Mark Tanner
Mark Tanner
24 October 2018 0 Comments

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

Online: Digital China

Alibaba Pledges ‘Largest Ever’ Singles’ Day as Shopping Festival Marks 10th Anniversary, Goes International: Alibaba expects to achieve a record 1 billion orders in 24 hours as it pulls together its entire retail ecosystem in China and overseas, including Lazada in Southeast Asia.

2018 Single’s Day War Started; Pinduoduo Joined as a Major Player: Tmall has reportedly pressured brands to choose between Tmall and Pinduoduo for their Single’s Day promotion. Some brands are asked to delete their products, or even deleting their Pinduoduo stores.

Chinese Consumers Favour Local Brands as Phone Sales Slide 11.7%: Mobile phone sales in China in September were 39 million, 11.7% down from a year ago. Demand has been weak during most of the year, with the exception of a modest uptick in May. Local brands account for more than 80% of sales.

Ciao, Italia! New Tmall Pavilion Spotlights Italian Products: Alibaba has struck a first-of-its-kind deal with the Italian government to promote Italian products and culture in China through Alibaba’s ecommerce platforms. Unlike other country pavilions, this will be the first time an overseas government will finance and work closely with Alibaba to support its homegrown brands and products. The pavilion hosts 88 stores from over 100 Italian companies, spanning categories including fashion and cosmetics, home and design and food and wine. Launches Express Delivery Service with WeChat Mini-Program: JD is expanding its portfolio to take on SF Express, YTO Express, and ZTO Express and Alibaba by offering individual consumers an express delivery service. This will take advantage of JD’s extensive logistics network including 500 warehouses across China. In related news, the White House has announced its intent to withdraw the US from a 144-year old international postal alliance, which subsidises postage from ‘developing’ countries allowing them to build their economies through trade. China accounts for 60% of all packages shipped to the US – mainly through cross border commerce. The subsidies make it 40-70% cheaper to send a small package from China than sending from one US location to another.

Consumers, Chinese Consumers

China’s Q3 GDP Growth Slowest Since 2009, On Track for Government Targets: China’s GDP grew at 6.5% year on year for the third quarter, below expectations of 6.6%, although economists expect China’s full-year growth to come in at 6.6% this year – comfortably meeting the government’s 6.5% target. September retail sales grew at 9.2%, above expectations of 9.0%.

The Trade War’s Latest Casualties: China’s Coddles Cats and Dogs: American pet food brands have become collateral damage in the trade war seeing China’s choosy pet owners become increasingly nervous about the scarcity of their favourite foreign brands for Fido and Mittens. Pet spending in China has surged more than eightfold since 2010 to about $25 billion a year.

Premium Food & Beverage

Mondelez Catching Up With Competitors in China’s Ecommerce Space: Although Mondelez only started selling on China’s ecommerce platforms in 2016, it holds the highest market share for cookies on Tmall with 12%. Its market share for gum is 32% and chocolate 14% – only behind Mars. Across all brands, cereal, rice/pasta, and dairy are among the best preforming food categories online with 18%, 17%, and 15% market penetration respectively. On the other hand, processed meat, edible oils, and ready meals enjoyed a relatively small ecommerce penetration at 4%, 3%, and 1% respectively.

Alibaba Uncorks $290 Million Deal with Stake Purchase in Wine E-tailer Alibaba has invested domestic wine and spirits importer and retailer to tap into resurgent demand for imported wine in China.

Overseas Chinese Tourists

Chinese Tourists Shop Less While Abroad, but That’s Not a Bad Thing for Global Brands: 12% of travellers said shopping their main motivation for going overseas this year according to Ctrip, in line with overall trends which saw just 33% of Chinese tourists interested in shopping in 2017 and 68% in 2016. This is attributed to greater availability of international goods in China through general trade and cross border commerce, but also maturing travellers. Alipay’s cross-border payments have increased 30% YoY to reach an average of ¥1,979 ($286), with lower tier cities significantly growing. Over Golden Week, Fuzhou, Hangzhou, and Wuhan increased spending by 70%, 50%, and 31%, respectively.

Mafengwo Accused of Faking 85% of All User-Generated Content: Over 18 million user comments and blog articles among the total 21 million “original” content pieces on travel blogging site Mafengwo are reportedly fake or plagiarised from rivals. A total of 7,454 fake user accounts were found.

How Alibaba-Backed Shiji Is Expanding Its Tech Sales to Hotels Outside of China:
Shiji, the hospitality tech giant of China, has been expanding its global push since Alibaba acquired a 13.07% stake for $486 million in February. In China, Shiji has over 60% market share for enterprise software services among upscale and international hotels and luxury retailers. About 13,000 Chinese hotels use Shiji-networked systems, including many global brands. Outside of China, about 47,000 properties use products or services from Shiji Group. More than 100,000 hotels worldwide connect to Shiji’s inventory distribution system. Alibaba’s data catchment is growing globally!

Designers and Fashion

Nike Store to Target Younger Consumers: Nike has opened its first global flagship store – dubbed the “House of Innovation” – in Shanghai targeting digital-savvy younger Chinese consumers with its digital integration, innovations and personalized services. The store features its latest localized collection themed with Shanghai elements, which is linked to the upcoming Shanghai Marathon in November. Online-and-offline integration is key in the store’s retailing experience, which ties in with Nike’s WeChat Mini-program.

Pollution and Environment Green Planet-Sustainable Week: JD has kicked off its second Green Planet-Sustainable Week this month to build awareness around sustainable consumption while developing its ongoing efforts to reduce consumption-related waste. Key initiatives include offering eco-friendly, reusable shopping bags; collecting clothing using its in-house logistics network; and gathering appliances to be recycled.

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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