This week’s China market and marketing news:
American Families Only Half as Rich as Those in Chinese Cities: A People’s Bank of China survey of urban families’ finances found that median household net worth stood at ¥1.41 million ($198,330) at the end of 2019. A similar survey from the Federal Reserve conducted in 2016 but adjusted for inflation estimates the median US household net worth at about $104,000 in 2019. However the US average household is 80% higher due to the really wealthy American families pulling the average up.
China Home-Price Growth Accelerates in Property Market Boost: China’s home sales have almost returned to pre-virus levels. New-home prices in 70 major cities, excluding state-subsidized housing, gained 0.42% in April, up from a 0.13% increase in March. Prices in the secondary market, which is free from government intervention, rose 0.22% last month after edging up just 0.05% in March. The central bank has cut the cost of funding to banks, pledged liquidity to virus-hit industries and lowered requirements on banks’ buffers to allow them to lend more.
How Has China Handled the Economic Fallout of Covid-19?: 4:30 video: How will economic issues playout at China’s National People’s Congress taking place this week? Scott Kennedy, CSIS Trustee Chair in Chinese Business and Economics, explains China’s efforts to economically recover from the outbreak of the novel coronavirus.
China Tries to Revive Economy With $205 Billion of Projects in 2020: China will likely spend about $205 billion this year on projects ranging from 5G networks to power grid enhancements to rail upgrades as it tries to revive its economy after the coronavirus pandemic. Those sectors are among seven that China has identified as “new infrastructure,” which it wants to prioritize in its recovery, with ‘old’ industry unlikely to see much of the stimulus.
Germans Turning to Beijing for Friendship as Relations With US Cool: Germans are now as likely to want to forge close ties with China as with the United States, according to a poll that suggests the public mood has tilted significantly over the past 12 months. Only one in ten respondents identified the US as Germany’s principal ally, half as many as this time last year. In all, 36% said it was more important for Germany to have “warm relations” with China than with the US, while 37% said the opposite. A year ago 24% preferred China and 50% the US.
National Survey Lays Bare the Sex Lives of Chinese Students: Female students are less satisfied in relationships. Men are more comfortable with live-in partners. A majority of women at Chinese universities have never masturbated, and one-third have never experienced an orgasm or don’t know what one is according to a survey of 45,540 students from 1,764 universities nationwide. 3.6% of respondents said they had had sex with a teacher. Only half of the surveyed students said they received sex education in school, and less than 15% said they felt “very satisfied” with what they were taught.
Tencent Posts First-Quarter Beat as Users Turn to Hit Mobile Games During Coronavirus Lockdown: Tencent’s results beat expectations, with revenue up 26% to $15.2 billion in Q1, thanks to its gaming business, as well as better-than-expected performance in both social media advertising and fintech services – although this fell from the last quarter as people stayed at home. Mobile games got a boost from Tencent’s hit titles including “Honour of Kings,” which saw new upgrades during the quarter, and “Peacekeeper Elite.” Tencent’s gaming AI Wukong has won 99.8% of games against human players since launching in August 2019, including defeating five-versus-five professional esporters in Honour of Kings.
Smartphone Shipments in China up 17% in April, Signalling Likely Rebound: Phone makers shipped 40.8 million handsets in April in China, up from 34.8 million in April 2019.
With 5 Kids Sick, Hunan Authorities Investigate ‘Infant Formula’: In yet another scandal in China, parents in the central China city of Chenzhou noticed their children’s heads had become swollen, a media investigation found that they had been consuming a protein powder drink instead of hypoallergenic infant formula. This is the second time in six months that Chenzhou has made headlines because of unsuitable products being marketed for young children.
Long Lines For Grand Opening Of Popeyes Shanghai, Which Ran Out Of Food: After withdrawing from China in 2003, New Orleans-based fried chicken fast food chain Popeyes has returned with its first store opening on Shanghai’s Huaihai Road. By 8am, there were already hundreds of people queuing, which stretched for hours before the crowds eventually dispersed as the food ran out.
Luckin Coffee Still Expanding Stores and New Offerings Despite the Scandal: Luckin is still opening 10 outlets a day, even as its shares are suspended. While the 10 stores is slower than the 20 stores/day in Q1 – it’s more than the same period a year ago. Last week, the brand also launched a line of lifestyle products, which range from beauty masks and hand soap to Apple Airpods and Beats headphones. Most of the non-beverage merchandise is third-party, except for a small collection of Luckin-branded items such as coffee mugs. Luckin’s scandal-related boost saw daily users jump four-fold overnight to 4.4 million. The growth was short-lived, with daily users hovering around 1.5 million as of last week, albeit higher than last pre-scandal.
Chinese Fitness App Keep Raises $80 Million on the Rise of Home Workouts: After falling on hard times in late 2019 – seeing it lay off 15% of its staff – fitness app Keep saw user numbers jump 15% in Q1 to 18.1 million a month, averaging 20.4 minutes a day. The company now has over 200 million registered users and more than 3.6 billion user exercise data entries. The company, now valued at $1 billion, will invest the $80 million into the development of a comprehensive sports solution which integrates its various businesses from content generation and workout community management to hardware.
Inside Revlon’s China Re-Entry Playbook: Revlon is ‘re-entering’ China, expanding from its current cross border Tmall Global sales. On the surface, the launch seems to be lacking anything creative or smart: a 100%-digital domestic Tmall launch and engagement of former K-pop girl band member Jessica Jung as its new global ambassador.
China’s Air Pollution Overshoots Pre-Crisis Levels for the First Time: It was good while it lasted. Levels of health-harming air pollutants in China have exceeded concentrations at the same time last year over the past 30 days, for the first time since the start of the COVID-19 crisis. The rebound appears to be driven by industrial emissions, as the pollution levels in the largest cities, Beijing and Shanghai, are still trailing below last year. More broadly, pollution levels tended to increase more in areas where coal-burning is a larger source of pollution.
COVID-19 is Making the Luxury Industry Even More Dependent on Chinese Shoppers: Chinese shoppers are the world’s biggest luxury buyers including purchases made inside and outside their country. A faster economic recovery in China than in the US and Europe could widen this gap further. Bain and Altagamma estimate by 2025 Chinese shoppers will account for 49% of global luxury purchases, up from about 35% in 2019. The rest of Asia (excluding Japan) will retain 11% over the 6-year period, with every other nation seeing their market share drop. Luxury purchases in Chinese-based stores will account for 28%, from 11% in 2019. Just 37% of luxury purchases are forecast to come from non-Asians.