Chabuduo is a word used far too often in China, as British writer James Palmer eloquently scribed earlier this month.  It spans wider than corruption; a challenge that Beijing must overcome to successfully deliver its Supply-Side reforms.  It is why Chinese consumers buy countless foreign brands, and why data-rich companies like Alibaba ad JD place so much focus on imported products.  In short, it is a deeply-embedded attitude in China that ‘close enough’ is good enough.

Whilst there are some true craftspeople in China, the vast majority of goods and service providers still don’t take pride in their work like a shoe maker in Milan, a chocolatier in Zurich, a toilet seat maker in Tokyo or an analyst at China Skinny.

Although many Chinese businesses and workers don’t appear to care, Chinese consumers see things a little differently.  Recent research by Pew found that consumers feel the quality of manufactured goods and the safety of food and medicine is a bigger problem than China’s lung-choking air pollution.

Consumers are voting with their wallets.  McKinsey’s research was the latest to highlight the trend of trading-up by Chinese consumers.  44% have traded up their cosmetics purchases between 2011 and 2015, compared with 4% who traded down. 25% even traded up their rice purchases versus 3% trading down.  Cars selling for ¥100,000-¥250,000 ($14,800-$37,000) grew twice as fast as cars less than ¥100,000, and over ¥250,000 grew even faster.

Agriculture and food security is one of Beijing’s key focuses, and the recipient of hundreds of billions of investment dollars. Yet chabuduo still plagues many components of the supply chain.  Understanding how China is addressing this is crucial for anyone in the food and beverage industry, whether exporting to China, being supplied by Chinese companies or competing against them.  China Skinny’s Mark Tanner joins a remarkable line up of Chinese and foreign experts in New Zealand’s beautiful harbour capital Wellington next Thursday and Friday, 27-28 October to discuss the Rise of Chinese Agriculture.  It would be great to see you there. More info here.

China’s chabuduo culture will continue to present significant opportunities to exporters of quality goods and services for some time yet; particularly those that are marketed well and in the right sales channels.  China Skinny can assist with that.  Go to Page 2 to see this week’s China news and highlights.

In the latest round of conflicting messages coming from Beijing, cross border ecommerce no longer looks to be the flavour of the month.

After featuring prominently in the much-celebrated “Internet Plus” strategy, which became a key pillar of the latest Five Year Plan and has been supported by Free Trade Zones popping up across China, things are looking a little less rosy in ecommerce imports camp.  From Friday, every cross border commerce purchase will be subject to a new tax rate.

The Ministry of Finance says the new taxes will address ‘unfair competition’ which allowed imports to be cheaper than locally-bought products. Although the tax will hit some lower cost imports the most, such as milk powder priced under ¥500 ($77), the taxes are unlikely to significantly affect demand for premium products, as product quality and trust remain the two most cited reasons Chinese consumers shop cross border.  Nevertheless, price is always a factor in China and the new published rates are set to further increase when temporary discounts and waivers are removed.

Unfortunately, the new import duties aren’t the only signs of Beijing’s teetering support for cross border commerce. Mid-last year, the Government announced it would close loopholes which allowed consumers to import products for personal consumption not otherwise allowed in China.  This has been one of the drivers of cross border commerce. They stated that cross border products such as foreign cosmetics not tested on animals would be banned, a year after Chinese companies were allowed to sell cosmetics that weren’t subject to animal testing.

More recently, Beijing has used another influential tool in its war chest – state media, and has been publishing some not-so-positive articles.  For example, they identified that cross border complaints increased drastically last year – 369% – but without highlighting the context that is was just 1,059 complaints out of millions of cross border transactions and that sales in the category had also increased drastically too.

Diminishing Government advocacy for cross border commerce won’t be well received by Jack Ma and his merry men in Hangzhou, who have announced global imports as one of three key components driving its expansion this year.  The company’s cross border division, Tmall Global, grew 179% last year, driving the opening of offices in Germany, France, Italy, the UK and five in the US.  Last year, the company hired former Goldman Sachs vice chairman Michael Evans to lure foreign brands to the platform. Similarly, and a host of niche players have pinned their hopes on cross border commerce as a key growth driver.  Even Walmart is jumping on the wagon with its new Global E-Buy app.

Whilst ecommerce imports have been championed as a way to bolster Chinese consumption rates, most of China’s leaders would rather consumers supported and bought local products – whether it be toilet seats or cosmetics.  Cross border commerce will continue to grow, but it won’t be with the same unbridled support from Beijing that it has enjoyed in the past.  Brands whose Chinese strategy is purely based on cross border commerce would be prudent to explore other channels and hedge their bets.  China Skinny can assist with that.  Go to Page 2 to see this week’s China news and highlights.

There’s no shortage of research and analysis emphasising the pulling power that digital channels have over Chinese consumers.  Most of these studies focus on ecommerce and social media, whereas good old-fashioned websites typically don’t get due credit.

PWC research earlier this year found that 85% of online Chinese consumers choose a digital channel as the first step in researching a new product, with brand websites cited as one of the main avenues when seeking information.

Yet with millions of websites vying for attention, sites should have more than just an excellent technical back-end and intuitive usability. They need content that Chinese consumers want.  Localising a website isn’t just translating your Western site’s pages word for word, but understanding your Chinese target market’s needs, desires and concerns, and tailoring content to meet them.

To ensure your content is relevant, it’s best to consider how your site fits into the customer journey.  China Skinny’s research has found the most common time Chinese consumers visit a brand website is in the early awareness and education stages, moving onto other channels such as online shopping or booking sites and physical stores when they are more familiar and comfortable with your brand.  With that in mind, website content should have a strong focus on education, particularly for foreign brands that aren’t well known and in less familiar categories.

With 89% of online Chinese accessing the Internet through a mobile, it’s also imperative that your mobile content fits the context of where they are, and what type of information they are seeking when on a smartphone – those needs are often quite different than when they’re on a desktop.

In short, websites are a key touch point in the customer journey.  A well considered and marketed site is one of the most cost-effective channels to build awareness, educate and increase purchase intent.

Speaking of websites, has had a refresh.  Our new site tells our story better, with more information about us and our marketing, research and digital services.  All the old favourites are there including previous Weekly Skinnys, infographs from WeChat to wine, and updated City-Nator population figures so you can check how your city stacks up against Chinese cities. Like everything we do, we’re always looking for ways to make it better, so please let us know your feedback – good or bad.  Likewise, if China Skinny can assist to make your Chinese website and overall marketing more effective, contact us today.  We hope you enjoy this week’s Skinny.

Consumers,  Chinese Consumers

‘Carmageddon’: 50-Lane Traffic Jam in China Causes Chaos: This year’s Golden Week buzzword was ‘Carmageddon’, summed up by the 50-lane gridlock as Beijingers returned home on the Beijing-Hong Kong-Macau ‘Expressway’. They made up a small part of the estimated 750 million Chinese who travelled during this year’s Golden Week. Beijing alone, received an estimated 11.5 million visitors during the week.

Sales Up Over The Holiday: Shanghai retail sales over the Golden Week holiday increased 10.3% from last year. Jewellery was up 31.6% and cosmetics grew 23.7%. Similarly, Beijing’s sales were up 6.2%. Travellers took 63 million train trips in the first six days of the holiday, 8.8% more than last year, with ticket revenue up 18.5%. Plane trips increased 10%.

Chinese Millennials Come Into Their Own: The 415 million-strong group of 80s and 90s-born consumers outnumber the working population of the U.S. and Europe. Their average income is expected to more than double in the next decade to $13,000, with spending power growing from $2.4 trillion to $5 trillion according to Goldman Sachs. 68 million Chinese born in the 90s and 39 million in the 80s have university degrees, versus just 8 million of those born in the 70s. 95 million were born in cities, but 245 million now live in urban areas.

Buzzwords: Chinese Families: Family forms the foundation of China’s society and is therefore a great place to understand Chinese consumers.

Children of the Yuan Percent: Everyone Hates China’s Rich Kids: China’s second-generation rich kids, the fuerdai, are the most loathed group in the country. They’re also its future. Family businesses account for 85% of non-state-owned enterprises, but 82% of second-generation heirs aren’t willing to take over their family business.

Online: Internet, Mobiles, Social Media & Ecommerce

11-11 Single’s Day 2015: What to Expect: China Skinny was in Hangzhou yesterday to find out what Alibaba has planned for the world’s biggest day of online shopping this year.

The Value of WeChat Official Accounts: There were 330 million monthly WeChat users in China in Dec 2014, accessing the app 7.8 times and spending a total of 18 minutes a day on average according to iResearch. 126 million Weibo app users used the app 1.8 times and spent 4.2 minutes a day.

Xiaomi Under Investigation for Misleading Advertising: Xiaomi’s use of adjectives such as ‘the best’ and ‘the most advanced’ has seen it become the first company to be investigated since advertising laws banning superlatives were introduced last month.

Premium Food & Beverage

Chinese Diets Set to Beef up Demand for Agricultural Commodities: The average Chinese adult is expected to eat 60kg of meat this year, up from 46kg in 2003. That’s around 15 billion extra kilos of pigs, fish, chickens, cows and sheep a year.

Overseas Chinese Tourists

China’s Golden Week Sends a Wave of Chinese Tourists Abroad: An estimated four million Chinese travelled abroad this Golden Week, 11% more than last year. The growth is contributing to an overall increase in Chinese tourists from 116 million in 2014 to 242 million by 2024 according to CEIC.

