WeChat and its data. To make things tougher, AI-driven competitors such as Douyin are cannibalising the screen time users spend on WeChat through services that are easier to use and more entertaining.
Tencent isn’t sitting still. It’s made some structural shifts in its strategy such as seeking to entrench itself in more industry-related applications from health services to public transport, and this month announced it joined the race for auto intelligence, aiming to provide car makers networking services, algorithms for autonomous vehicles, and location-based services.
Nevertheless, WeChat remains committed to its bread-and-butter (or rice-and-soy) consumer base, evolving with services such as authentic story telling, Official Account live streaming and new Little Red Bookesque-social commerce features – all enriching the consumer experience and presenting exciting opportunities for brands.
For many brands, finding success with WeChat isn’t just about strapping on new services as they are launched, but changing the structural approach to how they view WeChat – much like Tencent has done. The good old approach of pushing out content week in-week out on WeChat rarely works these days. More than half of WeChat Official Accounts are losing followers and the open rate of WeChat articles dropped from 17% to 6% between November 2015 and August 2018 according to social media management platform KAWO.
To increase engagement on WeChat, more brands would be wise to view the platform less as a one-to-many broadcast tool and more as a personalised and targeted interface to connect with and understand the target market. CRM capabilities on WeChat allow brands to gather information about their fanbase far beyond the standard name, avatar, gender and location that come by default. WeChat’s expanding suite of services and subsequent touch points allow brands to track individual’s preferences, behaviour and propensity to engage with different things. This data can be complementary to other insights that can be tracked such as how the user followed the WeChat account, whether through a specific article, promotion, at an offline event, store or scanning a QR code on packaging.
WeChat also lends itself to engaging initiatives such as chatbots, which offer brands a form of simple AI allowing them to connect with their customers’ personal needs and have related dialogue – over and above the usual WeChat messaging quotas – directing them to relevant content and services. Data from these interactions can feed into the CRM system to provide a view into consumer needs that can be coupled with other insights to build truly meaningful consumer-led propositions.
Richer CRM data allows brands to have more targeted, localised and personalised communications over WeChat. Interactions with consumers can be much more resonant based on whether the consumer has a family or is single, lives in Shanghai or Shenyang, if they like lace or leather or the time of the day they are most responsive. In a market as competitive and cluttered as China, particularly with more brands engaging with AI for targeted and personalised interactions, it is fast becoming a minimum requirement to continue to grow engagement. China Skinny can assist to develop your strategy for this.
For our Shanghai-based readers, China Skinny’s Andrew Atkinson will be presenting the Heath Ingredients & Food Ingredients Asia event next Wednesday 19 June discussing headline trends influencing consumer needs across China’s health food categories. More information here. Please let us know if you’ll be there. Go to Page 2 to see this week’s China news and highlights.
Remember when you’d see the big tricycles stacked metres high with polystyrene, rubbish and furniture cruising the streets? Or the vividly-coloured Facekinis poolside or on the beach? Or how about the infants with split pants on a cold Beijing day? They were all China novelties that have largely disappeared from the bigger cities. Yet with each disappearing quirk, a new curiosity has arisen to ensure that there is never a dull day in China.
One area that has recently taken on a life of its own is beauty. Fashion, haircuts and even hair colours are becoming more varied and diverse daily. It is not uncommon to see young Chinese spending 40 minutes on a photo editing app polishing their latest selfie, or a young man in a public place diligently applying mascara – not just representing the exponential rise of male makeup, but also that younger Chinese are confidently challenging traditional social norms to be what they want to be, unfazed by state media’s direction on how to behave.
The pursuit of beauty has been important since ancient times in China. In the Tang Dynasty, makeup became a part of everyday culture, with women applying foundation powder, blusher and a dusting of light yellow powder. Bluish black eyebrows, lipstick, painted on dimples and ornamental forehead flourishes were also added. Whilst beauty is a little less novel than it was 11-14 hundred years ago, it is as relevant as ever for Chinese consumers and something that many of us should take note.
China Skinny has compiled numerous pieces of research asking consumers how they would spend extra money if they received it. Beauty always scores highly, often the top way young millennials would spend the windfall. Many Chinese will directly correlate the way they look with their chances of success – in both their personal and professional life.
