Mark Tanner
Mark Tanner
26 June 2019 0 Comments

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

Consumers, Chinese Consumers

Urbanization Rate to Reach 70% by 2035: Study: One billion Chinese people, or over 70% of residents, will live and work in cities by 2035 according to a report published by the National Academy of Economic Strategy. Hangzhou, Changsha, Chengdu and Xi’an had the highest rate of talent inflow between Q4 2016-Q1 2018. The per capita GDP in 12 Chinese cities surpassed $20,000 in 2018. China’s urbanisation rate was 58.5% at the start of 2018.

Chengdu Is Tapping Into China’s $300 Billion Rainbow Economy: Chengdu, or “Gaydu,” the city of 16 million best known internationally for its pandas, was voted the gay capital of China in a recent poll by gay dating app Blued. Although China decriminalized homosexuality in 1997 and removed it from an official list of mental disorders in 2001, gay, lesbian, and transsexual individuals still live in a grey area. There’s no law against being LGBT, but no rules protect against discrimination, either. China doesn’t recognize gay marriage and bans gay imagery in mainstream media. Just 5% of China’s LGBT population live their diversity openly according to the UN. Businesses have been carefully tapping into the $300 billion opportunity.

Is the Chengdu Music Scene Being Boiled Alive?: Yet all isn’t rosy in the laidback, chill town of Chengdu. As of March 2019, permits were technically compulsory for all ticketed live performances in Chengdu, which require artists to submit their ID, lyrics, recordings, setlist and general description of the show content. In actual fact, parties, gigs and festivals are actually growing in number rather than diminishing and the underground scene continues to thrive in new and innovative ways.

The Rise of Trap Music in China (Chengdu): 18 minute vid: The most thriving Trap scene in China isn’t in Shanghai or Beijing, but Chengdu and it is now spreading. Here’s a short video of one of Sichuan’s most popular Trap bands Higher Brothers, comparing their concert in Atlanta with one in Shanghai.

China’s Unmanned Store Boom Ends as Quickly as it Began: Across China, shops were considered the future of retail as recently as two years ago, have been shutting their doors for good. Alibaba launched the first unmanned store in 2017, and by the end of the year an estimated 200 convenience stores had sprouted up around the country. The difficulty of selling fresh groceries in stores without staff was one major obstacle, with boxed lunches, ready-made fresh meals, desserts and other products with limited shelf lives making up a large share of convenience store sales and a 40-50% margin, versus 25% for processed food.

Online: Digital China

Consumers “Trading Up” and Seeking Quality Drives Record-Breaking 6.18: Includes Infographic. JD sold $29.2 billion worth of merchandise for the 18-day shopping festival. Transaction volume growth was twice as high in lower tier cities than the overall growth. 91% of orders coming from JD fulfilment centres were delivered same-or next-day. JD’s smart customer service robot fielded more than 32 million inquiries, solved 90% of them. Some big numbers: 350 million cartons of milk sold, 150% increase in tampons sold, 6,700 tons of imported fresh food sold. Cosmetic medicine grew 572%, and sales of male beauty products saw a 522% increase within the first hour.

Alibaba’s Ecosystem Drives the Largest-Ever 6.18 Campaign: 200,000 brands took part in Alibaba’s 6.18 Mid-Year Shopping Festival, with 110 brands generating gross merchandise of more than ¥100 million ($14.6 million) for the 18-day campaign. Flash sales channel, Juhuasuan, added over 300 million new consumers, with more than 180 products topping ¥10 million ($1.5 million) and 4,700 breaking ¥1 million ($146K). 48% of newly-launched products were bought by consumers outside of first- and second-tier cities. Cross border sales from 3rd and 4th tier cities grew 153% from a year before. The top-5 cross border countries were Japan, US (consumers still love their goods), South Korea, Australia and Germany. Livestreaming promotions grew 120% from the previous year. During the campaign more than 100 brands – including L’Oréal, Clé de Peau Beauté, Emporio Armani, Crocs, Godiva and Budweiser – saw sales surpass last year’s 11.11.