Chinese sport Sports

One Chinese Sector That’s Still in the Game: Chinese are showing increasing interest in sports, reflected in results such as Nike’s 30% growth last quarter. The number of marathons and marathon runners in the country doubled between 2011 and 2014, and Chinese Basketball Association’s finals saw 50% more viewers a game this year than last.

Video and Entertainment

Rich Chinese Can Have In-Home IMAX Theater Systems for $400,000: Fresh off the back of its IPO in Hong Kong, Imax is banking on wealthy Chinese villa-dwellers shelling out $400,000 for its 6 x 3 metre screen and pimped sound systems. On the subject of films, Stephen Colbert’s 6 minute Youtube parody of Hollywood’s posturing to Beijing is worth a viewing.

Overall Health

More Working Women in China Freeze Their Eggs: Chinese women are increasingly going abroad for fertility treatment, with procedures such as freezing eggs unavailable to women in the Mainland unless they have cervical cancer or other diseases. The average age of a Chinese mother at the birth of her first child has grown from less than 23 in 1981, to over 28 in 2010. It is 25 in the U.S.

Autos and Cars

This Is Why Chinese Consumers Suddenly Stopped Buying Autos: Economic uncertainty, stock market falls, urban congestion, urban transport availability and taxi hailing apps are the top-5 reasons Chinese consumers believe auto sales have slowed down this year according to YouGov and Bernstein. Overall, 53% have become more optimistic about the economy in the past 12-months, with higher tier cities the most optimistic.

Premium and Luxury

Online Sales of Luxury Goods Growing at Healthy Pace, Says Study: 45% of Chinese consumers chose e-commerce sites as their top choice for buying luxury goods according to a KPMG survey. Spending grew by 28% over the past 12-months to ¥2,300 yuan ($362) per deal online, with almost one in three buying goods at full price. Cosmetics are the top luxury purchase online, with sales 18% higher than a year ago. Luxury bag sales grew 109% and female clothing grew 58%.

That’s the Skinny for the week! See previous newsletter here. Contact China Skinny for marketing, research and digital advice and implementation.


A lot can happen in a year in China, and 2014 is a testament to that.  It was the year China’s face-kinis went global, girls with armpit hair went viral and Yao Ming’s campaign to save sharks helped fin soup sales dive 82% since 2012.  Over the past 12-months, China surpassed Japan to become the world’s second largest advertising market, with spending on online ads usurping television ads for the first time.  

Retail growth slowed a little this year, but still rose a respectable 12% in the first 9-months – two-thirds faster than GDP.  Not all segments have grown though; the Government’s crackdown on corruption, coupled with changing tastes, has seen mainstream luxury brands continue to struggle, while also giving the state-run media a wakeup call.

Smartphone usage has continued to soar, fundamentally altering the way Chinese consumers shop both online and offline.  42.6% of sales at this year’s record Singles’ Day festival on Tmall were by mobile, up from just 5% in 2012. More than 83% of online Chinese access the Internet from their phone, while many business’s China websites still remain unfriendly to mobile visitors.  WeChat strengthened its top standing for social media with a slew of new features, but not everyone is impressed.

Health is the word on most Chinese consumers’ lips with worsening pollution and countless food scandals from bean sprouts, to mineral water, to expired meat from the floor at Western fast food chains, driving demand for safe, imported food and beverage.

Ever-rising wealth, coupled with new FTAs, visa agreements and Government policies have made it easier for Chinese to travel, invest and migrate abroad. This aided China to become the first country to ever send 100 million tourists overseas in a year this November.  That growing wealth has also enabled more Chinese to get behind the wheel, with licensed drivers surpassing 300 million, collectively buying 23 million new vehicles this year – around 50% more than in the U.S.

There’s little doubt that 2015 will be another fascinating year in China with its share of curiosities and challenges, but no shortage of opportunities.  With Xmas next week, this is our last Weekly Skinny for the year.  We wish you the happiest of Festive Seasons and hope you enjoy the last Skinny until 2015.  圣诞节快乐!

Consumers,  Chinese Consumers

‘Authentic Christmas’ in China – Another Shopping Holiday Whilst there are an estimated 100 million Christians in China – more than Communist Party members – and one ‘village’ in China produces 90% of the world’s festive supplies, Christmas is still typically observed as a shopping holiday by most Chinese.

Retail Traditions Hit a Wall at Wal-Mart ChinaWith rental for commercial premises rising 3-5% a year and 10% in premium locations, and retail staffing costs up 10% a year over the past few years in China, Walmart is hurting as it grapples with the rise of ecommerce in China.

HSBC Asks: How Big is China?IMF’s announcement earlier this year that the Chinese economy is the world’s largest based on purchasing power parity has been questioned by some. HSBC recently announced rankings based on measuring GDP in USD, concluding that the U.S. accounts for 22% of the world’s economy, versus China’s 11%. Although the U.S. reigns supreme on those measurements, there’s no disputing China’s rapid rise since 2000, when the U.S. accounted for 31% and China just 4%. China’s contribution to global growth will be double that of the U.S. next year.

What You Need to Know About the Global Ad MarketChina has passed Japan to be the world’s largest ad market after the U.S. Whereas ad spending on TV globally is almost double that of the Internet, in China this year, ad spending on the Internet has surpassed TV. Red Bull spends 38% of its global ad budget in China; KFC’s owner Yum Brands 35.5%; Estée Lauder 29.2%; and Mars Inc. 25.9%

Online: Internet & Social Media

Does Social Media Influence Buying Decisions in China?68% of 26-35 year old Chinese consumers frequently make purchase decisions based on what what’s happening on their social networks versus 7% of Americans according to AT Kearney.

Overseas Chinese Tourists

Luxury Hotels Chains Expand in ChinaHotel chains such as JW Marriott and Sofitel are rapidly expanding into China’s Tier 2 and 3 cities. The Marriott is opening a new hotel each week in Asia and is expanding its China coverage from the current 16 cities to 59 cities by 2017. Chinese chains are increasingly moving into the space, with local developer Dalian Wanda looking to build 150 premium hotels globally by 2018.

New Transit Card to Ease Travel for China TouristsMore than 2 million Chinese tourists who visit Singapore each year can now pre-purchase a transit card using their Alipay account, with collection at the airport. Transport is a top concern for Chinese tourists, who prefer travelling by public transport overseas according to World Tourism Cities Federation.

Premium Food & Beverage

KFC Calls on Chinese Diners to Inspect its KitchenKFC is advertising on its placemats for tours of its kitchens and suppliers in a bid to restore faith in the safety of its chicken. KFC’s parent company Yum Brands plans to open 700 new restaurants in China in 2015.

Chinese Tests Find Quarter of Drinking Water ‘Substandard’China Food and Drug Administration (CFDA) found excessive bacteria in 23% of purified drinking water products. Brands with unsafe water included China’s biggest drinks maker, Wahaha Group, as well as C’estbon Beverage Co Ltd and Danone SA’s Robust brand.

Digestibility Drives Yogurt Consumption in China80% of Chinese consumers seek probiotics as an ingredient when purchasing yoghurt, with 76% buying yoghurt for gut health benefits versus an average of 48% in US, Brazil, Turkey, Poland and France.

Retail and Fashion

Abercrombie’s Still Having Its Heyday In China As American Teens Walk AwayAs sales tumble in North America and Europe for Abercrombie, the rare bright spot is China. The company’s flagship store opening in April drew “huge crowds and strong sales”, exceeding forecasts and generating 500 million social media impressions and more than 30,000 new Weibo followers.

Pollution and Environment

Xiaomi Answers Jack Ma Pollution Jibe With Air PurifierJust a month and a half since Jack Ma asked Xiaomi’s Lei Jun how much making a good smartphone mattered when the air and water were so bad, the company has announced a ¥899 ($145) air purifier. In related news, local purifier brand Baomi is following Xiaomi’s marketing model with flash sales, and U.S. company Alen looks to join as many as 300 competitors in China’s contested air purifier market, developing products tailored to China’s requirements.

Banking and Insurance

Online Insurance Sales Growing Amongst Consumers in ChinaOver the past decade in China, 56% of insurance buyers purchased through an agent, 13% through a bank and 8% through insurers’ websites. Last year, that shifted to 23% through an agent, 13% through banks and 40% through insurers’ websites. Males make up a larger share of online purchasers and females dominate banks’ customers.

Premium and Luxury

Consumption of Luxury Brands in China50% of luxury consumers in China plan to spend more on travel – the highest category according to IPSOS and Ruder Finn. 57% reported greater confidence in buying luxury goods online, but 78% of online shoppers still prefer to visit a physical store first. 90% of Tier-1 consumers affirmed the relevance of social media to their everyday life.

China’s Luxury Consumers Buy for Quality While Americans Seek Bargains‘Exclusivity’ is a purchase decision for 86% of Chinese luxury consumers, versus 51% of Americans. 81% use the web to research luxury products compared to 65% of Americans.

Tastes are Changing, but Appetites Remain KeenSince 2008, 70-80% of global growth in the luxury sector has come from China. Spending on luxury by the rich will nearly quadruple between 2012 and 2020, according to Exane BNP Paribas. Female’s share of luxury purchases in China have gone from around 10% in 1995 to 50% last year.

That’s the Skinny for the week!  See previous newsletter here.  If you have any comments and suggestions about our newsletter, please contact us at

The long awaited China-Australia Free Trade Agreement (ChaFTA) was recently signed. The China FTA joins Australia’s other recently signed FTAs with South Korea and Japan. Together, the three countries covered by these agreements account for more than 61% of Australia’s exports of goods and services. The clock is ticking to take full advantage of the unique opportunities afforded by the new agreement.

