Here are this week’s news and highlights for China:
The “Easy to Win” Trade War Against China and the World: “Trade wars are good, and easy to win.” – 2 March 2018 tweet from president trump. If you are unsure of the pros and cons of trade wars and protectionism in our interconnected world, you will enjoy this synopsis from China Law Blog.
2017’s Top-10 WeChat Moments Ads as Voted By Consumers: The top-10 WeChat Moments ads from 2017 as voted by 600,000 WeChat users. Good lessons in resonating with Chinese consumers.
FMCG in 2017 Up By 4.3%, Highest in the Last Three Years: Sales of fast moving consumer goods in 2017 grew by 4.3% year on year in China last year. The growth rates were 0.7 percentage points faster than 2016 according to Kantar. The West and North regions grew fastest at 6.0% and 4.7% respectively, with the two regions having the most fragmented retailer mix. Hypermarkets, supermarkets, and convenience stores grew by 2.6% – almost twice as fast as last year’s 1.6%. FMCG purchases online grew 29% with online fresh food growing 39%. WeChat grew 52% to account for 1.4% of spending.
3 New Trends in KOL Marketing in China: 54% of the new university graduates polled in China want to become a KOL, here are three trends from the channel overall: 1. Short videos are becoming more important as a format for KOL marketing – in December 2017, Chinese users spent 6,149 million hours on short videos vs 881 million hours on live streaming; 2. KOLs are building their own brands; and 3. KOLs are educators and entertainers, rather than static media.
Over 40% of Cross-Border Cosmetic Goods Fake, says Consumer Association Report: Over 40% of cosmetic products purchased through cross-border ecommerce platforms on Singles’ Day last year were fake, with refunds and changes much more difficult than domestic platforms based on a report by the Chinese Consumer Association. 78% of online vendors mark-up prices prior to the shopping festival to give the appearance of greater discounts. Just seven of the 206 surveyed courier receipts did not show recipients’ personal info.
Alibaba’s Tmall is Moving Cross-Border Ecommerce to Blockchain: Tmall Global and logistics partner Cainiao aim to move information on goods for import and export onto a blockchain that can then track their country of origin, shipping port and method, arrival port and customs report details. Chinese consumers from various cities covered by Cainiao, including Shanghai, Guangzhou and Shenzhen, will be able to track the blockchain-based logistic information for some 30,000 goods from 50 countries through the Tmall app.
WeChat Hits 1 Billion Milestone: WeChat’s active monthly users has hit a billion, up 20 million from September 2017. Numbers were bolstered by the 688 people who sent and received virtual red envelopes over the Chinese New Year.
Move Over Oreos: Cheese Biscuits’ Appeal on the Rise in China: Chinese consumers are expected to eat more Western style biscuits in the coming years as their knowledge of cheese types increase, with cheese-flavoured biscuits the fastest growing flavour-type according to Mintel. Chocolate and milk flavoured biscuits are the most popular flavours and had the most introductions between 2014-16, yet launches have slowed down, much like with traditional flavours such as plain, sesame and scallion. Sweet biscuits still account for 53.9% of total biscuit value.
Urban Chinese Consumers’ Willingness to Pay for Pork with Certified Labels: Jiangsu consumers’ willingness to pay for pork with an “Organic Food” certification (¥26.78) was the highest among all attributes, followed by a “Green Food” certification (¥20.22), a “free from veterinary drug residues” label (¥23.18), and location-of-origin (¥12.77). However, there was only a moderate preference for “Safe Food” certification (¥8.10) according to a discrete choice experiment.
China Outbound Tourism Hits Record High in 2017: Chinese people made 130.5 million trips overseas last year, a 7% jump over 2016, while total spending increased by 5% to an estimated $115.3 billion according to a report from Ctrip and the China Tourism Academy. Thailand and Japan, were the most popular destinations attracting 9.8 million and 7.4 million visitors respectively. China was the largest source of tourists to ten countries last year – Thailand, Japan, South Korea, Vietnam, Cambodia, Russia, the Maldives, Indonesia, North Korea and South Africa.
Inside US Retailers’ Big Mobile Play for Chinese Tourists: Although total spending by Chinese travellers accounted for a small fraction of the $5 trillion US retail industry, they still drove roughly 9% of total US sales of the categories they traditionally favour – clothing, accessories and electronics. More struggling US store operators are turning to Alipay and WeChat Pay to lure the 3.03 million Chinese tourists who spent $33 billion in America last year. 90% if Chinese travellers would use mobile payments if given the option according to Nielsen. The draw will only become greater with Alipay and WeChat incorporating tax refund services into their apps.
How Tencent’s Medical Ecosystem is Shaping the Future of China’s Healthcare: Over 38,000 medical facilities in China had WeChat accounts by the end of last year. 60% of those provided online consultation and appointments, and 35% allowed WeChat Pay for medical bills. Over 110 million users have searched for or used these services through WeChat, with cutting out physical appointments and payment lines saving an average of 42.6 minutes. Tencent’s AI Medical Innovation System has accuracy rates of over 90% for preliminary diagnoses of esophageal cancer, 95% for lung sarcoidosis and 97% for diabetic retinopathy.
Dirty Sex: Massive Production of Counterfeit Condoms Shocks Chinese Consumers: Police in Shanxi Province busted a counterfeit condom production centre where a group of villagers in their 50s were putting the condoms into packages by hand, without any sanitation or other safety precautions. In the room, a pile of condoms were soaking in buckets filled with low-quality silicone oil, waiting to be packaged up as Durex and Jissbon. The police confiscated more than 1.7 million packaged condoms in six hideouts. A box of three counterfeit condoms cost ¥0.42 (7 cents) to produce and retail for ¥10-20 ($1.58-$3.15) in market.
China’s Acute Water Shortage Imperils Economic Future: In the past 25 years, 28,000 rivers have disappeared in China. Groundwater has fallen by up to 1-3 metres a year and parts of Beijing are subsiding by 11cm a year. The flow of the Yellow River, water supply to millions, is a tenth of what it was in the 1940s; it often fails to reach the sea. As of last year, 8.8% of China’s water was so polluted it was unfit even for agricultural or industrial use. Eight provinces in northern China suffer from acute water scarcity, and a further four from scarcity. The provinces account for 38% of China’ agriculture, 50% of its power generation, 46% of its industry and 41% of its population. Agriculture currently uses 62% of China’s water resources [FT Paywall].
Women are Driving Luxury Carmaker Aston Martin’s Growth in China: Aston Martin’s sales grew 57% last year, with sales almost doubling in China. The average age of a customer in China is about ten years younger than customers in the West with females accounting for 50% of Chinese customers.