With some of the world’s least affordable houses, endless food scandals, air quality likened to smoldering boots and, recently, pork-flavoured tap water in Shanghai, you’d think Chinese consumers would have enough to worry about without making pesky complaints for slightly faulty products or surly customer service. Not likely. Although many Chinese are new to the consumer game, they are far from green.
China’s middle class are aware that they have become some of the most desirable consumers on the planet. They make no qualms about lodging a consumer complaint or broadcasting their disappointing experiences to the world on social media. Weibo is littered with irate shoppers on a rant. And with the Government increasingly clamping down on food and other products scandals, you’re best to just keep your products and marketing above board, and have a solid contingency plan if it all does go pear-shaped.
Chinese consumers trust many western products more than their local equivalents. As a result, the Chinese Government and their media, are always quick to jump on any hint of a fast one by a western brand. Many of the big boys have had it, from Carrefour to Nike to KFC, and every year about this time, a couple more are hung out to dry by the popular TV consumer watchdog, 3.15. This week you’ll find out about the naming and shaming, 25 million consumer complaints, some foreign stores that didn’t play the Chinese game and lost, and the usual’s. We hope that you find something helpful to keep all your own Chinese customers thrilled. Happy reading…
Chinese Authorities Recover Billions for Deceived Consumers: Wow! 25 million Chinese consumer complaints in 5 years (there are less than 2 million a year in the USA), with the authorities investigating 546,000 cases of sales of fake or shoddy products and 104,000 from the service sector. $768m was paid back to those conned.
McDonald’s to Give Away a Million McMuffins in China: Last Friday, popular Chinese TV news program 3.15 had it’s annual name and shame for companies that it says violate the trust of consumers. Prior to the show, a number of companies launched social responsibility campaigns, including Walmart’s adopt a tree programme and McDonald’s million McMuffin giveaway, some suggest to lessen the blow if bad press comes their way. Last year’s show led to Carrefour launching a fruit and vege tagging system.
Apple, Volkswagen Unfair to Consumers: China TV Exposé: After all the free McMuffins and new foliage, it was Apple and VW, the no.1 auto brand in China, singled out as being unfair to Chinese consumers by CCTV. Apple was slated for not providing the after sale service it gives in other countries. VW has a long-standing gearbox transmission issue. The show has seen a lot of commentary about the companies, especially in the Weibo space.
What’s The Roadmap For Innovation In China?: Interesting research determining what Chinese consumers define as innovation: – (1) Being first is based on being commercially successful first, not launching a product first; (2) Constant updates to keep things fresh helps the perception of innovation; and (3) Customer service is the biggest factor on perceived innovation, with 59% of consumers saying it contributes. The study also found that ‘micro-innovation’ is favoured by many execs in China, as grandiose launches can often be seen as imprudent.
Foreign Stores Can’t Swim Against Chinese Currents: A slew of failed western retailers are struggling to compete with local stores who charge suppliers for shelf space. They also haven’t jumped on the ecommerce wagon effectively enough which is growing faster than 8.4% of brick and mortar stores in China.
China – The Land of Milk and Honey (and Washing Powder): China will lead the growth in almost all FMCG categories versus 5 big emerging markets, the US & UK. The only category it was challenged in was household goods by India. Overall spending growth is forecast at 15.2% for the next 3 years, with growth of beverages and non-alcoholic drinks and prepackaged food exceeding 20%.
US Companies in China: The Situation: Not many US companies can expect double-digit growth in China any more, although 71% of US companies claim profits are up in the Mainland, with many opportunities as the economy shifts to consumption and services. 40% still enjoy better margins in China than elsewhere. Two-thirds of companies claimed the regulatory environment was “not improving” or “deteriorating,” a consistent trend over the previous three years.
Where to Dial “M” for M-commerce: A comprehensive infograph from Alibaba into Chinese consumer’s increasing mobile habits and how they compare to the US. mCommerce sales are forecast to grow to $15.7 billion this year. The average purchaser is just over 27. Although 58% of shoppers are male, apparel is the top category bought, followed by cosmetics, accessories, shoes and baby products. 10pm is the busiest time of the day for purchases.