There has been a lot of media celebration about the FTA but it is important to understand what the FTA means for you. Although there is still plenty of work to be done before the FTA is finalised, here are some indicative signals of the benefits to specific Australian industries:

Australian service providers, manufacturers, and agricultural producers who already export to China will now have much greater access to the markets in which they operate. Companies that do not currently export to China now have a stronger reason to do so.

Depending on your product or service, awareness and acceptance may take longer than you think. Even when taking the early-mover advantage, firms should keep the long game in mind. The Chinese market is like no other. Its scale, rate of change and regional variances, together with influences such as political intervention, a rising middle class, urban migration, changing family dynamics, rapid modernization and internationalization, and the increasing influence of the Internet, social media, eCommerce and smartphones has created a market more dynamic and complicated than anywhere else.

China’s constant changes really come to light with each research project that China Skinny does. For example, in 2012 China Skinny research found that by far the most common reason Chinese migrate was for education. Similar research a year later found that pollution had become the main reason. Change happens quickly in China and understanding the consumer is vital. The appeal of Australia, driven by the perceptions of the country as an unpolluted, clean, and natural environment, bodes well for Australian products looking to enter the China market today.

Chinese consumers are bombarded by advertisements and new products, so communicating your focused key benefits in a way that is comfortable and relevant to them is vital. Online channels are the most cost effective and targeted channels that Chinese use to find information about purchases. A China optimized website and the pertinent social media communications are vital as more Chinese get online, specifically with their mobiles. Having a strong strategy is key to seizing ground in the Chinese market. Getting in early is important, but only if it is carefully planned and executed. While the agreement will not be a panacea for doing business in China, it will make it easier, not just by bringing down your landed costs, but also through the Chinese Government endorsing Australia as a country to do business with.

The agreement will go through a checking and translation process and is not expected to be fully approved for another year. In addition, some tariffs and other barriers will not be eased immediately. Some of these trade barriers will take years to remove. For example, it will take 4 to 11 years for the removal of all tariffs on Australian dairy products. This timing is not all bad as it allows time for market entry preparation. Brands in China who do their due diligence in researching their target market and building a strong presence will take the lead in brand awareness and understanding of the market before the inevitable influx of goods and services after the FTA is finalized. Fortune is most likely to favour those who lead than follow.

Back in 2011, most of the cool kids in China were sporting foreign-branded Apple, Samsung and Nokia phones, with the three brands accounting for 57% of all smartphone sales. By June this year, eight of the top-10 selling brands were Chinese. Local darling Xiaomi, which released its first smartphone just three years ago, now outsells every other brand – foreign and local – in the Mainland.

Similarly, 2012 research from the World Luxury Foundation found that 86% of Chinese consumers wouldn’t go near luxury goods labelled ‘Made in China,’ due to the country’s reputation for cheap goods. Research just released by Added Value, discovered that only 9% of luxury consumers now say they’d exclusively buy Western brands.

The rapid swing represents both Chinese brands upping their game and a growing acceptance from Chinese consumers for local goods.

Even outside of the Mainland, Chinese culture and preferences are becoming more a part of consumers’ lives; from the bubble tea sold at Western shopping malls, to big screen smartphones, to Chinese Zodiac symbols on products, to Chinese actors and backdrops increasingly starring in Hollywood blockbusters. This is being driven by brands hoping to appeal in China’s booming domestic market, cashed up tourists and migrants, but also a growing curiosity from Western consumers.

Yet most of the China-fication seen in the West is being steered by Western companies. Research last year found that just 6% of American consumers could name one Chinese brand.  Things won’t stay that way for long.

Chinese brands are already making a big impact abroad. Xiaomi is rolling out its phones in Latin America, Russia, Turkey and much of South and Southeast Asia, as has just been named as the 35th most innovative brand in the world and the top up-and-comer by BCG. WeChat is popular in many Asian markets, and eCommerce companies in India, Africa and much of the developing world are looking to follow Alibaba’s business model – not eBay or Amazons’. Lenovo is the world’s largest PC vendor by units sold and Huawei is the biggest communications equipment maker in the world.  Some of the world’s leading fashion houses now have production in China. Chinese cars, although not yet popular at home, are being recognised internationally for design, with manufacturers such as Hawtai selling more than three quarters of their cars outside of China.

Increasing confidence and growing revenue in the Mainland will undoubtedly lead to more Chinese companies expanding overseas, both organically and through acquisition.  We will see also growing numbers moving from developing countries to take on Western brands in their own markets. So whether we’re targeting Chinese consumers or consumers anywhere, China should be on the radar.

One of the categories where imported brands will reign supreme for some time is premium food and beverage, due to a lack of trust in the local fare.  For our readers in Shanghai, China Skinny will be presenting about Feeding the Masses: Trends in Food and Beverage Consumption in China next Thursday, November 13 – it will be worth the early morning.  Go to Page 2 to see this week’s China news and highlights.

Few segments represent the dizzying rise of China and its unique characteristics like eCommerce. In addition to breathtaking growth rates, online shopping is fundamentally altering consumer behaviour across both online and offline channels, from product research to purchasing.

Last week’s announcement that America’s second largest retailer, Costco, is launching in China just on Tmall further emphasises this. Whereas Costco is predominantly a physical big-box retailer in its traditional markets, it realises that China needs a different approach. The high cost of real estate, low car ownership, HR challenges and the popularity of online shopping in China has seen many large-format Western retailers from Home Depot to Media Markt fail.

Ecommerce enables easier setup for Costco in China and will help it capture the ever-increasing share of the affluent and open-minded consumers shopping online. It can reach consumers in many of the 152 cities with more people than Seattle, without the need to build and operate hundreds of physical stores. Tmall is also popular for competitively-priced, bulk packaged food products which aligns with Costco’s typical product mix.

Alibaba isn’t just attracting the world’s largest retailers to sell on its Chinese platforms, it is looking to infiltrate the websites in their home countries as well. Capitalising on the international exposure from its record-setting IPO, Alibaba has announced a new service, ePass, allowing retailers to sell to Chinese consumers in RMB with Alipay on their Western sites, and ship internationally to Chinese consumers using its affiliated Cainiao logistics network.  Uber Taxis and AirBnB already use ePass.

With Single’s Day less than 3-weeks away, there will be a strong international focus this year.  Tmall CEO Wang Yulei stated that the key word for Single’s Day this year is ‘globalisation’. Tmall Global is offering heavily discounted products from seven countries including the US, UK and Germany. It is also offering free international shipping on selected items to international destinations such as Spain, Brazil and Russia. Tmall is hoping to grow the biggest shopping day on the planet by 40% from ¥35 billion ($5.7 billion) in 2013 to ¥50 billion ($8.2 billion) this year. We’ll keep you informed about how it all turns out.

We hope you enjoy this week’s Skinny!

Consumers,: Chinese Consumers

1.1 Billion Yuan Retrieved for Disgruntled Consumers in China: Chinese authorities retrieved ¥1.1 billion ($180 million) for disgruntled consumers from January to September this year as the Government places greater emphasis on protecting customer rights.

Online: Internet, Mobile & Social Media

Costco Goes to China Without Opening a Single Store: US warehouse retailer Costco has entered China on Tmall, not through its usual bulk retail format, and without membership fees. Food and healthcare products will be the mainstay initially. The most recommended products are unsalted nuts, Starbucks instant coffee, dried cranberries, cotton pyjamas for 4-year old girls and olive oil.

Alipay Helping More Western Companies Sell to Chinese Consumers: Alipay’s new ePass allows Western websites to sell goods in RMB through Alipay. Goods can then be shipped cross-border using Cainiao (China Smart Logistics Network), a multi-billion dollar logistics consortium investment whose shareholders include Alibaba, retailer Yintai Group, Fosun and four major Chinese courier companies.

China’s State TV Network Just Launched a Food Ecommerce Site: CCTV has launched an online food shore FaxianGO, most likely on the back of the success partnering with Tmall for shows such as A Bite of China.

Ecommerce Supply Chain Platform Brings Made-in-Italy to China: CCIG, a new ecommerce platform will make it easier and more reliable for Chinese businesses to get Italian products from 27 October. Targeted businesses include traditional shopping centres as well as hotels, restaurants and sports clubs across China.

Social Media Influences Young Chinese Consumers’ Purchasing Behaviour: 40% of 18-35 year old urban Chinese consumers consider social media their top information source according to Accenture.

Premium Food & Beverage

Chinese Red Wine Sees Growing Competition from Foreign Labels: The average price of imported red wine in China grew 3.9% in the past year, just offsetting the 1% drop in volume. Domestic red wine volumes dropped 8.5%. Red imports currently account for 20% of the market, but are expected to be 50% by 2020 and 80% by 2030 according to the Fortune Character Institute.

How Bright Food is Furthering its International Strategy: State-owned Bright Food, China’s second largest food-processor, acquired a majority stake in Italian olive oil manufacturer Salov Group earlier this month. This adds to recent foreign acquisitions which include stakes in the UK’s Weetabix, Australia’s Manassen Foods, New Zealand’s Synlait Milk and Israel’s biggest food producer, Tnuva, reflecting Chinese consumers’ increasing demand for safe imported food, but also fuelling the company’s global growth ambitions.

Overseas Chinese Tourists

Shangri La Becomes Fastest Growing Luxury Hotel: Chinese consumers’ interest in luxury hotels grew 39% between July 2013 and July 2014, joined by UAE (16%) and India (12%) as the only countries not to have single digit or negative growth according to Digital Luxury Group. China’s favourite luxury hotel brand, Shangri-La, rose the fastest globally on the back of China’s growth.

