Mark Tanner
Mark Tanner
7 November 2018 0 Comments

Here are this week’s news and highlights for China:

Consumers, Chinese Consumers

Full Text: Keynote Speech by President Xi Jinping at Opening Ceremony of 1st China International Import Expo: In his speech that translated into over 3,000 words, Xi Jinping noted China “will take further steps to lower tariffs, facilitate customs clearance, reduce institutional costs on imports, and step up cross-border e-commerce and other new forms and models of business.” Xi pledged that China will import $30 trillion worth of goods and $10 trillion of services in the next 15 years.

CIIE 2018: 10 Things the World Wants to Sell to China at Inaugural Import Fair: Some of the highlights from the 3,000 foreign companies hoping to sell their wares in China include Slovakian flying cars, the world’s smallest heart pacemaker from the US, Italian-made helicopters, Finnish eco-friendly cars, bio toilets from Singapore, diamond-crusted shoes from the UK, American logistics technologies, foldable presbyopic glasses from Italy, Maori food produce from New Zealand and premium Kenyan coffee. to Buy ¥100 billion in Overseas Brands’ Products: JD announced at CIIE that it will purchase nearly ¥100 billion ($14.4 billion) worth of imported products. JD Worldwide, the company’s cross-border e-commerce platform, has attracted more than 20,000 brands from over 70 countries. Last year, the number of users purchasing products from overseas brands grew by 37.1% compared to 2016. The volume of imported goods in 2018 to date has skyrocketed 150% as compared with two years ago, with the growth rate for imported brand purchases being highest in tier 3 & 4 cities where brands are often not available in brick and mortar stores.

US Orders From Canton Trade Fair Sink 30%: Guangzhou’s Canton Fair ended on Sunday just as Shanghai’s CIIE began. Export orders to the US were down 30.3% from 2017 to $2.8 billion. The number of US attendees dropped 4.1% to 10,739. There were reportedly a smaller number of buyers from advanced economies generally, but more from developing countries and emerging economies. The value of export orders made at the fair has dropped from 44.5% annual exports in 1978 to just 2.7% last year.

The Chinese Century is Well Under Way: China’s GDP grew 903% between 1990 and 2017, whereas most other developing countries just doubled in the same period. The Economist’s global centre of economic gravity has been tugged so far east by China it is now in Siberia. Many trends that appear global are in fact mostly Chinese. Since 2008, China accounted for 45% of the gain in global GDP. Between 1990 to 2017, two-thirds of poverty alleviation came from China, 60% of the increase of global defence spending, 55% of the carbon emissions and half of the growth in patent applications.

Online: Digital China

Double 11 Campaign Techniques & How to Get Ready: Promotion campaigns are becoming more complicated and social-orientated this year. Pre-sale events, early promotions, and first come first serve gifts are good techniques to encourage users to make a purchase as early as possible.

Cainiao Ready for 2018 11.11 Global Shopping Festival: Alibaba’s Cainiao logistics company recently opened the biggest automated warehouse in China, in Wuxi close to Shanghai. 700 robots drive, load and unload while planning the best routes to distribute parcels and avoid collision. The robots allow for 50% more orders to be processed within a given time period than a traditional warehouse. In expectation of an increase in cross-border shipments, Cainiao has chartered 51 flights to Western Europe, Russia and Southeast Asia, as well as about 1,000 shipping containers set for buyers in Southeast Asia and other destinations by sea.

Xiaohongshu: How a Chinese Ecommerce App Built a Thriving Community Around UGC: Little Red Book / Red / Xiaohongshu’s has attracted more than 100 million users through its authentic, customer-centric approach that doesn’t allow anonymous reviews, one-click ratings, advertising or official brand accounts, although qualified brands can set up their own digital shops. 8% of Xiaohongshu users make an order on the app after reading Notes, compared with 2.6% who do the same on Tmall.

Lifestyle Upgrade Driving Imports to China: The cross border ecommerce retail import penetration rate has increased from 1.6% in 2014 to 10.2% in 2017 according to AliResearch. Cosmetics and beauty care products have increased from around 26% of cross border trade to around 36% between 2014 and 2017, with mum and baby products seeing the largest increase in share of commerce. The average delivery time from bonded warehouses dropped from 9.2 days to 4.5 days over the same period.

Premium Food & Beverage

China Battles to Control African Swine Fever as it Reports 50th Case: The disease, which can be deadly for pigs and has no vaccine, has reached 14 provinces and municipalities in China since it was first detected in early August. Most of the recent cases have been in the south, which has the country’s highest pork consumption per capita. Taiwan last week reported that it had found the African swine fever virus in a sausage product made by top processor Shuanghui that had been imported from China.

Dairy Eyes Big Rise in Consumption: A new report has labelled Chinese residents as having weak knowledge of dairy products and hence low consumption volumes, suggesting significant growth potential for the domestic dairy industry.

Starbucks CEO on China Tensions: “We’re Not Immune” but “We’re Playing the Long Game”: Iconic American brand Starbucks is yet to see an impact from the US-China geopolitical situation, but admits they are not immune. The company is not changing its China strategy and will continue to open a new Starbucks every 15 hours in the country until 2022.

Chinese sport Sport

Women’s 10km Race in China Offers Hair, Make-Up, Cupcakes and Male Models: The organisers of an all-women’s 10km run in Shanghai want to give women their own platform to take part in the sport – and they want them to look pretty afterwards. Candyfloss and hot chocolate, beauty services at the finish line and handsome men. Nearly 5 million people took part in 1,102 registered running events in China last year — nearly 20 times the 2014 number.

Video & Entertainment

A Look at China’s Massive Music Streaming Industry and How it Differs from Spotify: Tencent Music’s pending IPO could value the division at over $25 billion – in line with Spotify’s US$28.7 billion IPO. China has 15 different audio streaming services with at least one million daily active users, including radio and karaoke services and nine on-demand album streaming similar to Spotify. Tencent Music owns the top-3 apps and 75% of the market, helped by its emphasis on music videos and karaoke features – a formula that makes it profitable unlike Spotify and Tencent’s competitors in China. Tencent Music doesn’t just sell subscriptions like Spotify, it also sells songs, virtual gifts that can be sent to artists, and premium memberships with higher audio quality and access to exclusive content. Tencent Music reported it had more than 800 million monthly active users across its platforms in the second quarter of 2018, with 23.3 million paid subscribers paying about $2 a month – one-fifth of Spotify’s fees. Spotify has just 180 million users, but 83 million paid subscribers.

Premium and Luxury

Generation Z Consumers are Online Big Spenders for Luxury Goods, Survey Reports: 59% of Chinese consumers born after 1995 say they buy luxury goods online, compared to just 37% of those born 1980-1995 and 26% of those born between 1960-1980 according to OC&C. More selection, convenience, flexibility with payments and getting exclusive/latest season products are the top reasons for purchasing online, whereas authenticity, pre and post-sales service and a pleasant experience are the top reasons for buying offline. For trends and product awareness, official brand sites and social media accounts are the top touchpoint for consumers, followed by domestic luxury specialists, the mainstream platforms, customer reviews from social media and overseas luxury specialists.

JD Tries Offline Approach To Luxury E-Commerce In China: Pop-Up Stores: The number of luxury merchants on JD’s Toplife channel has increased from 33 to more than 80 in four months. To celebrate its first anniversary the platform launched a standalone, offline “pop-up” store in Shanghai, with JD intending similar pop-ups in other cities following its results.

That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.

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