Mark Tanner
Mark Tanner
15 April 2015 0 Comments

Chinese consumers embrace few things with more enthusiasm than ecommerce and smartphones.  WeChat’s Tencent, Alibaba and China Mobile are rated the three most valuable brands in China with good reason. 

Online shopping and mobiles are not just an important component of everyday life to urban Chinese, but also a source of national pride.  By most measures, Alibaba is at the top of the ecommerce world, bringing adoration from the Chinese public, businesses and the Government. Local mobile companies like the world’s most valuable startup, Xiaomi, are also showing consumers that homegrown brands can build a genuine x-factor thanks to great marketing and PR. Back in 2011, when just 31% wanted to support China by buying locally-made goods, over two thirds of smartphones sold were from Nokia, Samsung and Apple.  Nowadays the large majority of smartphones in Chinese pockets and purses are local brands. 

What’s making things really interesting is the convergence of the two.  By 2018, 62% of sales online will be through a mobile according to iResearch, up from around a third today.  Mobiles already sway purchase decisions throughout the customer journey.  39% of urban Chinese claimed smartphones, and 23% said tablets are the most influential digital channels for purchases, versus 30% on PCs in a recent OMD poll.  Given 71% of connected Chinese use online-to-offline services, mobiles and ecommerce are making their mark in the physical world as well.

With lower tier cities accounting for an ever-larger share of consumer spending, mobile’s importance increases even further.  In 2012, just over a third of Android smartphones sold in China were in Tier-3 or lower cities.  Now it is over half.  But with many ‘smaller’ city consumers coming online for the first time on their mobile, their usage habits are quite different from their Tier-1 cousins.  Consumers in lower tier cities spend a larger portion of their incomes shopping online, and are more likely to do it on mobile.  They also view mobile ads quite differently.   It’s another reason to consider localised tactics for different regions in China, something the team at China Skinny can help with.  We hope you enjoy this week’s Skinny.

Online: Internet, eCommerce & Mobile

Alibaba Maintains Mobile Ecommerce Dominance Through Investments and AcquisitionsAlibaba’s platforms accounted for 86.2% of China’s mobile commerce transactions last year, followed by JD at 4.2% and VIP at 2.1%. Mobiles are forecast to account for 62% of all online shopping by 2018 according to iResearch. Online shopping currently accounts for 21% of China’s $2.2 trillion ecommerce market.

Poll Shows Mobile Commercials Yet to Gain Consumer Confidence89% of Chinese mobile users get annoyed by mobile advertising, with 70% finding it irrelevant and 65% a waste of data. Nevertheless, 75% find the average 8.5 ads seen daily interesting and 94% necessary. 22% of tier-1 consumers ignore ads versus 52% in tier-3.

Xiaomi: The Secret to the World’s Most Valuable StartupXiaomi has “spun a dream of social advancement for China’s vast numbers of young people, a dream of luxuries from the developed world now within reach.” Organising VIP parties for average Chinese consumers to make them feel part of an exclusive club that they may not have been able to afford normally has helped create loyal fans and advocates. Another ingredient in Xiaomi’s success, is that senior executives take the time to meet users in person and answer their questions online [subscription required].

Samsung Caught Hiring ‘Fans’ to Attend S6 Press ConferenceSamsung paid 500 people to fill a launch event. The ‘fans’ had to be younger than 30 and look like students, and cost the company ¥50 ($8) a head.

Alipay’s ePass – A Simple Premise With Big PromiseAlipay ePass makes it easy for U.S websites to add an Alipay button, allowing any of China’s 800 million Alipay accounts to easily make a purchase.

Consumers,: Chinese Consumers

Selling to China: Most Common Mistake Merchants MakeThe most frequent mistake businesses make when entering new markets is not localising marketing and sales strategies to the market. Digital channels such as ecommerce and social media provide real time data to assess market demand and responses to initiatives.

House of Fraser is Bypassing the Obvious Cities for its China Launch166-year old House of Fraser is one of the UK’s most revered retailers, counting the British royal family as customers. When it launches in China, it isn’t taking the usual tier-1 city route to market, instead setting up shop in two of the world’s 20 most dynamic cities according to JLL: Chongqing and Nanjing, as well as Xuzhou. The retailer will tap into the less contested, and increasingly sophisticated lower tier consumer market, offering them a slice of Britain on their doorsteps [subscription required].

China’s Buy-Out of Corporate Europe, in Maps and ChartsThe lower Euro has helped motivate firms from Greater China go on a spending spree acquiring businesses in Europe, spending more in just the first three months of 2015 than any full year in history. The UK has been the top market for acquisitions in the past 15 years, with investments over five times that of second-placed France.

Premium Food & Beverage

Yum’s Upmarket China Diner Seeks Recipe for RevivalKFC and Pizza Hut owner Yum Brands has opened a trendy Shanghai eatery Atto Primo overlooking the Bund in Shanghai. The restaurant’s dimmed lights, colonial-style balconies, 16th century Italian painter-inspired murals and fancy crystal make up what the company calls “an innovation lab to help us learn more about the evolving tastes of Chinese consumers.”

Regulator: Food Complaints Double to Half a Million Last YearThere were 562,402 complaints and tip-offs about food, pharmaceuticals, dietary supplements, cosmetics and medical equipment in China last year.  Almost four out of five complaints were made on the Government’s Whistleblower hotline. Food made up 74% of complaints, with most complaints regarding online sales of fake products, false advertising, unlicensed production and adverse reactions.

Overseas Chinese Tourists

Festivals Need to Tap Into the Huge Chinese Market81% Chinese international travellers strongly agreed that “when travelling internationally I always look to time my trip and places visited with an event or festival of ­interest,” according to a Tourism Australia survey [subscription required].

Why Asian Hotel Prices Fell in 2014 When Travel rose An increase in hotel supply saw average hotel prices drop 4% in China last year. Asian hotel prices sunk for the second year running in 2014 and are now only slightly higher than they were a decade ago.

Films and Entertainment

Will China Prefer Blondes? Cartoon Marilyn Monroe Set to DebutA joint Chinese-US venture hopes to tap into Chinese consumer’s love of cartoons with Mini-Marilyn. Cutesy Japanese personalities such as Hello Kitty and Doraemon are currently the most popular foreign characters, but American classics are investing to increase their presence in China [subscription required].

Cars &: Auto

Ford Motor Company Plots Its Future Growth in ChinaIn 2014, Ford sold more than double the number of cars in China than in 2012, even with growth restricted by production constraints. Ford’s next phase in China includes increasing its manufacturing capacity significantly to drive further growth.

China Sales of Smaller, Leaner SUVs Soar Amid Car ControlsRetail sales of SUVs soared by more than a third last year to 3.82 million, and have more than doubled since 2012. The rate of growth of SUVs is expected to be 27% versus just 1% for sedans in China this year.

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