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What We Can Learn From Chinese New Year

China’s biggest holiday has come and gone.  The festivities were filled with the usual orchestra of pyrotechnics, red paper cut-outs symbolising good fortune, and reunited families huddling together with one eye on CCTV’s Spring Festival Gala and the other on their smartphones.

Each passing Lunar New Year sees businesses develop more innovative ways to capitalise on Chinese consumer’s generosity, to capture a share of the $605 per capita allocated for gifting.   There were the customary limited edition horse-engraved gift sets for everything from liquor to lipstick, but there were a few surprises as well.

Products that weren’t even a consideration a few years ago, such as chocolate, were decorated with stallions and packaged with red envelopes and localised flavours like milk cherry almond and white pineapple Macadamia.  Even some enterprising young men got on the horse, with 6,000 individuals advertising fees as high as ¥600 ($100) a day, for women wanting to take a gentleman home to meet the family over Chinese New Year.

One observation in recent years is how much the Internet has become an integral part of this traditional celebration.  Online tools and apps provided a big help to the 3.6 billion trips that happened over the holiday period, as Baidu’s heat map illustrates.  Friends and families who were apart for the festivities sent 13.6 billion messages on the popular QQ network – just on New Year’s Eve.  Similarly, in the minute before New Year’s Day, ten million messages were sent on WeChat alone.  WeChat also had its own spin on the age-old tradition of gifting red envelopes with money, with 20 million virtual envelopes ‘WeChatted’ in two days – an initiative that won five million new mcommerce customers.  And of course, there were the countless businesses, such as the luxury car and cosmetic brands, which used the web and social media to promote their horsy hoopla to Chinese consumers.

Fortunately cash registers weren’t just ringing in the Chinese stores and Internet, a good few businesses abroad took advantage of the 4.73 million Chinese consumers group travelling overseas during the holiday (up 18.1% from last year). Harpers BAAZAR launched its second Chinese language edition for Chinese tourists visiting Sydney seeking luxury shopping and lifestyle.  Airports in destinations popular with Chinese tourists also had their share of Year of the Horse displays. Those Chinese consumers who experience a product abroad, are much more likely to make a positive association with that product back in China, as Australian studies found.

Much of what applies to successful marketing over the Spring Festival period can be applied year-round in China, such as adapting promotions and products to resonate with Chinese consumers, having a strong online presence, and thinking of the Chinese market beyond the borders of the Mainland for a start. 

Wishing you all the best for the Year of the Horse – we hope your business is show jumping by the end of it.

Consumers, Chinese Consumers

Doing it Their Way: Chinese tourists will double to 200 million by 2020, and their spending will triple. Migrant workers are known to blow an entire month’s wages on an iPhone, and over 75% of Chinese consumers are willing to try new brands.

China’s Consumers Aren’t Shopping Like Their Economy Is Doomed For A Hard Landing: National retail sales and catering grew 13.3% from 2013 in the first week of the new year.

Attracting Chinese Consumers with New Year Gift Items: The usual round of limited edition Chinese New Year luxury items and gift guides have appeared, playing on the popularity of gift giving and fashion buying at this time of the year in China. Chinese consumers allocate an average of ¥3,668 ($605) to give out for Chinese New Year.

What Chinese Citizens are Concerned About: Consumption of bottled drinking water in China has grown 16% a year for the past five years, reaching $13 billion in 2013. Undoubtedly, the rising concern of water pollution has been the major contributor to this. Of Chinese consumers’ main concerns, air and water pollution had the most significant change over the period in the number who think they are a big problem, rising 11% and 7% respectively.

Online: Internet, eCommerce, Mobile & Social Media

Mobile E-commerce Increasingly Part of Chinese Consumers Lives: Online travel bookings rose 62% last year. The big growth areas for mobile in 2013 were online video, up 17% to 247 million users, mobile shopping, up 16% to 144 million, and mobile payments up 12% to 125 million. 53% of mobile shoppers searched for bargains and deals right before bed.

China Online Shopping Transaction Overview: eCommerce in China grew 42% to ¥1,850 billion ($305 billion) in 2013 – 7.8% of consumer purchases, up from 6.2% on last year. B2C shopping accounted for 35.1% of value, up from 29.6% in 2012. B2C is forecast to account for half of total sales by 2016.

How Wechat Users Search For Public Accounts: 27% of WeChat users find public accounts through a keyword search, 22% by scanning a QR code, 16% from a friend’s recommendation, 22% from a friend circle sharing and 15% through Weibo.

Premium Food & Beverage

China Aims for Food Security as Pollution Destroys Crop Land: Farmland the size of Belgium – 3.3 million hectares – has become too contaminated to grow crops in China.

