This week’s news and trends in China:
China CBD Crackdown: Ban on Cannabis Cosmetics Will Likely Halt Sales Online as Authorities Push ‘Anti-Drug’ Stance: China’s proposal to ban the use of cannabis and cannabis extracts in cosmetics will likely affect sales via cross-border ecommerce channels as the authorities double down on ‘anti-drug’ education.
China’s Consumers Boost Its Economic Recovery: Encouraging news for China’s leaders—who have been eager to rebalance the economy toward consumer spending after a year in which manufacturing drove the recovery—a parallel gauge of services and the construction industry jumped even more in March, suggesting a broadening of consumer activity. [paywall]
China’s First-Tier City Rich Need USD2.9 Million to Make Hurun’s Wealth Freedom List: The entry-level point for wealth freedom in China’s first-tier cities is ¥19 million ($2.9 million) according to the Hurun Research Institute. The threshold amount was mainly made up of a 120-square-meter urban home, two cars, ¥600,000 ($91,440) in annual after-tax household income and ¥8 million in investments. In first-tier cities, the threshold for advanced-level wealth freedom is ¥190 million ($29 million) versus ¥120 million ($18.3 million) and ¥69 million ($10.5 million) in tier 2 and 3 cities respectively. Over 60% of high-net-worth individuals surveyed plan to travel around the world after achieving financial freedom. Nearly 40% were looking to study and enrich themselves, while 30% had plans for family trusts and charitable donations.
China Court Ups Damages 10X on Appeal in Trademark Infringement Case for Lego Bricks: Last week, the Guangdong Higher People’s Court awarded ¥30 million ($4.7 million) to Lego on appeal, an increase from the original award of ¥3 million. The pirates using the brand name Lepin, infringed on 8 registered trademarks and the commercial name of Lego for 4 years generating revenue of at least ¥330 million ($50.25 million). Last year the toy company boss was sentenced to 6 years in prison.
Douyin: Much More than Just China’s TikTok: A comprehensive explanation of how Douyin is much more feature-rich than its international sibling Tiktok for content, livestreaming, monetization, gamification, search, messaging & social and local services.
Comeback King: China’s Disgraced Live-Streaming ‘Sales King’ Sells in 12 Hours What a Hong Kong Mall Sells in 12 Months: Mega-streamer Xinba became the subject of controversy last year after selling fake bird’s nests, but as we predicted in February, selling the odd dodgy product has little-to-no impact on the big KOLs’ pulling power in China. 10 days ago, Xinba sold more than 16 million items across categories as diverse as shampoo and smartphones on Kuaishou, shifting more than ¥2 billion ($305.7 million) worth of goods. That is more money than Times Square shopping centre in Causeway Bay, one of the most high-profile locations for luxury goods in Hong Kong, made in all of 2020.
Understanding the Death of Meitu’s Coolness: Meitu used to dominate the business of digital “beauty,” becoming a verb much like “Google” and “Uber.” At its peak, it was used by half a billion people and defined the aesthetics of an era. The convenience of Meitu fuelled a culture where everyone feels obliged to alter how they look before posting a picture. But numerous attempts to diversify from being just a photo beautification tool have never taken hold. With users spending an average of four minutes a day on the app, it has struggled to monetise its popularity, which has steadily declined as alternatives become more convenient.
Shanghai Found to be City with Most Coffee Shops in the World: Shanghai had 6,913 standalone coffee shops in January. In comparison, Tokyo had 3,826, London had 3,233, while New York had 1,591. Per capita, there are 2.85 coffee shops per 10,000 people in Shanghai, about the same with Tokyo. London scored 3.69. Shanghai’s Huaihai Middle Road was found to be the street with the most coffee shops (49), while Nanjing West Road came in second with 41 shops, followed by Wenhui Road at 37. More than half of the coffee shops in Shanghai are considered boutique or artisanal. Black coffee looks to be a new trend in China, with sales on JD increasing 130% from a year earlier largely driven by health-focused consumers.
Chinese Fresh Food Chain Qiandama Weighs Hong Kong IPO: Qiandama, established in 2012, sells products including vegetables, fruits, fresh meat and eggs through its franchised stores. The company is well-known for its slogan “never sells overnight meat” and offers discounts toward the end of each day to clear stocks. The firm posted revenue of over ¥7 billion ($1.1 billion) in 2019 and operates more than 2,000 stores as of July 2020.
Southern Meats’ Secret Meeting with China Turns Contract From ‘No’ to ‘Go’: A large Australian meat company defied government advice and met secretly with a top Chinese customs official in an ultimately successful attempt to overturn a multi-million-dollar export licence ban.
China’s WH Group to Boost Meat Imports as High Prices May Endure: WH Group, China’s largest pork processor, said it will increase meat imports this year as local prices are likely to stay elevated following the resurgence of African swine fever in the country. While Chinese pork prices will ease in the second half as supply expands, they’ll remain significantly higher than overseas, creating an opportunity for higher imports.
Chinese Travellers: Back on the Road?: Luxury consumers are 40% more likely to travel internationally than non-luxury consumers over the next three months according to a Vogue/GQ survey. 17% of luxury consumers show a willingness to travel abroad in the second quarter of 2021. Local Chinese consumers who need to travel internationally are mostly for family-visit purposes, not for leisure travel in 2021 according to iiMedia. A third of Chinese luxury consumers are waiting for travel to return to make most of their luxury fashion purchases.
Thailand Sees Chinese Leading Tourists to Phuket After Reopening: Thailand expects about two million foreign tourists – over two thirds being from Greater China – to visit Phuket this year after it reopens to vaccinated visitors from July 1. Increasing appeal for beach destinations has boosted swimwear sales in China, with the peak sales season stretching from just May before 2018, to April – July now.
H&M Responds to a Firestorm in China Over Xinjiang Cotton: More than a week after the Swedish retailer H&M came under fire in China for a months-old statement expressing concern over reports of Uyghur forced labor in the region of Xinjiang, the company published a statement saying it hoped to regain the trust of customers in China. If the Xinjiang cotton ordeal wasn’t enough, regulators in Shanghai have summoned H&M for talk over ‘problematic map’.
The Biggest Sneaker Company You’ve Never Heard of is Capitalizing on China’s Nike and Adidas Boycotts: Anta has pulled out of the Better Cotton Initiative (BCI), an organization that promotes sustainability in the cotton industry, over BCI’s decision last October to exit Xinjiang owing to reports of Uighur forced labour. Capitalizing on such sentiment may lead to a short-term spike in Anta sales. But sidling up to Beijing is not just about immediate gains. Over the past few years, Anta has leaned into its Chinese roots to contrast itself with Western brands and to meet the demands of an increasingly nationalistic consumer base.