One of the most poignant illustrations of the importance of beauty in China is the soaring segment of cosmetic surgery. Unlike in the West where patients are older when looking to have work done – more than 75% are over 35 in the US – 54% of Chinese going under the knife are under 28. This is fuelling an industry expected to be worth ¥360 billion ($52 billion) by 2023. Last month’s IPO of plastic surgery app So-Young soared 44% on its first day of trading and has settled to a value of around $1.5 billion. Almost 2 million users are on the app monthly, 79% more than a year ago.
In addition to the obvious beneficiaries of plastic surgery, cosmetics and fashion, many other categories are touched by China’s beauty obsession. For example, health supplement purchasers are often motivated by beauty benefits – even with target markets you may not expect like the 20-year olds buying anti-aging pills. Categories such as food and beverage are heavily influenced by the quest for beauty, with an increase in healthy food demand resulting from how they can improve appearances such as skin and hair. The fast-growing fitness industry is also heavily swayed by the aesthetic outcomes. The good news is that it isn’t just the Pechoins, L’Oreals and J&Js of the world who stand to benefit, with the majority of Chinese consumers showing interest in niche beauty brands.
The free-spending young Chinese in particular often strive to stand out amongst the masses, and looking good is considered a key component of this. When brands are communicating to their target markets, they should bear this in mind wherever plausible. China Skinny can help determine if and how this all fits for your products or services.
In other news, China Skinny has moved its Shanghai HQ to a bigger and better office. We’re still in central Jing’An District, a block from our our office on Jiangning Road. We love visitors, so pop by any time for a coffee, tea or just to say ni hao. You’ll find our address here. Go to Page 2 to see this week’s China news and highlights.
China is famous worldwide for its unique consumer trends, here’s a review of some of the ones we found interesting in 2015 courtesy of Victoria Richardson. From ‘Face-Kinis’, to the ‘Belly Button Challenge’, to weird and wacky fashion fads, Chinese consumer culture is always throwing up new ideas and products which can prove puzzling to the outside observer. But what can these unusual trends teach us about China’s rapidly evolving consumer dynamics? – It turns out a lot! Read on to learn more…
“The Belly Button Challenge” – fan shou mo duqi – 反手摸肚脐
One of the biggest fads on Chinese social media this year has been the Belly Button Challenge. Chinese social media users are dared to reach behind their backs and touch their belly buttons to determine if they had the “ideal” figure and don’t need to lose weight by some questionable logic. In less than two months, the craze had received almost 300 million views on Weibo. Although the challenged is based on no scientific evidence and accused of encouraging unhealthy body image and eating disorders, it continues to attract social media hits from women aspiring to be baifumei (白富美) – pale-skinned, rich, and beautiful.
The fad has been followed by the “Collarbone Challenge” (锁骨放硬币 – suo gu fang ying bi). In an equally peculiar vain, women measure their slimness by stacking coins within the gap of their collarbone. China’s obsession with beauty carried on with the “Taylor Swift Leg Challenge” (Taylor Swift：你的腿可以横跨几个人- ni de tui ke yi heng kua ji ge ren). Inspired by Swift’s long legs, Chinese women posted pictures of themselves stretching their legs across as many people as possible to show off the longness of their own pins.
The appeal of these campaigns lies in their simple and accessible “do-it-yourself” nature, and all of them showcase the power and influence of Weibo as a viral marketing tool.
Crush Crush Tribe – nie nie zu – 捏捏族
First emerging in the summer of 2009, this strange phenomenon quickly spread from China’s mega cities to second and third tier cities. The Crush Crush Tribe are typically white collar workers who, in an effort to release stress from busy urban lives, go to shops and take out their frustration by secretly crushing and stomping on food products. Popular groceries include dried noodles, soda drinks, and cookies.
The phenomenon has proved a popular topic on social media. There is an account dedicated to the “art” of crushing on the popular QQ messaging service, providing a central discussion point for tribe members. The page discusses the psychological benefits of crushing products, with users describing the satisfaction they feel as they destroy items. Many “crushers” tout the craze as a valuable form of catharsis and stress release.
Most attribute the Crush Crush Tribe’s origins to the increasingly pressurised professional and social lives of modern urban China. Many “crushers” identify as Diaosi; white collar workers with dim professional or romantic prospects. For example, one member of the QQ account explains his passion for crushing dried supermarket noodles as driven by solitude, claiming: “It’s not instant noodles that I’m crushing, it is loneliness”. However, the Crush Crush Tribe’s actions have been deemed an irresponsible fad by many; not least shop keepers, who claim the trend is “immoral” and reflective of a “sheep-like” mentality amongst Chinese consumers.
