Mark Tanner
Mark Tanner
28 August 2019 0 Comments

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

Consumers,  Chinese Consumers

Infographic: Figures on Healthy China Action plan: China has issued the Healthy China Action Plan (2019-2030), a new guideline to implement the country’s Healthy China initiative, alongside detailed objectives to promote healthy living.

Cafes, Bookstores in China Riding Wave of Creative Boom: 60% of urban Chinese respondents said that they have been visiting more cafes in the past six months, while 56% have increased visits to libraries and 55% to bookstores as consumers hope to slow it all down with a sense of escapism. 40% say they have been visiting more museums and 36% the same of art galleries according to Mintel. The research found that 61% of respondents from Tier 2 cities visited libraries more in the past six months as compared to 51% in Tier 1 cities. Bookstores and art galleries had similar differences.

Ikea Goes Ahead With $1.4 Billion China Investment Despite Slowing Growth: Ikea will open four new stores by 2020 and adjust its business operations in China to suit the local context, such as launching sales on local ecommerce platforms and piloting a program on Wechat for consumers to order its beloved meatballs. It’s also bringing a new concept of mini-Ikea stores to Shanghai next year. These “planning studios,” meant to cater to urbanites who don’t want to travel outside the city centre to go to Ikea’s larger stores.

Online: Digital China

Pinduoduo – China’s Newest eCommerce Giant: Infographic and analysis: Whilst global heavy-weights Amazon and eBay failed to make an impact in China, Pinduoduo – which only launched in 2015 – has already overtaken JD for active users and has the highest loyalty rates among the top ecommerce platforms. PDD is investing heavily raising its standards and increasingly targeting foreign brands, aiming to recruit 500,000 for its overseas channel by 2022.

Chinese Teens are Shying Away From Posting About Their Lives on WeChat to Avoid Prying Parents: Just 15% of WeChat users born after 2000 post every day on WeChat versus 57% of those born in the 1960s. By comparison, ByteDance’s Douyin short-video app counts 51% of its users born after 1995, while the proportion of users under 21 years of age increased 13% for QQ. More than 100 million people use WeChat’s function enabling restrictions on post visibility.

Banking, Payments

Cashless China: Would You Use Facial Recognition to Pay?: 4 minute video: Mobile payments in China grew from $5 trillion in 2016 to $41.5 trillion last year. Facial recognition is looking to be the next big thing. JD’s flagship cashless store app scans your face the first time you use it, then you are free to shop with hundreds of cameras tracking your movements in store. Each shelf has an integrated weight sensor, so as soon as an item is removed, the smart shelf logs the selection and cameras pinpoint the customer who picked it up. There are no checkouts, when you leave the store you receive a ping on your smartphone with a receipt of everything you’ve purchased.

Premium Food & Beverage

China Is Eating More Beef Than Ever Now That Pork Is So Expensive: The African Swine Fever has driven pork prices to a record high this month, with hog herds down 32% as of last month. Imported beef increased 83% in July from a year ago and pork imports grew 107%. Other soaring imports included sugar which grew 78%, and edible palm oil which more than doubled, much to the dismay of the orangutans.

Is a “Meatless Meat” Revolution Really Underway in China?: On a net basis, 13.8% of tier 1 consumers reported eating less pork and 6.4% were eating less poultry according to the NZ Institute of Plant and Food Research in 2018. Soy products (including plant-based meats) did replace this to some extent, rising a net 12.5%. However, fish and seafood were the protein source that rose the most – 25.6%. Beef, mutton and lamb rose a net of 8.1%. The survey took place before the African Swine Fever took hold so things are likely to have shifted further. The major reasons given for reducing meat intake were perceived health benefits (63.5%), managing personal weight (56.7%), and environmental concerns (40%). 17.4% claimed they reduced their meat intake due to concerns for animal welfare. Currently, 43.6% of all plant-based meat consumption is in first tier cities.

Liquor Group Kweichow Moutai’s Market Valuation Tops $200 Billion: Chinese premium liquor company, Kweichow Moutai, overtook the UK’s Diageo to become the world’s most valuable liquor company in 2017 and is now worth twice as much. Its share price has risen 94% this year even as trade tensions hit shares in other Chinese companies. It is China’s most valuable company outside the technology and financial services sectors, capitalising on the trend of Chinese consumers drinking better rather than drinking more [FT paywall].

Costco Bets on International Appetite for First Chinese Store: Costco thinks it can avoid the malaise that has plagued others with its “no-frills approach” and bulk-buy strategy, opening its first China store yesterday in Shanghai. Just a few hours into business, it had to shut down in the afternoon because of overcrowding. Consumers raved online about the ¥32.9 ($4.60) price for nearly 4 litres of milk. About 50% of their products are from overseas and they’ve replaced some US imports of fresh produce with Australian importers in order to keep prices low. Costco’s big rival, membership-based warehouse Sam’s Club from Walmart, has over two decades of history in China and is still on the expansion trail with plans to reach 40 stores by the end of next year.

Parents and Kids

How a Canadian Mom Became One of Tmall’s Top Baby Brands: Fredericton, New Brunswick brand LuluJo saw an opportunity for swaddling blankets before they were popular in China. The brand started to sell over cross border ecommerce and evolved into a traditional ecommerce store. It is now one of the top selling baby brands on Tmall. There have been lessons along the way such as floral prints – while they may be huge in North America right now, Tmall shoppers think they’re ugly. If something is going to be given as a gift, as baby products often are, its wrapping is almost as important as the product itself. But in the US, a ribbon is good enough.

Schooling and Education

The Universities Which Rely Most on International Students for Cash: Monash University received almost a billion Australian dollars in international student fees in 2018, while 12 Australian universities received more than 25% of their revenue from international student fees. International students pumped more than US$5 billion into Australia’s $21.5 billion university sector in 2017. In 2018, about 400,000 foreign students, around a third of them from China, were enrolled in Australian universities. International students now make up 25% of Australia’s university enrolments with some top universities accused of using back-door entry programs to lower English standards for overseas enrolments.

Overall Beauty

The New Perfume Market for Chinese Millennial Men — A User’s Guide: In 2017, Chinese consumers accounted for a mere 1% of the global perfume market. But now, things are starting to change. This July, male perfume was one of the highest trending topics on the lifestyle platform Little Red Book (XiaoHongShu). Consumers still see perfume as more of a luxury gift rather than a daily necessity, with most male perfume purchased by a female. In the Chinese market, “sexy” smells differently than it does the West. Male Chinese fragrances smell relatively conservative or “tame” compared to Western scents. For Westerners, a classic lady-killer perfume might use spicy or woody scents to convey passion, sexuality, and power. But in China, a “bad boy” fragrance smells aquatic and citrusy to accentuate “freshness.”

Premium and Luxury

Consumption Upgrade Powering Demand for Luxury Goods: The Chinese luxury goods market grew by 6% to more than $122 billion in 2018. Growth is forecast to remain at 5-6% until 2025, when Chinese will account for 41% of the global luxury goods market according to recent analysis by BCG. About 48% of consumers are currently younger than 30. 80% of consumers search for information online and purchase offline, 30 percentage points higher than the global average. About half of Chinese consumers prefer famous brands and they are more willing to pay a higher price for better quality, healthy or environmentally friendly design and optimized function.

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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