Mark Tanner
Mark Tanner
5 September 2018 0 Comments

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

Consumers, Chinese Consumers

FMCG Sales Growth in China Accelerates in Q2: FMCG sales in China grew 4.7% year-on-year in Q2 2018, higher than Q1’s 2.3% and 4.3% in 2017 according to Kantar Worldpanel. Ecommerce FMCG sales grew 36% to take total share to 10.1% online. Growth in traditional channels was relatively flat with 2.7% growth in supermarkets outpacing convenience stores and hypermarkets, which saw a 1.3% penetration decline. Tencent-related Walmart and Yonghui led growth in market share, with JD growing fastest online.

Dare to Fail: Why China’s Women Entrepreneurs Are Finding Greater Success: Chinese women account for 21 of the world’s 56 self-made female billionaires, with the female:male ratio of entrepreneurial activity being 0.87 versus 0.7 globally. Enterprising Chinese women who start a business today tend to be motivated by the pull of greater opportunities rather than just trying to find a livelihood. They generally start younger, are better educated, and are not afraid to fail. 60% of China’s entrepreneurs were educated abroad, 51% in the US.

Online: Digital China

WeChat Rival Receives ¥150 million ($22 million) funding but also criticism for racy content: After a week of operation Bullet Messaging (Zidan Duanxin) has become the most downloaded social app in the Chinese Apple App Store. The automatic voice-to-text function and news feed from Toutiao provide a point of difference over WeChat, but downloads are also driven by the plethora of available porn and other content that is blocked on WeChat. Now the app is getting airtime, that may be short lived. Alipay is likely to be integrated soon.

Tencent – A Total Rethinking: Why Tencent should be rethinking its strategy from how its departments talk to one and other, its approach to data and algorithms and the way it makes acquisitions. In short, it is struggling in its transition from traffic 1.0 (users go and find information) to traffic 2.0 (information goes and finds users). There are some promising signs not covered in the article such as structural changes within Tencent to encourage more connections between departments and the large number of AI acquisitions Tencent has made of late.

JD Turns to Google, Walmart to Build Global E-Commerce Empire: “To expand our supply chain ability to the whole world – to connect any brand, any goods and any consumer globally,” no that isn’t Jack Ma, but JD’s Richard Liu who is teaming up with Walmart and Google to take on the world. JD also has a goal of 1 million franchised convenience stores in China within 5 years. The company recently announced its plans to monetize its logistics properties – including 2.5 million square metres of warehouse space. Google probably won’t be happy about the arrest of Richard Liu in Minnesota on Friday on suspicion of sexual misconduct. Liu has returned to China having been released without charge and without having to post bail, although investigations continue.

China Adopts Ecommerce Law to Improve Market Regulation: Beijing has passed a new ecommerce law coming into effect 1 January 2019. The law requires all ecommerce operators to fulfil their obligations to protect consumers’ rights and interests as well as personal information, intellectual property rights and cyberspace security. Fake reviews are banned, including incentivising buyers to give glowing reviews with offers of cash and other sweeteners. Sellers should promote environmentally friendly packaging, storage, and transportation. Ecommerce platforms, merchants, websites and social commerce such as WeChat stores and Pinduoduo all fall under the bill. Although the law covers cross border commerce, it provides no further clarity on the possible grace period extension for cross border commerce from 31 December. Official text of the law is still to be released.

Tencent’s Stock Falls More than 5% After Chinese Ministry Proposes Increased Regulation: China’s Ministry of Education has released a report highlighting China’s youths’ worsening eye problems from the heavy study load, the proliferation of mobile phones and other gadgets, as well as a lack of outdoor activity and exercise. Tougher regulations on online gaming were suggested as part of the solution. Around 40% of Tencent’s revenue comes from gaming.

Alibaba’s Customer Service Bot Upgraded Ahead of 11.11: Alibaba’s customer-service chatbot Alime has been upgraded to include 24/7 automated customer support, stronger predictive analytics to forecast what users might ask next, greater scalability for peak demand and small nudges to facilitate shopping decisions, such as reminders about discount vouchers on offer to consumers. The free service is already used by 600,000 merchants and is said to cut up to half of their previous call-centre costs, as well as feature a “warmer touch.” L’Oreal tapped the Alime Shop Assistant during June’s 6.18 promotional campaign, using to the tool to cover 86% of inquiries received on its Tmall flagship store—up from only 49% the previous month.

How WeChat Became China’s Everyday Mobile App: From humble beginnings as a research project in October 2010 to 1 billion users, virtual hongbaos, fitness trackers and mini programs – all within less than 8-years of WeChat. Click/tap here to learn how to win on WeChat from our Webinar.

Premium Food & Beverage

How Chinese Tea-Drink Brand Heytea Saves Millions in Marketing Costs Thanks to its Millennial Customers: Cheese-topped tea brand Heytea relies on word of mouth among its young consumer who discuss its non-traditional tea drinks and long-queues on social media and post well composed photos of the drinks and shops. In April 2018 Heytea announced it had raised ¥400 million ($58.6 million) in second round financing. Last year investment in Chinese tea brands last year exceeding 1.3 billion yuan.

China’s Appetite for a Stinky Fruit Booms — Could Durian be the Next Baby Milk Formula?: It may be banned on many South-East Asian public transport systems, but Chinese can’t get enough durians. An Alibaba promotion saw 80,000 durians snapped up in just 60 seconds and a durian fair in southern China last year drew more than 150,000 fans. McDonalds is making durian McFlurrys and hotcakes, and Pizza Hut is serving durian pizza. There’s durian-flavoured ice cream, coffee, and candy. Imports have grown 35% a year on average in recent years to reach $1.1 billion last year. The fruit sells for around $60, and even more in seasons with poor harvests.

Overseas Chinese Tourists

Chinese Tourists Among “Best Prepared” in World: UN Tourism Body Director: Chinese tourists are among the best prepared in the world in terms of education and the use of modern technology. They don’t have barriers such as the language problem that their parents had … they are very well-educated tourists according to findings in the UNWTO Tourism Highlights 2018. Chinese tourists spent $258 billion on international tourism in 2017, making up almost a fifth of the total tourism spending.

Designers and Fashion

Chinese Millennials Stock Up on Shoes: The average Millennial in Shanghai owns 32.3 pairs of shoes, in Wuhan its 23 pairs, significantly more than the 13.8 pairs in Hong Kong. 34% of Chinese males born in the 80s reportedly own a pair of platform shoes thanks to the popularity of K-Pop.

How China Wearables Market has Changed Since Apple Watch Launched, With Rising Demand for Personalised Products: Unlike smart jewellery start-ups in the United States that usually focus on bringing mobile alerts or making fitness wristbands more jewellery-like, Mintel has found there is greater demand among Chinese consumers for using jewellery to express emotions, due to differences in expression in Chinese culture. 43% of urban Chinese consumers claim they’d purchase a wearable device and almost half of 20-24 year-olds. 70% of smartwatch owners also own a wristband.

Schooling and Education

Pollution May Dim Thinking Skills, Study in China Suggests: In addition to increased respiratory diseases, risk for strokes, heart attacks, obesity and fertility, a study of 25,000 people across 162 Chinese counties found long-term exposure to air pollution can affect performance on nationwide math and word-recognition. The effects are especially pronounced among older men, which is particularly troubling in part because cognitive decline and impairment are risk factors for Alzheimer’s disease and other forms of dementia.

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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