This week’s news and trends in China:
H&M, Nike Face Boycotts in China as Xinjiang Dilemma Deepens: H&M was blasted by the Communist Youth League and the People’s Liberation Army last Wednesday after social-media users dug out an undated company statement from last year about not using Xinjiang cotton due to accusations of forced labour in Xinjiang. Calls to boycott the Swedish retailer have spread far and wide along with brands such as Nike, Adidas and Burberry who had taken a similar stance last year.
Chinese Boycott Against Nike and Adidas Over Xinjiang Cotton Appears to be Losing Steam: The two international sportswear brands remained visible on major e-commerce sites and a special Nike offer sold out quickly. Celebrities have cut ties with firms that expressed concern about forced labour, but the country’s national soccer team has not followed suit. Nike’s sales in Greater China grew 51% year-on-year last quarter.
Xinjiang Cotton: Hugo Boss’ Comments Spark Accusations of Hypocrisy Online: Germany’s Hugo Boss and Japanese homeware brand Muji have been accused of double standards as Beijing’s dispute with Western countries heats up. “Xinjiang long cotton is one of the best in the world, we believe quality raw materials would show its value. We will continue to buy and support Xinjiang cotton,” said Hugo Boss in China. The post, however, seemed to contradict a statement on the brand’s main website, which says the company does not buy any goods directly from Xinjiang.
After Pop Mart IPO, Blind Boxes Are Helping China’s Tech Giants and Luxury Brands Gamify Ecommerce: Pop Mart helped make the blind box concept a mainstream sensation in China, and now online retailers and social media are replicating the experience. It plays into the gambling psychology; it’s collectable; and it represents a trendy youth culture. Beauty retailer Sephora, fashion brand Lanvin and even live pet sellers are among the brands that have used surprise products on platforms like WeChat and Douyin. China’s market for designer toys was worth ¥29.4 billion ($4.5 billion) in 2020, and the blind box market accounted for about 31% of it.
Global Home Appliance Suppliers Eye Chinese Market in Post-Pandemic Period: Even though the overall sales of home appliances in China saw a 6.5% decrease during COVID-19 pandemic, the sales of high-end and smart home appliances witnessed a sharp increase. Sales of TV sets with retail prices higher than ¥10,000 yuan ($1,533) increased more than 70% year-over-year in 2020 while the sales of refrigerators over ¥20,000 increased 132%.
‘Not OK’: Scott Morrison Speaks Out After China Announced New Wine Tariffs: The decision comes after China last year said it would impose temporary tariffs of between 116-218% on wine from Australia for four months. The country has now extended tariffs for five years. The Australian wine industry and was looking at taking the issue to the World Trade Organisation.
Chinese Consumers Shift From Instant Noodles to Soft Drinks: Instant noodle giant Tingyi, owner of the top-selling Master Kong brand, reported a 29% increase in instant noodles sales in the first half of 2020 compared with a year earlier as the lockdown had people stuck at home stocking up. But its full-year earnings showed a deceleration in sales growth to 6.1% for the second half. Rival Uni-Present saw growth of 22% in the first half drop to -0.4% in H2. Meanwhile, soft drinks saw the opposite, with Swire’s Coca-Cola franchise seeing a 1% drop in sales for the first half followed by a 9% increase in the second half. Tianyi’s beverage business reversed a 4.1% contraction in H1 with 14.1% growth in H2.
Thailand Exports Fruit to China on Behalf of Neighbouring Countries: Neighbouring countries such as Myanmar, Laos, Cambodia, and Vietnam all produce large volumes of fruit popular in the Chinese market. They export them to Thailand, and the fruit is then onsold to China as ‘Thai’ Fruit which has permission to export the varieties.
Nuxe Hits the Ground Running in Chinese DF&TR; New Points of Sale Confirmed: Paris beauty brand Laboratoire Nuxe is continuing its duty free and travel retail expansion in China by forming partnerships with companies such as China Duty Free Group, CDF Sunrise, Lagardère Travel Retail and Dufry Group. “China’s duty-free industry is receiving unprecedented policy support from the Chinese government to enhance the attraction of downtown duty-free shopping and expand the extent of downtown stores,” according to Nuxe’s global travel retail director Marion Bruimaud. “Our four points of sale in Hainan alone are contributing around 64% of total Nuxe sales [in the travel retail category].”
Health is Primary Indicator of People’s Happiness: Xi: During the 14th Five-Year Plan period (2021-2025), efforts should be made to put people and their lives first, continue to deepen the reform of the medical and health system, increase medical resources and optimize their distribution, so that people don’t have to travel far to have their illness treated, according to Xi.
China plans to add over 30 new airports to its aviation network by 2025: Infrastructure improvement is a top-priority of the latest Five-Year Plan, with new tech infrastructure a focus. Covid’s impact on the US saw China overtake the country as the world’s largest aviation market in 2020. China’s 2025 airport capacity will be 2 billion passengers. The new airports are also part of China’s efforts to enhance the country’s ‘dual circulation’ economy.
Jack Ma’s Ant Demands Bigger Fees to Rebuild Valuation After Pulled IPO: Ant Group is demanding a larger slice of lucrative commissions from its popular payments platform at the expense of local banks, as China’s largest financial technology group tries to offset losses from a government crackdown on its lending business. Multiple lenders have seen processing fees from transactions conducted increase by up to 80% since the beginning of this year. As of June 2020, Ant held 55.6% of China’s non-bank payment share. Tencent held 38.8%. Non-bank electronic payments are more than double bank card purchases in China. [paywall]
From Burberry to Tesla, Luxury Labels Borrow the Star Power of Blockbuster Games to Reach Young Chinese Consumers: Owning a Burberry trench coat or a Tesla car may be a pipe dream for many people, but international luxury brands are now giving China’s young gamers a taste of the high life in the virtual world. This was cancelled as a result of the cotton issue.
Western Brands Must Learn from China’s New, Individualistic Consumers: Younger people’s attitude to luxury differs from the older generation, in that it’s less about showcasing wealth and more about communicating what sort of person you are. Luxury brands such as Dior, Gucci and Burberry are tuning into this need for self-expression with customized accessories and personalization, like Louis Vuitton’s ’Hot Stamping’ program, where customers can stamp their monograms on leather products.