90% Of Traveling Chinese Luxury Shoppers Plan Purchases Before Trip: Most Chinese travellers buying luxury goods do considerable research before leaving home. 38% know exactly which products they will be buying. 50% find out information on luxury brands’ official sites and 49% research on social media – the primary sources of information.

Chinese Tourists Rank US Third Best: The China Tourism Academy has found Italy, Singapore and the US are rated as the top-3 for tourism satisfaction by Chinese consumers – different results to similar research recently.

Universal Studios Beijing Update 2014: Biggest Theme Park To Open In 2019: Universal have received Government approval to build a $3.25 billion Universal Studios movie theme park. Universal’s biggest theme park – initially covering 300 acres (1.2 square kms), and expanded to 1,000 acres (4 square kms) over time, will include strong Chinese elements and pay “proper homage to culture in China.”

Overall Health

European Study Shows Chinese Consumers are Far More Enthusiastic About Future Smartwatch Services: 69% of Chinese consumers are interested in using their smart watches to carry health information and share information with doctors and hospitals, versus 50% of US, 43% of South Koreans, 34% of Brits and 25% of Germans according to a GFK survey. Chinese were also by far the most enthused about every other category including public transport payment, secure online identification, wireless identification to state authorities and wireless payments.

Recreation and Sports

Beijing Marathon Runners Don Masks to Cope With Smog: The Beijing Marathon joins the list of high profile sporting events  plagued with smog in the city this month. Many of the 30,000 registered runners pulled out for health reasons and thousands of others ran with face masks.

Retail and Fashion

Topshop’s Mainland ShangPin Launch All About Mobile: Topshop’s exclusive China launch on ShangPin is heavily supported by mobile obvious throughout its pop-up stores. Currently 40% of ShangPin’s sales are through mobile, with 50% of them being though its app and 20% through WeChat.

That’s the Skinny for the week!  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 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.

China’s state press agency Xinhua has shut down the website of the respected business newspaper 21st Century Business Herald, and terminated a ¥3.5 million ($590,000) contract between the agency and the Bank of Communications, after it was exposed for receiving payouts for publishing good news and concealing bad press. It follows other high profile state media corruption cases this year, such as the senior CCTV employees involved in bribery and corruption.

Extortion by staff at the state-run news monopolies continues to erode Chinese consumers’ faith in traditional media channels. IPSOS research found that Chinese shoppers trust online sources more than the state media. For example, 49% of consumers increase their purchase intent through websites, versus less than 32% for the state-run newspapers, television and radio.

Research by Cohn and Wolfe found the watching television is the 6th most common method Chinese consumers use to find info about a brand, newspapers are 9th and radio is 10th.  Digital channels such as web sites, social media and online reviews are the main methods for research, and they influence other popular channels such as asking friends and family.  Although most Chinese consumers know not to trust everything they read online, it is much more transparent and objective than state media, and has become the standard research channel for middle and affluent class Chinese.

Whilst online channels are important, offline marketing can still create many synergies that reinforce and raise awareness of online campaigns.  Traditional media channels are powerful tools that can make or break a brand – as Nike or Apple will tell you – and should be an important component for brands with large marketing budgets in China.

Between October 1-7, China Skinny’s Shanghai office will be closed for the Golden Week holiday.  We hope our China-based readers have a great break and don’t eat too many instant noodles.  See you on the other side!

Go to Page 2 to see this week’s China news and highlights.

Many websites hosted outside of China are experiencing increasing traffic coming from the Mainland. Although these sites can be optimised for Chinese visitors by providing translations, localised content and familiar payment options, they will only ever win a tiny share of China’s rising consumers’ spending.

Sites hosted outside of the Mainland load noticeably slower for Chinese surfers. They are less likely to rank well on search engines such as Baidu and Qihoo, and are generally less trusted than sites hosted in Mainland China. Just 3% of China’s Internet traffic goes beyond the Great Firewall, and most of it is to the big American dotcoms.

Notwithstanding, as Chinese consumers’ become more aware of lower prices and wider ranges on overseas sites, and sign up to credit cards, online shopping outside of China has risen. Chinese consumers buying on overseas websites accounted for around 4% of online shopping in 2013, spending a total of $12.1 billion. That number is expected to almost double this year and is growing faster than eCommerce overall, although the big international sites will account for the vast majority of sales.

Cross-border sites such as Tmall Global are making it easier for consumers to buy abroad, but additional steps still act as a deterrent for consumers. Last week, Amazon announced that Chinese shoppers will be able to buy directly from its international sites, following a partnership with the Shanghai Free Trade Zone.

Growing cross-border sites are all helping groom Chinese consumers to buy on online from overseas. China-optimised sites hosted in the West can test Chinese appetites for their wares, however any business who is serious about China should have a site hosted in Mainland China to best position themselves to really tap into the potential of China’s growing market. We hope you enjoy this week’s Skinny.

Consumers,: Chinese Consumers

In China, More Girls Are on the WayIn 2004 in China, 121.2 boys were born for every 100 girls, with the ratio being close to 140 in some rural areas. Last year, the balance dropped to 117.6 boys, and is expected to fall to 110 within a decade. Since 2001, it has been illegal for doctors to reveal the sex of the fetus to expectant parents in China.

P&G’s Take on Targeting China’s Fast-Changing ConsumersP&G is China’s biggest advertiser, spending almost $1.8 billion a year. Their words of wisdom for succeeding in China is 1. China’s affluent segment is increasingly sophisticated and influential for other segments; 2. Japanese and Korean brands and culture have a growing influence; 3. Individuals are empowered and have higher expectations; and 4. Online is influencing everybody’s lives in China and has a huge impact on the fast moving consumer goods industry.

China Remains a Key Market for Cross-Border RetailersBeijing and Shanghai make the top 10 markets globally for attracting new international retailers, despite having additional challenges to market entry. Stores in Paris, the top market, also benefit from Chinese tourists as the highest spending tourists in the city.

Meet China’s Boomerang Kids: One-Third of Graduates Still Rely on ParentsMore than one-third of recent Chinese graduates continue to live off their parents according to a Peking University survey. Over 40% live paycheck to paycheck.

“Bastards” and “mongrels”: What Will Clive Palmer’s Anti-China Crusade Mean For Your SME?Australian billionaire mining magnate turned politician has come under fire from Australian political leaders and the Chinese embassy in Australia for berating the Chinese Government on the national ABC network.

Online: Internet, Mobile, Social Media & eCommerce

Meet China’s ‘Hai Tao’ Shoppers Who Spent $12.5 Billion OnlineChinese consumers spent ¥74.4 billion ($12.1 billion) on online retailers overseas in 2013, with the value expected to almost double to ¥140 billion ($22.7 billion) this year. Beauty and health products, women’s clothing, milk powder and toys are the top sellers.  The USA, Hong Kong, Malaysia and the Netherlands are the top sources.  66% are female and nearly half of shoppers are married with kids. Just 8% of shoppers are over 36 years old.

Deal Accesses All Amazon’s SitesChinese consumers will be able to buy products directly from Amazon’s international sites in Q4 following a partnership between Amazon and the Shanghai Free Trade Zone. Amazon China currently has 7.85 million users, accounting for 1.5% of China’s B2C online shopping market in Q2 this year.

Qihoo’s search share tops 30%, Baidu’s drops below 55%Baidu’s share of China’s search market is 54.5%, down from 67.7% a year ago according to CNNZ. Qihoo now has 30.2%, almost double the 16.3% it had 12-months earlier.

Weibo Grows to 157 Million Monthly Active Users, But Still Losing Money in Q2Weibo’s active monthly users grew 30% in the past year to 156.5 million according to the company’s quarterly report. 69.7 million are active each day.

Premium Food & Beverage

Heinz Recalls Some Infant Cereal in China After Excessive Lead Is FoundHeinz is the latest US-owned food company to be affected by food safety issues in China after regulators found excessive levels of lead affecting more than 1,400 boxes of infant food.

Overseas Chinese Tourists

Chinese Are Traveling More, Shopping LessChinese tourists outspent travellers from other countries, accounting for 27% of the value of all tax-refund claims, however refund claims by Chinese travelling to Europe grew just 18% in 2013, compared with 57% in 2012.

Understanding Chinese Luxury TravelersOnline reviews of luxury hotels indicate that Chinese guests care most about helpfulness, beds and speed. 30.7% of luxury hotel reviews from Chinese travellers are on Ctrip, with 16.8% on Tripadvisor.

High End Fashion

Fashion Brands Seek China FootholdBritish fashion brands Top Shop and Miss Selfridge have opted to launch online first in China, starting with The site has a limited base of just 5 million users, but is well positioned amongst fashionable Chinese consumers.

Premium and Luxury

Swarovski Has Crystal-Clear Vision for Chinese MarketSwarovski has 245 stores in China covering 71 cities, and is expanding in China at a rate of 25-30 stores a year. Sales in the Mainland now account for 10% of global revenue. European craftsmanship holds a lot of appeal with Chinese consumers, as does jewellery pieces designed for local tastes such as the 12 animals of the Chinese zodiac. Many are designed by young Chinese artists.

Kooky, Weird & Wonderful

Chinese ‘Facekinis’ Take High-Fashion TurnMasks warn by Chinese women at the beach to protect their face from sun damage have made the French world of high fashion, featuring in CR Fashion Book.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at 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.

It wasn’t long ago that many Chinese consumers considered KFC’s greasy chicken drumsticks to be a good healthy meal.  The assurance of safe Western preparation standards and quality control processes had diners confident that they were less likely to fall ill than eating at a local restaurant.

