Mark Tanner
Mark Tanner
11 October 2017 0 Comments

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

Online: Digital China

7 Reasons Alibaba is Becoming More Like ‘China’s Google’ than Baidu: Baidu is often referred to as ‘China’s Google’ yet if you go a little deeper, Alibaba is looking more like Google in many ways.

Shared Bikes in China: a Look at the Market After 1 Year: There are 68 million monthly active users of China’s bike share apps, but growth is starting to plateau with users more likely to use just one app. Mobike and Ofo are virtually tied for users, each having about 35 million active users according to Quest Mobile and Penguin Intelligence.

Mobike, Ofo Investors in Talks to Merge China’s Biggest Bike-Sharing Startups: Mobike and Ofo investors are in early talks to push China’s two largest bike-sharing startups into a merger, aimed at ending a costly competitive battle and creating a single dominant player in the fast-growing business. The two combined valuation may exceed $4 billion.

A New Narrative of Chinese Corporate Growth: Unlike famous Chinese internet companies like Alibaba Group Holding and Tencent Holdings, the latest crop of startups with skyrocketing valuations are comparatively down-to-earth and generally had humble beginnings, but now boast solid business models.

A Tea and Tiananmen: Inside China’s New Censorship Machine: In 2013 China had an army of 2 million content auditors in government departments and private companies in addition to automated tools, with the number believed to have risen sharply as the Government continues to tighten control on online content. The trend has seen VPNs become a popular item for Chinese to bring home from overseas.

Consumers,  Chinese Consumers

How China is Battling Ever More Intensely in World Markets: To separate hype from reality, think of Chinese competition as having three dimensions: illegal, unfair and intense. Each needs a different response. Illegal is declining. Unfair is the hardest to deal with – sharp practice that breaks no global rules where the government restricts access to lucrative sectors, while financing assaults on those same industries abroad. The third, intense but legal competition has shown Chinese firms have proven that they can make good products for less. Consumer prices for televisions, adjusted for quality, fell by more than 90% in the 15 years after China joined the World Trade Organisation (WTO). China’s share of global exports has risen to 14%, the highest any country has reached since America in 1968. Having done so well out of the global commercial ecosystem, China should recognise that it has become one of its custodians. Abuse it—illegally or by overburdening it—and it will break.

Hema Finds Partners to Expand its ‘New Retail’ Model in China: Alibaba is opening seven new Hema supermarkets and 3 newly renovated stores in Shanghai, Beijing, Hangzhou, Shenzhen and Guiyang – the first in Southern and Southwestern China – to take the total to 20 stores in China. Customers place an average of 4.5 orders per month per user with sales per unit store area about 3-5 times that of a traditional supermarket, as more than half of orders are placed through online channels.

Overseas Chinese Tourists

Bumper ‘Golden Week’ as Chinese Make Most of Longer Break: Last week’s National Day “Golden Week” saw the number of trips made rise 11.9% on last year to 705 million, spending 13.9% more at ¥583.6 billion ($87.7 billion). The number of outbound tourists was roughly the same as last year at about 6 million, but more travellers were opting to go it alone than join a tour group.

How Brands Should Target Chinese Consumers During Golden Week and Beyond: Savvy UK-based stores have caught onto the importance of social media and experience-led marketing to appeal to visiting Chinese tourists, making the visitors feel special. One example is the Cambridge Satchel Company which embossed satchels with visiting customer’s initials.

Premium Food & Beverage

China Postpones Controls on Food Imports After Global Outcry: China has granted a transitional period of two years for sweeping new controls on food imports that require each food shipment to have an inspection certificate from a foreign government.

China’s Yoghurt Sales Poised to Overtake Milk for First Time: Chinese milk sales will grow just 4% in 2017, while yoghurt sales will rise 18% to almost ¥122 billion ($17 billion), surpassing plain milk sales for the first time, Euromonitor projects. While foreign brands should have an advantage, China’s three big dairy companies control about 70% of China’s yoghurt market. Yoghurt sells for higher prices than milk because of perceptions that it is more nutritious and can be slimming. [paywall]

Land of the Long-Life Yogurt: Yogurt from the Bulgarian village Momchilovtsi has become a sensation in China, and dairy companies are milking it for all it’s worth. In 2009 China’s Bright Dairy took home the bacteria found in the local yogurt which enabled the company to develop drinking yogurt for Chinese consumers. They branded it Momchilovtsi which achieved sales of $910 million last year – the top-selling brand in the booming category.

Parents and Kids

Toys ‘Я’ China: Despite struggling with other markets, foreign toy retailers are experiencing strong growth in China. Toys R Us just opened its 140th store in China following four years of double digit growth in its best performing market globally. Lego’s China sales have seen double digit growth despite a 5% reduction globally in the first half of 2017. High-end Dutch toy seller Instore Kids Corners (IKC) has grown 29% in the first eight months of 2017.

Schooling and Education

China’s Quest for ‘World Class’ Universities Triggers Spending Spree: Beijing has released a long-anticipated list of 42 universities that have been handpicked to be transformed into world-class learning facilities. Regional governments have already earmarked at least ¥55 billion ($8.3 billion) for programmes to help universities boost their standing by upgrading their infrastructure and lab facilities and enlist top talent. China had nearly 2,600 universities at the end of 2016.

Autos and Cars

Savvy and Sophisticated: Meet China’s Evolving Car Buyers: By 2022, China’s auto market will be larger than the US and Europe combined, with SUVs and the premium segment driving growth according to McKinsey. Around half of buyers no longer think of cars as status symbols, although young people and those who bought expensive cars (>¥400K ($60,000)) are more likely to. Just 12% of recent car buyers want to buy the same brand the next time, versus 19% a year ago – owners of foreign brands are more loyal though. 43% of consumers in Northern China consider domestic cars either more reliable than or on par with foreign brands compared with 33% in other regions.

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

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