Seeking China’s Most Stylish: Internet fashion retailer Net-a-Porter launching Chinese site with HK distribution center and marketing team in Shanghai & HK. They will not accept RMB? Competitor Lane Crawford who launched 18 months ago and accepts RMB, already gets 850K visitors a month.
Exclusive Travel Sites Hit The Sweet Spot For China’s Globetrotting Elite: There’s a suite of niche travel sites targeting wealthy Chinese tourists – many on their 5th of 6th trip, who are looking for more than just shopping; spending more on accommodation and experiences. HH for example, boasts an average spend of $16K, with a recent $100K+ trip selling out in 10 seconds. 60% of their packages are standard, with 20% personalised.
Glass Half Full for Imported Liquor: Imported high-end spirits are enjoying big growth while the local premium Baijiu struggles with the luxury gifts crackdown. Scotch imports grew 59% last year. Imported high end spirits make up just 2% of China’s alcoholic beverage market valued at $80m in 2011.
US Dairy Exports to China Market Keep Flowing: China and the US have resolved a nearly 3-year dispute over health & sanitary certification of US dairy exports, which has increased exports to $430 million in 2012. Lactose and whey protein concentrate are the top two categories.
Who Are the Chinese Buyers Snapping Up U.S. Real Estate?: A 4 min video on Chinese property buyers in the USA. Buyers are either individuals or groups. Individuals place an emphasis on proximity to good schools. Some go for older, established homes and others going for new, gated communities. Group buyers are generally looking at commercial projects downtown. Sotheby’s, who has seen sales grow 15% this year, claim 95% of buyers pay with cash, although credit is growing with HSBC in particular aggressively marketing loans to foreign buyers of up to $3m.
SMBC Consumer Finance to Double Chinese Offices in Three Years: Chinese household savings are about $6.6 trillion, more than Germany & Brazils’ combined GDP. Government policy is increasing consumerism in China which has sparked an increase in finance companies offering easier and faster access to loans in China. As a consequence, SMBC Consumer Finance is doubling its China offices in the next 3 years.
China to be Global Premium Car Leader: China is picked to be the number one market for premium cars (the top-23 brands like Acura, Aston Martin, Audi, Bentley, BMW, Lamborghini & Rolls Royce) selling 2.3 million costly wagons by 2016. China’s premium car segment has grown 36% in the past decade versus 26% for cars overall. 80% of premium car owners are considered affluent with an ‘official’ household income of more than $32,100. 30% of owners cited “reflection of social status” and the reason for buying the cars, 27% “self-indulgence”. 300 cities will have consumers who can afford premium cars by 2020, up from 100 cities today.
Great Wall Succeeds in China Auto Biz With Starter SUV: Great Wall is effectively targeting the China niche of low cost SUVs, starting at $13K. The SUVs account for nearly 50% of Great Wall’s revenue which grew 71% last year.
Ford Races Forward in China: Ford’s new approach to China paying off as it’s Blue Oval sales soar 46% for the first 2 months of 2013.
Chinese Golfer Signs with IMG: World number 5 women’s golfer Feng Shanshan joins Li Na getting IMG sponsorship as the limited aspirational Chinese athletes on the world stage command big bucks.
Puma Closes 90 Stores; Nike Adds 50 Factory Stores in China: China’s slowdown in sportswear since the 08 Olympics has lead to Puma closing 90 stores in the Mainland, and Nike opening 40-50 Factory Stores, discounting stock up to 70% to get shift inventory.
New Look to Enter Chinese Market: New Look are hoping to launch in China, targeting the mid-range fashion retail segment, starting in the crowded markets of Beijing and Shanghai. It is an interesting segment between cheap or high end categories.
How Important Is China To Ralph Lauren’s Long-Term Growth?: Ralph Lauren is aiming to build it’s brand in China, which is also expected to drive sales in Europe and the US where Chinese account for 30% and 15% of luxury sales. They see growing opportunity from the rising number of millionaires, increased credit card penetration and more women and youth purchasing luxury goods.
China’s Shoppers Fund Luxury Tycoons: Chinese consumers have contributed to 20% of the bank balance of the world’s richest tycoons.
That's the skinny for the week!
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