That perception took a dive in late-2012, when state media revealed that excessive amounts of antibiotics and hormones were being pumped into some KFC chicken products.  Coupled with the bird flu outbreak in early 2013, KFC’s sales sunk 30% in the first quarter of that year.  The ensuing advertising campaign centred around the “trust in every bite” messaging has struggled to restore consumers’ faith.

Chinese consumer’s trust in foreign fast food chains has just taken another hit with the KFC/McDonalds/Pizza Hutt/Starbucks scandal, which saw Shanghai-supplied meat being used from the floor and labelled as much as seven months fresher than it actually was.  A Sina survey that followed shortly after, found more than two thirds of consumers claimed they would no longer dine at foreign chains.

The whole debacle should demonstrate just how significant food safety challenges remain in China.

Many Western food and beverage brands selling in China source ingredients from the Mainland.  This is likely to be more cost effective and guarantee surety around supply chains, but companies should weigh up the true risks to their brands from this.  Chinese consumers are waking up to the fact that even Western brands who source food supplies in China are no longer guaranteed to be safe.

As Chinese consumers are becoming more affluent and health conscious, they are increasingly prepared to pay a premium for safe food.  Western brands trading on their healthiness and safety, will need to be ever more transparent about where their products are sourced.  Chinese consumers do a lot of research before buying products, and are particularly vigilant about food and beverage.  Just being a Western brand in China no longer cuts it, as KFC will tell you.

One of the most influential channels for research and purchase decisions in China is social media.  For our readers braving the summer in Shanghai, tomorrow (Thursday) night China Skinny’s Sophie Lees will sharing some valuable insights about the importance of integrating social media.  Click here for more information.

We hope you enjoy this week’s Skinny.

Consumers,: Chinese Consumers

Chinese Consumers: Increasingly Optimistic But Also Realistic8% more middle and affluent classes in lower tier cities plan to spend more than a year ago, versus 3% in higher tier cities. 21% in smaller cities experience a great deal of stress in their lives, versus 32% in bigger cities. 78% of consumers in big cities value quality over quantity, with 46% planning to trade up on at least one good this year. Baby-related purchases are the highest priority followed by big-ticket purchases like cars and houses, then spending on fresh produce, and lifestyle spending according to BCG.

The New Retail Democracy: China Results RevealedOracle research released in May found 83% of Chinese consumers increase spend when interacting with a retail assistant. 97% believe retailers should adopt new technologies to improve their shopping experience.

China Has The World’s Best Consumer StoryChina’s retail spending rose a healthy 10.8% in the first half of this year, on the back of real urban household spending rising 7.1%, up from 6.5% a year ago.

Premium Food & Beverage

Half of Mainland Consumers No Longer Trust Western Fast-Food Companies After ScandalA Sina survey found that half of Chinese consumers no longer trust Western fast food chains following the meat scandal. A second survey by Sina found that 77% believed the fast food chains affected such as McDonalds, KFC and Starbucks had been aware of their supplier’s faulty practices. 69% said they would no longer dine at the chains.

Chinese Confectionery Firms Failing to Rise in the New Business AgeSome Chinese confectionery firms such as Hsu Fu Chi, rely on the Spring Festival for more than 50% of annual sales. But the over-reliance on this seasonal demand, the Government clampdown on corruption and failure to adjust their product line up, has seen domestic firms lose a large share to foreign firms, which are dominating in the high end confectioneries and chocolates segments.

Zespri ‘Juicy Water Fight’ Revitalises Shanghai SummerKiwifruit brand Zespri created a carnival atmosphere in a Shanghai park with live music, water balloons and golden kiwifruit, creating some good buzz on social media. It is part of non-traditional advertising and sales channels employed by the company which includes greening out entire metro stations, TV advertising on buses, taxis and mobile phones, and TV sales programmes. Zespri’s online sales are rapidly growing in China, with around 500,000 trays sold online this year.

Online: Internet, eCommerce, Mobile & Social Media

China Has More People Going Online With a Mobile Device Than a PCChina’s online population hit 632 million at the end of June this year. 527 million access through their smartphones – 83% of users. It’s not surprising that 30% of Baidu’s revenue now comes from mobile.

China’s Digital Transformation: Chinese consumers’ rampant online use has made the Internet’s contribution to China’s GDP greater than in the USA. However, businesses are still slow to catch on a McKinsey report has found. The typical Chinese company spends 2% of revenue on IT, half of the international average. The enterprise cloud adoption rate in China is 21% compared to 55%-63% in the U.S.

Information Key to Attracting Chinese Consumers66% of Shanghainese consumers seek information on a brand website before making a purchase versus 52% of New Yorkers. 42% rely on point of sale information in luxury stores in Shanghai compared to 46% in New York.

Can Tencent Win The Mobile Commerce Battle With Alibaba?One of the most likely monetisation opportunities for WeChat is through local services.  A good example of this is a Chinese hotel chain which sold ¥10 million ($1.61 million) worth of accommodation in the first quarter of this year, using geolocation services to offer discounts to travellers close by.

In China, Apple’s Focus Pays Off While Samsung Feels Squeeze: Last quarter, iPhone sales grew 50% in China, nearly twice the rate of analyst forecasts, following great premium positioning. Market leader Samsung isn’t faring so well, with earnings expected to drop 25% in the quarter following stiff competition from Chinese smartphones.

Overseas Chinese Tourists

A Chinese Luxury e-Retailer Raises $100 Million for Global ExpansionLuxury e-Retailer, a small Chinese eCommerce player with $40 million of sales in 2013, has raised $100 million in funding to open physical stores in major Western cities to cater to the rising number of affluent Chinese travelling abroad.

Overall Health & Fitness

Razer’s Nabu Smartband To Support WeChat, Will Hit US Soon For Less Than $100The wristband will show notifications, measure and share health and fitness metrics with other WeChat users. It can also share information with other WeChat users merely by being within range of one another, with a handshake or a high five.

High End Fashion

Tmall Goes Social with Brand-Tagging Mobile AppTmall has created another social app that allows users to tag their brands, and added a simple link to eCommerce to the mix with the launch of ‘FUN’. 6,500 brands are on the app already.

Cars and Auto

China to Dominate 30% of Global Car Sales by 2020China will account for 30% of car sales by 2020, up from 23% in 2012. By comparison, the US is expected to account for 15%, and Brazil and India around 5%-6% each. Half of luxury cars sold in the Mainland are made in China, with the portion expected to grow to 75% by 2025.

That wraps up this week’s 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 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.

Group travel has been losing its shine for some time with Chinese tourists. Research by TNS last August found that 62% of Chinese tourists would prefer to travel independently.  This has been backed up by countless anecdotes from tourism operators, and recent spending analysis from Union Pay which points to a healthy rise of independent Chinese travel abroad.

Whilst many less experienced tourists still prefer the security of travelling in tour groups, Chinese consumers, especially the younger ones, are becoming more confident with their journeys.  A slew of online information and tools are helping them get by on their own in faraway lands.  It’s also becoming easier as local operators increasingly cater to Chinese language and cultural differences – although there’s still plenty of room for improvement.

One of the promising signs from the Union Pay data is the 65% average annual increase on dining expenditure abroad between 2010 and 2013.  In the past, travellers in tour groups would often be shuttled between restaurants serving poor quality Chinese food. The rise in spending on dining indicates that travellers are becoming less likely to be eating at restaurants as part of their “all-inclusive travel package”, instead paying for their own meals elsewhere.

More varied dining, means there’s a good chance Chinese tourists are eating at restaurants that give a snapshot of the local cuisine and culture. In most cases, they’ll have a richer experience, and potentially acquire a taste for local food which may see them buy it when they return to the Mainland. That’s great news for food and beverage exporters.

Spending on recreation has also seen a significant rise in spending, at more than 60% a year, indicating Chinese tourists are becoming ever more adventurous and not just focused on shopping.  This is positive for overseas destinations.  Although independent Chinese tourists still travel with somewhat of a ‘pack mentality’, and are most likely to visit places marketed well and endorsed by their peers, they are going beyond the few stops serviced by tour groups, meaning their spending funnels down across a wider range of tourism operators. 

With Chinese consumers’ wealth increasing and visas becoming easier to obtain, the high portion of independent travellers making up the 200 million Chinese expected to travel abroad by 2017 will change the landscape of global tourism forever.

For our Shanghai readers, China Skinny’s founder Mark Tanner will be joining the panel talking about China’s mega trends next Thursday 29 May, as part of the Austcham Shanghai Business Forum and All Star Lunch – it should be a great afternoon if you can make it.  In the meantime, we hope you enjoy this week’s Skinny.

Consumers, Chinese Consumers

4 Unique Characteristics of Chinese Shopping Habits68% of Chinese consumers enjoy shopping versus 48% in the USA and 41% in the UK. Chinese consumers are more inspired and want to learn something when shopping, with digital channels being significantly more important components of their shopping experience, and instore being less so than in the USA and UK. Chinese also consider themselves much more likely to be an opinion former than a follower.

China’s Luxury Market Set For Good TimesOver one third of Chinese households will earn more than $50,000 a year by 2030. 10.3 million will make more than $150,000 according to the Economist Intelligence Unit.

The New Buzzword for Wealthy Chinese – Balance63% of young professionals in China think that their lives were “getting really busy” and 44% are worried that they weren’t taking good enough care of themselves because of it. 22% percent of China’s total population believe in separating work and leisure.

Overseas Chinese Tourists

Travel Boom Reshapes Spending70% of China’s international travellers are from outside of the Tier 1 cities Beijing, Shanghai, Guangzhou and Shenzhen. Between 2010 and 2013, recreation and dining were the fastest growing categories for Chinese tourists, with spending up around 65% annually for both.

