Mark Tanner
Mark Tanner
24 June 2015 0 Comments

Your brand has locked in favourable deals with the top-10 retailers in China, including the best in-store placement and positioning of your merchandise and regular point of sale promotions.  You’re well placed to reach China’s 1.36 billion consumers, or at least a couple of hundred million middle class customers, right?  Unfortunately not.

In a market like the U.S. things would be looking peachy.  Between 2010 and 2012, the top-100 American retailers made up 57% of all consumers sales.  By comparison, China’s top-100 retailers accounted for 11% of sales in 2010, and just 8% last year.  The differences reflect how fragmented China’s retail market is, made up by many ‘Mom and Pop’ stores and small, regionalised chains; further reiterating the need for a region-specific strategy.  Most of us know how different the customer journey is in China, but we may not appreciate the extent of dissimilarities in China’s retail structure.  

Ecommerce makes up 11% of China’s retail market – not yet a large share overall – but by far the biggest and only truly nationwide channel to reach China’s masses.  Sales on Alibaba’s Taobao and Tmall now supersede China’s top-100 physical retailers’ turnover.  

Companies such as Unilever have been caught off guard, and are now placing a significant focus online.  

In some ways, online shopping levels the playing field for retailers, as everyone has the same storefront and pages to work with to woo consumers.  But in many other ways, multi-platform players still have an edge over the pure play online brands.  Chinese consumers often look to physical channels when making purchasing decisions, even when buying on the Internet, so it is advantageous to be present online and offline.  Big brands also get ‘sweeteners’ by online retailers, such as JD wooing LVMH’s Sephora to launch its first Chinese online store on the platform and Shangpin giving Top Shop special treatment.  Unilever is likely to have been given incentives to launch on JD as well.

Like any market, whether brands are big or small, it will be the nimble, creative brands who understand their customers and channels that win.  China Skinny can help with that. We hope you enjoy this week’s Skinny.

Consumers,: Chinese Consumers

Western Firms Caught Off Guard as Chinese Shoppers Flock to WebConsumer-goods sales from the top 100 retail chains dropped from 11.2% of total sales in China in 2009 to 8% in 2014 – less than 80% of overall ecommerce sales.

China’s Adds Unilever to its Stable of Global BrandsUnilever launches on JD Worldwide giving consumers access to products not formerly available in China. It follows Sephora launching its first online store in China on the platform – the brand was likely to have had all sorts of incentives from JD to do so.

Why Louis Vuitton, Gucci and Prada Are In TroubleChanges in consumer tastes which took 20 to 30 years in the U.S., took two to three years in China.

Online: Internet, Social Media & Ecommerce

How To Borrow Mobile Moments To Engage Chinese Consumers‘Borrowed moments’ are essential to winning over Chinese consumers according to Forrester research because: 1) WeChat and a few mega apps dominate the time Chinese spend on their mobiles; 2) “Owned” mobile moments are less likely to work in China; and 3) Top Chinese apps have evolved to provide more features that marketers can borrow from.

Digital Commerce in China: Cheap Tricks or Deep Love?“If managed skilfully, digital commerce can enhance – rather than degrade – value perceptions. High-tech cheap tricks can morph into deep love. When marketers harmonize digital and offline assets, online transactions blossom into intimate relationships,” says Tom Doctoroff.

Premium Food & Beverage

Why China Shops Online for GroceriesOnline grocery sales grew almost 50% last year in China, versus hypermarket and supermarket’s 6.7%, with much of that growth coming from new store openings. 40% of Chinese buy food online versus 10% in the U.S. according to McKinsey. Online shopping and delivery suits many urban Chinese consumers who still don’t have cars.

Chinese Wine Drinkers Prefer Contemporary LabelsAlthough traditional wine labels donning gold and red and pictures of castles and chateaux dominate Chinese wine aisles, Wine Intelligence research found consumers are becoming more inclined towards original, contemporary labels for both formal and informal occasions.

Cainiao Launches Three Fresh Food Distribution CentersAlibaba’s logistics affiliate Cainiao will establish fresh food distribution centres in Beijing, Shanghai and Guangzhou to support cold chain delivery within 24-hours. The news comes soon after Alibaba’s announcement that it will seek more Latin American food suppliers, particularly fresh fruit and vegetables. Last month there were 10,000 orders for avocados on Alibaba’s platforms.

The Increase In ‘Artificial’ IntelligenceMore than half of Chinese consumers say they prefer snacks to meals, compared to just 9% in Japan according to Innova Market Insights.

Overseas Chinese Tourists

The New Conquistadors: Chinese Tourists Turn to Latin AmericaChinese tourists to Latin America are increasing rapidly, albeit from a low base. Tourists to Mexico grew 58% last year to over 75,000 arrivals. Interest in Latin America is rising, with exposure like leading Chinese online travel agency Ctrip naming Peru as its destination of the year this January, and China’s Top Travel magazine selecting Chile as its featured destination of 2015.

Airbnb Says Chinese Travelers Are Fastest-Growing Users“The future of international travel is really the Chinese tourist,” says Airbnb CTO.

Clothes and Fashion

German Fashion Brand Under Fire For Racist Slur On ChinesePhilipp Plein’s plans to expand in China took a knock after social media users reminded their peers of the brand’s limited edition T-shirt from 2007 which contained the words “F**K YOU CHINA.”

Cosmetics, Health & Beauty

Waist Wars: China Belly Button Challenge Gets TrendingChina’s Weibo sensation this month is checking if you can touch your belly button by reaching behind your back and around your waist. The topic has been mentioned almost 150 million times, with more than 100,000 active discussion threads.  Many have posted photos trying it, while others claim it promotes eating disorders and those who could do it haven’t completed the evolution from monkey to human. Following on, is the collarbone challenge, urging women to snack coins in the gap beside their neck to indicate how defined their collar bone is. The topic received 34 million hits in 24 hours on Weibo.

Music and Entertainment

Chinese Entertainment, Tech Execs Grow More ConfidentFurious 7, Avengers: Age of Ultron and Jurassic World have sold almost $750 million in tickets in Chinese theatres since April, but Chinese movies are also riding on the back of the 40% box office growth in Q1 with lower budget local movies like The Taking of Tiger Mountain and From Vegas to Macao 2 grossing about $150 million each. Chinese movie execs are walking with a swagger these days with little talk of co-productions or partnerships with U.S. studios, and a lot of focus on leveraging Internet technology to understanding consumer tastes, crowdfunding, marketing, ticket sales and streaming.

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