You probably heard the news late last week about China’s fake beef and lamb made from rat and fox. Couple that with the H7N9 chicken drumsticks, decaying pigs in rivers, hauls of putrid, dead fish flavoured with ginger infused with highly toxic pestacide – and that’s just in the past month. It doesn’t exactly leave you salivating.
Although local brands in some segments are on the rise in China, a dismal track record of local food and beverage has seriously eroded trust in Chinese producers. More and more Chinese consumers can afford to be choosy about what they eat, and with the web, social media and an increasingly transparent Government media helping spread the news of dangerous local produce, imported food is on the up. An Ipsos survey last year discovered that 61% of Chinese shoppers were less confident about local food than in 2011, with 28% planning to buy more of the imported stuff. That sentiment has resulted in sales of imported food officially growing 28% in 2012. Those figures were all prior to the past month’s avalance of meatmares.
While food scandals may not last forever in China, they will inevitably be here for a while yet. The infamous melamine milk scandal and its 300,000 victims focused Government attention on fixing food supply chains, but five years on we’re still seeing grilled kebabs made from vermin. Quality food and beverages are among the shining performers of western businesses in China, especially those brands who understand the Chinese market. As always, there’s some news and views below that may help you get the Chinese market a little more. Enjoy!
Top 10 Retail Priorities: The top-10 priorities for Chinese youth consumers when shopping in bricks & mortar: 1. Quality; 2. Price; 3. Reputation; 4. Cleanliness; 5. Service; 6. Promotions; 7. Information; 8. Location; 9. Displays; and 10. Sales people.
Legislature Mulls Consumer Rights Law Changes, Online Shopping Included: The Chinese Government is considering changes to consumer rights covering better information privacy and online retail laws – including a seven day right of return.
Made in China: 8 insights into Chinese consumers: 1. There’s no ‘One China’; 2. Constant conflict between fitting in & standing out; 3. Aspiring to be global, not Western; 4. Status anxiety – displays of status via luxury goods or gifting, even the poorest household spend 30% of their budgets on gifts and festivals; 5. The growth of individual shoppers; 6. Huge investment in ‘Little Emperors’ – it’s not unusual for 30% of household income to be spent on education; 7. Power to the women; 8. Connecting through Social Media..
How Chinese Tastes Are Reshaping American Malls: Chinese shopping trends are now influencing American consumers from foot massage salons and “bubble” milk tea in malls. Django Unchained’s withdrawal from Chinese cinema’s is providing further impetus for Hollywood to cater movies more to Chinese tastes and rules, not to miss out on the huge market. Chinese-inspired big smartphones, Buicks, green tea and luxury goods are all pushed along in the US by China’s influence.
China’s Toxic Harvest: Consumers Flock To Imported Food: Imported food grew 28% in China last year, to $18 billion. Imported food labelled ‘organic’ was much more trusted than similarly labelled local products. Well recognised western seals of quality control made food even more desirable.
Danone: Premium Formula Need Spurs China Imports: An under-supply of premium products are driving f&b imports for western countries according to Danone. Danone are limiting exports to China because there are capacity constraints, regulation, and the only sustainable answer to demand is from locally produced products. Their strategy is to build brands, equity and categories for local consumers, not to ride the current fears of local products, which could be temporary. Danone’s baby nutrition sales were up 17.1% in Q1, helped by strong China demand.
Over 900 Arrested In China For Meat-Related Crimes: A 3-month campaign has resulted in 904 arrests from 382 cases of meat-related crimes in China. Offenses included producing fake beef and mutton made from rat and fox, water-injected meat, chemically processed products and selling diseased & fake meat. Delightful.
Chicken Brands Scramble To Reassure Consumers As Chickpocolypse Hits China: Buy a chicken for less than a $1. Chinese chicken sellers report that prices have dropped to a quarter of the price post-bird flu. High end hotels have stopped serving chicken, live chooks have been unavailable on taobao and you can’t even get a chicken meal on Chinese airlines. KFC’s March sales dropped 16%. Within the first week of birdflu China’s poultry industry lost $1.6 billion.
Gaia Gaja: On Chinese Wine Consumers, Italian Imports, Auctions & More: Chinese wine consumers understand lightness, delicacy, elegance according to an Italian wine expert. Italy is behind the French and Spanish wines in China due to a lack of a national program for promotion.