Here Are Top 12 Most Interested Topics of Chinese Online TravellersMore than a third of travel searches on Baidu are for destination, followed by locations at 29%, transportation maps at 13% and travel guide at 10%. Special local products were number 7, price at number 9 and travel agencies number 12.

Could UK Do More to Attract Chinese Tourists?France has nearly ten times more Chinese tourists than the UK and numbers are growing faster – over 23% in 2012, and expected to continue at a similar rate over the next few years. One of the biggest barriers for Chinese travelling to the UK are the difficult visa processes.

Online: Internet, Mobile, Social Media & eCommerce

WeChat Grows to 396 Million Active UsersWeChat’s active monthly users grew 11.6% in Q1 2014 to 396 million. Not quite the 30.6% the quarter before, but as WeChat changed its measurement techniques at the end of Q3, the two figures can’t be compared like for like. The number of users paying for WeChat games doubled in Q1.

China Top B2C Websites Market Share in Q1 2014Tmall and accounted for around three quarters of B2C eCommerce in China.

Electronic Word-of-Mouth Significantly Influences UK and Chinese ConsumersUK respondents are more cynical toward a positive review that follows a negative review online than their Chinese counterparts. Neither Chinese nor UK respondents’ initial purchase intentions improve when first exposed to a positive comment, while they drop significantly when first exposed to a negative one.

Top Ways to Maximize Your Online Brand Presence in China80% of Weibo users followed an average of 18 company accounts, but less than 20% reported paying much attention to information from them.

Chinese Find Number URLs Easier Than LettersWebsite addresses with numbers that loosely represent Chinese spoken words are often easier for Chinese to remember than Roman characters.

Premium Food & Beverage

Food Categories Lead Slowdown in Retail GrowthBiscuits followed an overall trend of slowing growth in China, yet premium segments, including gift cookies and innovative bite-size snacks, still enjoyed double-digit growth. Chocolate was another fast grower. The anti-corruption crackdown has reduced the cost of eating out, reducing spending on cooking by 6.6%, although premium ingredients such as oyster sauce and olive oil showed strong growth.

High End Fashion

How Burberry Has Fared in its First Days on TmallNews of Burberry’s new Tmall store had 1,500 reposts on Weibo within the first few hours. In 18 days, 132 items had sold, although 32 were returned – more than three times the average rate for similar items on the platform. Feedback was 60% higher than average.

Recreation and Entertainment

China Has 100 Million Brain-Damaged Online Gamers: StudyAn estimated 100 million gamers in the mainland have lost self control and developed an irrational dependence on games. There is a particularly high concentration in the northeastern provinces.

Pollution and Environment

New Government Report Shows China’s Air Pollution Worries Going from Bad to WorseA new Government report has found the average PM2.5 reading across China’s 74 main cities is 72, with just three cities meeting Government standards of 35. The report was published at a similar time to the World Health Organization raising its estimates of China’s premature deaths caused by air pollution from 3.2 million to 7 million.

Kooky, Weird & Wonderful

Fake Government Busted in ChinaJust when you thought you’d heard it all in China, a fake Government was set up in Dengzhou, Henan, complete with an HQ, fake government seals and issue papers, and even advertisements for staff.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at 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.

Earlier this month, the New Republic magazine published a stunning account of the inaugral season of the unlikely Chongqing Dockers American Football team. It had the Skinny office in hysterics.

The 8,000-word piece was one of those online epics that was not only entertaining and inspirational, but also weaved in many of the traits shaping the younger generation of China’s consumers.  As it turned out, we weren’t the only ones who enjoyed it. Someone down at Sony Pictures took a shine to the story and has penned a deal that will probably see it made into a movie.

The film is likely to hold appeal with the world’s two largest movie markets, China and the USA.  For Chinese audiences, it should provide a comical reflection of contemporary Chinese youth who find themselves caught up with Western influences, throwing in some heart-wrenching inspiration that Chinese can connect with on a personal level.

For the USA, the tale has the formulaic cast of villains, the cheerleader love story and the University of Michigan hero, with the dramatic backdrop of Chongqing.  But just the bizarre concept of America’s national pastime in the Middle Kingdom should strike a chord. Hopefully it will paint every-day Chinese in a more realistic light than a token Asian actor who does Kung Fu, or the sometimes one-sided view by American press.

American Football is unlikely to reach the heights of NBA in China, but a movie like this will certainly help the cause.  Like many Western organisations in China, some would say that the NFL initially rushed into China a little too ambitiously. But the shift to a more realistic grassroots approach is making some headway.  There are now an estimated three million ‘avid’ fans of the game in China and 1.4 million watched the Super Bowl live online in 2013, 35% more than 2012. Swaying Chinese to follow a completely foreign sport was never going to be easy, but a combination of the long game, coupled with breaks like the Chongqing Dockers movie will position it well to tap into the hundreds of millions of potential fans.

Unfortunately not all of us will have a blockbuster to help promote our wares, but hopefully some of the news and views below should provide some assistance.  We hope you enjoy this week’s Skinny.

Consumers, Chinese Consumers

My Hilarious, Heartbreaking, Triumphant Season With the American Football League of China: Long, but laugh-out-loud, tear jerking article about the inspirational journey of the Chongqing Dockers football side. Representative of many characteristics of the young generation of modern China.

Where China’s Future will Happen: The change happening in China’s cities is a thing of awe. By 2030, one-eighth of humanity will live in them. Six years ago there were no bullet trains linking them, now the network is larger than Europe’s and is set to expand by two thirds by 2020. But China’s urban growth hasn’t come without its problems.

China’s New Path Indicates Crucial Role of Consumers: China’s retail sales grew 12.2% year on year, well above GDP growth. Communication appliances and furniture led spending increases, both up 18%, followed by vehicles, rising 14%, and household appliances and traditional Chinese and western medicines, growing 13% each.

The Chinese Digital Consumer in a Multichannel World: Chinese consumers prefer to get most of their shopping recommendations from word-of-mouth methods such as social media, according to new research from the Boston Consulting Group. Consumers visit an average of ten Web pages over the course of their research into products and services, however it varies per product type.

9 Ways Chinese Consumers Are Completely Changing: A good reminder of how Chinese consumers are evolving: 1) They’re becoming more obsessed with technology; 2) Work-life balance is turning into a must; 3) They want to be inspired; 4) They’re going shopping at night; 5) They expect company transparency; 6) Chinese brands are gaining prestige; 7) They’re going niche; 8) They’re becoming foodies; and 9) They’re doing almost everything on their mobiles.

‘The China Market’ Becomes ‘The China Global Demographic’: With over a hundred million overseas travellers, 250,000 studying at universities in the USA and 100,000 studying in Europe, tending to Chinese outside of the mainland also is key for China marketing strategies.

Online: Internet & Social Media

Chinese Internet Giants Need to Give Shoppers “Total Retail” Experience: A PWC survey found 93% of Chinese consumers follow brands on social media versus 49% in the USA. 86% bought products through social media compared with just 29% in the USA.

Why China is 10 Years Ahead in Social Commerce: 75% of online Chinese consumers post ratings and reviews at least monthly. Less than 20% do the same in the West.

Premium Food & Beverage

China’s Arsenic-Laced Soil Harming Food, Health, Survey Shows: A 9-year Government survey into the state of China’s soil has found 16% of the 6.3 million square metres of land tested breached safety guidelines, laced with pollutants including mercury, arsenic and the radioactive cadmium.

Xi’s Corruption Crackdown Hits China’s Restaurants: China’s restaurant industry grew ‘just’ 9% in 2013 to ¥2.56 trillion ($411 billion), its lowest growth in more than two decades. Mid and high range restaurants fared worst. The Government’s budget for overseas work trips, government-use of vehicles and official receptions is down 10.3% this year.

Banking, Property

$13 Million New York Real-Estate Deal Done Entirely Over WeChat: The agent sent an inquirer photos of the apartment via WeChat, and setup a chat group between herself, the buyer, and their attorneys.

Overseas Chinese Tourists

Good News for Gucci and Prada: Italy Eases Chinese Tourist Visa Restrictions: Chinese travellers can now apply at the Italian Consulate closest to their residence, not their household registration (hukou). About 45 countries and regions introduced visa exemption or visa-on-arrival policies for Chinese travelers in 2013. Italy is said to be the top country for Chinese luxury spending, although France gets more visitors. Italian wine producers recently announced more marketing for China.

Babies Little Emperors

Made In The USA: Childless Chinese Turn To American Surrogates: A new export opportunity for the USA – surrogate mothering, guaranteeing a US passport, education and clean air if needed. One particular agency only had their first mainland China client in 2009. They now account for 47% of clients.

High End Fashion

Abercrombie & Fitch to Open 100 Stores in China: A&F’s new flagship Shanghai store features the same ambiance as A&F stores in the USA, with store models, classic lighting, heart-pumping music, and the smell of Fierce cologne. Their launch certainly created some buzz, with young girls all over Shanghai sending WeChat and Weibo pictures of A&F boys with abs.

Cars and Auto

VW Has Agreed Budget Car Concept, Design: Volkswagen is good to go with manufacture of budget cars in China, expected to sell between ¥52,000 ($8,300) and ¥69,000 ($11,000).

Hongqi L5 Limousine Debuts on the Beijing Auto Show: China’s answer to the Rolls and Bentley, the V12 Hongqi L5, launched for official duties a year ago when the French president visited China, is now available for civilians to purchase – going for a song at ¥4.9 mill ($800,000).

