Mark Tanner
14 September 2016 0 Comments

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

Consumers,  Chinese Consumers

As China’s Consumer Sector Gains Prominence, HSBC Picks Winners: An HSBC survey focusing on China’s 18-35 year-olds found the top-3 issues that make them nervous are real estate, job security and medical. The top-3 items they’d buy after necessities are entertainment, shopping and domestic travel. The F&B categories that they are purchasing in greater quantity than 12 months ago are drinking milk, chilled yoghurt and fresh food – 74% believe Chinese products are inferior to imports.

Not All Doom and Gloom for China: Increasing affluence and a growing awareness of branded products are two reasons well-marketed products have a strong future ahead in China. Consumers born after 1980 recognised three times as many brands than the previous generation, and were huge advocates for brands they liked and trusted according to BCG research.

Negotiating With Chinese Companies: Takeaways From President Obama’s G20 Stairgate Incident: China’s recent dissing of President Obama is a springboard for explaining how foreign companies should negotiate with Chinese companies. They are testing you and if you let them get away with it this time, you will be opening up the door to future incidents. Say “thank you”. The Chinese side is supplying you with free information. They are illustrating who they are, what they care about, and how they react to situations.

China Reviews Inbound Investment Laws: National People’s Congress (NPC) Standing Committee will consider provisions that may allow foreign and Taiwanese investors to start businesses across China as easily as in the four free trade zones (FTZ) to encourage investment across China. In the first half of 2016, a total of 4,923 foreign-funded firms were established in the four FTZs, investing $54 billion.

Overseas Chinese Tourists

Chinese Travellers Top Reasons for Choosing a Destination: Nature hikes, tasty food, a good shopping experience, short time flight/limited time difference and price/cheap currency are the top-5 reasons China’s youth will choose a destination abroad according to an HSBC survey.

Record 133 Million Chinese Tourists to Travel Out of Mainland this Year, with Hong Kong their Top Destination: About 133 million tourists will make outbound trips in 2016 – up 11.5% on 2015, according to a report by the China Tourism Academy and UnionPay. Hong Kong, Macau, Taiwan, Thailand, South Korea and Japan are the top destinations, with Eastern Europe, South America, and Central Asia on track to become popular destinations.

Vineyards Cash In on Chinese Tourism Boom: Almost 612,000 foreigners visited New Zealand vineyards in the 12-months through June, 11% more than a year earlier.  Wine buffs typically stay longer and spend more in the country. With Chinese being the second largest and fastest growing tourism source, many are investing in attracting Chinese to New Zealand vineyards.

Premium Food & Beverage

Chinese Threat to Australia’s $295 Million ‘White Gold’ Dairy Export Boom: Chinese authorities have announced “strengthened supervision” of 41 fresh milk exporters, while alleging that “disease-causing bacteria” was found in a spot test of fresh milk from Australia.

British habit of drinking tea catching on among Chinese: Tea houses serving British afternoon tea have sprouted up in the bigger cities in China and the number of upscale British tea blends from companies like Twinings, Taylors of Harrogate and Hudson & Middleton occupy increasingly more space on shelves in Chinese supermarkets, restaurant menus and online shops.  Meanwhile, Starbucks is launching its Teavana brand through its existing chains, rather than standalone stores like in North America

Alipay to Expand Reach with KFC China Investment: Alipay’s parent company Ant Financial and private equity firm Primavera, owned by former chairman of Goldman Sachs China Fred Hu, will invest $50 million and $410 million respectively into Yum China. Many believe McDonald’s needs a local partner to grow in China.

Online: Digital China

More China Netizens Love WeChat, Self-Built Websites: 52.8% of Chinese consumers use WeChat public accounts regularly, 50% self-built websites and 50% QQ groups according to iResearch.

In Apple’s iPhone 7, Chinese Consumers See Homegrown Features: Apple’s iPhone 7 launch on Friday may be its toughest yet, particularly with some of the big new features already available in Chinese smartphone makers Huawei, LeEco and Oppo.

China’s VR Gold Rush: The Chinese VR market was worth $236 million in 2015. Analysts conservatively expect it will reach almost $1 billion in 2016, with forecasts from $9 to $150 billion within 5 years. Over 300,000 VR headsets sold on Taobao in July, while Chinese manufacturer Baofeng Mojing sold 1 million low-end VR headsets in the first quarter of 2016. Alibaba recently announced that it is developing gesture-driven, VR-enabled mobile payment technology, with Shanda, Vectr, Tencent, Baidu, Alibaba, Perfect World, and Xiaomi also making significant investments in VR and Augmented Reality.

Autos and Cars

Chinese Consumers, Once Averse to Debt, Embrace Credit to Stoke Car Sales: Chinese households are bucking their aversion to debt, with 30% of Chinese car buyers purchasing on credit last year, up from 18% in 2013, helping a rebound in the car market after a tough 2015. 80% of cars bought in the US are on credit.

That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.

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