Pets were denounced as bourgeois vanity by Chairman Mao which saw China late to the game of keeping pets as companions. But this has changed in recent years, driven by political, economic, societal and technological drivers, and accelerated by Covid. Now more than 500 million pet lovers embrace them online. The infographic below provides some of the more interesting data points about China’s online pet group of more than 500 million who now adore our canine and feline friends…
Contact China Skinny to learn more about how to best tap into to China’s burgeoning pet economy.
When Chinese consumers are looking for facts, Baidu is the go-to for many. Here’s a list of the most-searched items of the year on China’s leading search engine which may give you some clues into the thoughts and interests of Chinese consumers:
Keyword of the Year:
1. The Pandemic
2. Moderately prosperous
3. Face Mask
4. China’s Mars Exploration
5. Return to China
6. 70th Anniversary of Resisting US Aggression and Aiding Korea
7. The Relationship Between China and US
8. Nothing But Thirty
9. Sisters Riding the Winds and Breaking the Waves
10. Kobe’s Death
Event of the Year:
1. The Pandemic
2. Wuhan Lockdown
3. Oversea Students Return China
4. Mars Exploration
5. Work and Production Resumption
6. The US Presidential Election
7. China Issued The Civil Code
8. US Stock Triggered “Circuit Breaker”
9. The People’s Bank of China Cut the Reserve Requirement Ratio
10. Moderately prosperous
Tears of the Year:
1. National Mourning
2. Anti-Pandemic Hero
3. Kobe’s Death
4. Zhao ZhongXiang’s Death
5. Shen Jilan’s Death
6. Xi Chang Firefighter’s Death
7. Founding Major General Chen Shaokun’s Death
8. Maradona’s Death
9. Little Girl Learning Under the Chopping Board
10. Explosion in Lebanon
National Pride of the Year:
1. China’s Mars Exploration Mission
2. Zhong Nanshan
3. The Guard of Honor Performed at the Red Square in Russia
4. BeiDou Navigation Satellite System Launched
5. New Infrastructure
6. The Civil Code
7. 70th Anniversary of Resisting US Aggression and Aiding Korea
8. Five-hundred-meter Aperture Spherical Radio Telescope Official Opening
9. China Diplomatic Group
10. Huoshenshan Hospital Construction
Lifestyles of the Year:
1. Face Mask
2. Selling Products Through Livestreams
3. Work from Home
4. Online Courses
5. Refuse Bushmeat
6. Exercise At Home
7. Cloud Social
8. Take-out Food Economy
9. Haircuts at Home
10. Domestic Travel
Knowledge Words of the Year
2. Versailles Literature
3. Nucleic Acid Detection
5. 715 Working System
6. Workplace PUA
7. New Infrastructure
8. Cloud Supervision
9. Flexible Working Time
10. Stock Circuit Breaker
Technology Words of the Year
1. Facial Recognition While Wearing Face Masks
2. Quantum Computation
3. Virtual Human
4. Brain-computer Interface
5. Unmanned Taxi
6. Industrial Internet of Things
7. Elastic Compute Service
8. Industry Intelligence
9. Artificial Neural Network
10. Intelligent Traffic Lights
Last month’s epic IPO of Chinese beauty conglomerate of Yatsen, driven by the Perfect Diary brand further highlights how far Chinese brands have come. There are several reasons for the rise of Chinese brands, a trend which is expected to continue over the next decade and beyond.
As Chinese brands have developed, so have city clusters focused on different industries – something foreign brands may want to consider when exploring localised NPD and trends. The infographic below highlights just this.
Diaosi, the Chinese slang term (屌丝) meaning ‘loser,’ has undergone a decade-long transformation.
First appearing in online forums in 2010, diaosi was a comedic insult used to imply someone was an outcast and their life was absorbed in video gaming. Next to its antonym slang term, gao fu shuai(translation: tall, rich and handsome), diaosi was known as meaning “short, ugly and poor.”