Chinese Consumers Reluctant about Electric Vehicles: A survey of six countries found Chinese consumers have the lowest awareness and positive opinion about electric vehicles, with just 16% viewing them favourably.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at or call us at +86 21 6256 9082 so we can learn more about your objectives and let you know how we can help.

China has long been known as the land of fakes. The country was the source of two thirds of fake goods seized globally between 2008 and 2010.  Street-side stalls, shops and entire shopping malls are dedicated to counterfeit bags, garb and DVDs.  Staff in a fake Apple store were fooled into believing that their employer was the real thing.  Rat meat has been sold as beef and lamb.  Even the kids aren’t sacred, with a local zoo in Henan duping visitors with a fake lion.  From the minute Chinese are old enough to consume, they are exposed to a myriad of phoneys.

Having your brand and products ripped off in China is an unfortunate reality of doing business in China.  Even though the China Government is focused on addressing the issue to meet the World Trade Organization mandate, and to protect its own growing innovate and creative companies, China’s vast and disparate supply chains mean it’s a difficult puzzle to solve.

However, not everything is looking grim.  Online shopping, once a breeding grounds for peddlers of fakes, is one of the beacons of hope for fighting the fraudsters.   China’s B2C platforms such as Tmall, and Yihaodian are the fastest growing eCommerce channels in China, and are close to accounting for half of all online sales.  Much of their growth can be attributed to consumers trusting the platforms to sell genuine and safe products.

Sites such as Tmall only allow registered trademark holders or associated parties to list on their platform.  Vendors pay a sizable deposit which can be used as refunds if goods aren’t what they’re meant to be.  And customer reviews, which are a large factor for consumer perceptions and search results, soon weed out the fraudsters.

Buying goods online is often more reliable than elsewhere in China.  We only need to look to wine as an example; even at a swanky bar in Shanghai, you could drop $100 on a bottle of wine, which could turn out to be fake plonk in a real bottle. On Tmall or Yihaodian, you can be pretty sure it’s the real thing, which has why 47% of wine consumers are expected to buy online by 2020.

Alibaba’s imminent IPO in the USA will bring even more focus to cleaning its platforms of fakes.  Expect to see smaller players like Amazon and Dangdang clamping down on third parties selling fake cosmetics and other wares following CCTV accusations.  Online platforms are working with the authorities to help the cause.  ¥172.9 billion ($27.8 billion) worth of fakes have been seized and 59,000 people have been arrested. The war hasn’t been won yet, but the good guys are winning a lot of battles.

For our readers in Hong Kong and Southern China, China Skinny’s founder Mark Tanner will be sharing valuable insights at the Fashion Access Conference in Hong Kong on 1 April.  It would be great to see you there.  In the meantime, we hope you enjoy this week’s Skinny.

Consumers, Chinese Consumers

Alibaba Shakes Off Counterfeit Label Smoothing Path to U.S. IPO: 18 months after Alibaba was under US scrutiny for supporting counterfeiters, it may now be the biggest IPO in America since 2008. Alibaba has removed 114 million allegedly intellectual-property infringing listings and has teamed up with brand owners and law enforcement to arrest suspects from 51 counterfeit rings. Tmall is now more trusted than some physical retail outlets.

How China (and the Rest of the Emerging Markets) Spend Today: Unlike in Western countries where older people make more, young and educated Chinese have higher incomes and spend more of it. Consumers aged 18-29 earn the most, more than those aged 30-45, and significantly higher than older age groups.

In China, the Customer Experience Is Better Online: Chinese consumers rate online retailers easier, more enjoyable and having better customer service than physical retailers. Four of the top five ranked retailers only sell online.

Chinese Consumers Fastest to Adopt Ultra-High Definition TV: Of the 1.6 million ultra-HD TVs shipped in 2013, China accounted for 84% of them.

Online: Internet, eCommerce, Mobile & Social Media

China Mobile Search Development in 2013: Reading is the most searched category on Baidu mobile, accounting for almost one in five searches. Life service, tool & inquiries, health and education searches rose in 2013, however Chinese sites were of poor quality in these areas.

WeChat Sees Resurgent Growth, Now Has 355 Million Active Users: In December 2013, 355 million WeChat users sent out one or more messages via WeChat or used other features such as logging into Game Centre or updating Moments. Weibo has 129 million active monthly users, although it is hard to compare like with like as it is often used for different purposes.

Premium Food & Beverage

Weetabix Explores ‘Savoury’ Flavours as it Sets Sights on Chinese Consumers: Weetabix is incorporating ingredients such as green tea and sesame seeds, to align with Chinese breakfast habits. Chinese also prefer hot and fast breakfasts.

‘Hedonic Expectations’: How to drive healthy drinks sales in China: The Chinese place more trust in the bigger beverage brands to deliver safe products.  They also link ‘naturalness’ to single-flavour varieties and are increasingly willing to pay more for quality, safety and nutrition.

Why Chinese brands stumble in the West: Some Chinese brands are focusing on data and customer experience in the domestic market which will help them expand globally. Hot pot chain Hai Di Lao ‘delivers happiness’ by creating a fun-loving employee culture and share that enthusiasm with customers.

Milk Flies Off e-Commerce Shelves as Site Sets a New Guiness World Record: 30 container-loads, or 600,000 packets of half-price milk imports sold in less than an hour on Yihaodian to set a new world record. The online grocery store expected it to take a day to break the record. Yihaodian sells 40% of China’s imported milk. In an average week, 5,000 litres of fresh Australian milk is flown from Melbourne to Shanghai and sold at $8/litre. Interestingly, OzDairy was singled out for dodgy use-by date labelling on CCTVs 315 Gala consumer protection show.

Chinese Pay Double for Organic Kale After Food Scandals: An online poll of 3.26 million people by People’s Daily found food and drug safety was the third-biggest concern for ordinary Chinese this year, up from seventh place in 2013. The number of certifications issued to ‘organic products’ more than doubled between 2009 and 2013 in China. Sales of those items reached ¥‎80 billion ($13 billion) at the end of 2012. Sales of packaged organic foods such as honey and cereals jumped 46% in China last year to ¥‎5.94 billion ($1 billion).

Overseas Chinese Tourists

Chinese Travel Willingness Report in 2014: A Ctrip survey found 51% of Chinese want to travel three or more times in 2014. 56% plan to increase travel spending this year. 81% wanted a self guided tour, with a little under half not booking those through travel agencies.

High-End Malls in Southern California Court Shoppers in China: 40 of the wealthiest 100 individuals made their millions in Tier 2 & 3 cities, and shopping malls in popular tourist destinations like LA are increasingly catering for them.

Samsonite Takes the Pulse of Chinese Consumers: Samsonite’s China sales grew from $92 million in 2010 to $192 million in 2013. Although sales increased just 5.3% last year, Samsonite are expecting sales to grow more than 10% this year due to rising wages and soaring tourism numbers. Some Samsonite retailers around the world are offering scales in stores as Chinese consumers like to double check the advertised weight of cases.

Accessories Jewellery

China’s Secret Vaults: Where Is All The Missing Gold?: Chinese consumers bough a record 1,066 tons of gold in 2013, 32% more than a year earlier. The value and status of gold remain high in China, where it represents financial security. Tight government control over gold in the past has contributed to this.

Pollution and Environment

Beijing’s Smog Ain’t Going Nowhere: In the Beijing and its surrounds, 58% of PM2.5 pollution comes from coal combustion in the power, steel, cement and brick industries, with an as little as 4% coming from cars according to one study. Even with all the attention on pollution in China in 2013, coal consumption still rose 2.5%.

Cars and Auto

Chinese Consumers Prefer Not to Buy Chinese-Built EVs – In Steps US-Made Tesla: “Modern electric vehicles are a new mass market technology, which adds to the apprehensions of the typical Chinese car buyer…Consumers must not only overcome this range anxiety but also Chinese-car anxiety.” Beijing, Tianjin and Shanghai are all subsidising electric, hybrid and fuel cell cars.

Premium and Luxury

Luxury Brands Look to South Korea for China Sales Boost: Brands such as Chanel, Gucci and Louis Vuitton have used product placement in Korean TV dramas to broaden their appeal to young Chinese consumers.

Kooky, Weird & Wonderful

Farmer Rides His Pig to Market After Illness Left Him Too Sick to Walk: A pig farmer in Chongqing who became too sick to walk after a bout of bronchitis, has started riding a 250kg hog to get around. Pigs may be the answer for China’s aging population.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at 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.

In the first four weeks of January this year, the air quality in Beijing was 16.6% worse than the shrouded confines of an airport smoking lounge.  Last month in the Northeast city of Harbin, pollution led to visibility at less than 10 metres in places.   The PM2.5 levels reached 1,000, forty times the rate that the World Health Organisation deems safe, and as high as Fairbanks, Alaska during the 2004 wildfires. Lung cancer deaths in China have grown by more than 400% in China in the past three decades, and recently, an 8-year old girl was diagnosed with lung cancer.  Couple that with food scandals such as tainted rice, rat dressed as beef and lamb and toxic preserved eggs, all within the space of a few weeks, and it’s little surprise that more than a few Chinese are looking to buy homes abroad.

Tier 1 cities are said to be the safest residential property investments in China, where prices have grown more than 20% in the past year.  Even still, the price to income ratio in Shanghai is 27:1, 31:1 in Guangzhou and 33:1 in Beijing, versus less than 9:1 in New York and Sydney. When prices are reaching those levels, and commentators start speaking of property bubbles, added to purchasing restrictions put in place trying to curb constantly-rising house prices, a growing group of cashed-up Chinese are going to diversify their property investments elsewhere. Chinese have become a force to be reckoned with in many property markets they consider safe and transparent, buying houses where the air is clean, the food won’t poison them and their child can get a good education.  They can wash their hands of ‘grey’ money in some cases, and get residency if everything goes pear-shaped in the homeland. 

