This week’s China market and marketing news:
RCEP: Asia-Pacific Countries Form World’s Largest Trading Bloc: The Regional Comprehensive Economic Partnership (RCEP) is made up of 10 Southeast Asian countries, as well as South Korea, China, Japan, Australia and New Zealand. It covers 2.2 billion people and nearly a third of the global economy. The RCEP is expected to eliminate a range of tariffs on imports within 20 years. It also includes provisions on intellectual property, telecommunications, financial services, e-commerce and professional services. Many of the countries in the bloc already have equal or better deals with each other.
China’s Firms Sign $73 Billion Worth of Deals at Flagship Shanghai Import Expo: The global pandemic and 14-day quarantine for overseas visitors was always going to be a challenge, but the third annual China International Import Expo (CIIE) saw $72.62 billion worth of deals signed, up 2.1% from last year. Before the event, the Shanghai government said that 400,000 people had registered, although it did not provide a breakdown of foreign visitors. In 2019, more than 500,000 people registered for the trade fair with 6,000 from overseas. Lego’s 378 square metre booth was considered the most fun booth at the show, with the theme “Rebuild the World” including a 2.7 x 2 metre LEGO globe, where 100 Chinese children’s creations were added to it.
China’s Consumer Prices Head for Deflation as Pork Prices Slump: China’s consumer price index rose 0.5% in October from a year earlier, the slowest pace since late 2009 and the first time below 1% in more than three years. Inflation was dragged down by declining pork prices – which dropped 2.8%, the first fall since February 2019. Overall food inflation weakened considerably to 2.2% in October from 7.9% in the previous month. Retail sales grew 4.3% year-on-year in October, picking up the pace from September’s 3.3% growth.
Understanding Chinese Consumers: Growth Engine of the World: McKinsey’s 2021 China consumer report. Five accelerating trends in China since COVID-19 are: digitalization, declining global exposure, rising competitive intensity, private and social sectors stepping up, and consumers coming of age. The accelerating maturity of Chinese consumers can be seen in four key areas: Young consumers’ spending; Even more prudent personal financial management; Health conscious purchase decisions; and Purchasing trade-offs amid a flight to quality.
Leading Chinese Supermarket Chain Apologizes for ‘Fat-Shaming’ Size Chart: Fat shaming is all too common on the Chinese internet and in advertising, but this week, one of China’s biggest supermarket chains, RT-Mart, was forced to apologise for displaying a size chart for clothing that called plus-size women “rotten.” The guide states that women who wear size small or medium are “slim” and “beautiful.”
Chinese Shoppers Spend Over $100 Billion in Singles’ Day Frenzy: American brands topped the international table selling $5.4 billion worth of goods, followed by Japan, South Korea and Australia, which sold over a billion in goods.
China Drafts New Antitrust Guideline to Rein in Tech Giants, Wiping $102 Billion from Alibaba, Tencent and Meituan Stocks: All the things that allowed China’s internet innovators to become big, powerful and hugely profitable are under threat.
Tech Giants Quarterly Results: For the quarter ending in September, Alibaba sales grew around 20%, with 9% more users taking the total to 757 million. Sales on JD’s were up 35% from a year ago, helped by 32% more users – 441.6 million in total. Pinduoduo sales were up 73%, with users climbing 46% to 731.3 million. Tencent also saw strong growth, with revenue up 29%.
Video: IKEA’s 3D Shopping Feature Online: Ecommerce has been trying to bridge the experience gap between online and bricks & mortar shopping for years. While it still isn’t quite there, Tmall’s 3D shopping feature is a step on the way as illustrated by IKEA. More than 60 million consumers used the 3D shopping feature during the 2020 11.11 Global Shopping Festival.
TikTok-Owner ByteDance to Rake in $27 Billion Ad Revenue by Year-End: After overtaking Baidu to become China’s second largest digital ad player in the first half of 2019 with 23% ($7.6 billion) of China’s digital ad spend, the country is on track to generate at least $27.2 billion this year, closing in on Alibaba. Tiktok contributes a fraction of ByteDance’s revenue, with Douyin bringing in 60% of ad revenue, Toutiao 20%, and Xigua 3%. As ByteDance pursues its global ambitions, it is also looking to step up investment in three main areas at home next year – e-commerce, search and longer-form videos. Douyin’s ecommerce platform is projected to hit around ¥150 billion ($23 billion) in gross merchandise value this year.
Wahaha Targets China’s Health Boom, Livestreaming and Gen Z’s ‘Tribes’: Chinese food and beverage giant Wahaha enjoyed brand recognition but not brand resonance in China. But the family-owned, formerly old-fashioned conglomerate is rejuvenating through a strategy of product personalization, a healthcare e-commerce venture, and multiple brand and IP partnerships with Chiccream, PopMart, and the League of Legends Professional League.
Q&A: Loren Zhao, Fresh Bridge Supply Chain: Most avocado promotions and education in China are based on Western-style consumption, so there is scope for more integration with localised cuisine and eating habits. Smaller avocados have been more popular with Chinese consumers in retail. More than half of the avocados in China were sold to hospitality channels pre-Covid, illustrating the significance of restaurants and cafes, alongside travel, to build preference.
Viral Video Exposes Wuhan Canteen Kitchen Food Malpractices: A video that exposes the poor food hygiene inside the kitchen of a Wuhan college canteen has been making its rounds on Chinese social media. The video shows how a kitchen staff member picks up meat from the floor to put back in the tray, and how another kitchen worker uses rain boots to ‘wash’ vegetables in a big bowl on the ground, while another person is smoking. “I’m afraid that this is just the tip of the iceberg,” one commentator said on Weibo, receiving over 25,000 likes.
Budget Beauty Specialist Spruces Up for $600 Million US IPO: Yatsen, the owner of local cosmetics darling Perfect Diary plans to raise money for investments and acquisitions, to develop new products and data analytics technology, and to open new physical stores. The company has over 200 physical “experience” stores across more than 90 Chinese cities and directly sells its products to 23.5 million consumers. Last month it acquired skincare brand Galenic in an attempt to strengthen R&D capabilities and bolster product innovation.
How Chinese University Admissions Became a No-Holds-Barred Arms Race: Looking to boost their minimum admissions scores — and their reputations — universities are waging a cut-throat battle for top students. Now that students can test first and choose afterward, schools have more room to jostle, and they’re making full use of it. But who’s really benefitting?