But it wasn’t long before diaosi became a self-ascribed identity, with a huge portion of netizens happily labelling themselves ‘losers.’
In fact, 64, 81 and 70 percent of people in their 20s, 30s and 40s, respectively, said in a survey run by internet giant Soho that they can identify with the feeling of being a diaosi.
MI Group, founded in 2010 and internationally recognised for products like Xiaomi phones, focused on creating products which were high value for money. With affordable prices, MI Group became known as being a diaosi brand – a title which founder Jun Lei embraced.
In 2012, he posted a photo of a fake Adidas shirt, with the logo misspelled “Adiaos,” and cleverly captioned it: “Famous brand, ADIAOS” will launch on May 23. By 2013, the internet was celebrating Jun Lei’s sense of humour, referring to him by his self-ascribed title the “leader of diaosi” and saying that Jun had “won the world.”
This year, it appears that the term has lost some of its pop culture charm and acceptance.
On November 21 2020, Mei Wang who manages talent training programs at MI Group, made a comment at an annual China Human Resource Management Annual Conference in Beijing, saying “MI Group thinks who wins Diao Si who wins the world.” In short, their most valuable customers are losers. She then noted that “when they grow out of their diaosi stage, the company will consider making expensive smartphones.”
By November 25, Mei had resigned, apologising for the inappropriate remarket that “do not represent the MI Group in any way.”
From internet insult to self-ascribed identity, and now, to an impolite phrase which prompted resignation of senior management, diaosi has taken on a life of its own. Netizens wait to see whether it will be embraced or rejected in the next decade.
The ever-popular pastime of singing in front of your friends and strangers with the help of words on the screen has continually evolved in China. Karaoke, or KTV, has long been one of the most popular forms of entertainment, and in recent years has become online as well, with more than 200 million users.
Yet, in another example of Chinese innovation, KTV has incorporated online and offline into a truly online and offline experience at K-Station, which recently opened its first ‘store’ in Guangzhou. Entertainers can start to make money performing on the stage, and potentially go viral. More below in the infographic, including other information about China’s KTV sect…
WeChat mini programs have been jewel in the WeChat crown over the past few years, as the only major segment of WeChat seeing strong growth in usage and users. Savvy brands have understood behaviour and trends on the platform and developed mini apps that met those needs. The infographic below highlights some key takeaways for brands to help them understand China’s mini program usage.
Post-90s are now the biggest age group online in China and a significant spender. Yet they are unlike any other demographic in the market. The infographic below highlights the segment’s online preferences and behaviours to shed light into what pushes their buttons and where to push them.
Chinese APP usage has skyrocketed since the pandemic, and we take a look at how that usage has changed.
On August 19, we were among more than 2,000 exhibitors and 80,000 professionals gathered in Shanghai for the 23rd Pet Fair Asia at Shanghai New International Expo Centre.
The Centre now has 17 halls (an increase from 14 halls in 2019) and 225,000 m² (up from 185,000 m² last year) of exhibition space, making this year’s exhibition the largest for pet supplies globally.
Looking at data from Pet Fair Asia over the past three years, we can see a rapid and significant shift in industry interest towards Asian markets with estimated numbers of both exhibitors and professionals.
While the rate of increase in attendees slowed down in 2020, the main reason for this was the pandemic. Of last year’s attendees, 8,656 were overseas professionals, making up 12.9% of the total. Excluding this percentage, we can still see a significant increase in attendees since 2019.
Although foreign brands were prevented from attending this year’s expo due to travel restrictions, there was an increased number of exhibitors, indicating a rise in Chinese pet brands. Many Chinese brands are now offering high end pet food with quality ingredients and good nutritional value. These products, brands claim, have enabled them to create a sub-brand which is benchmarked against Orijen, a well-known pet food brand from Canada.
Many new foreign brands are entering the China market themselves with the assistance of local distributors. Some of these are getting support from national trade bureaus, such as New Zealand Trade and Enterprise (NZTE), whose hall at the Expo included New Zealand brands such as Zeal, Omega Plus, and Bowls & Bowls, amongst others.