Since peaking in 2009,the Crush Crush Tribe’s ranks have depleted considerably in recent years, with “crushers” splintering off in favour of other kooky forms of tension relief. Amongst them are the “Rip Rip Tribe” (拆拆族) who split open packages of socks and underwear, and the “Switch-Switch Tribe” (调包族) who take out their frustrations by mixing and matching different products in similar sized packages. Nevertheless, there’s no shortage of evidence of continuing frustration of shoppers’ mischief within supermarkets aisles across China.
“Face-Kinis” – liǎnjīní – 脸基尼
Coming to a beach near you! Since their invention in Qingdao in 2006, the slightly creepy design of Face-Kinis (脸基尼) has attracted attention around the world. The latex masks cover the wearer’s entire face and neck, aside from small holes for the nose, mouth and eyes, withthe added bonus of protecting wearers against jelly-fish stings..More than 30,000 of the masks sold in 2014.
The popularity of Face-Kinis is consistent with the traditional idea that dark skin is unattractive in China. Those with a dark complexion are often associated with poor rural laborers who work long days in the sun, whilst pale skin is seen as a mark of high social class and refined culture. The Face-Kini is just one of a long line of weapons available to Chinese consumers including the ever-popular sun umbrella – tai yang san 太阳伞.
Face-Kinis are worn by Chinese women beach-goers of all ages. Even men occasionally don the mask. However the typical Face-Kini wearer is a mature woman – a powerful consumer demographic which marketers often overlook, or find difficult to successfully access. By 2050, it is estimated that one third of China’s citizens will be over 60, over twice the current proportion, so it’s clear that businesses that are able to successfully understand and tap into this demographic will reap significant rewards.
International visitors to China are often fascinated at the diversity of unusual food and drinks available to them. Flavours, textures, and tastes, as well as the development, packaging and promotion of products all take on a unique twist within the Middle Kingdom. Many Western companies have adapted their products to local tastes in China. PepsiCo markets its Lay’s potato crisps in flavours ranging from cucumber to the Sichuan classic ‘Numb & Spicy Hot Pot’ to ‘Hot & Sour Fish Soup’. While Mondelez has adapted the universally popular Oreo cookie to Chinese consumers’ tastes with flavours such as green tea, and ‘Birthday Cake’. Other products deemed peculiar to Western tastes are Quaker’s beetroot and sun-dried tomato flavoured instant porridge. McDonalds’ metallic grey-coloured ‘Black Sesame Soft Serve’ ice cream and matching silver cone is a popular choice amongst Chinese consumers.
Within China, consumer taste buds vary massively, with consumers in different regions preferring a wide spectrum of flavours and different styles of products. For example, Shanghainese are famous for enjoying sweeter food, while consumers in Chongqing are obsessed with all things spicy.
These unique quirks, combined with the complexity of the Chinese market, necessitate that brands interested in marketing to Chinese consumers get serious about ‘localising’ their products to suit Chinese consumers’ tastes and preferences. Consumer-led market research and product trials are a great way to do this.
China’s “Vampires” and their ‘Blood Bag’ Drinks
The “Vampire Craze” has been a growing trend in Chinese youth culture for the past few years, however the popularity of this trend has recently picked up speed with the popularity of American TV drama, ‘Vampire Diaries’.
Within China a small teenage sub-culture of “vampires” has emerged, creating an increasing demand for quirky Gothic products, merchandise and vampire themed activities. This demand has seen the creation of products such as ‘Blood Energy Potion’; drinks which are decanted into, and consumed from plastic IV bags. The goriest version is the “Blood B-Type” drink. Pitched as the world’s first blood substitute beverage, “Blood B-Type” is designed to mimic the nutrients, colour and texture of real blood.
However, these creepy Gothic drinks have not gone unnoticed by the Chinese Government. Last July, China’s Food and Drug Administration (the CFDA) banned the drinks – citing concerns about the product’s safety and their impact on young adults in China. The CDFA claims the drinks, and their provocative marketing strategy “violates social integrity and moral principles”. The ban demonstrates the need for marketers in China to toe the official line.
Despite this ban, aspiring vampires can continue to stock up on their favourite drinks via China’s largest online platform Taobao as well as enjoy their favourite blood beverages in vampire themed cafes across China.
