Here are this week’s news and highlights for China:
China’s Smaller Cities Fuelling a $9.7 Trillion Consumer Market: China’s tier-3 and lower cities will fuel a $9.7 trillion consumption market by 2030, according to Morgan Stanley – more than double that of Japan. The lower-tier cities make up 59% of the nation’s nominal gross domestic product and 70% of the urban population. Per capita disposable income for urban households in small cities is set to double to US$8,261 in 2030, which would be 64% of big city levels compared to 55% last year and 45% in 2006. This will further drive demand for most goods and services.
Three Golden Rules of Brand-Building in China: Two conflicting factors motivate Chinese consumers: They want to project their status, but they also want to protect their economic and social interests. To best address this brands should 1. Maximize public consumption; 2. Externalize the payoff; and 3. Provide reassurance.
Chinese Consumers More Positive About Ads: 76% of Chinese are interested in brands which target them with relevant content. The global average is 78%. However 63% are interested in personalised, individually targeted ads, compared to 55% globally according to Kantar. 79% of sampled adults in China felt advertising is a good way for brands to communicate with them versus a global average of just 51%.
Top Takeaways from Alibaba’s Gateway ’17: China Skinny was in Detroit at Alibaba’s first conference outside of China. Key takeouts, the big names there, tech on display and the general feeling from the floor. For those who attended Gateway ’17 or are considering China here are our suggested next steps.
Alibaba Launches Data-Driven Marketing Tools To Target Chinese Consumers: Alibaba’s new Uni Marketing system analyses live data from Chinese consumers across Alibaba’s vast ecosystem. The information can provide brands insights into Chinese consumer behaviour and, in turn, brands can use this data to segment audiences to personalise targeted communications.
China’s Authorities Tighten Noose Around Online Video Content: Beijing has shut down online video services on three popular Chinese media sites: Weibo, ACFUN and news portal iFeng.com in a swift action that unleashed financial shockwaves and posed a firm warning to the country’s online video industry: clean up, or close down.
This Company Helps Luxury Brand Improve CRM with AI-Powered Chatbots: AI-powered chatbots are replacing membership cards on WeChat – they engage customers in conversation, handle routine questions, send out personalized messages, and recommend products based on their purchase history.
The Hottest New Craze in Shanghai, a Two-Hour Queue for Tea with Whipped Cream: The event of queueing for a pricey cup of tea is as much about the experience and status as the drink itself.
‘Out of Home’ Consumption Market in China Thrives as Country’s FMCG Market Continues Along Two Different Trajectories: Food purchased for in-home meal preparation grew by 3% annually from 2013 to 2016, whereas food delivery rose by 44% and dining out grew by 10% over the same period according to Bain.
China Needs Patience to Fight Costly War Against Soil Pollution: Government: China could be facing a clean-up bill as high as ¥1 trillion ($146.39 billion) to clean up its soil pollution, with the cost of cleaning up one mu (0.066 hectares) of polluted farmland as much as ¥20,000 ($2,928.86). According to the last nationwide survey published in 2013, about 50 million mu (3.33 million hectares) of China’s farmland – an area the size of Belgium – was too polluted to grow crops.
Chinese Police Seize Over 1 Million Fake Cosmetics: Reporters have exposed a police bust of a Zhejiang factory running a fake cosmetics operation worth an estimated ¥100 million ($14.6 million). Police seized 1 million fake cosmetics products and 4 million partially-complete products branded to look like products from L’Oréal, Shiseido and other reputable brands.
Economic Watch: Entertainment, Media Propel China’s Economic Shift: China’s entertainment and media industries are forecast to rise 8.3% annually until 2021, around double global average of 4.2% according to PWC. It has become one of the driving forces of consumption which contributed 77.2% of economic growth in Q1, up from 64.6% in 2016. PWC also forecasts that China will use 86 million virtual reality headsets within five years, versus 68 million in the US. VR content revenue is picked to hit US$3.6 billion in China by 2021 with over half coming from video and 46% from gaming.
Leading Chinese Sportswear Company Capitalizing On Consumer’s Shift To Premiumisation: Anta Sports is the only domestic sportswear company that gained market share in the Chinese market in the past five years; driven by its focus on premiumisation and investments on future growth. The company operated 9,668 retail stores at the end of 2016 which account for 89% of sales. It plans to increase store count to at least 10,000 stores by the end of this year.
Shanghai Backs Down on Converted-Housing Crackdown: Shanghai has made a U-turn on regulations that would have seen owners of apartments converted from commercial buildings sitting on uninhabitable homes and worthless assets. This is the latest in a series of measures imposed by Shanghai authorities to try to defuse soaring house prices which jumped 31.7% year-on-year in December. Although the pace of gains has slowed this year, prices in April were still 15.4% higher than a year earlier.