With the development of the Asian pet industry, a rising trend is to make pets appear more like humans, through dressing them in stylish clothes, providing pet insurance, introducing pet dating apps, pet funeral services, pet beautifying parlours, pet training centers, and even taxi services and house cleaning specifically for pet owners. Also on display at the Expo were high-tech machines, like automatic feeders, waterers, self-cleaning litter boxes (all of which include sterilization functions) and automated pet toys.
Livestreams are becoming a key means of exposure for pet brands, with key opinion leaders (KOLs) adding a layer of trust between consumers and sellers. As it seems with every event in China nowadays, there were the livestreaming rooms – here’s a peak into a few including famous pet food KOL Lao Yang…
The record attendance at Pet Fair Asia is another indicator of how much opportunity China’s pet care market presents, valued at over USD $223 billion in 2019. China Skinny has worked with numerous pet brands and would welcome the opportunity to discuss how we can assist your brand to win the hearts of Chinese pet lovers. Contact us today!
On 11 August 2020, Jun Lei the CEO and Co-Founder of Xiaomi gave an opening speech on the company’s 10th anniversary, sharing stories of their product launches and memorable moments over the last decade.
An internet company with IoT platform-connected smartphones and smart hardware, Xiaomi operates with a vision to be friends with its users.
With a market cap of $450 billion HKD ($58 billion) on the Hong Kong Stock Exchange, revenue of $49.7 billion (an increase of 13.6 percent year-on-year) and 1 billion devices sold in 2019 (up 7.3 percent year-on-year), it’s no wonder that Xiaomi is currently the world’s fourth largest smartphone brand.
Like Apple and other big competitors in the tech space, Xiaomi’s products span various categories. From air purifiers, to neck pillows and ballpoint pens, CEO Lei says the key question they ask themselves before entering a new category is: “whether we can build an amazing product that touches people at half the price of what others are offering.”
Lei’s public speaking and audience engagement has helped the brand become a household name globally. He addressed a public audience of 48.25 million people at Xiaomi’s 10th anniversary and in the same week, did his first Douyin livestream video, which sold 502.9K products, generated ¥195 million ($28.2 billion) in revenue, and raked in an additional ¥364,700 ($53K) in tips. Within one day of the presentation, Xiaomi’s Douyin account had increased their follower count by 1.5 million, taking their total followers to over 3 million.
An ambitious yet humble, serious yet entertaining leader, Lei demonstrated through his storytelling at the 10th anniversary address that the best way to serve consumers is not just to offer them a high tech, high value or cool product. It is to exceed their expectations.
In China, it’s said that “the consumer is god.” Lei showed this belief through his actions, right when Xiaomi was just getting started.
Before Xiaomi devices existed, the company was focused on creating its own operating system, MIUI. The only way to test it was to find 100 people willing and brave enough to install it on their own mobile phones, at a risk of their devices becoming useless bricks if it were to fail.
These original volunteers became known as the “first 100 dream investors,” with Lei changing the Mi logo on the startup screen to a list of their names as a gesture of gratitude.
(The red words below read: Thank you, brave gods!)
Personal charm & entertaining
A humble leader, Lei showed that didn’t take the words of his critics to heart. During his speech at Xiaomi’s 10th anniversary, Lei shared a video which made fun of his English accent, allowing the audience to laugh along with him.
Mi MIX Alpha is a futuristic phone which has a foldable display, unique from its competitors in the smartphone market.
Coolest product ecosystem
With the help of Xiaomi’s AI speaker, you can control everything in your home using just your voice.
“Hello Xiao Ai, turn on movie mode.” Close the curtains, dim the lights, turn the TV and AC, name a movie, and enjoy!
Best value for money
The first RedMi product retailed at ¥1,999 ($289), with a per-unit cost of ¥2,000.
At that time, Lei recognized that Xiaomi was a small company with no bargaining power, but he still wanted to sell through the best supply chain, which meant high sales and distribution costs.
