Here are this week’s news and highlights for China:
Rural Revitalization With Chinese Characteristics: The five year Rural Revitalization plan hopes to establish 300 or so specialized agricultural export regions and create a set of “China No. 1, World Famous” agricultural brands by 2020. The Plan calls for improving biosecurity, strengthening border control, standardizing enforcement of animal and plant inspection and quarantine measures, and cracking down on smuggling of agricultural products. It envisions that China’s farmers will need a steady intravenous drip of subsidies and fixed asset investment for major “foundational, long-term, influential” projects that will address weaknesses in agricultural infrastructure.
China’s Small Farms Are Fading. The World May Benefit.: Traditional plots of land are slowly becoming parts of bigger operations, eroding a way of life but enriching local residents and helping more Chinese people move into the modern world.
A China Veggie-Selling App May Be Worth $7 billion: Meicai, a Chinese startup that helps farmers sell vegetables to restaurants, has raised at least $600 million. The money will be used to expand as the startup competes for a bigger share of China’s fragmented food sourcing market.
Why Bill Ackman and Coca-Cola Are Betting Big on Coffee in China: China’s nascent cafe scene is attracting billions in investment from Coca-Cola, Internet companies and even high-profile hedge fund managers including Bill Ackman with the two main reasons being opportunities for growth: 1. Chinese coffee drinkers make fewer purchases per year – 8 versus 82 in the UK, and just 34% have purchased coffee over the past year versus 70% in the UK; and 2. When Chinese do purchase coffee, they are paying much more – $4.50 a pop versus $2.90 in the UK.
Majority of Chinese Consumers Check Front-of-Pack Claims: Seven out of ten Chinese consumers check front-of pack claims and logos, according Innova.
Is China Continuing a Consumption Upgrade or Experiencing a Consumption Downgrade?: Last year saw the first growth in instant noodle sales since 2011 alongside strong growth from relish and inexpensive wine. This is coupled with the rise of e-commerce platforms like Pinduoduo for low-priced products, and the booming sharing economy which are all labelled as the proof of consumption downgrade. Yet luxury sales are strong, domestic travel is up 11%, the cinema box office grew 18%, the average price per car is increasing while volumes are decreasing, and for instant noodles – leading brand Master Kong saw a 24% slip in sales of its low-end noodles but a 15% jump in its high-end products during the first half of this year.
The Question Mark Hanging Over China’s 400 Million-Strong Middle class: Will China’s consumers lift the country to a more prosperous level, or cause the economy to stagnate and even lead to political chaos? Income grew slower in 2016 for China’s lowest-earning 60%, while growth stayed the same or sped up for its top-40% of earners.
China to Further Promote Healthy Consumption Structure: The State Council has released a 2018-2020 action plan for improving China’s consumption mechanism to further stimulate the vitality of domestic consumers consisting of six aspects: 1. Further relaxing market access in the service and consumption sectors; 2. Improving policy systems to upgrade non-service consumption; 3. Establishing product and service standards in key fields; 4. Building a credit system for consumption; 5. Optimizing supportive fiscal measures for consumption; and 6. Strengthening consumption promotion and information guidance. Market access should be relaxed in several service-related fields, including tourism, culture, sports, healthcare, elderly care, domestic service, and education & training.
Time-Honoured Chinese Brands Seek Cross-Industry Collaboration: A lip balm collaboration between China’s White Rabbit candy with cosmetics firm Maxam, and a cocktail combo between Liushen Florida Water mosquito repellent and alcopop brand Rio are examples of increasing collaboration between brands in China. They are proving so popular, Tmall has set up a special team to support them, claiming each brand could gain about of 90% of its new customers through launching cross-industry products its platform.
New Technologies and Customer Experience are Driving Rapid Evolution in Retail in China: In China, over 61% of respondents say they like online shopping best. Having a variety of products in-store is the most important aspect of their in-store shopping experience (25%), followed closely by having a unique brand experience, along with a personalised service according to JDA.
Experience Brand Index: Chinese consumers rated the following brand’s experience highest across the following categories – employees: Royal Carribean cruises; in-store: Starbucks; web & mobile: Blizzard Entertainment gaming; online shopping: Tmall; content: Visa; and events & experience: Singapore Airlines. Huawei, Alipay, SK-II, WeChat, Xiaomi, Macy’s and Heineken also ranked among the top brands. 60% of Chinese agreed that brands rarely live up to brand promises according to a survey by Jack Morton. Whilst employee experience isn’t as important to Chinese consumers as those in the UK and US, social content is much higher.
Alibaba Activities to Combat Fakes and Counterfeit Products: The number of takedown requests concerning fakes and counterfeit products on Alibaba’s platforms declined 44%, while brand participation increased 36%. Of the world’s most valuable brands from Forbes, 76% are on Alibaba’s platforms.
Mobile Payments Surge Among Chinese Travellers: Alipay: Bicester Village outlet shopping centre in the UK, Dotonbori commercial zone in Osaka, and Sydney Airport were the top three Alipay destinations among Chinese consumers during Golden Week, increasing by 90-fold, 70-fold, and 55-fold, respectively.
SK-II Ushers in the Future of Retail With a “Smart Store” in Shanghai: SK-II’s Shanghai store sees large-scale digital wall generates art pieces by reading facial expressions, body movement and blinking creating different colour themes and energy lines across the screen. The store also provides immersive education, a personalised skin scan analysis booth and payment using a bracelet.
Filing Process to Replace Traditional Registration Procedures: In late September, the State Council has decided to substitute the registration method for imported non-special use cosmetics. Cosmetics filing can now happen around China rather than a few designated pilot zones and there will be swifter market access for foreign cosmetics brands. Animal testing remains mandatory.