Cypriot Ice Cream Maker Expands To Chinese Market: Cypriot ice cream maker Papaphilippou is finding its lactose-free ice cream made from fresh milk is selling well in China given 95% of Chinese consumers are lactose intolerant.
WeChat Marketing: Another Way To Reach China’s Affluent Consumers: WeChat / Weixin, that mobile messaging service everyone is talking about in China. Some marketing advice about connecting with the 360m affluent consumers using it, including case studies from those doing it well. Our view.
The Great Leap Online: PWCs latest report on Chinese consumer’s online shopping habits: deals are the top reasons Chinese consumers shop online. 1/3rd use smartphones and 39% use a tablet to shop online at least once a month.
China’s Savvy Consumers Push e-Commerce To The Next Level: Vigilant online shoppers in China are driving the evolution of eCommerce retailers and state consumer laws as China looks to become the world’s largest online retail market this year. More than 40% of Chinese online consumers post product reviews online – in the US it’s around 20%.
China’s E-reading Revolution: 40% of online Chinese visit an online literature site, with Shanda Literature containing 85% of Chinese literacy resources on the net. Authors publish their own work on the site, where readers pay ¥2-¥5 per 1,000 characters, until they are popular enough to sell to Shanda and share the profits. Publishers can also have their own ‘shop front’ on the site, much like Taobao. The company also producers highly successful eReaders and software. An estimated 30% of Shanda’s clicks come from outside of China.
Apple Shares 72% Of 4Q12 Chinese Consumer Tablet Sales: Apple still dominates China’s tablet market with 72% market share. Lenovo, the next biggest, comes in at 10%. An estimated 100 million units will be shipped this year in China, with another 100 million entry-level ‘tablets’ costing less than $100 a pop.
Large Companies ‘Slow To Use Weibo To Respond To Bad News’: Large companies in China are slow to use Weibo to respond to bad news, with less responding than core Government agencies. Few used spokesman to address it. 30% of negative news stays on Weibo more than 10 days, longer than the 17% on traditional media.
More Chinese Travel Overseas, Study Reveals: 2nd and 3rd Tier City Chinese increasingly travelling abroad. Singapore, for example, last year saw 28% more tourists from 2nd Tier cities, and 18% from 1st Tier. Chinese tourists are only “adequately satisfied” with outbound tourism, citing a lack of ways to lodge complaints and insufficient Chinese signs and indications when overseas.
Fears Surface After Hippo Kills Tourist From Shanghai: On the subject of signs for tourists, a Shanghai woman has been killed by a hippo in Kenya. She apparently received insufficient warnings from her hotel. As many Chinese tourists are used to having the tour group do everything for them, they are often not prepared for dangerous adventure tourism. Many warning signs are still in English, French or other languages, not Chinese. 40,000 Chinese visited Kenya last year, up 43% from 2010. Tourism operators claim their business to Kenya hasn’t been affected in China from the accident.
Zhou Chunya Ranked Best-Selling Chinese Artist: Oil painter Zhou Chunya is on top of the Hurun Art List. At 58, he’s the youngest artist to ever top the list. The value of his work more than doubled last year, with sales of his auctioned works hitting $75 million. 91-year-old Chen Peiqiu turned over $22.4 million, ranking her at 11th. She was one of 6 women in the top-100.
Chinese Auto Market Shifts Toward Larger Cars: Many Chinese consumers are no longer content with a compact car, they’re going for bigger wagons with SUV sales growing 49% in the past year, versus 13% for the auto industry overall, and demand is picked to double by 2015. Great, more pollution in Chinese cities.
Changing Rules Of The Road For China’s Auto Industry: Increasingly sophisticated Chinese car buyers are looking past exterior styling, to safety features and the overall driving experience. They’re also placing a big emphasis on customer service – in the showroom and after purchase. Anti-lock braking systems and leather seats are now standard with most China-branded budget cars, so consumers in that segment often don’t place a lot of value on them. Local manufacturers are failing to do adequate research to understand what their target market actually values.
That’s the skinny for the week!
If you’ve missed earlier news or need to learn more, there’s a stack of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.