Mark Tanner
Mark Tanner
19 August 2015 0 Comments

There has been a slew of recent coverage about Chinese FMCG brands outsmarting foreign players with faster growth rates.  Local brands often better understand customer needs and meet them with nimble product development and marketing.  They also have strong distribution networks in Tier-3 and lower cities, which boasted 8% growth last year, versus 2% in Tier 1 and 2 cities.

However, FMCG is only one part of the supermarket shop for Chinese consumers, with premium imported goods increasingly taking up more space in trolleys.  Imported food grew three times faster than FMCG in China last year.  

China Skinny’s research has found that as consumers earn more in China, they are spending a larger share of their incomes on food and beverage – converse to how most developing countries evolve.  Companies like Danone are selling off local brands as they are struggling to compete with premium imported products attractive to affluent consumers, and local products which appeal to price-sensitive consumers. 

Savvy Chinese investors have been quick to recognise the rising demand for foreign food brands, scooping up companies such as America’s largest pork producer Smithfield Foods, Britain’s Weetabix, Italy’s Salov Olive Oil and Israel’s largest food producer Tnuva.  They’re not just going for brands too; having signed agribusiness deals in more than 40 countries since 2005, with Australia, New Zealand and the U.S. attracting the highest number of major investments.

Spurred on by their extensive insights, China’s cash-rich Internet giants are investing in the premium food supply chain, both online and offline.  Jingdong is one example – it has opened up pavilions for imported products, recently bought a share of Australia’s largest milk producer Murray Goulburn and invested $700 million into local supermarket chain Yonghui Superstores.

While many foreign food and beverage brands may not have the same depth of understanding and ability to adapt to the market as much as local brands, they have an enviable reputation for safe, clean and transparent products that Chinese brands won’t be able to match for some time yet.  If imported brands can compliment that with stronger insights and marketing, there’ll be no stopping them in China! China Skinny can help with that.  We hope you enjoy this week’s Skinny.

Consumers,  Chinese Consumers

When The Stock Bubble Burst, Did It Take The Rest Of China With It?What actually seems to be happening following China’s stock market fluctuations?

What A Cheap Yuan Means For Rest Of the WorldChina’s Central Bank’s decision to let the yuan drop 3.5% over two days last week will see commodities continue to slump, raise the price/lower margins on imports into China, and make overseas travel and shopping more expensive.  It won’t help the already-wounded luxury sector, where 70% of sales to Chinese are outside of the Mainland.

P&G Tripped Up by Its Assumptions About Diapers in ChinaPampers diapers positioned themselves too low for China’s growing middle class, with P&G recently launching a range of premium diapers made in Japan to better meet market demand.

A Worldwide China StrategyUnderstanding what influences Chinese consumers’ decisions – and where those influences are – is vital to succeeding in China.

Buzzwords: Chinese GovernmentSome important strategies and plans from the all-powerful Beijing and how they may impact the market.

Premium Food & Beverage

Chinese Eye Australia’s Outback in $43 Billion Foreign Farming FrenzyChina has made agribusiness deals in more than 40 countries since 2005, with Australia, New Zealand and the U.S. attracting the highest number of major investments.

5 Chinese Meat Scandals That Will Make You CringeLittle wonder food imports are soaring in China. A recap of some of the old favourites in China: glow-in-the-dark pork, rat meat sold as mutton, 40-year old poultry and more. Hungry?

One Code That Starbucks Corporation Still Hasn’t Cracked46% of Starbucks sales in the U.S. happen in the morning, but the chain’s 1,700 stores in China just can’t convince local consumers to do the same – Nescafe owns that space. 

Why Do We Drink Wine In China?Wines suit the new generation of Chinese post-80s consumers as they stress differentiation and personalisation, as opposed to Baijiu, which many consider an outdated form of unification.

Online: Internet, Web, Social Media, Mobiles & Ecommerce

Mobile Accounts For More Than Half Of All Sales In China For Alibaba55% of total spending on Alibaba’s platforms was on a mobile last quarter, with shopping up 125% from a year ago. The 307 million active mobile shoppers spent $195 on average last quarter. There were 367 million active buyers overall on Alibaba’s consumer platforms in the past year, placing 58 orders each on average, with sales growth slowing to 34.4%.  In other Alibaba news, the company has invested $4.6 billion in electronics retailer Suning.

JingDong reports 82% sales growth in the second quarterThe value of goods sold on JingDong reached $18.5 billion in Q2 – less than a fifth of Alibaba’s sales, but growth was more than double at 82%. The company also purchased a 10% stake in Chinese supermarket chain Yonghui Superstores for $700 million and will offer food delivery services through the chain.

China Telecom Says Slow Internet Not Sales PloyA Shanghai Television investigation has found visiting International sites through China Telecom is even more painful than normal in China.

WeChat Rockets To 600 Millon Monthly UsersWeChat added 51 million monthly active users between April-June this year, although Tencent is still tight-lipped about how many are based in China – we know that most are.

Xiaomi At 5 years OldInfograph illustrating the remarkable journey Xiaomi has made to become a $45 billion company in just five years.

Overseas Chinese Tourists

Priceline – The Big US Web Firm That’s Figured Out ChinaUnlike other big Internet players in China, online travel agency Priceline is making good headway, through its shareholding and integration with Ctrip, advertising spending on Baidu and Qunar, and 11 offices in the country.

Clothes and Fashion

How Western Fashion Brands Are Using Social Media In ChinaOtte, a small boutique chain in NYC is launching its first foreign store in Shanghai next March due to its significant sales in China, due to the success of its social media campaigns in the market.

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