There’s no shortage of evidence about the rate of change in China. From urban landscapes to lifestyles, diets to shopping habits; Chinese consumers preferences are shifting every month. Less than 12-months ago, KFC was the pin-up kid for western businesses breaking into China. Today, although KFC is opening hundreds of restaurants across the country, its sales are actually shrinking. While contaminated chicken can shoulder much of the blame, it has just sped up a trend that many Chinese consumers constantly crave new and fresh experiences. Chinese consumers acceptance of change has become the one constant in this incredibly dynamic market.
For businesses who are regularly innovating and adapting to Chinese consumer’s needs, the ever-changing nature of the Chinese market presents opportunities to grow market share. For businesses who are a little late to the market, it should provide some reassurance that China isn’t a closed shop. Even in the legendary instant noodle market, consumers are eager to give new products a try.
While many of the changes are seeing Chinese consumers take on more western traits, there remain many distinctive Chinese characteristics. Below you’ll find examples of how Nike and Adidas are adjusting their positioning in China to appeal to the more ‘individualistic’ youth market. There’s some pointers on how Burger King could do the same, among a handful of new products and branding. Hopefully you’ll get some insights into some of the changes of preferences, which apply across many segments. Enjoy!
China’s ‘Grassroots’ Consumers Changing Online Business: Businesses overlooking less wealthy Chinese consumers could be missing a big opportunity. 500-600 million online Chinese with an average monthly income of $320-$480, mostly rural, are spending 40% of their income on internet shopping. immomo.com is tapping into the opportunity with a rural/3-4th Tier city mobile-ecommerce site claiming to be China’s largest B2C mobile platform with annual sales of $80m
Reasons for Staying in China, and the Emergence of One Billion Consumers: The desires in China’s smaller-tier city consumers are more likely to be owning a pair of Levi’s or Nike’s versus no-brand local garb or canvas pumps. It means taking a date to Starbucks instead of a tea house, or buying Ferrero Rocher chocolates instead of the local variety. The national minimum wage has increased 12.8% a year every year since 2008. Some interesting comparisons between Chinese cities in Sichuan province and famous cities of the world.
Adidas, Nike Vy for China Youth Market: Adidas & Nike are promoting individuality and creative expression to appeal to the ever-changing youth segment, who consume a third of all clothing sold in China. Unlike consumers in the mature luxury market, who buy into style & value recognized by their peers, the youth segment likes stand out individualism. Nike is targeting the skateboarding culture which represents free-expression and creativity in China. Adidas is shifting from an athletic brand to fashion. This year, Adidas plans to open 500 stores across China, with upper-tier cities sophisticated, brand and style conscious, and lower-tier cities focusing on entry-priced affordable brands.
Not So Fast on the Burgers and Nuggets: KFC and McDonalds are finding out how quickly China is changing – the novelty of eating Western food, and it’s image of safe, high-quality food are diminishing as rampant growth has been replaced by a drop in sales. Chinese, who in recent decades have been so used to constant change are experiencing familiarity fatigue with the chains.
Consumption Levels Picking Up In China: Chinese FMCG products grew 14% in 2012. Categories that soared were mint candies, wine/spirits, chocolate, biscuits and oral care. Coffee is seen as one of the emerging products with just 40% of Chinese families buying it.
The Scandals That Show How Hard China Must Work to Improve Food Safety: The Chinese Government is offering rewards of up to $48,000 for reports of slack food labeling, toxic additives and fake food in China.
Tmall Announces Cooperation with Foreign Baby Formula Companies: Leading B2C online retailer TMall is working with overseas baby formula companies to sell direct to Chinese consumers online. Who needs to risk of fine of HK$500,000 to smuggle it over the border?
Capitalise on Rising Demand for Instant Noodles in China: Even China’s mature instant noodle market can be broken into with 59% of Chinese consumers prepared to try new products and flavours. Low-fat, low-salt and additive-free products will appeal to increasingly discerning Chinese consumers.
Treasury Wine Readies China Gifts Modeled on $168,000 Ampul: Australia’s Treasury Wines are creating new China-specific packaging and marketing to cater to China’s wine gift giving culture, which has taken a hit lately with the crack-down on corruption. Super-expensive, limited edition bottles of wine are also on the cards, inspired by Beringer’s $168,000 bottles targeted at Hispanics.
How Burger King Can Recover in China: Burger King has just 1.6% of the restaurants KFC has in China. The world’s 2nd largest burger chain is yet to really tap into China’s $29 billion fast food market, but here’s a suggestion how: Build on it’s traditional beef dishes – this as seen as low fat and higher quality than pork and chicken. Consider tapa burgers to appeal to Chinese dining preferences for varied plates, and increase variety including crab, fish, tofu, etc. While making the youth target market feel somewhat ‘individualistic’, ensure that overall they can feel part of their collective group.
Chinese Market Poised for Roo Meat: Australia has done a great job of selling their beef to China, now they’re poised to export Kangaroo meat in a market expected to be worth hundreds of millions of dollars a year. Will Chinese be hopping to it?
California Almonds Renamed in China: California almonds have been rebranded in China to Ba Dan Mu in hope of growing the 236 million pound yearly exports.
Dear Apple, Amazon, Google: Here’s Why Chinese Consumers Hate Your Ecosystems: Chinese consumers aren’t taking to the walled gardens. They’re scouring a wide range of third party app stores for the best deal, rather than using the most convenient and least fragmented experience (and it’s not just online too).
Yum China Recovery Remains Rocky Even as Online Anger Calms: Chinese consumers post 3 million overwhelmingly negative comments in a month about KFC on Weibo following their contaminated chicken, helping a 37% decline in same-store sales.
Chinese Search Engine Targets Users’ ‘Livelihood’: Qihoo Search, the Health Times newspaper and China State Food & Drug Administration are joining together to make small search engine Jike.com offer a complaints service for consumers to report dodgy pharmaceutical products & services.
It’s Time to Get Serious About China. Seriously.: China’s massive 247 million-strong smartphone market is still the 6th fastest growing in the world. Samsung is the only non-Chinese manufacturer in the top-5. Although large, the 247 million is pale in comparison to the 1.12 billion mobile users in China.
To Succeed In China’s E-Commerce Market, Take Culture Into Account: Exclusive luxury retailer Luxup failed because the business model was culturally flawed; it required Chinese consumers to make payments in advance, with no guarantee of finding something. They targeted more sophisticated, demanding shoppers who can afford the best, but still want discounts and a raft of perks.
That’s the skinny for the week!
If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.