Shamate – 杀马特
Shamate are a subculture of young Chinese rural migrants. Typically with little formal education, stuck in low-skilled jobs and living in overcrowded apartments, Shamate can be considered the polar opposite of xiaoqingxin (小清新) – China’s well-travelled, educated, and privileged youth. The group’s distinctive fashion sense is a mix of Goth, glam and anime fashion, with heavy eye make-up and hair bleached in bright colours a Shamate style staple.
The term is a Chinese transliteration of the word smart, and the insult “Idiot Shamate” (“脑残杀马特”) is a popular put-down bounded around on Chinese social media channels with the purpose of describing anything considered tacky or coarse. Shamate are popularly perceived to be backwards hicks who don’t belong in the city and are therefore seen as fair game for mockery. Popular disgust directed towards Shamate is a reflection of China’s rapid development, and the class strains that this has created. The discrimination facing Shamate is part and parcel of a wider societal and institutional bias against rural migrants in China.
Yet whilst social media is widely used to ridicule the Shamate, it is also a platform from which this urban sub-group can make friends in the unfamiliar cities they move to, express their identity and escape the urban alienation they encounter. The plight of the Shamate is another example of the power of social media in China and the ability of different consumer groups and “tribes” to carve out their identity via the internet.
Canned Fresh Air – guan zhuang yang qi -罐装氧气
It is no secret that alongside China’s rapid economic development, the country has experienced widespread environmental degradation and pollution. This degradation poses a serious threat to China’s growth and stability; costing the country roughly 9% of its gross national income, and causing between 350,000 and 500,000 people to die prematurely each year as a result of air pollution.
In order to minimise their exposure to these dangerous pollution levels, health-conscious Chinese consumers are resorting to extreme, and sometimes weird, strategies. The market for environmental health products is thriving–sales of air purifiers hit ¥3.5 billion ($560 million) in 2013, 80-100% more than 2012. Consumer demand for environmental products only looks set to continue growing.
One of the more unusual of these environmental products which recently hit international headlines is canned fresh air. In 2013 a Chinese millionaire, Chen Guangbiao, launched an initiative to sell cans of fresh air which is bottled in China’s countryside at 5 Yuan a pop (80c). With the proceeds going to charitable causes, the initiative was intended as a tongue-in-cheek reminder of the value of environmental protection and the priceless commodity that is clean, unpolluted air. The campaign proved a big hit amongst environmentally anxious Chinese consumers with a claimed 10 million cans sold in just 10 days.
One of the giveaways of a newbie to China is the bafflement about being unable to access Google, Facebook, Youtube, Instagram and Twitter – unless they’re chewing through their data roaming quotas or have planned ahead with a VPN. It quickly becomes apparent that China’s digital ecosystem is unlike anywhere else in the world.
Those same newbies are likely to try and make sense of it all by making direct comparisons of Amazon with Alibaba, Facebook with WeChat and Twitter with Weibo. Yet the Chinese platforms aren’t just different by appearance and namesake; their features and, more importantly, the purpose they serve in the consumer journey are often quite disparate from platforms in the West. In many cases, they are functionally more advanced (often by years) than overseas apps, which has seen companies like Apple, Amazon and Facebook replicating features from Chinese apps.
Many brands understand these differences and focus on localising tactical campaigns to take advantage of Chinese platforms’ rich and engaging features online and offline. Yet a number still miss the bigger picture of how China’s tech giants differ from the West: their touch points with consumers are far deeper, wider reaching and offline than those overseas.
One of the important growth strategies executed by China’s tech companies has been to expand beyond their core industries, even if links seem tenuous to outsiders. We saw this in 2014 when Alibaba began purchasing brick & mortar stores and then again in 2018 with their investment in screen advertising.
There are a number of reasons why this type of expansion has happened much more in China than other countries: 1. In most countries when companies get too large and dominant, they are usually forced to split. In China there is barely a whiff of this; 2. Most of China’s bigger companies with real money to invest are tech firms and State Owned Enterprises (SOEs). As SOEs are comparatively more conservative, there is less competition for big tech companies when making major acquisitions; 3. Traditional channels are less mature and more fragmented in China, enabling lower acquisition costs for market leaders and much more scope for disrupting tech giants to break in; 4. Accumulation of user data is far more liberal in China, providing significant scope for tech companies who already have the data. This enables them to utilise data synergies across new acquisitions, which can help justify paying a higher price for them; and 5. Consumers are much more open the commercial use of their data and appreciate the convenience it brings.
