Mark Tanner
15 March 2017 0 Comments

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

Consumers,  Chinese Consumers

China’s Expanding 1 Trillion Yuan Club Shows Changing Economy: Nanjing and Qingdao have joined China’s Trillion-Yuan Club, with 12 Chinese cities now having GDP higher than ¥1 trillion ($145 billion).

Shanghai Ranks No. 4 in World’s Top-30 Cities: Shanghai, Beijing, Shenzhen, Hangzhou and Nanjing all place in the top-30 most dynamic cities in the world ranking 4th, 15th, 22nd, 26th and 29th respectively in JLL’s Global City Momentum Index. The most dynamic cities are able to embrace technological change, absorb rapid population growth and strengthen global connectivity.

Top 10 Provincial Regions with Fastest Economic Growth: China’s top regions by GDP growth last year were Tibet, Chongqing, Guizhou, Jiangxi, Tianjin, Yunnan, Anhui, Fujian, Hubei, Henan and Ningxia with growth ranging from 8.1% to 11.5% versus China’s 6.7% growth overall.

Millennials Drive Offline Markets: 25% of Chinese millennials claim that the reason they don’t do more non-food shopping online is they like to see the products. 14% like to get it there and then, 13% enjoy shopping as a leisure activity, 12% think it’s easier in store, 9% want to try items on and 9% use it as an opportunity to spend time with friends and family according to CBRE.

Top Nine Priorities of Govt for 2017: Beijing’s priorities for the year: 1. Pushing ahead with the five priority tasks through reform; 2. Deepening reform in major sectors and key links; 3. Doing more to unleash the potential of domestic demand; 4. Transforming and upgrading the real economy through innovation; 5. Promoting steady development of agriculture and continued increases in rural incomes; 6. Actively expanding China’s opening up to the world; 7. Effectively strengthening environmental protection; 8. Promoting social development to ensure and improve the wellbeing of our people; and 9. Strengthening the all-around improvement of government.

Why is China so … Uncool?: China has the world’s largest middle class, as well as the world’s largest population of billionaires. These facts suggest that Chinese consumers should be the world’s new tastemakers. But their current tastes in entertainment and fashion are largely sourced from outside the country.

Overseas Chinese Tourists

Growth of Independent Travel from China’s Lower Tier Cities Outpaces that of the First Tier Cities: With the exception of Shenzhen, independent traveller growth last year was much faster in lower tier cities such as Hangzhou (36.9%), Tianjin (44.2%), Chongqing (44.9%), Xiamen (69.0%) and Kunming (69.1%). Women make up 54% of China’s independent travellers but account for 84% of overseas shopping according to the study by Skyscanner and UnionPay.

Travellers are being Secretly Enticed into Spending Money at Heathrow Airport by ‘Ambassadors’ Who are Supposed to Give Directions: Heathrow’s so-called Passenger Ambassadors are supposed to help people find their way through the terminals, but they are also set targets of up to £4,000 ($4,870) worth of sales a day, with commission earned by directing passengers into shops.  Some ambassadors targeted Chinese travellers as they were likely to spend more.

Online: Digital China

Will eCommerce Replace Brick & Mortar Stores?: It’s not looking like it, but there are a number of examples from Uniqlo to Bestore who are increasingly merging the two.

WeChat & Luxury Fashion in 2017: In the luxury fashion segment, Service Account features make up the majority of leading brand accounts who are utilising features such as store location and payments. WeChat now allows brands to move their followers from Official Subscription to Service accounts or other accounts.

 Premium Food & Beverage

China’s Chefs Are Finally Falling in Love With Cheese: Royal FrieslandCampina has joined Fonterra to provide demo kitchens in China to train chefs how to incorporate cream, cheese and butter into dishes. If dairy used in catering in the Mainland accounted for the 5% of ingredients seen in HK, it would create a $7.5 billion-a-year market.

China to Become the Second Largest Wine Consumer by 2020: Vinexpo expects wine sales in China to grow 39.8% in the next three years to $21.7 billion in 2020, surpassing France and the UK to become the world’s second largest wine market after the US. Per capita consumption only ranks 36th in the world at 1.34 litres a year, compared to France’s 47.19 litres. This is expected to grow to 1.53 litres by 2020.

UK Beer Exports to China Rise by 500%: A total of 1.05 billion pints of beer were exported from the UK in 2016 – £84m more than the £500 million in 2015, making British beer the UK’s third most valuable food and drink export. China was the fastest growing market, up 5-fold from a year earlier.

Premium and Luxury

High-End Product Sales Pick Up as Brands Cut Prices, Build Presence Online: China’s luxury product market started growing again in 2016 after three years of stalling. The return to growth resulted largely from luxury brands lowering their prices to reduce the price gap between the Chinese mainland and other markets, and a move to online sales channels to reach younger shoppers and consumers in second- and third-tier cities.

Autos and Cars

The Tesla China Numbers That Elon Musk Won’t Tell You: Tesla Inc.’s revenue from China tripled to more than $1 billion last year, but the annual report failed to mention how China went from Tesla Hell to a cash cow. In 2015, Tesla made less money in China’s 1.4 billion people market than in Norway, but Government policy exempting electric vehicles from extremely restrictive licensing rules is believed to be a big contributor to the rise in sales, in addition to a large expansion of stores and charging stations.

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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