Riding the ups and downs
As a whole, Xiaomi has been a solid player in both the China market and overseas over the past 10-years. There have been times when they have been the consumer darling, and times when they haven’t been the flavour of the month. Through it all, Jun Lei has showed strong and thoughtful leadership, adapted to changing conditions and perceptions, not been afraid to try new things, and ultimately brought sexy products and an ecosystem to consumers at a fair price. He and his company are an example of slick and assertive branding coupled with efficient manufacturing, which we will increasingly see coming from China looking ahead. Congratulations on 10 years Jun Lei!
Many Youtube watchers in the West will have observed the comeback of Auto-Tune Remix-Themed Content (ATRTC) in recent years, helped by the many timeless quotes from President Trump which lend themselves to song.
Yet while songs in the genre are generally created by people at home with a Mac and some sound and video-editing tools, some of the biggest names in China’s tech scene are jumping on the trend to connect with the masses in a humorous way.
The most recent was Jun Lei, founder and chairman of Mi Tech (of Xiaomi fame), who created a Bilibili account on 28 July and posted his first ATRTC video on 30 July. The video resulted in around 4 million views and 627k followers. Long before he created his own account, Mr. Lei already had a following from ATRTC fans. Back on 30 April 2015, a Bilibili account called ‘Mr. Lemon’ posted a video called “Dance with Mr. Lei! Are you OK!” The ATRTC made fun of his accent from media he’d been in India, and clocked 330.5m views.
Jun Lei wasn’t mad at Mr. Lemon for mocking him, in fact he expressed his gratitude to Mr. Lemon for helping his fame and even bought the song’s copyright. The Chinese public appreciated that Lei didn’t take himself too seriously.
Following Mr. Lemon’s video, Jun Lei’s footage became fodder for the ATRTC genre. This meant Jun Lei’s first personal ATRTC video on Bilibili already had a tuned-in audience. When Mr. Lei created his Bilibili account, Mr. Lemon gave his welcome in a humorous way at once “Hello, everyone, Mr.Lei is coming, so I gotta run.” The comment received 54k likes.
Other Mi sub-accounts and Kingsoft accounts (Mr. Lei is also chairman of Kingsoft) welcomed Jun Lei too with a “Welcome, dad”. Communication is often quite humorous and down-to earth on Bilibili, which brands should note. Many other official accounts such as MSI and ASUS, welcomed Mr. Lei or made fun of the meme “are you ok?” creating quite a fun and harmonious atmosphere for the new arrival. In short, the simple action of creating the account was a free but powerful marketing exposure for Mi.
Prior to Jun Lei’s account, Mi had actively worked with ATRTC creators which had created strong buzz for the brand. Similarly, Alibaba created ATRTC videos during the outbreak, based on Jack Ma’s singing performance, receiving 2.5 million views. They alcom which brought much attention to Mi before as well.
Similar thing happened in Alibaba too. During epidemic, Alibaba group created an ATRTC video based on Jack Ma’s singing performance, which received 2.5m views.
Yet not everyone finds the ATRTC videos quite so fun. A video which found humour in mega pop idol Xukun Cai (KUN)’s performance combining dancing and basketball, was met with many lawyer’s letters from KUN, bringing him many anti-fans. This saw the rise of popular phrase “lawyer’s letter warning”.
Brands and individuals who embrace the genre, and remain down-to-earth, will connect and resonate with consumers, bringing positive and large exposure to their brands. DingTalk’s begging for mercy and Tencent vs Laoganma, are both a testament to this.
China’s ballooning endearing popular is the last frontier of growth for budding brands hoping to tap into China’s enormous population. China’s over-60 market is likely to double in size from 240 million in 2017 to 486 million by 2050.
Understanding this demographic’s online behaviour will give indications of their preferences, and also provide clues into how to best reach them. Get in touch with China Skinny to help solidify that plan and take advantage of the enormous opportunity.