The approach hasn’t just been adopted by China’s famous tech giants though. We’ve also seen lesser-known tech companies utilising their presence, channels and data from their category. For example, mid-sized travel portal Tuniu has tapped into the nuptials industry, launching a marketplace just for wedding photography.
What does this mean for brands? Brands should understand just where Alibaba, Tencent, ByteDance, Meituan and other niche platforms are playing, even if they don’t appear to have an obvious connection with their industry. Awareness of their reach and subsequent opportunities can help determine how best to partner with and leverage them. Even the biggest brands in China rarely attempt to approach the market alone and will buddy up with one or more of the tech giants. Similar to the many brands who have co-located marketing staff close to Walmart or Carrefour in the West, close proximity to China’s tech leaders is likely to be an increasingly common strategy in China. Contact China Skinny to assist you in identifying these opportunities and recommending how best to leverage them. Go to Page 2 to see this week’s China news and highlights.
Food exports to China have been growing for some years now. Chinese consumers are known to pay a premium for foreign food and beverage as it is perceived to be safer and healthier, more prestigious and having interesting, unique varieties to feed their inherent curiosity. Yet one of the big drivers for shipping food from afar is that in many cases, they are actually cheaper and meet a demand that local produce can’t serve.
Although China has long been known for low wages and exporting cheaply produced food, for many food categories, China finds itself unable to supply enough food at a quality and price acceptable to Chinese consumers. The well-cited stat that China has to feed over 20% of the world’s population with just 7% of its farmland means this shortage will be around for some time yet.
With China’s population becoming wealthier and eating more as a result (calorie intakes have more than doubled in the last 50 years on average) and arable land eroding due to urbanisation, natural disasters and pollution, China is having a hard time keeping up with supplies. In addition, much of China’s working population have left rural areas for the bright lights of the city, and all of its drones, robots and AI have been unable to fill the farm worker gap. The majority of China’s farms are tiny and lack the ability to produce as cheaply and efficiently as in other countries, and even many of its larger scale operations cost more than abroad. For example, the US produces pigs 20% cheaper per kilo than even China’s new, factory-scale hog farms. Filling a bottle of wine in Ningxia Province can be as much as three times more expensive as South Australia, with the need to bury vines during the harsh winter and high costs of bringing experts into the Chinese hinterland.
Food production costs continue to soar in China, contributing to food prices growing 6.1% in the past year according to the Government’s official consumer price index. To note a few, prices for fresh vegetables jumped 17.4% and pork prices grew 14.4% – the most since mid-2016.
The domestic price increases are making imported alternatives more alluring and giving some rosy trade figures – imported fruit purchases grew by 36% last year and beef imports have more than doubled since 2016 for example. Unfortunately the lion’s share of those imports are commodities, which are much more vulnerable to price variations.
The benefits of well branded food and beverages is nothing new – they can command a higher premium and are less susceptible to fluctuations in commodity prices and new lower-cost producing markets coming on board such as Latin America, Southern Asia and Africa. But having well-branded food products has become increasingly important as producers face mysterious delays and inexplicable rejections for food imports into China due to geopolitical tensions, and of course, increasing tariffs or lowering tariffs for competing exporters. In most cases, the hold ups at the border are commodities rather than branded products. With tariffs, well-branded products will always fare better as consumers are much less price sensitive to a brand they like than a no-name product.
Food producers don’t have to be one or the other. Selling commodities often provides cashflow that can be used to invest in building a brand. But to reduce exposure in these increasingly uncertain times, the advantages of branded products have never been more pronounced. Even if you already have branded products, it’s likely you could make them more resonant with consumers from optimised branding, messaging and other communications, being in the right channels and integrating those channels, having more appropriate packaging and formats and even loyalty programmes. China Skinny can assist you with these. Go to Page 2 to see this week’s China news and highlights.
“After 5,000 years of trials and tribulations, what kind of battle have the Chinese not been through?” asks the anchor on state broadcaster CCTV, referring to the escalating the trade war. The clip received more than 3.3 billion views. “Negotiate— we can! Fight— bring it on! Bully us— YOU WISH!” says the Chinese Communist Party’s official newspaper the People’s Daily.
