Mark Tanner
20 February 2019 0 Comments

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

Consumers,  Chinese Consumers

Localized Lineups Capturing Chinese Consumers’ Hearts: Chilli chocolate bars and rose blossom flavour mouthwash are two examples of brands serving China’s tastes. Unilever is turning around new products in China within 6 months instead of the usual 24-36 months elsewhere to meet Chinese consumers ever-changing needs.

Worries About Chinese Consumers Spending Less Are ‘Overdone,’ Analysts Say: Chinese consumer spending is healthier than it appears in retail sales data alone, analysts say. Growth in retail sales slowed last year but a broader index that includes services accelerated from 5.4% to 6.2%, providing a sign of optimism. Services are an increasingly important part of the equation in China – accounting for more than 50% of consumption – as consumers spend more on healthcare, leisure and travel. Urban households spent 15.1% more on healthcare last year compared to 9% growth in 2017. “The fact that retail sales excluding cars (have) held up well and consumer confidence has also improved indicate that concerns about China’s consumers are largely overdone,” according to Tianjie He, a senior economist at Oxford Economics.

Automobile Issues Top Chinese Consumers’ 2018 Complaints: 30% of complaints received by the Chinese Consumer Association concerned after-sales service for automobiles and auto parts, with auto quality problems accounting for the next highest number of complaints. Communications products, apparel, food and shoes also had a lot of complaints.

The Incredible Rise and Fall of China’s Bike Firm Ofo: Once valued at $3 billion, bike sharing giant Ofo was one of the darlings of China’s tech world counting companies like Alibaba and Didi as investors. Yet it has been a slippery slide from its peak in late 2017, based on an unprofitable acquisition drive and many $100 bikes surviving just a month or two – versus the two years they were meant to last. Its workforce sits as just a few hundred from a height of 3,600.

Overseas Chinese Tourists

Alipay Grows Overseas with China Outbound Tourism: 58% of Alipay merchants in Singapore, Malaysia and Thailand experienced an increase in foot traffic after adding Alipay, and 56% saw sales increase according to research from Nielsen and Alipay. 69% of tourists surveyed used mobile payments abroad, using it for an average of 32% of transactions on their most recent trip – overtaking cash for the first time. Meanwhile, Alipay usage from older Chinese is fast catching up to with millennials.

Warnings to Chinese Tourists Spark Further Questions: The Consulate-General of the People’s Republic of China, in New Zealand, issued a notice to tourists in December warning of robberies, a low rate of police investigation, dangerous driving conditions, and cases of Chinese citizens being refused entry to New Zealand, despite having a valid visa, as Beijing exercises it trade democracy again following their clear disappointment with NZ taking sides over Huawei. Hysteria in New Zealand media appears to be significantly overstated based on other countries’ geospats with China. New Zealand primary exports continue to clear the China border as usual.

Premium Food & Beverage

The Year of the Pig: How China’s “Consumption Upgrade” is Spurring Innovation: Premiumization, health and wellbeing, multi-sensorial experiences, personalized and targeted nutrition as well as balancing taste and nutrition are some of the trends driving innovation in China. Seasonal fruit flavours and cross-category flavours such as sweet and salty, alcohol-based teas and coffees, and carbonated tea and coffee all present opportunities in the market.

Famous Chinese Health Food Brand Stung in Honey Scandal: The world’s biggest traditional Chinese medicine producer Tong Ren Tang has been fined ¥14 million ($2.9 million) after it was caught “recycling” expired honey into premium label jars for sale in supermarkets. Fake honey, mixed with sugar syrup, has also long plagued Chinese consumers and had helped create demand for Tong Ren Tang’s “quality” honey as an apparently a safer choice in supermarkets.

China’s Popular Coconut Milk Brand Under Fire For Sexually Charged Ads: Coconut Palm 椰树牌, a leading coconut milk brand in China, is under investigation for several sexual-innuendo-laden ad campaigns to promote its products. In the advertisement, a woman with large breasts can be seen holding a can of coconut milk in a tight white tank top. Next to her is a slogan that reads, “A can a day and you’ll be pale and busty.” Another billboard featuring a busty model posing for the drink, accompanied by the words, “Applying coconut milk to your breasts and drinking it every day can enlarge your boobs.”

Overall Beauty

A Surgically Sculpted Face, the Newest Back-to-School Necessity: 22 million Chinese people were estimated to undergo cosmetic surgery last year, with common procedures including creating creases in eyelids, enlarging eyes by cutting open the corners (eye surgery accounts for 50% of surgery), removing excess fat, heightening nose arches, whitening skin, and puffing up cheeks. 54% going under the knife are under 28, with those born after 2000 making up 8%, even though patients under 18 require their parents’ company and consent. In the US, nearly 75% of patients are over 35. In China there are 60,000 unlicensed clinics and 150,000 unlicensed doctors, six and 10 times as many as their legal equivalents respectively.

L’Oréal Results Thrive Thanks to Strong Demand from Chinese Consumers: L’Oreal Asia-Pacific, driven by China, took a tremendous lead ahead of other markets, growing 26.2% in the fourth quarter and 24.1% at the end of 2018, well above the overall growth of 7.1%. Estee Lauder saw 20% growth in the region in Q4. The post-90s generation is estimated to buy about half of the high-end cosmetic make-up in China.

Premium and Luxury

Marketing Luxury to Chinese Consumers: Young Chinese consumers allocate around 20% of their discretionary spending on luxury items according to UBS. BCG notes that Chinese consumers have a deeper knowledge of luxury brands and rely more heavily on social media and ecommerce than their western counterparts. JD’s white glove ecommerce services have been so popular that the company claims 41.5% of their customers want the delivery experience.

‘Nice but a Bit Dull’ – Why China’s Growing Ranks of Affluent, Independent Women Don’t Want their Men to Buy them Jewellery: Marketing of jewellery in China focuses on appealing to the modern female shopper and has more to do with how women view themselves than the couples’ gift-giving tradition prevalent among Asian cultures. 37% of Chinese women bought jewellery for themselves, while just 30% said they had received jewellery as a gift from their partners according to 2016 research.

Autos and Cars

Chinese Drivers Switch Lanes, Follow US Motorists in Buying More Used Cars: New car sales fell by 2.8% in 2018 to 28.1 million units, while sales of second-hand vehicles jumped by 11.5% to 13.8 million units as part of a wider trend that consumers don’t need to everything shiny and new.

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

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