Although the Chinese New Year and Spring Festival has been the talk of the town in China this month, another celebration is getting it’s share of observers. Valentine’s Day is becoming increasingly fashionable with Chinese consumers; especially the young, urban and affluent. While romantics aren’t yet spoiling their loved ones with chocolates, jewelry appears to have become a popular gift. During the Spring Festival period from February 9-15, bank card transactions in jewelry shops increased 119% from the 2012 Festival period. That compares to a 43% increase for overall card usage in China and 33% overseas.
Valentines Day is another example of Chinese consumers embracing western traditions – with Chinese characteristics, as chocolate sellers have discovered. Below you’ll find the usual weekly roundup of news, views and stats to help you better understand and appeal to those characteristics; hopefully you find it useful. Enjoy!
Three Things You Need to Know When Building Your Brand in China: Three essential pieces of advice for building a western brand in China, with some best practice from those finding success; our view.
Elderly Chinese Consumers have Money to Burn – And Nowhere To Spend It: Chinese elderly consumers not feeling loved by marketers and retailers. Given 34% say they have no worries about their financial future, you may want to reconsider that. Entertainment, value-for-money and sensitivity are key ingredients for marketing to the elderly.
China Consumer Mood to Gather Pace in 2013: Chinese consumer sentiment to improve in 2013 according to Nielsen. Rural consumers are most optimistic, then consumers from 2nd & 4th Tier cities.
Infographic: Why Do Chinese Consumers Pay So Much for Foreign Brands?: A widely-circulated infographic translated into English, comparing the high costs Chinese consumers pay for goods compared to other countries – such as 4 times as much for milk powder as Holland. The reasons for the higher prices: higher distribution fees, higher taxes and established brands. The infographic overlooked one key element of marketing to Chinese – many consumers are more likely to buy an expensive product over a mid-priced equivalent, so a lot of brands intentionally charge a premium.
What’s Next for China?: McKinsey’s predictions about the shift in the Chinese economy. Consumerism will account for 51% of GDP growth from 2020-2030, versus 41% this decade. Cities with current populations of less than 1.5 million will make up 40% of GDP growth, more than the 35% from megacities. Their advice for businesses selling to Chinese: (1) Embrace new trends in urban development – have city-specific products, marketing and operating models; (2) Focus on the growing demand for services and consumer goods – demand stemming from growing incomes. Business services opportunities will also grow; and (3) Foster new skills and innovation capabilities – training, automation, flexible production and increased staff loyalty will take place.
Chocolate Not Yet China’s Cup of Tea: It’ll take more than a chocolate Terracotta Army to tempt Chinese consumers to chocolate. Although consumption has grown 17% a year for the past 5 years, Chinese eat just 100 grams a year on average – that’s two snicker bars each, or 1/82nd of the Germans.
Consumer Goods in China, Moving Fast: Nice chart illustrating market share of the top 5-players in the Chinese beauty, packaged food & soft drinks in 2007 & 2012. Interestingly, there are 3 new big players in the food and beverage categories, indicating late-comers still have a good chance of succeeding in China.
Chinese Farmers Now Growing More Corn Than Rice: Chinese farmers are set to grow more corn than rice for the first time. Chinese consumers are demanding more meat, which needs to be fed. In the past 20 years, poultry has increased 300%, pork 87% and beef 155%. Will corn syrup in everything be next?
More Counting the Cost of True Love in China: Chinese romantics who bought jewelry on Valentines Day spent an average of $350 each. For those splashing out for dinner, it was $40 according to a Home Credit survey.
Online Video Revenues Surge in China: Online Video revenue surges 50% in China, with big brands like Pepsi, Nescafe and GM finding much success. Pepsi, for example, premiered a 30-minute film “Bring Love Home” and related music videos with celebs on online video leaders Youku and Tudou and got 71m views and 72,000 comments in the first day of being online.
Global Multi-Channel Consumer Survey 2012: Findings from PWC international online shopping survey including some interesting statistics on China: 36% of Chinese consumers shop online several times per week and 56% of Chinese online consumers have already shopped via a social media platform, versus the global average of 24%.
It Won’t Be Long Till The Chinese Are More Important To Apple Than Americans: Although Apple didn’t end 2012 as well as they started in China, the numbers would indicate that China will contribute more revenue for the company than it’s home market within a few years.
Chinese Consumers are Increasingly Purchasing Overseas: 71% of Chinese consumers in a KPMG survey say they travel overseas, up from 53% in 2008. While there, 72% are purchasing luxury goods, which is making luxury brands (especially cosmetics, watches and bags) around the world refine their strategy. The survey reiterated the importance of a digital strategy with 70% of those consumers searching for luxury items at least one a month online. 40% of those intend on purchasing luxury goods online, up from 22% in 2011. 56% prefer to purchase well-known luxury brands, with 69% paying a premium for them. Consumers distinguish country of origin, with European countries popular for heritage brands, particularly Switzerland for watches, France for cosmetics, perfumes, clothes and bags, and Germany for cars.
Chinese VIP Tourists’ High Expectations in Europe: VIP Chinese tourists and their high expectations when shopping abroad: (1) Shopping is a key part of the trip, but VIPs prefer the service and choice from boutiques, not department stores; (2) Have high expectations and expect tickets to big fashion shows, etc; (3) Are not very imaginative and generally want the same big brands, Hermes, Chanel, Louis Vuitton and locations; (4) Expect even further discounted prices; (5) Prefer in-store presentations than visiting manufacturing sites, as they don’t want to lose shopping time; (6) Men often like to meet brand managers and often recommend locations they’d like to see the goods sold; and (7) Love to take pictures from the store and post on Weibo.
China’s Green Drivers: Electric cars and renewables have a bright future ahead in China as the Govt aims for renewables to account for 20% of energy consumption by 2015 – a lot of incentives when you can see the effects of pollution out the window, just read the Weibo posts.
More Than 1 Million Vehicles Imported, But Growth Slows: China auto imports broke 1m last year, although they only grew 9%. More than half of dealers trading imports faced a loss due to high operating costs and lowering margins.
Coming of Age: China’s Used Car Market Outpaces New Sales Growth: Not all Chinese are buying shiny & new everything – used cars growth was more than new car growth in China for the second year running – although new cars still outsold used by 3 to 1.
The Chinese Art Market Slowdown Is Great News: Auction houses are reporting sales of Chinese art are half of last year, but some believe this is a good thing as it will reduce the speculation and leave room for art lovers to develop a healthy market based on increasingly sophisticated tastes.
Chinese Brands Struggle in Luxury Market: Chinese luxury brands aren’t faring well against foreign brands, not helped by high retail rents pushing the local brands out. Just 10% of Shanghai’s traditional brands are making a healthy profits.
That's the skinny for the week!
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