Following the breakdown of trade negotiations between the US and China in Washington on Friday, and new tariffs on hundreds of billions of dollars of Chinese imports, Chinese propaganda has ramped up. Compared to other geopolitical disputes, China’s state run media had been relatively passive in the 310 days since the trade war began. Yet based on recent state media sentiment, China’s faith in forging an amicable deal appears to be thinning.
Wall Street bankers, American farmers and other US exporters will be deflated following Friday’s breakdown. In addition, many foreign brands in China are likely to feel some impact.
Chinese Brands Day – which coincidently also fell on Friday – was the catalyst for a number of reports highlighting Chinese consumers’ growing preference for homegrown brands. JD.com found the sales value of Chinese brands grew 8% faster than foreign brands last year with volume growing 14% faster. Categories that have traditionally been dominated by foreign brands, such as Mum & Baby, saw strong growth from domestic competitors.
Rising Chinese nationalism is not a new trend, we’ve being seeing signs of this over the past six-or-so years, but it is accelerating with every bit of news about trade wars and Huawei-exec arrests. As powerful and impressive as China is, consumers can still be hyper-sensitive to anything that looks to be putting their country and people in a bad light.
Rising nationalism is coupled with local brands producing better quality products and services, with more resonate marketing and sales strategies. It doesn’t mean foreign brands’ days are numbered in China – there remain plenty of cases of continued growth: purchases of imported fruit grew 36% last year, Nike’s sales in Greater China grew 24% last quarter, and Roger Dubuis announced their watches “resonate very well” with Chinese consumers last week. What it does mean is foreign brands have to work harder to find they place and point of difference that connects with consumers.
In a recent China Skinny fashion project, “国潮” – “China trend” often came up when speaking to consumers. It is something brands across many categories should consider incorporating into their mix to resonate with their target market. There have been many contrived attempts from foreign brands hoping to connect with Chinese culture, however we’ve found some of the most successful examples have been collaborations with local artists and cultural influencers. This could mean working with local fashion designers right through to well-known local chefs for product development and promotion.
Yet beyond trying to connect more with Chinese culture, countless foreign brands could align more with Chinese consumers by simply getting the basics right. Too many brands are still trying to force western sales channel strategies into China’s unique marketplace, others are using armies of Caucasian models to show Chinese how good something may look on them, they’re stocking the wrong sizes, shapes, packaging, formats or even flavours. Some are even developing China strategies based on talking to the ethnically Chinese who haven’t lived in China for some time, or are from a different region to their target market.
Trade war or no trade war, rising Chinese nationalism or not, there’s still countless opportunities for foreign brands to grow from delivering thoughtful strategies in China. China Skinny would welcome the chance to chat about how we can assist with that. Go to Page 2 to see this week’s China news and highlights.
The experience and knowledge that you’re likely to be getting from marketing to Chinese consumers – and from resources such as China Skinny – are hopefully helping you sell more in China. There’s also a good chance that they’re equipping you with expertise that spans far beyond the market. Chinese marketing campaigns are faster, cheaper, and often more effective than traditional Western ones, and in some ways they are better suited to today’s global marketplace, according to a study by US-based academic and former practitioner Kimberly Whitler.
Marketing in China hasn’t undergone the long evolution that many of us have grown up with in the West, and as a result, Chinese strategies are usually without the often-outdated and expensive approaches of traditional marketing. Instead, they’ve grown up with a mobile-first model, where everything is much faster and more data-driven.
As we find at the Skinny, effectively harnessing China’s unique digital ecosystems can garner much greater insights into consumers. This allows brands to build better products and services while improving engagement with consumers because they know a lot more about them.
Many who have marketed in the West tend to approach things from a channel-centric model, whereas successful marketers in China have to be much more consumer-centric, putting them ahead of individual sales and marketing channel-based strategies – online and offline – as much of these have become blurred.
Whitler’s extensive study highlighted the energy and excitement from Chinese-based companies. The size of the prize and growth in China has attracted the best from all over the world, and brought the money with it, creating an incredibly competitive marketplace where you have to innovate, and fast. This was summed up by the Head of Visa for Greater China: when working for companies such as PepsiCo and Unilever in the US, she would sit down with Walmart one or two years in advance to discuss a seasonal promotion far into the future. Whereas in China, she would think about creating seamless content across multiple platforms that is relevant right now, while building systems that are agile, adaptive and fast.
