Mark Tanner
23 July 2014 0 Comments

Every other week, there’s a report of a new WeChat feature allowing businesses to advertise or sell to the 400 million+ active monthly users on the service. 

While WeChat’s transition from a communication tool to a transactional one won’t happen over night, and sales of products are currently only a fraction of platforms like Tmall, there are plenty of signs that Chinese consumers are warming to the idea of shopping through their favourite app. 

In January this year, more than 20 million users received a virtual hongbao as part of WeChat’s innovative Chinese New Year campaign.  The following month, 21 million taxi rides were booked through WeChat. In the first quarter of 2014, WeChat contributed a sizable share of the $2.95 billion that Tencent earned from its games.  The service’s popularity has fostered an industry of developers creating apps just for WeChat and China Skinny works with businesses that are very happily selling on the service. 

But WeChat has to tread carefully.  Much of Weibo’s fall from favour can be attributed to its news feeds being clogged with spam and advertisements (which it has recently tried to address).  WeChat’s one-to-one personal nature makes it even more important to keep things relevant to its users. 

WeChat has had the luxury of learning from Weibo and has done a better job of separating businesses from personal accounts.  But commerce’s creep into the app is blurring the boundaries and will be an ongoing balancing act.  Last month, WeChat deleted 20 million messages and 250,000 accounts related to the sex-trade.  This month, there’s been reports of fake accounts Photoshopping ‘Verified’ symbols onto their WeChat logos, burying the real accounts down the list.

Above everything else, WeChat needs to keep its users happy and safe from the scammers.  And equally important, it needs to keep Beijing satisfied. There are increasing reports from state media about misdemeanours on WeChat, and earlier this month the Government went as far as amending its Food Safety Law to ban personal WeChat accounts from selling food.  It will be an interesting time ahead for the service.

We hope you enjoy this week’s Skinny.

Consumers,: Chinese Consumers

Chinese Tycoon Guo Copying Buffett Rises From Bread to Club MedChina’s eighth richest man Guo Guangchang has made his billions from investing in assets that China’s growing middle class can buy to upgrade their lives: health, travel, leisure, education and the Internet.

5 Key Takeaways on Global Views of the U.S. and ChinaResearch from Pew has found that 49% of people globally have a favourable opinion of China, versus 65% of the USA. 49% believe China has/will replace the USA as the world’s leading superpower, 34% think this will never happen.

The Flow of ThingsAlthough Shanghai has the world’s busiest container port, the third-biggest handler of air cargo, more than 200,000 kilometres of expressways and railways and cashed-up eCommerce players trying to fix it, China’s logistics is still far from world class. While the U.S. has 7,000 trucking operators, China has 700,000, most of them one-man bands. The top 20 firms barely account for 2% of the market.

Online: Internet, eCommerce, Mobile & Social Media

WeChat First: a New Frontier in China Beyond Android and iOSWeChat is turning into an industry of its own, with two of the nine startups in China’s premier accelerator programme focusing solely on developing apps for WeChat.

Weibo Started News Feeds Filtering to Improve QualityWeibo is looking to make its news feeds more relevant with a Facebook-style filter that boosts posts that get higher engagement and reduces airtime for low-engagement posts, spam and auto-published posts.

The Power of Women in China’s Booming eCommerce MarketIn 2013, 60% of Chinese online shoppers spent more than ¥3,000 ($454) online, with the majority being female. 50% more ladies than men spent over ¥100,000 ($16,118) last year. Females tend to view ecommerce as a fun way to entertain themselves and relax. On the subject of profiling, mobile commerce penetration rates are highest in far flung locations such as Tibet, Inner Mongolia and Qinghai.

Rough Week for Apple in China: Court Case Tanks, Media Brands it a National Security ThreatCCTV slammed Apple again earlier this month for its location-tracking function, saying it constitutes a national security threat.  Apple has since refuted this claim. The company also lost its claim against China’s Patent Review Committee that a Shanghai-based tech company’s Siri-like chat robot patent was invalid.  It will be appealing the decision.

