Mark Tanner
Mark Tanner
30 May 2018 0 Comments

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

Consumers,  Chinese Consumers

China’s Got a $46,000 Wealth Gap Problem: While residents in Shanghai and Beijing are almost as well off as those in Switzerland, parts of the country live more like they were in Guatemala. GDP per-capita adjusted for purchasing power in Shanghai and Beijing ranks among the top 10 of all countries with populations of at least 3 million people. China’s poorest province Gansu is less than a seventh of Shanghai per capita, with Yunnan and Guizhou not far behind.

US-China Tradewar Back On: 10 days after Washington announced it was putting trade action on hold, the reprieve looks to have ended. Donald Trump to hit $50 billion of Chinese imports with 25% tariffs and restrict investment in US hi-tech industries.

China Plans Tariff Cut on Wide Range of Consumer Goods: Beijing has announced further tariff cuts on food, medicine, health products, and cosmetics, among other items, which could be effective as early as July 1. The cuts would apply to significantly more product lines than the similar reduction on 187 categories of consumer goods announced last November.

China Considers Ending Birth Limits as Soon as This Year: China’s four-decade fertility policy that has spurred steep fines, sterilization and forced abortions, and left the world’s second-largest economy short of workers is about to end. Even after loosening the policy to two-children in 2015, birth rates have continued to fall.

China Has Threatened to Cut Australian Imports by Billions of Dollars: Everyone’s favourite Beijing mouthpiece The Global Times newspaper issued a lengthy editorial today slamming Australia, saying: “It is necessary for China to leave Australia hanging for a while, instead of being too quick to bury the hatchet whenever Canberra tries to put a smile on its face.” The article said it was time to “make Australia pay for its arrogant attitudes it has revealed toward China over the past two years”, threatening trade reductions to harm the Australian economy, noting wine and beef as items that can “easily” be replaced with the products from the US.

Online: Digital China

WeChat Uses Mini-Programs to Enter Livestream Shopping Arena: WeChat has been behind its competitors on China’s livestream wave, but its mini-program launch with L’Oreal may see it catch up. L’Oreal turned Cannes Film Festival into a shopping opportunity for Chinese consumers, enabling themed “see now buy now” live-streaming shopping on a Film Festival WeChat mini-program. The livestream collaborated with celebs such as Guan Xiaotong and Wang Yuan highlighting the L’Oreal products they used, seamlessly available for purchase. Alibaba’s live-streaming sessions grew 238% over the past year, with sales transactions increasing 755% in 2017 from the 68 million monthly active users. One out of two viewers end up visiting the related store while watching a livestream.

Alibaba Anti-Counterfeiting Report: Any brand with fakes on Alibaba platforms should request Alibaba to take them down. Alibaba claims to have proactively removed 27 times more listings following requests from rights holders, with 97% removed before a single sale was made. The company seized $700 million worth of counterfeit goods last year, up from $438 million in 2016. 95% of takedown requests happened within 24 hours in 2017 – 68% faster than last year.

Premium Food & Beverage

Costco Hopes Shanghai Will Buy Into Bulk Shopping: Costco will open at least two Shanghai stores, the first being a 33,000 sq/m store in Minhang District with 1,000 carparks in April 2019. The second store will be 20,000 sq/m in Pudong New Area. The retailer first entered China with an online store four years ago and has since been one of the top 10 Tmall Global stores in terms of sales every Singles’ Day. Aldi is also reportedly preparing brick-and-mortar stores in China.

Century-Old Chinese Restaurant Gets a Koubei Makeover: 1.5 minute vid showing how Wu Fang Zhai has incorporated New Retail to save on operational costs and improve the experience for customers. The changes allow customers to order phone on their smartphone with locker collection points. They can play AR games and earn discounts while they wait. An unmanned store allows consumers to buy food at any time.

For Chinese Wine Connoisseurs Wondering What’s in Their Bottle, it’s Blockchain to the Rescue: It’s a $2.8 billion industry, but comments such as “the Chinese gulp down more ‘French’ wines than France makes” and “at least half of the Chateau Lafite-Rothschild consumed in China is fake” have undermined its credibility. Blockchain looks to be a solution. For more premium wines, the company plans to embed a designated NFC chip near the wine stopper. Once the chip is broken, users can no longer read or write data onto its blockchain, alerting consumers about refills. 10,000 blockchain-enabled bottles have been shipped, and the volume is expected to rise tenfold in 2019.

Overseas Chinese Tourists

Ctrip takes revenue boost from Chinese outbound travelers: Ctrip saw revenue grow 11% to $1.1 in Q1 this year, crediting its growth to increased international air purchases by Chinese outbound customers and an expansion of its customer base in overseas markets. Excluding Skyscanner, international flights accounted for 40% of its air ticketing revenue. Israel-based sports and music ticketing platform Sports Events 365 announced it will begin selling tickets on Ctrip to serve the growing market of Chinese consumers interested in international sporting events, particularly football in England, Spain and Italy as well as American sporting events, primarily basketball.

Designers and Fashion

Made in China 2.0: How Li-Ning Sneakers Went from Beijing Outlets to New York Fashion Week: Once synonymous with discount stores as a mass market, middle-of-the-road choice, Li-Ning has become the first Chinese sportswear label to ever feature in New York Fashion Week. It’s yanzhi nian shoes embodies an aspect of traditional Chinese culture with its design inspired by a grand story of a swordsman who travelled across the world, but kept a souvenir of the woman, until they could meet again. It has been a hit with young Chinese consumers who have a growing appreciation for their culture and the changing idea of “Made in China” isn’t just sociological.

Pollution and Environment

Air Quality Worsening in China’s Yangtze River Delta in 2018, Figures Show: Whilst there is a lot of talk about China’s pollution improving, air quality in the affluent Yangtze River Delta worsened 1.9% in the first four months of the year, largely because of a 20% surge in emissions in January according to environment ministry data. Although Beijing’s year-on-year PM2.5 rose 20.8% in April, the first four months in Beijing-Tianjin-Hebei fell 18.8% on the previous year, yet it remains nearly double the national standard.

Premium and Luxury

Galeries Lafayette Second China Store to Open This Year: Galaries Lafayette will open a 23,100 square metre store in the L+MALL in Lujiazui in Pudong District. China’s first Galeries Lafayette store opened in Beijing in 2013. The Shanghai store will be different from that of Paris and Beijing. Besides luxury brands, the store will introduce some new brands to Chinese consumers, including niche designer brands from Europe.

Q&A: ALibaba’s International Director of Fashion & Luxury Talks New Retail: Alibaba is looking to roll out its iStore technology which lets brands digitize their physical retail space almost instantly and gives store managers unique insight into consumer behaviour. This can have an impact on merchandising, store layout and linking online and offline CRM.

Autos and Cars

These Six Chinese Cities Dominate Global Electric-Vehicle Sales: Beijing, Shanghai, Shenzhen, Tianjin, Hangzhou and Guangzhou accounted for 40% of China’s electric-car sales of 579,000 last year. Growth in those cities is two to four times faster the national average, and purchases by individuals versus governments and car-sharing services are at a higher level, driven by restrictions for gas-powered cars in those cities.

That’s the Skinny for the week! See previous newsletters hereContact China Skinny for marketing strategy, research and digital advice and implementation.

 

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