Home Appliance Manufacturer Galanz Accuses Tmall of ‘Playing Dirty,’ Burying Search Results: One of China’s leading microwave makers, Galanz has accused Alibaba of blocking traffic to its products and demanding it to choose between its platform and the up-and-coming rival Pinduoduo, in what is describes as “forced exclusivity”. According to Galanz, its inventory of 200,000 home appliances was not visible on the first page of Tmall’s search results ahead of the 618 shopping festival. Alibaba began asking shop owners to choose between Tmall or rival e-commerce platform JD as far back as 2012 which is against Chinese law.

Premium Food & Beverage

Costco Set to Open First China Store: Five years after setting up an online store in China, Costco is set to open its first brick-and-mortar store in the country in Shanghai’s Minhang district at the end of August. Costco will offer two types of memberships – one for families and the other for corporations, with both having an annual price of ¥299 ($43).

JD.com Inks Deal to Handle Cross-Border Logistics for Carrefour: French retailer Carrefour is to offer cross-border logistics services. As part of the deal, Carrefour will set up a store on JD’s international marketplace to sell imported goods, following last year’s opening of a store which sells the retailer’s domestic goods on the platform. JD will import the goods and arrange customs clearance, sorting, and distribution for Carrefour. Interesting, the news may be short lived with Alibaba’s Suning acquiring 80% of Carrefour’s China unit for $698 million. Similarly, Japanese department store chain Takashimaya will close its Shanghai store and halt its operations in China.

China’s Dairy War Threatens to Engulf 2022 Winter Olympics: Yili and Mengniu are fierce rivals in China’s $62 billion dairy products market and things just got more heated with Yili warning it may pull out of sponsoring the 2022 Beijing Winter Olympics due to Mengniu allegedly infringing its status as the sole sponsor of dairy products at the games. Mengmiu slipped in as “joint beverage global partner” partnering with Coca Cola through its parent company Cofco. Yili is China’s dairy market leader holding a 23.6% share, with Mengniu close behind on 22.4%.

Overseas Chinese Tourists

Australia Nets US$8.2 billion from Chinese Tourism: China remained Australia’s leading tourism market, with the number of visitors from the country growing 2.9% to 1.3 million in the year ending March 2019. Their expenditure grew 10% to A$12 billion ($8.2 billion), representing an additional A$1.1 billion ($757 million) for the year, and 27% of total tourism expenditure.

Alipay Launches Cab-Hailing Integration Mini-Program: Alipay has launched a new mini-program which integrates online cab-hailing services from five overseas platforms, in 33 cities in 10 countries including the UK, the United States, Australia, Singapore, Thailand, Vietnam, UAE, Malaysia, Indonesia, and Philippines. It plans to expand to 20 countries and regions by 2020. The app will mean Chinese tourists don’t need to download a different app and can pay with their Alipay account.

Wellbeing & Healthy

Over a Third of China’s Babies are Delivered Via C-Section – the National Health Commission Wants to Change That: 36.7% of women in China deliver babies by caesarean, although in some urban and wealthier regions in China, such as Shanghai, rates are as a high as 68%. The international healthcare community considers rates of 10-15% to be the ideal rate. Anxiety about giving birth and fear of pain are the main reasons for nonmedical caesarean deliveries, especially considering that only a minority of Chinese women are given any form of pain relief during labour. Beijing hopes to reduce this rate by including stricter regulation of caesarean section operations and the provision of more support and pain relief for labouring women, as well as a higher hospital income for natural births.

Chinese sport Sport

UEFA Gets Digital Assist From Alipay to Grow China Fan Base: Alipay, the “digital lifestyle and payments platform” has signed a deal with the Union of European Football Associations, launching a “lifestyle account” on the Alipay mobile app to connect Chinese fans with the latest news about European soccer, as well as a mini-program within the app that fans could use to buy tickets to the UEFA Euro 2020 tournament – the first time UEFA will allow a digital ticketing channel outside of UEFA.com.

Autos and Auto

Harley-Davidson Strikes Deal to Build Smaller Bike in China: Harley-Davidson Inc will partner with China’s Qianjiang Motorcycle Co to build a new smaller motorcycle than its trademark “big hogs”. The new bike will be notably cheaper than Harley’s existing range and be 338cc, one of the smallest in the company’s 116-year old history. Its existing bikes are typically 601cc or more. Harley’s sales in China grew 27% in 2018.

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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