Below you’ll find insights into what China’s elderly are doing online, how this is changing, and how it compares to other internet users. Happy reading!
All eyes are on the current lead-up to JD.com‘s 6.18 festival as China’s consumers look like once again defying the odds and continuing their notorious consumption habits. We have been looking at how brands are standing out, and what forms of retail marketing are spurring consumption. One such tactic is that of the ‘blind box’ – purchasing an unknown product from a brand for a set price whether for the mystery, or for the chance at something worth much more.
Mi (a mobile internet company who usually focus on phones, smart hardware and IoT) has been successful in this period – selling “Unknown Suitcases”. During Jun. 1 to Jun. 20, as long as you buy one of their suitcases, you’ll find something else in there when it is delivered. Given travel outlook is a bit bleak, this is a clever way of selling suitcases that may otherwise not be moving off shelves.
Other brands have definitely joined in of late – In April, Pringles launched an “mystery flavour” of chips. Whereas the flavour is normally on the package, with these products its hidden in the background words, or you can just taste it to find out. In May WAHAHA (a huge snack / F&B company) launched Dimoo “blind water”, which can only be bought by the box, with flavours not revealed until its opened.
Our recent article – MollyBox Case Study: Lessons Around Subscription Models and D2C in China details another successful form of a “blind box”. The box includes a main cat food that you specified and a random assortment of toys and snacks.
A Tmall X China Joy report from August 2019 showed nearly 200,000 consumers spent an average of ￥20,000 on collecting blind boxes, the top bracket of these consumer ‘thrill-seekers’ even reached ￥1 million!
So where did this all start, and why has the ‘blind box’ economy become so significant? One possible reason is the brand POP MART which was a pioneer in leveraging this tactic in China.
POP MART is a leading player in China’s pop culture and entertainment industry since 2010 and is known for toys (targeted at adults). It has held five successful international toy shows in Beijing and Shanghai attracting more than 100,000 visitors on average. It also has its own app called PAQU, a social media and e-commerce platform for designer toy enthusiasts and vending machines called ROBOSHOP, that serve as self-service retail channels. Pre-2016, POP MART was essentially a retailer of other brands, and hadn’t become the innovator it is today. Since that time, it has grown rapidly on the back of two core tactics:
1. Creating its own IP (famously started with the successful “Molly” toy)
2. Building and leveraging the ‘blind box economy’
The charm of blind box lies in the delivery experience: collection, surprise, social engagement and the packaging. It takes the western crazy of ‘unboxing’ videos to new heights when you’re part of a community who don’t know what they’ll get, and are eager to trade, make friends and continue the conversation online. Usually a POP MART blind box will contain several toys, the price/toy is not high, about ￥59, but if you want the whole set, you will spend thousands on it.
According to 2019’s Xianyu blind box economy report, SATYR RORY (the hidden toy on the right is the most rare one) rose by 39 times and one user made ￥100K through selling these toys.
As above, the gamification and digital community building of these toy ‘blind boxes’ have particular power in China. The subcultures have even developed further, with a strong subculture now modifying the toys. See below, the left one is original, the other is modified.
Ning Wang, CEO of POP MART confirmed,“75% of our consumers are female, usually 18-35, especially 26-27.” Years before, these kind of art toys, like Iron Man, Gundam, were mainly targeting males. At a toy show, maybe only 10% of visitors were female, but now through exciting consumer engagements like blind boxes, Ning Wang has propelled a toy business with￥1.6B ($230 million) revenue mainly from females.
Blind box is not new, having originated from Japan’s GASHAPON culture in the 1980s. However, only Ning Wang caught this trend and made it into an art toy empire. Brands would be wise to follow these evolutions closely and immerse themselves in potential opportunities that could help them separate from the masses in their retail engagements. China Skinny can assist with this.
Chinese livestreaming continues to soar, even as Chinese consumers get back to their busy lives as life returns to normal. Between January and March, over 4 million commerce livestreaming marketing activities were held, with 560 million livestream users in China by the end of this period.
