Here are this week’s news and highlights for China:
Seven surprising Chinese Crossover Fashion Collections: Whether they are selling technology, holidays, fast food or consumer goods, companies have tapped China’s independent fashion designers to reach young Chinese consumers looking for unique ways to express themselves. Birkenstock, Huawei, Magnum ice-creams, KFC, TripAdvisor, Lipton Tea and Mickey Mouse have all teamed up with local and international fashion designers and brands.
China’s Ecommerce Giants are Reaching for the Wallets of Overseas Chinese: Alibaba and JD.com are expanding global shipping options to target the more than 100 million Chinese overseas. Alibaba opened two Tmall Home pop-up stores for six days last month in the cities of Melbourne and Sydney to raise awareness of its new sea freight options. Australia has the largest number of overseas Chinese per capita outside of Asia.
Alibaba Tops Revenue Forecasts as Investments Clip Margins: Alibaba’s first quarter revenue grew 61% to ¥61.9 billion yuan ($9.73 billion) from a year earlier, beating analyst estimates of a 53% increase. The results mark two years of continuous quarterly revenue growth above 50% for Alibaba, even as new business investments in offline retail, cloud computing and overseas expansion continue to weigh on margins. Ecommerce platform sales grew 28% in 2018, with 552 million active shoppers – up 37% on the year earlier.
Xiaomi Just Filed for the World’s Biggest IPO Since 2014: The world’s fourth-largest smartphone maker filed for an IPO which is expected to be worth more than $10 billion – the biggest since Alibaba’s $25 billion market debut in 2014. At $10 billion, the company would be valued at $100 billion after a comeback last year following opening stores, smart appliances and focusing on markets outside of China.
How is Meituan Competing Against Alibaba, Didi, and Ofo?: Meituan started out as a Groupon copycat. In 2015, it merged with Dianping, the biggest restaurant review app, forming the biggest group-buying company. And it keeps expanding the scope of services to anything related to O2O. Meituan currently provides food delivery, ride-hailing, travel booking, movie reviews, restaurant reviews, and other lifestyle services. Its 280 million yearly users make 21 million orders per day in 2,800 cities.
Coolhobo Brings Augmented Reality to Chinese Millennial Shoppers: Shenzhen-based startup illustrates some cool uses of AR to assist China’s Millennial shoppers and make it more fun. The cute assistant guides consumers to find products they’re looking for and educate them about the product.
Digitizing Dairy in China: Mengniu sells 12 billion dairy products a year, with 20 million of its customers “actively” sharing information about their product preferences and lifestyle habits through ecommerce and social channels to assist with product development, forecasting, manufacturing, and marketing. The well-cited issue of lactose intolerance among Asians has been marginalised by research showing that 80% of Chinese people can drink 200mls of milk at a meal without adverse reaction according to a McKinsey report.
Hema Launches 10 New Stores in 10 Cities: Four new cities – Xi’an, Nanjing, Wuhan and Guangzhou – now have Hema, with the total count now 46 stores in 13 cities across China. Beijing, Shanghai, Hangzhou, Suzhou, Chengdu Shenzhen, Ningbo, Fuzhou and Guiyang also have stores. The chain is currently opening a new store every six days, and plans to have 2,000 by 2020.
China’s Domestic Fruit Industry and What it Means for Imports: Chinese production is growing steadily, but too much of the overall supply is low grade specimens of a narrow selection of species and varieties. For example, Fuji apples, Asian pears, bananas, red globe grapes, bananas, and melons. However, Chinese consumers are more and more craving “fruit that is premium-quality, differentiated, safe, organic, branded and/or high value,” which has helped boost imports. Fruit consumption in China is less than half the world average, and 30% of developed countries, yet averaged over the past three years, fresh fruit imports into China are actually growing at a slower rate than China’s GDP.
Quality Over Quantity for Chinese Shoppers in 2018: 40% of Chinese travellers see quality as an important purchase driver when abroad, with 36% citing authenticity. A ‘cheaper price’ was a purchase driver for 34% of travellers, down from 41% a year ago according to CiR research. Just 18% wanted a souvenir versus 25% in 2017. The top three regions for growth in Chinese international departures were Eastern Europe (+30%), Oceania (+28%), and Southern Asia and North Africa (both at +25%).
McDonald’s, Starbucks Favoured by China’s Alipay Users Overseas During Labour Day Holiday: US fast-food chains, Hong Kong-style cafes and coffee shops had processed the most Alipay transactions among food establishments visited by Chinese tourists during the recent Labour Day holiday. Government estimates had more than 1 million mainland Chinese travelling overseas on April 30, with Hong Kong, Thailand, South Korea, Japan and Macau the top spots in terms of Alipay transaction volume. Spain, France, Italy, Israel and South Korea saw the highest average AliPay spend. About two-thirds of those who used Alipay overseas during the Labour Day holiday were female. Users born in the 1980s and 1990s accounted for 85%.
Inside Alibaba and Tencent’s Plans for World Media Domination: Alibaba and Tencent are duking it out for customers in a booming Chinese market that boasts 140 million paying streaming-video subscribers — almost double the number in 2016 and more than Netflix’s worldwide total of 125 million. Last year, 14 of the top 20 dramas in China were online titles. Tencent Video’s content bill in 2017 was estimated at $2 billion, while Alibaba’s Youku spent $1.1 billion. By some counts, Tencent has invested in 51 entertainment companies, especially early-stage animation firms, while Alibaba has invested in 48 entertainment firms along the length of the supply chain.
Tech Giants Put China at Forefront of Change: From Detroit to Wolfsburg to Tokyo, global players are looking to China for inspiration and leadership as the country spearheads a global industry upheaval in everything from electrification and autonomous driving to connectivity. One example is the Ford-Alibaba car vending machine, which saw more than 1,200 people try in its first month and 10 test drivers buy. The fun and novel platform to engage consumers has had a far wider marketing reach, and provided Ford with some good learnings with facial recognition, big-data lead management, customer profiling and digital service integration at the feet of an ecommerce leader. It also drives traffic to Ford’s store at Alibaba’s Tmall online emporium.
With D-Alliance, Didi Plans to Overturn Car Ownership and Manufacturing Worldwide: The world’s biggest transport provider Didi Chuxing is launching a program it hopes will alter the very nature of car ownership and shake up the automobile manufacturing supply chain in China. According to the figures, the D-Alliance would let Didi control 50% of the transport needs of 2 billion people. Didi is also working with BYD to launch the first vehicle designed specifically for car-sharing, a market they believe will service a predicted market of 10 million units in 10 years time.