Mark Tanner
31 July 2019 0 Comments

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

Consumers,  Chinese Consumers

It’s China’s World: As the Chinese Century nears its third decade, Fortune’s Global 500 shows how profoundly the world’s balance of power is shifting. American companies account for 121 of the world’s largest corporations by revenue. Greater China companies account for 129. For the first time since World War II, the US isn’t at the top of the ranks of global big business. The US is still ranked first for the top-50 and revenue, accounting for 28.8% of the Fortune 500 companies versus China’s 25.6%. 82 of the Chinese firms in the Global 500 are “SOEs”. Whether the 21st century becomes the Chinese Century in the full sense—with China dominating culture, ideals, and concepts of human rights and human nature—remains to be seen. But at least in business, the Chinese Century is growing intensely more Chinese, and faster every day.

Chinese Consumers Rate Quality Above Price: 91% of Chinese consumers agree that when making a purchase, quality is more important than price, although when it comes to basic daily offerings, value for money is still the top consideration according to Mintel research. Consumers are willing to spend more for broader, self-indulgent experiences; as many as 84% of Chinese respondents who upped their spending on holidays in the last year did so to treat themselves. 81% are interested in trying something new rather than sticking to the familiar, such as buying a new product or going to a new holiday destination.

Vivid Hopes to Simplify Access to China’s Burgeoning OOH Market: China set to be the second largest Out-of-Home (OOH) advertising market in the world by 2022, valued at $9 billion, yet it remains fragmented and complex. The White Magnolia Plaza on the Huangpu River in central Shanghai is an example of the platforms available, with the screen extending over 23,000 square metres over two sides of the building – more than three times the size of a football pitch.

Online: Digital China

Formulating Values for AI is Hard When Humans Do Not Agree: How we embed human values into AI code will be one of the most important forces shaping our century. Yet China and the west prioritise different things in algorithms; how far values differ were highlighted during an AI ethics seminar in London this month [paywall].

Intro: China’s AI Dream: Chinese companies often lag behind their American peers in quality and diversity of data, but are particularly strong in the depth of data on each person. What this means is that many aspects of a Chinese citizen’s daily life are captured in digital form, and can then be used to either optimize AI-powered products. Digital and o2o apps aren’t the only source of data, with facial recognition through CCTV helping the “data-tization” of China’s public spaces. In 2014, China had one university – Tsinghua – ranked in the top-15 for AI. By last year, it had four. The article includes interactive tools such as some of WeChat’s sources of data.

5 Ways Digital Payments are Most Disruptive in Ecommerce: Just 10% of Chinese use cash, 12% use bank transfers and 20% use cards for ecommerce purchases – two-thirds of Japanese and three quarters of South Koreans use cards. China has the highest penetration of eWallets such as Alipay and WeChat Pay for online shopping globally.

What Are Click Farms? A Shadowy Internet Industry is Booming in China: One third of all clicks on China’s internet are from click farms or bots, as businesses and KOLs of every shape and size pay companies to boost their rankings and sales. Last year, Chinese state media CCTV reported that 90% of views generated by many popular shows on video sites are fake. As algorithms and regulations get tougher, many fakers have shifted from automated bots to human click farms which are harder to detect and regulate, albeit more expensive.

Schooling and Education

How Squirrel AI Learning is Shaking Up Education in China: 6 minute video: Squirrel provides AI-adaptive, personalised learning content for students. It is particularly valuable for rural students who don’t have good quality teachers. Students take a test, then AI identifies weaknesses and strengths. The system will only focus on teaching the parts individual students need, aiming to reduce the amount of study. Two million students have signed up, 20% are paying. Students can learn from home online or offline in learning centres. There are currently 2,000 learning centres, with 4,000 expected by the end of the year and 6,000 at end of 2020. 80% of students’ scores increase after 3-months and interest in study grows.

Premium Food & Beverage

Light Meals Turn Heavyweights in Catering Sector: Last year, online orders for light meals such as salads rose 75% from 2017 according to Meituan Dianping. Light meal restaurants surged to more than 3,500 from 600 a year earlier. Female diners accounted for 70% of light-meal buyers.

PepsiCo Makes Strategic Investment in Chinese Natural Food Company: PepsiCo has bought 26% of China’s second largest natural health food company Natural Food International for $131 million. The natural food company has a data-led, direct-to-consumer business model with a focus on grain-based premium nutrition powder.

Uproar in China After Study Suggests Eating Chilli is Linked to Dementia: Eating chilli may be linked to a decline in cognitive function and an added risk of dementia according to a foreign study of 4,582 Chinese people aged over 55 during a 15-year period. It concluded that those who ate more than 50 grams of chilli a day had more than double the risk of poor memory, and a 56% higher risk of suffering memory loss. The topic received more than 300 million views on Weibo, with some chilli lovers standing firm and others expressing disbelief. The researchers’ previous study suggested that eating chilli had beneficial effects by being inversely associated with mortality, obesity and hypertension.

Video & Entertainment

Jay Chou Fans Claim Rare Social Media Victory Over Gen Z: China’s Internet is abuzz with mostly older fans of 40-year-old Taiwanese singer Jay Chou declaring digital victory over the largely Gen Z followers of brash 21-year-old vocalist Cai Xukun. Chou topped Weibo’s list of “super topics”, with Xukun trailing at number two for influencer power. What the article didn’t mention is that one of the methods Weibo ranks influencers is by the tips or ‘virtual flowers’ that fans give their idols, with some receiving millions in each cycle.

Designers and Fashion

Digital Savvy Could Help Brands Win the Chinese Consumer: Chinese consumers are increasingly interested in apparel brands and retailers that not only offer trendy products, but also products or experiences that are different from others. 64% of consumers made mobile apparel purchases in 2018, up from 55% in 2017 and 50% in 2016. Comparing US to Chinese consumers, 60% in the US say they’ve made a purchase as a result of an email marketing message, whereas just 2% of Chinese consumers say they start their online apparel shopping from emails they receive from stores and brands.

H&M Spins its Collaborations: Allies with Angel Chen to Conquer the Chinese Consumer: H&M is collaborating with Chinese designer Angel Chen to launch a 45-piece capsule collection. From September it will be available in bricks & mortar and ecommerce stores in China, and in other markets such as Singapore, Malaysia, Philippines and Canada. To localise for China, H&M has been curating a Chinese New Year collection specially designed for the Greater China market for six consecutive years, it has launched Asia-inspired collections since 2016 and Asia-exclusive lingerie since 2018.

Premium and Luxury

China’s Duty Free Sector to Quadruple by 2025 – Morgan Stanley Report: China represents just 8% of the global duty free market, even though Chinese consumers accounted for a third of global duty free sales in 2018. China’s duty free market is expected to grow 28% CAGR, outperforming onshore and overseas markets. Chinese duty free accounted for $6 billion of luxury purchases in 2018 and is expected to rise to $24 billion in 2025.

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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