“When you look at China versus the Western mindset, the Western mindset has been really around scale and efficiency. Be slow, risk-averse, create systems, reduce from five plants to one plant, create one global product platform,” says Whitler. “And the China system is a growth mindset. How quickly can we grow our market share? These two contrasting approaches are colliding.”
Whitler noted BMW’s X1 campaign in China as a good example of straying from a traditional advertising-first, promotion-first type campaign to deliver content that consumers wanted to really engage with. BMW worked with WeChat to livestream a concert, amplified by key opinion leaders spanning different generations. Rather than the token ‘brought to you by BMW’ sponsorship, the brand wove its car into the fabric of the experience, offering gamification and allowing viewers to have a virtual test drive with KOLs, and even vote on the drivers. More than 10 million viewers participated.
Over the past few years, product and marketing innovation has shifted from Chinese companies looking to the West for ideas, to a more balanced dynamic where many companies, such as Apple, Amazon and Facebook are learning from and replicating what’s happening in China. There will always be initiatives that are specific to China’s unique consumer and ecosystem, but there is a sizable increase in innovations that the West can learn from China. We’ll aim to continue to keep you across these through our newsletter and client-specific projects. Go to Page 2 to see this week’s China news and highlights.
To many readers, video gaming may seem like pastime reserved for a small tribe of socially-awkward folk with Vitamin D deficiencies. Yet any marketer in China should be paying attention. China’s $36 billion video gaming market is four times larger than its movie industry and a driving force behind the inclusion of eSports as a medal event in the 2022 Asian Games, and even a possible demonstration sport at the 2024 Paris Olympics as the IOC wrestles between tradition and appealing to vast new audiences.
Chinese gamers have long been stereotyped as young males spending their free time in dingy internet cafes; their gaming-contorted fingers covered in a thick film of greasy food and crumbs. The People’s Liberation Army has even attributed gaming as a major reason so many young men fail its physical tests.
Nevertheless, profiles are changing. Gender fluidity is one of the big trends happening in the China market. Just look to the runaway growth of men’s makeup, a spike in males buying lacy-style and see-through fashions on Taobao, while women are buying up suits and almost half of cars from brands typically purchased by men in other markets such as Maserati and Porsches. It seems now that gaming is no longer just the realm of males, with some estimates claiming females make up almost half of China’s 530 million gamers.
Chinese consumers’ obsession with gaming should give marketers clues into how their target markets – male and female – see the world. For many, gaming is a form of escapism from boredom during long commutes and the 9am-9pm-6 days a week work schedule in many Chinese firms. But it is also a pillar in many Chinese social lives; a convenient place to meet others with shared interests, and the closest thing many have to playing team sports, brother and sisterhood, and even a place to meet love interests.
When many marketers think of utilising games in their strategies, it revolves around gamification to connect and engage with Chinese consumers. Whilst there are some success stories, most attempts simply aren’t interesting, relevant or well-integrated into other marketing initiatives, with few gamification investments attracting more than a handful of genuinely engaged participants.
The sophistication of game developers is presenting increasingly diverse opportunities to connect with the target market during an emotional moment in their day. Female-focused mobile dating game Love and Producer saw an estimated $32 million of in-app purchases after one month of being launched. High-end cosmetics brand M.A.C. released five Honour of Kings limited-edition lipsticks targeting its 100 million+ female players – 14,000 were preordered and all five lipstick styles sold out across all sales channels within 24-hours of launching.
Combined with awareness-building initiatives through placements and partnerships, gaming is also looking to become a legitimate sales channel for goods and services. The industry has even created its own sect of KOLs who are supported by millions of live streamers, all potential endorsers of products and services.
With Beijing’s new gaming approvals freeze starting to thaw, games and their players will continue to evolve into more sophisticated marketing and sales platforms to connect with the lucrative male and female millennials, and Gen-Zs. Contact China Skinny for advice on how best to do that.
With the extended May Day Holiday (in hope of stimulating spending), there’ll be no Skinny next week, but we’ll be back the following Wednesday. Go to Page 2 to see this week’s China news and highlights.
It’s been a relatively lean few months for positive news about China’s economy, but things appear to be starting to thaw. Many of the world’s big hitters have recently made upbeat statements about China’s prospects including IMF, HSBC, Bank of America, Morgan Stanley, Goldman Sachs, Credit Suisse and Deloitte among others.
