Mark Tanner
Mark Tanner
31 October 2018 0 Comments

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

Consumers, Chinese Consumers

New Rules Clamp Down on Private Agents Sneaking Overseas Purchases into China Without Paying Taxes: China’s ecommerce law launching 1 January 2019 will target daigou, claiming they will be made to register with the industrial and commercial administration departments to pay tax on imports. This will include Daigou who have traditionally been less visible by conducting business on WeChat Moments and streaming on live platforms.

Chinese Crackdown on Travelling Personal Shoppers Dents Luxury Stocks: LVMH, Kering (parent company of Gucci and Yves Saint Laurent), Moncler, Estee Lauder, Tiffany and Shiseido saw their stock take a hit of around 10% hit earlier this month after the crackdown on daigou. In 2015, 70% of Chinese luxury purchases were estimated to be purchased abroad or via daigou.

The First China International Import Expo to Welcome 2,800 Exhibitors from over 130 Countries as China Looks to Grow Imports: 150,000 buyers are expected to be in Shanghai for next week’s CIIE. China has granted “Guest of Honour” status to 12 countries, including Brazil, Canada, Egypt, Germany, Hungary, Russia and the United Kingdom. In addition to the established trading partners, more than 100 companies from 30+ African countries will attend. Russia will also host a “Russian exporters” fringe event with 2000 square meters of products. Xi Jinping will deliver a keynote speech at the opening ceremony and visit the country pavilions with foreign leaders.

National Per-Capita Disposable Income Rises 8.8%: China’s per-capita disposable income was ¥21,035 ($3,029) in the first three quarters of the year, a nominal growth of 8.8% year on year, or 6.6% in real terms. Per capita consumption increased at a similar rate of 8.5%, 6.3% in real terms. Shanghai residents saw the highest disposable income at ¥48,339 ($6,962), followed by Beijing at ¥46,426 ($6,542) and Zhejiang province at ¥35,349 ($5,091). Shanghai’s per-capita consumption expenditure hit ¥31,909 ($4,596), the only location over ¥30,000 in China.

Entrepreneur Leads Handmade Wok Revival Among Affluent Chinese: A Chinese entrepreneur is reviving old ways of wok-making and hopes to tap into growing demand for niche, handmade goods from China’s young, affluent consumers. Three years since starting the company he now has six shops and employs 12 blacksmiths, selling 300-400 woks per month on WeChat. The woks sells for ¥600 ($86) to ¥1,000 ($144).

Online: Digital China

Alibaba’s ‘Blockchain as a Service’ Platform Goes Global: Alibaba is expanding its blockchain as a service (Baas) service internationally, allowing businesses in Europe, the US and Southeast Asia to build blockchain environments and manage their development, deployment, operation, and security – similar to the way a web hosting service works. JD, Tencent and Baidu also offer Baas in China, however Alibaba currently holds a monopoly on blockchain patents in China. The company filed a total of 43 in 2017 alone, 10% of the global total demonstrating how important it sees the technology going forward. In related news, industry players and observers spent much of last week trying to get their heads around China’s new draft rules on blockchain. The rules could wipe out many blockchain companies currently considered illegal, such as exchanges. Remaining players will have to shoulder extra tech and human resources costs to ensure compliance.

Shanghai to Become First Chinese City to Test Autonomous Trucks on Public Roads: Shanghai has become the first Chinese city to issue road test licenses for autonomous trucks. The news follows JD’s announcement last month that it was rolling out driverless trucks to add to its logistics service in cooperation with China’s largest auto-maker SAIC and Dongfeng.

Move Over, Uber: This Little Known Media Company is Now the World’s Most Valuable Startup: Six-year-old Bytedance, behind aggregator Toutiao and short video sensation Douyin/TikTok, has surpassed Uber to become the world’s most valuable startup with a $75 billion valuation.

Upcoming Single’s Day Sends Chinese Delivery Price Up: China’s four major courier services YTO Express, ZTO Express, STO Express, and Yunda Express announced that they are raising prices – with three of the four announcing price increases of ¥0.5 (7 cents) – it will add up given one billion orders are expected to be delivered on Singles’ Day alone.

Premium Food & Beverage

Rapid Development for Mr. Avocado as Sales Close in on 70,000 Fruits Per Day: Lantao, Pagoda and Mission Produce’s Mr. Avocado JV is selling 65,000 to 75,000 avocados a day, and is considering opening a third ripening facility and is planting 6,600 hectares of avocado trees in Yunnan Province.

Moutai Falls Most Since China Bubble Burst on Alcohol Warning: Chinese liquor stocks have fallen after the Beijing News reported that a revision to a draft law contained a stronger warning against alcohol use. This is likely to see increased taxes and more education into the harmful effects of excessive drinking.

Overseas Chinese Tourists

Alipay Partners with HMSHost to Bring Seamless Payment Experience to Major Airports Across the US and Canada: Chinese travellers will be able to pay with Alipay when making purchases at HMSHost-operated restaurants in most major airports across North America. HMSHost operates in more than 120 airports around the globe and at more than 100 travel plazas in North America.

Overall Health

Herbal Chinese Toothpaste Brand Accused of Using Western Drugs: Chinese toothpaste brand Yunnan Baiyao has become a household name because of its traditional healing powers has been accused of using prescription drugs and false advertising.

Premium and Luxury

Net-A-Porter Turns to Alibaba to Sell More $2,500 Bags in China: Yoox Net-a-Porter and Alibaba are establishing a joint venture to launch two mobile apps for Chinese customers, one for Net-a-Porter which caters to women, and one for Mr. Porter which sells men’s fashion. Net-a-Porter and Mr. Porter will also launch online stores and utilise Alibaba’s logistics. Net-a-Porter’s rival FarFetch partnered with JD.com last year. China accounts for 44% of luxury sales and is growing three times faster than the global average. China’s domestic luxury market grew 20% last year .

Luxury in the Bag for Less Than $2 a Day: In the latest development in China’s sharing economy, luxury handbag sharing platform MrsB allows its users to rent a Valentino clutch bag for ¥8 ($1.15) a day. It also offers “bag securities”, which involves users buying a share in the bags – similar to holding stocks – and gaining payouts from future rental fees. MrsB is currently small with about 200 bags in stock with 20 daily orders on average.

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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