Following on from my earlier post: China’s Soaring Livestream Trend: The What, Who & How, here is some new data and analysis on livestreaming:
Performance of some of the new kids on the stream
The buzz of livestreaming has seen many well-known Chinese throw their hat in the ring for a shot at livestreaming stardom. Two of the biggest successes have been older-than-the-usual internet stars and business people, Yonghao Luo and Mingzhu Dong.
We noted Yonghao Luo’s rise on Douyin back in April. Since then, his performance appears to be stabililizing, although on a steady downward trend.
On the other hand, Mingzhu Dong, businesswoman and chairperson of appliance retailer Gree, learnt from a lacklustre start and has soared since. After a poor pricing strategy and dubious internet connection which was not seen as “sincere” by audiences on Douyin, she worked with Kuaishou and JD to increase her revenue by 1,300 times for Gree. During a single livestream on JD she sold the equivalent of double Gree’s 2019 ecommerce revenue. Mingzhu Dong’s success on Kuaishou and JD can be put down to her established fame and fanbase, and high subsidies from the platforms allowing great pricing. And the Internet connection was fixed of course.
Electronic Vehicles Join the Feast
Of course it was only a matter of before the aspirational EV brands were in on the livestream act. Livestream sensation Viya reportedly did not charge Telsa to do a one-hour demo. Although the livestream has got a lot of airtime (anything with Telsa and Viya will), it was Telsa’s China challenger NIO who performed a lot better. 2,600 viewers (from a total of 4 million) paid ¥1 for a Telsa test-drive, whereas NIO, hosted by Han Wang and NIO’s founder Bin Li clocked 5,288 test drives and sold 320 cars worth ¥128 million ($18 million)
And Enter the Virtual Livestream Host
Top livestream anchors such as Yonghao Luo, Viya and Austin Li can command as much as ¥600K ($84K) just for a slot on their show, then 20%-40% commission. But virtual singer Luo Tianyi earned ¥900K ($127K) plus commission from French beauty brand L’Occitane.
Recently, virtual celebrity Luo Tianyi joined livestreaming king Austin Li’s show as a trial.
China has seen a rise in virtual celebrities who do everything a real celeb can do, such as sing, dance, do livestreams, have fan clubs and even do offline concerts.
Luo Tianyi’s image was released in 2012, followed by her voice in 2017. She stated a Bilibili account in 2016 and now has 185K followers, 1.9m likes, 22.8 million plays from 41 videos of famous songs such as PuTong Disco and DaLaBengBa.
Luo Tianyi has performed in many galas, including the 2016 Hunan TV New Year’s Eve Gala, 2016-2017 Hunan TV New Year’s Gala, 2017-2018 Jiangsu TV New Year’s Gala, 2018-2019 Jiangsu TV New Year’s Gala, 2016 and 2019 Bilibili Macro Link.
Luo Tianyi is owned by a company called Vsinger who has several singers. In 2017, they held a concert with virtual stars, and got 5m plays on Bilibili. The concert was not much different from a concert performed by a real singer, complete with crazy fans, but with technology that used advanced holographic projection to make it even more interesting. If a concert isn’t enough, she even hosted her own birthday party on the 94th floor of Shanghai World Financial Center.
Virtual stars are nothing new, Toyota engaged Miku as long ago as 2011. However the increased digitalisation and interactivity of platforms creates a ripe environment for such initiatives. Brands would be wise to follow these evolutions closely and see if they fit with their marketing strategies for China – China Skinny can assist with this.
Hive-Box runs the world’s largest express locker system, reaching 180,000 lockers in more than 100 cities across China serving 200 million people. In 2018, its users retrieved 2.5 billion packages – around 5% of China’s total parcel delivery.
The express lockers allow consumers to have packages/online purchases delivered close to their apartment, and then pick them up when you’re ready. If you’ve been for a walk in China, there’s a good chance you would have seen their distinct green lockers.
