Mark Tanner
11 September 2019 0 Comments

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

Consumers,  Chinese Consumers

Beyond The Headline: The Real Story of Australia China Trade: 23 min video: China Skinny’s Mark Tanner gives his two-cents worth in Sky News’ excellent series. This episode covers the under-reported area of what can be achieved through cultural exchange and sports diplomacy to build bridges between China and Australia. “We thought political frosting may translate into a cooling of the business network,” says David Koch, President of Port Adelaide Football Club referring to the annual AFL match in China. “In fact it was quite the opposite because business leaders said, we’ve got to step into the bridge.” Similarly, Tennis Australia is investing on the ground in China to build relations with initiatives such as the One Belt One Road University Championship presented by the Australian Open in Chengdu, working closely with the local government. Cultural partnerships such as the Australian Ballet, the Melbourne Symphony Orchestra, exhibits from China’s Palace Museum in Melbourne are all initiatives highlighting that the cultural offering is just as important as trade, reaffirming mutual understanding as the centrepiece of mutual trust and mutual benefit. View within China’s Great Firewall.

The Unlikely Chinese Cities Where House Prices Rival London: House prices in Xiamen have more than tripled over the past decade, and are almost as expensive as the average home in London, even though local wages are a quarter. House prices in tier-3 Jinan, Shandong are more than Manchester, Leeds and Birmingham. The house price values across second-tier cities have risen an average 68% since mid-2015, fuelled by people trying to catch the price rally and an easing of rules on hukou (local residency permits). House prices per square metre in Hangzhou, home to Alibaba, now rival Seattle, where Amazon is based.

China Allocates ¥30 Billion ($4.2 billion) to Help Rural People Settle in Cities: The funds will be used to support work on granting permanent urban residency to people who move from rural to urban areas. 59.6% of China’s population were urban residents by the end of 2018.

Jiangsu the First Chinese Province to Hit GDP of ¥9 Trillion ($1.26 trillion): Jiangsu province’s GDP growth is expected to have reached around 6.7% in 2018, with a total GDP of ¥9.2 trillion ($1.3 trillion), the first time a Chinese province has achieved a GDP of ¥9-trillion – close to Australia’s GDP – the 13th largest economy in the world. Guangdong’s 2017 GDP was ¥8.99 trillion in 2017 so it will also break the ¥9-trillion mark when its GDP is announced. 17 Chinese cities have now crossed the ¥1 trillion ($140 billion) mark, with Shanghai, Beijing, Shenzhen, Guangzhou, Chongqing and Tianjin top of the table.

Chinese Consumers are Deceptively Perky: Neither the trade war nor broader jitters about a slowdown have kept Chinese consumers from buying. In the first six months of 2019, consumption per person increased 7.5% on a nominal basis from a year earlier, while retail sales of consumer goods grew 8.4%. Rising consumption is ultimately a function of growing disposable income, which gained 8.8% in nominal terms in the first half. The figure was flattered by personal income tax cuts.

Time-Honoured Chinese Brands Appeal to Young with Crossover Products: 78.1% of Chinese consumers have bought crossover products manufactured by time-honoured brands such as White Rabbit and Forbidden City.

China Company Research: The 101: It’s always a worthy investment in time and money to do due diligence for potential Chinese partners. While professionals are best to engage this, there are some quick checks that may highlight some red flags including the National Enterprise Credit Information Publicity System, Chinese Business Credit Reporting Companies, and other resources mentioned in the article.

Online: Digital China

In Depth: After Conquering the Bargain Basement, Pinduoduo Sets Sights on Big Cities: PDD’s ‘team purchase’ model that combines social elements with traditional shopping model quickly helped it gain large followings in smaller cities that were neglected by Alibaba and JD. But that is rapidly changing. As of June, orders from top cities like Beijing, Shanghai and Wuhan made up 48% of Pinduoduo’s total transactions, up from just 37% in January. In the 12 months through June, the average active buyer on Pinduoduo spent ¥1,467.5 ($206) – nearly double the amount from a year earlier. Alibaba hopes to stem the rise of PDD after confirming the $2 billion acquisition of Kaola, which is continuing to be independently run under its own brand as China’s ecommerce platforms continue to consolidate.

Premium Food & Beverage

Why Farmers are China’s New Live Streaming Stars: Taobao said it aims to “incubate” 1,000 farmer live streamers in 100 counties in 2019, helping each of them earn more than ¥10,000 ($1,400) in monthly income. And Kuaishou said there are 1.15 million rural users selling local products on its app through short videos and live streaming. They earned ¥19 billion ($2.75 billion) altogether in 2018, according to Kuaishou. In 2018, China had 396.8 million users of live streaming, a 6% decline from 2017 due to waning user interest and stricter online censorship. It was the only online service category that saw a decline last year. As people lose interest in watching typical streamers sing and dance, the focus seems to be switching to more off-beat streamers like farmers. It seems that viewers in big cities are intrigued by the village lives shown by rural live streamers.

Impossible Foods Eyes Chinese Dining Table for Faux Meats: Impossible Foods is counting on the China market as a key driver of its vision to completely replace animal meats with plant-based meats by 2035. It plans to open its first factory in Yunnan and bring the whole business supply chain to China. But Impossible Foods will need to clear regulatory hurdles to enter the market due to China’s cautious attitude toward genetically modified (GMO) crops – GMO soy is a key substance that gives its faux meat products a meaty taste. China’s total meat consumption exceeded the combined amount of the United States and the European Union in 2018. The news comes just as Yantai Shuangta Food, a major Chinese supplier of protein and starch derived from peas, said it had successfully developed artificial meat products.

Penfolds 25 | Everyone Likes to Evoke this Brand in China!: 25 labels that have a disturbingly similar resemblance to Penfolds from cursive old time-y font, its deep ruby red colour, the use of Bin, or even Ben, numbers. Or the name: Benfolds, Penfriends, Benfu, Panfield. Maybe even a blend of these.

Designers and Fashion

Localization Vital Cog in Nike’s Expansion Strategy in China: First-tier cities like Shanghai and Beijing were merely a beginning for Nike Jordan’s business in China. The brand is launching a Nike Jordan store in Xiamen as part of its plan to expand into more lower-tier cities to “get in touch with more consumers”. Young Chinese consumers have gotten used to ecommerce and are able to buy goods basically from any city online. Hence, offline shops are no longer limiting themselves to selling products, but are also providing customized service and experiences of the basketball culture, which are new growth points for brick-and-mortar stores. China has proved to be the fastest-growing market where Jordan has achieved double-digit growth.

Alibaba Storms New York Fashion Week, with Data-Driven Design: Tmall China Cool, one of the shows on the NY Fashion Week’s opening day showcased designers who utilised Alibaba data to understand what consumers are wanting to buy, are looking for, and searching. 2019 marks the year Greater China overtakes the US as the world’s largest fashion market according to McKinsey.

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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