How Tmall.com Fills China’s Dinner Tables With Global Food: 25 countries participated in a Tmall Chinese New Year promotion to sell imported foods directly to consumers. More than 120,000 consumers had spent more than ¥20 million ($3.3 million) on specialty imported food by 31 January.

Chinese Now Drink More Red Wine than the French: China has pipped France to become the world’s biggest drinker of red wine. 1.865 billion bottles of red were sold in China last year, 136% more than five years ago.

French Paradox: 2013 China Wine Import Stats Show France Versus Everyone: Growth in wine sales to China slowed in 2013, rising 5% in volume and 0.5% in value. However taking France out of the equation, figures for the next top-9 exporters were much rosier, with volumes up 7% and values rising 15%. French wine: the new KFC?

Chinese Tourists to Australia Much More Likely to Love Australian Wine and Food: Around twice the portion of Chinese consumers who have visited Australia make a positive association with Australian wine and food than those who haven’t.

Bacardi Targets Chinese Travellers With Exclusive Glen Deveron Offering: Point of sale displays for Glen Deveron Whiskey were set up at duty free stores at Heathrow Airport packaged in premium gift packs and red apples representing peace.

Outbound Chinese Tourists

Chinese Tourism Set to Explode: 94 million Chinese consumers travelled overseas in 2013, bang on China’s Tourist Bureau forecasts from June last year. Together they spent $110 billion. 40% of profits for brand-name retail shops in Italy came from Chinese tourists. 100-110 million are expected to travel this year, with a good share of oldies.

Outbound Chinese tourists to reach 200 million by 2020: 64% of Chinese consumers are interested in travelling overseas in the next 12-months, with 67% intending on increasing their travel budget. And it will only get bigger. In other north-Asian countries, when GDP per capita broke the $8K mark tourism soared. By 2020, 27 provinces and admin regions are expected to have more than $8K GDP per capita, up from 10 in 2013.

British Airways Explores WeChat, Begins With Chinese New Year: “Today travellers in China are learning more about us through social media than traditional media,” says Viktoria Williams, Marketing Lead, British Airways, Asia Pacific.

Why UK Retailers Miss Out On Chinese New Year Spending: Chinese tourists are forecast to spend £1.2 billion ($2 billion) this year on luxury goods and hospitality in the UK, but many businesses are missing out on opportunities from not knowing how to communicate with them.

High End Fashion

China is Building a Wool Empire in Australia to Feed its Latest Luxury Fad: As they have done with dairy farms abroad, there are signs of Chinese firms buying up overseas sheep farms to cater for wealthy Chinese consumers’ to growing preference for fine wool products like tweed, tartan, and cashmere.

Banking and Investment

Chinese FDI in the US: 2013 Recap and 2014 Outlook: Chinese investment into the US doubled in 2013, with 80% of transactions and 70% of value coming from private firms. Food, energy and real estate were the biggest categories. On the subject, America’s EB-5 investor visas were issued to 6,895 Chinese nationals last year, breaking records.

Games and Entertainment

2013 Chinese Gamers Study: In 2013, there were 288 million mobile gamers and 208 million PC gamers in Mainland China, further endorsing the appeal of gamification in the marketing mix. 73% of online gamers were male, and 55% were aged 19-25. Chinese who prioritise sports and fitness in their lives, also spend a lot of time on games.

Cars and Auto

Tesla Prices Model S at $120K+ for Chinese Market: The 2013 Motor Trend Car of the Year and the highest ever rated by Consumer Report (99/100) has set its price for China at ¥734K ($125K) versus $81K in the USA. Telsa buyers won’t be eligible for the electric car subsidy, which is only available for Chinese brands.

Premium and Luxury

Why Mainland Consumers Have a Big Appetite for Luxury Goods: 65% of Westerners consider luxury products a signal of superficiality, in China it’s 1%. Materialism is really an indicator of hope for the future in China. Affluent Chinese consumers consider buying luxury products and services as an integral part of their lives, not an occasional treat. As consumers move up the social ladder, luxury is a way of demonstrating connoisseurship and a discriminating taste, such as knowing the difference between an Italian fabric and a French one.

The China Luxury Downturn Is Real – Global Luxury Brands Must Adjust: “Accessible Luxury” brands have been a key growth driver in the China luxury market, fueling a desire among the nouveu riche as well as emerging middle class luxury consumers for the casual luxury of American brands and lifestyle living.

LVMH’S Scaled-Back China Strategy Earns 8 Percent Mainland Growth: Exclusivity was the growth strategy for the year, such as only opening stores in first-tier cities, and growing smaller brands such as Céline.

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 info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

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