During these times of soaring ecommerce, supported by contactless delivery, Hive-Box should be on Cloud-9, but a series of business decisions over the past month have seen boycotts and belittling from Chinese consumers.
Here’s What Happened with Hive-Box:
Mid-Jan: Hive-Box’s service was free, however there was a function similar to WeChat original articles-“Like The Author”, where users can tip a delivery person. However the button to ‘skip’ the tip was somewhat hidden – many people didn’t see it and they thought they had to pay. When this issue went public, Hive-Box made the skip button bigger around the time of the outbreak.
April 30: Hive-Box launches a new membership service (¥5 (70c) /month) where member’s deliveries would be kept for 7-days for free. For non-members, deliveries would be held for just 12 hours, then charged ¥0.5 (7c) for every 12 hours thereafter, to a maximum fee of ¥3 (42c). Consumers were outraged given many consumers are often out from home for more than 12 hours due to long working hours, transport times and other interests, and office deliveries on the weekend would be caught.
May 4-7: A Hangzhou estate couldn’t come to an agreement with Hive-Box over the new rules, so send notice around the neighbourhood and powered off all lockers
May 5: SF-Group-backed Hive-Box announced it would be taking over China Post-owned Sudiyi, giving it another 94,000 lockers, taking its market share to around 70%.
May 6: Hive-Box started charging for their service for the first time. This caused an uproar on social media and from housing estates as the takeover of Sudiyi a day earlier effectively allowed Hive-Box to leverage its monopoly and force increased prices to users.
May 7: A Shanghai estate surveyed residents about whether to continue using the service in light of the new fees. 82% said no, so the neighbourhood halted the service on May 11.
May 8: Other delivery agencies (except SF, who own HB) announced they would raise their prices to pass on the higher fees. These were later withdrawn as they realised they could not compete with the superior SF-Best on anything but price, and lowered prices again.
May 9: Hive-Box formally explained their reasons for the unpopular decisions: 1. The short 12-hour period was based on big data and best for delivery folk; 2. After reintroducing the fees, 5% more people collected their parcels within 12 hours; 3. A 1% higher turnover rate of the 180K lockers can result in a significant rise in resource utilisation. Hive-Box also issues a letter to the Hangzhou neighbourhood claiming it had violated the contract and it will recover resulting financial and goodwill losses.
May 13: The PRC State Post Bureau urged Hive Box take active measures to shoulder social responsibility, develop a solution, improve the pricing mechanism and respond adequately to consumers.
May 15: That morning, the Hangzhou estate who was first to ban them, said that they were willing to discuss with Hive-Box about reopening. In the evening, Hive Box announced they’d: 1. Extend the free period from 12 to 18 hours; 2. Not charge during holidays; 3. Not charge in office buildings during the weekend; and 4. Existing members get a free month of membership. By this time, 115 estates in Shanghai had already said “No” to Hive-Box.
Backlash Against the Price Rise
Many consumers remain outwardly angered with Hive-Box. However the compromises announced on May 15 have helped temper the situation, particularly extending the free hours from 12 to 18. Many felt that it is was within Hive-Box’s rights to raise the price: they provide a service that costs money. Given they made a ¥781 million ($121 million) loss last year, many people realise that they can’t run at a loss forever.
The issue was the process, as delivery people would put parcels in lockers without notifying users … which Hive-Box already knew. On top of that, their timing was poor – announcing the price increase a day after taking over China Post-owned Sudiyi. Consumers were unhappy about having to pay twice for delivery. Hive-Box needs to figure out a way to make a profit, but it clearly needs to understand consumers better and deliver initiatives more thoughtfully.
The shenanigans have raised the threat of new competitors and alternatives and strengthening of others, with one Nanjing estate setting up lockers for themselves, and small shops who looked to store parcels.
Although many industries are consolidating in China and creating virtual-monopolies, the Hive-Box example illustrates that consumers will collectively vote with the their feet and force change, while potentially diluting the market as the result of poorly executed plans.