The bullish outlook has helped push up the price of Chinese shares and foreign stocks with high exposure to China. In markets like the US, share price changes directly impact consumer sentiment – not surprising given more than half of American households own stocks. In China, although stock price changes may indirectly effect consumer spending down the line, the average Zhou on the street is unlikely to change his/her behaviour as a result. We saw this during the 122% rise in share prices on the Shanghai Exchange in 2014, and the subsequent meltdown in 2015, with both barely altering consumer sentiment and retail sales. Back then, just 6% of Chinese households owned stocks.
There is one investment class, however, that directly impacts Chinese consumer sentiment: property. An estimated 90% of Chinese families are believed to own a home, 80% without a mortgage. Chinese love property: it is tangible, much easier to understand than other asset classes, historically stable and has proven to be a boon over the past generation. Although we hear about China’s enormous online funds such as Yu’e Bao, Chinese consumers’ property holdings pales all other investments.
Digging a little deeper, property ownership isn’t just the realm of baby boomers like in other markets. An HSBC study in 2017 found that 70% of Chinese millennials (aged 19-36 years) own a home. Mexico was second-ranked in the study with 46%, 31% in the UK, 28% in Australia and just over a third in the US & Canada. Given millennials are the driving force behind China’s consumption, it is little surprise that when house prices rise, they feel more inclined to spend. But like everything in China and many other countries, house prices aren’t evenly dispersed geographically, influencing purchase behaviour differently from city to city. Here’s an infographic we did in 2017 that illustrates how much more it costs to buy property in one city versus another.
Given property’s influence on Chinese spending, retailers will be happy to see some green shoots in China’s real estate. 30% more houses were sold in Tier 1 cities in the first quarter of 2019 than a year earlier. Also, after contracting in the first two months of 2019, project sales of nine major developers rose 20% in March from a year earlier indicating the consumers are feeling both more confident, and wealthier.
One of the powerful new drivers for property growth in China are females. In 2014, women accounted for just 30% of homebuyers; last year they were 48% as many young female homeowners seek security in real estate rather than marriage. About 47% of single women over the age of 30 have bought apartments. If you’re hoping to keep abreast of consumer sentiment, watching house prices and whose buying them will likely help.
In other news, to help tap into Chinese consumers’ amassed property wealth, China Skinny has partnered with the great team at ASX-listed eCargo to offer grounded and actionable workshops to refine China sales and marketing strategies. The workshops call on China Skinny’s unrivalled insights and holistic view of the market, with eCargo’s success delivering sales and marketing execution across multiple tiers of Chinese cities. We offer three types of workshops to meet your specific needs and budget. More info here. Go to Page 2 to see this week’s China news and highlights.
Acting on an identified gap in China market entry education offerings, ASX listed online to offline (O2O) solutions provider, eCargo Holdings Limited (ASX:ECG) (“ECG”) and China Skinny have partnered to create tailored insights and on the ground execution workshops for brands entering and operating in China.
Despite constantly changing policies, market fluctuations and a multiple of ways to navigate online/offline sales and marketing efforts – the influx of international products and brands continues to grow. Utilising China Skinny’s unsurpassed consumer insights and recommendations, along with ECG’s sales and marketing executional capabilities, each tailor made program will benefit boards, senior management, trade organizations, agencies and brand owners.
Workshops will encompass the following key areas, utilising real world case studies and examples to offer the best possible advisory and strategic outcomes.
- Deep understanding of market and consumer trends driving China market.
- Detailed analysis of platforms, retailers, social selling and online to offline (O2O) strategies – how to leverage these for your business.
- Marketing channel engagement strategies and ongoing management.
- Focused market, positioning and brand promotion analysis.
- Focused sales and marketing structure, recommendations and execution strategies.
The workshops will be held as a short format, half day and full day packages.
The ongoing partnership will promote a holistic means of business engagement for both businesses. Utilising and building on the knowledge, analysis and knowhow of China Skinny, coupled with the executional broad online to offline capabilities of eCargo.
Direct enquiries to:
Nelson Gable – email@example.com Andrew Atkinson – firstname.lastname@example.org
About eCargo Holdings Limited
eCargo Holdings Limited is an ASX-listed company specialising in sales and marketing strategy, execution and distribution in China. With a broad range of capabilities across; logistics and fulfilment, eCommerce management and operations, Online to Offline (O2O) distribution and wholesale, as well as strategic advice.