Whilst residential markets such as London, New York, California and Sydney are being driven up by Chinese purchasers, less-traditional markets are also starting to feel the presence, with countries like Germany and Belgium experiencing exponential growth in Chinese buyers and Portugal seeing 80% of its Property Investor Visas going to Chinese.  It’s unlikely to slow down any time soon.  China’s rising affluent classes are getting wealthier, and the air quality and food safety doesn’t appear to be improving, in the medium-term at least.  If you’re hoping to sell property to Chinese, it’s a good time to do it, but it’s also more competitive than it’s ever been.  Nevertheless, like most things in China, it comes down to the right messaging and channels .

Clarifying last week’s Skinny on the Singles’ Day boom: the ¥35 billion ($5.7 billion) figure quoted, was just the sales on Alibaba’s Tmall and Taobao. clocked in an additional ¥9.8 billion ($1.6 billion) and banked some 17,776 vehicle orders worth ¥2.6 billion ($433 million).  Along with the other stores participating, sales were around the ¥50 billion ($8.2 billion) mark.  Quite a day!  

For Weekly Skinny readers and friends in Shanghai or nearby, next Wednesday 27 November at 7pm you are invited join China Skinny’s founder Mark Tanner as he talks about leveraging social media to create brand champions in China. Mark will discuss how to best use social media as a tool to break through clutter, educate consumers, build trust and create brand champions in China, and how it integrates with your other marketing channels. Visit the Irish Chamber of Commerce for more information.

We hope you enjoy this week’s Skinny. 

Consumers,Chinese Consumers

Chinese Value Honesty More than Price: 91% of Chinese consumers value product quality when buying, 79% value the business’s transparency and honesty, ahead of 65% placing value on price.

4 Types of Chinese Consumers by Attitude to Brands: Analysis into four types of Chinese consumers. ‘Loyalists’ make up 24% of the market, are much more likely to be female and are especially strong in cosmetics and milk powder brands. ‘Indifferent’ are 17% and probably male. 39% are ‘Switchers’, with FMCG particularly high, and ‘Explorers’ make up 30%.

Furniture Giant IKEA sees Rapid Growth in China: Ikea’s sales surged 17% in China this year. It has moved its production to China to lower costs and tweaked furniture for the local market, such as balcony and hallway furniture.

Mattel Gives Barbie A China-Friendly Makeover: Now Equipped With Violin and Cheaper Price Tag: Mattel wants Chinese children to have a doll that emulates what their parents want, but with the signature Barbie flair. Unlike many other Western products, Barbie is selling for less than half the price of Barbies elsewhere.

Who needs Uber? This Chinese Startup Lets You Connect with a Designated Drive: Not long after Uber launched in China, there’s a new app from Beijing where passengers can book a cab. The difference here is that anyone with a car can sign up and effectively be a taxi driver, with driver location related to the would-be passenger. Interested to find out the how they screen their drivers?

Residential Property

Chinese Property Buyers go Beyond New York and London, Grab Bargains from Scotland to FloridaIn 2013 so far this year, property sales in Germany to Asian buyers, largely Chinese, are ten times what they were in 2012 according to JLL. The $453 million spent in Belgium is twenty times [WSJ subscription required].

Why Chinese People Buy So Many Homes in Palo AltoChinese buyers have tripled their purchases of home purchases in Palo Alto since 2011, and now account for 15% of transactions, helped along by education, investment and immigration opportunities.

Chinese Get 80% of Portugal Property-Investor Visas248 went to Chinese, with 15 to Russians, the next biggest group. A minimum property investment of 500,000 Euros ($668,000) is needed for the residents visa for Portugal.

Online: Internet, eCommerce, Mobile & Social Media

‘Social Shopping’ is All the Rage Now in China: China’s social media see’s more integration with online shopping, from Weibo users being able to make purchases from Taobao & Tmall, to Douban’s new Pinterest photo sharing that allows users to categorise products by ‘recommend’, ‘want’ or ‘own’, and Mogujie having a leaderboard for products based on user ratings.

Qihoo Takes 20% of Chinese Search Market in October, but Baidu SlipsBaidu’s China search engine search share dropped to 62% last month, whereas Qihoo broke 21% – more than double its share a year ago. Sogou came in at number 3 at 10%.

China App Index October 2013Three of China’s top downloaded apps in October were integrated into WeChat. Six of the ten fastest growing mobile games were from foreign developers.

Explaining China’s Mobile App Ecosystem: the Potential, Players, and Pain PointsChina has hundreds of app stores, but only about 20 main players, all with different billing and approval processes. Many apps beyond games are making traction in China.

Chinese Food and Beverage

Fonterra on Track in China: Fonterra has launched the instant formula brand Anmum in China, hoping to be in 70 Chinese cities within 3 years. 55% of Chinese consumers remained unaware that the Botulism botch-up was a false alarm and smaller baby milk exporters from NZ claim to be losing $1.65 million a week from it.

Retail and Fashion

75% of Chinese Consumers Interested in Buying Wearables, According to Baidu Report: 75% of Chinese consumers could be interested in a wearable device according to a Baidu poll. 48% would use it to keep fit, 37% to overcome laziness and implement a sports plan and 26% to share sports results with friends.

The Former English Tutor With One Million Weibo Fans: Fashion Blogger Peter Xu: Peter Xu, a former English tutor, is now a fashion opinion leader with 1.3 million followers on Weibo – more than Vogue China. His popularity has been helped by TV, magazines and other media.

Health and Beauty

Korean Cosmetics in China: 89% of Chinese 20s & 30s Like Korean Cosmetics: 89% of Chinese consumers between 20-30 are satisfied with the quality of Korean cosmetics. 26% preferred to buy them online. 70% of Chinese cosmetics are currently bought in department stores or large markets.

Banking and Finance

Alibaba Lends Smarter in China: Alipay’s lending arm assesses prospective borrowers using data from Taobao and Tmall sales, how much business they do, and their credibility with customers. Alipay has 45% of the online payments processing market, and it also uses this history to evaluate borrowers . Alibaba is expected to have issued $2 billion worth of loans by the end of the year.

Films and Entertainment

China and Hollywood by the Numbers: There are 7,914 people for every movie screen in the USA versus 103,923 people per screen in China. Plenty of room for growth. China’s box office is picked to surpass the US in 2018.

China Demands ‘Positive Images’ in Return for Access to Markets: Speaking from the US/China film summit in Hollywood, a senior figure in the Chinese industry outlined the conditions it is setting for Hollywood to have access to its market: “We have a huge market and we want to share it with you [but] we want films that are heavily invested in Chinese culture, not one or two shots … We want to see positive Chinese images.”

Premium and Luxury Goods

China Luxury Forecast: Expect Sophistication To Grow In 2014: 49% of Chinese luxury shoppers cited uniqueness as the reason for wanting to buy abroad. Last year it was 41%.

Kooky, Weird & Wonderful

China’s Top-Secret Nuclear Base to be Revived as £30m Communist Party Theme Park: 300 million RMB ($50 million) is being spent to convert the former nuclear base in Xinjiang into a Communist theme park, complete with a Communist-themed shopping precinct, military vehicle display, spa-like resort, and even a bit of horse riding.

That’s The Skinny for the week!  China Skinny would love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at 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.

Anyone looking for a view into how Chinese consumers differ from those in the West, should pop down to one of Ikea’s 12 stores in China on an idle Saturday afternoon. Shoppers in China’s Ikea mega stores provide a glimpse into the modern Chinese consumer: the parade of smartphone-snapping window shoppers; the young, cashed-up couples meticulously studying product details; the masses sprawled over furniture, from lovers cuddling on a couch watching iPad movies, to grandparents, parents and child sipping from flasks of tea and eating pork buns around the dinner table, to those deep in the land of nod on a queen size bed, just there for the whole experience.

Ikea’s problem hasn’t been getting consumers through its doors – 15 million went through last year, it’s getting them to open their wallets rather than napping and socialising. Like most successful Western businesses in China, Ikea has worked hard to retain its Western-ness, while localising those aspects that just don’t cut it with Chinese consumers.  Ikea has become a different place to what it was when it entered China 15-years ago.  To compete with the imitators, Ikea has had to lower its prices.  To appeal to a middle class who often don’t own cars and shy away from DIY, it offers a good delivery service and great installation packages.  Products have been localised, from furniture to the dishes in the cafeteria.  To woo shoppers away from the Internet and the array of other bright lights in China’s big cities, Ikea has had to provide a whole shopping experience, partially by accident, but it appears to be working.  That localisation, coupled with the necessary patience, and an increasing trend of Chinese consumers spending more on products that improve their life experiences, rather than just their outward image in public, has seen sales revenue in China grow to around a billion dollars last year, on top of growth of Ikea’s property values.

Chinese consumer differences span far beyond those buying furniture in mega stores.  Wine drinkers are more adventurous and eager to learn than in the USA.  Restaurant dishes are shaped by Weibo and WeChat feedback.  The rules around mobile usage, online shopping and social media are notably different from in the West and even Hong Kong.  And in Mainland China, those rules can be quite dissimilar based on geography and demographics.  Recognising and understanding those distinctions is one of the keys to succeeding here.

There’ll be no Weekly Skinny next week due to the national holiday, with the next issue in your box on October 9. Hopefully there’s enough news and views about China in this week’s Skinny to get you through until then. Go to Page 2 to see this week’s China news and highlights.