Here are this week’s news and highlights for China:
Herbalife, Nu Skin Shares Plunge Over Fears of Chinese Crackdown: Four deaths over the past few weeks circumstantially linked to separate pyramid schemes has seen Beijing announce nationwide crackdown on the ‘predatory’ practice. Companies such as Herbalife and other so-called multilevel-marketing businesses are likely to suffer from the move.
Consumer loyalty and growing individualism pose challenges: Just 54 brands which made the list of Campaign Asia’s China top 100 brands list in 2007 remained on the list in 2017, illustrating how fickle Chinese consumers are and how tastes are changing.
China Bans Weird and Long Company Names: ‘Scared of wife’ or ‘Prehistoric powers’ are off limit business names for anyone wanting to set up an entity in China.
Alibaba Profit Nearly Doubles on Robust Revenues: Alibaba surpassed analysts’ forecasts growing revenue 56% in the three months till June 30. Annual active shoppers grew 7% from 433 million to 466 million, spending 35% more than a year ago on average at ¥273 ($41) in the quarter. Active mobile users were up 24% to 529 million users.
Tencent’s Mix of Games, WeChat Drives Best Growth in 7 Years: WeChat users have grown by 19.5% to 963 million over the past year. Gaming revenue helped Tencent grow profits by 70% to ¥18.2 billion ($2.7 billion).
Chinese Video Game Rakes in Cash, Draws Young Rule Breakers: The runaway popularity of Tencent’s smartphone game Honour of Kings has alarmed officials, forcing Tencent to restrict it to an hour of play a day for those under age 12, and two hours for those between 12 and 18. China’s youngins are finding ways around it, such as purchasing fake IDs for as little as $2 a pop.
China’s Growing Middle Class Lose Appetite for Instant Noodles, Preferring Healthier Meals Ordered Online: China’s appetite for instant noodles continues to fall, with demand dropping 17%, or 7.7 billion servings, to 38.5 billion last year as consumers opt for a healthier diet and the rise of food delivery smartphone apps gives them access to quick, easy and inexpensive meals of higher quality. China’s food delivery industry grew 232% in 2016 with an estimated 295 million users currently. China’s global share of instant noodle consumption has dropped from half in 2007 to less than 40% in 2016.
Ice Cream as a Snack is on the Rise in China: 49% of urban Chinese saying they eat ice cream at home as a snack versus 39% in 2015 according to Mintel. 39% eat it as a dessert versus 28% in 2015. Overall volume declined 1.6% between 2014 and 2016, but value increased as consumers trade up to new formats and flavours.
Alipay Partners With Yelp to Continue its Pursuit of Chinese Tourist Money: Alipay has made US travel more attractive for Chinese tourists partnering with Yelp to allow payments through the service when they use Yelp for restaurant bookings. The launch initially covers restaurants in New York, Los Angeles, Las Vegas and San Francisco, but there are plans to expand more widely across the country. There are also plans to launch a Mandarin version of Yelp for travellers.
Chinese Men Spend 24 Minutes Grooming Daily, Signalling Market Opportunity: Men in China’s first-tier cities spent an average of 24 minutes on their daily grooming routine, a steep rise from a decade ago according to The Paper. 88% surveyed said they always look online for information and tips on beauty and fashion. Chinese males aged 20-45 typically use about 3.4 different skincare products per day according to the HKTDC. The male skincare and cosmetics products market in China is forecast to grow 13.5% on average over the next few years.
How Estee Lauder Grew Sales 40% in China: Estée Lauder is tackling the market from all angles by embracing both third-party partners as well as operating direct-to-consumer e-commerce sites. “China is a unique market. Product preferences and descriptions used in marketing are different. Social media and influencers are important, but the way to navigate that space is nuanced,” says Dennis McEniry, president of the brand’s online business.
Online Sales: Whither the Young, So Go Automakers: About 85% of post-90s car buyers turn to the Internet for information, and 64% make choices based on mobile apps and mobile website pages, according to IPSOS. Just 22% rely on traditional car dealers when looking to buy a car. China’s millennials are its most lucrative car market with the average age of a BMW owner 35, versus 53 in Germany.
Chinese Luxury Consumers: More Global, More Demanding, Still Spending: From 2008 to 2014, the number of Chinese households purchasing luxury products doubled, fuelled by growing incomes and greater access to luxury goods. Since 2015 the primary driver of spending increases has been incremental spending, not first time purchases. One out of two wealthy Chinese consumers expects to spend more in 2017, while only one in four average consumers. By 2025, 7.6 million Chinese households will represent ¥1 trillion ($150 billion) in global luxury sales, double that of 2016, and equivalent to the size in 2016 of the French, Italian, Japanese, UK, and US markets combined according to McKinsey. 80% of luxury stores are located in the top 15 Chinese cities as measured by GDP, yet these cities are home to only 25% of wealthy luxury consumers.
Luxury Goods Sell for 50% Higher in China Than in France or Italy: Although a number of luxury brands have been aiming for price equity across markets, luxury goods still sell for 50% more in China than in France and Italy, and 20% more than the global average, a Deloitte study has found. Watches and jewellery in China are 55% more expensive on average than France, while bags have the lowest gap at 40% pricier. 31% of luxury purchases are made by consumers who are travelling in a foreign market with 16% made at the airport.