Premium Food & Beverage

Food Vendors Using Weibo and WeChat Warned ‘You Will Be Held Responsible for Food Safety’Beijing has made a draft amendment to the Food Safety Law, promising tougher rules on food production, sales and regulation. WeChat and Weibo personal accounts are not considered to be ‘trading platforms’ and will be banned from selling food. Customers would be entitled to claim compensations from food websites if they failed to provide authentic information.

China’s Wine Market Shifts Toward Entry LevelOffline, wine accounts for 5% of the value of alcohol sold in China. Online, it makes up 34%. Consumers are especially price conscious online, but even offline few are drinking the ¥5,000 ($805) bottles any more.

Pizza Express sold to Chinese firm Hony Capital for $1.54 billionChinese investors have paid big bucks for another British household food brand, Pizza Express, as Chinese consumers demand more Western-style food and beverage. The investor plans to expand the chain in both the UK and China.

Fast-Food Chains Reinvent Themselves as Chinese Tastes EvolveIn addition to fast food chains ramping up their menus, their restaurant decor is being given a makeover. One of the first examples is a KFC in Beijing, which has lost the bold red and white colour scheme, replaced with beige walls, modern paintings, wooden chairs and potted plants, with the aim of creating a relaxing environment.

China Food Scandal Drags in Starbucks, Burger King and McNuggets in Japan: Let’s hope the beige walls aren’t in vain following the latest exposé into foreign fast food chains serving expired meat and meat from the floor. McDonalds, Starbucks, Pizza Hut, Papa Johns, Burger King and even Dicos were all supplied questionable meat by Shanghai Husi, a unit of a US company. Fast food restaurant chains in Japan and Thailand have also been affected.

Overseas Chinese Tourists

G’Day Mate: Australians the Most Welcoming to Chinese TouristsAustralia has been rated as the most welcoming country for Chinese tourists and top of the wish list for places to visit. France and New Zealand also scored highly on both counts. For tourist operators hoping to get repeat visitors, you may want to think again.

Chinese Tourists Traveling More but Less SatisfiedAn estimated 3.7 billion trips are expected to be made by Chinese this year, 1.2 billion of them overseas. 54 million tourists travelled overseas in the first 6-months of the year, up 18% on last year, with spending increasing 20% to $1,086 a day excluding accommodation costs. But they’re not all happy campers, both domestically and overseas.

Schools and Education

A Majority of Chinese Online Education Consumers Spend Less than US$8039% of Chinese consumers surveyed last November claimed to have taken a course online, with 54% planning to in the future. 23% spent more than ¥500 ($81), with the most popular online courses being vocational training (14.3%) and English (8.7%).

Banking, Property

Chinese Lead $92 Billion of U.S. Home Sales to ForeignersChinese buyers spent $22 billion on homes in the USA for the 12-months through March, up 72% on a year earlier. A year ago, they bought 12% of houses sold to foreigners.  This year it was 16%, accounting for 24% of total value.

Cars and Auto

Auto Expo Reveals Close Competition in Chinese MarketDiscounts on cars are becoming an increasingly important factor in the purchasing decisions for Chinese consumers. 11 million automobiles were manufactured in China during the first half of 2014, up 9.6% from a year earlier. 50% more new energy vehicles were manufactured – a total of 20,962 units, in line with the whopping 20,477 sold.

Innovation to Keep Carmakers TickingChinese consumers may not be taking to new energy vehicles, but SUVs are the flavour of the month, with more than half of respondents in a Nielsen survey planning to purchase one – up from the current 20% owned. 40% aspire to own a ‘connected car’. The number having a preference for Chinese auto brands grew from 11% to 13%. American cars had the biggest growth in preference, rising from 6% to 16%.

That’s another week and another Skinny!  On the to-dos this week, why not contact China Skinny to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

If you’ve missed earlier news or need to learn more, there’s a library of information about Chinese consumers in prior China Skinny Weekly’s right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed.  If you have any feedback or suggestions for future articles, please let us know.