This week’s news and trends in China:
Food Delivery Giant Meituan Sinks Into The Red Amid Expansion Into Community Group Buying: Meituan, China’s largest food delivery platform, is investing heavily in its community group buying division Meituan Select. The unit generated revenue of ¥9.24 billion ($1.41 billion) in Q4 last year, representing 51.9% year-on-year growth. Last month, China’s market regulator fined Meituan Select, along with peers including Tencent-backed Shixianghui and Pinduoduo’s Duoduo Maicai for anticompetitive behaviour.
China’s Hottest Grocery Startup, Worth $8 Billion, Wants to Build an Online Version of Costco: JD-backed Xingsheng Selected grew from ¥800 million ($122 million) in 2018 to ¥30 billion ($4.6 billion) last year by pioneering community group buying—people in a local community grouping together to buy cheap groceries in bulk. Xingsheng’s next phase of growth is to become an online version of Costco. [paywall]
Genki Forest is a Chinese Health Tech Beverage Startup that is Growing Faster than Alibaba: A new beverage company — valued at $6 billion after its latest fundraising round — has combined technology with health-conscious marketing to take the consumer goods industry by storm. Its flagship “sugar-free, carb-free, and fat-free” peach-flavoured soda water is distinctive for its slick black-white-and-pink label with an “air” (気) logo, written in a Japanese version of the character. The brand’s reputation recently took a hit when state media released a video that the brand isn’t actually sugar-free.
Beyond Burgers: China Plant-Based Protein Market Growing Up: The uptake of locally-sourced plant-based protein has generally been faster in China than in other parts of the world and the industry there is moving quickly beyond burger analogues, according to ADM Asia Pacific. Alternatives to shrimp and shellfish, plant-based cheeses and ready-to-eat protein snacks are all becoming more popular. China’s plant-based protein market is forecast to grow to $14.5 billion in 2025 from under $10 billion in 2018. Beyond Meat has just opened its first production facility in China, where its products are sold in Starbucks, KFC, Hema supermarket and other retail channels across major cities.
Xinjiang Cotton: Western Brands Blurred on China TV: Episodes of popular variety shows such as Sisters Who Make Waves now feature singers and actors who look like they are floating on clouds, thanks to their blurred out shoes. The blurring treatment was taken up a notch on reality show Chuang 2021, as contestants had worn clothes branded with Western logos from head to toe. Reality TV contest Youth With You, was postponed for two days, airing with more than 50 people having brand logos on t-shirts blurred.
The Quiet War to Become China’s Next WeChat: Over the past few years, Douyin has beefed up its social network by adding features from livestreaming to ecommerce and from gaming to instant messaging, challenging existing dominant players in each vertical. Now Douyin has expanded into the so-called “local life services,” taking on Meituan, which offers a wide range of services meeting users’ offline life needs, from food delivery to ticket booking.
Why Alibaba Just Got Hit With A Record $2.87 Billion Fine In China: A monopoly probe found that the company had abused its dominant market position. The size of the penalty was determined after regulators decided to fine Alibaba 4% of its ¥455.7 billion ($69.5 billion) sales in 2019. The regulator also ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights. Just days later, major regulatory changes have impacted Alibaba’s Ant ability to operate in the way it has been.
China’s ‘Uber for Trucks’ to IPO in the US at $30 Billion Valuation: At the end of last year, its Full Truck Alliance (FTA), also known as Manbang, was used by 5 million shippers and 10 million truck drivers across 338 cities. There are a total of 18 million truck drivers across China, so about half the industry is already on the app. China’s logistics market grew from $300 billion in 2001 to $2 trillion in 2018.
Chinese Customs Detains 15 Suspected of Smuggling Baby Milk Formula: Fifteen people were detained last month in coordinated raids across China on criminal gangs accused of smuggling ¥1 billion ($152.4 million) worth of New Zealand baby milk formula into the country over the past two years. The gangs claimed the infant formula was for personal use, allowing them to evade customs duties and sell them online at discounts of up to 40%. In one of the raids, 170,000 cans of baby milk formula were found in a single warehouse.
China ‘Could Start Easing International Travel Restrictions by Next Spring’ if it Hits Coronavirus Vaccination Targets: Chinese people may be able to start travelling overseas with fewer restrictions next spring as the country pushes to inoculate at least 70% of the population against Covid-19 by then, a medical specialist has said.
More Chinese Women Are Buying Homes Than Ever Before: In 2020, Chinese women accounted for 47.5% of home purchases in 30 key cities, including Beijing and Shanghai. Women above the age of 50 are still the biggest force in home buying because of the wealth they have accumulated over time, but women under 30 are feeling increasingly confident about buying their own places, often with financial support from their parents. In cases where couples purchased houses together, over 60% of women say they “play a key role” in the buying process.
Number of ATMs in China shrinks by 80,000 in 2020: With the rapid growth of mobile payments in China, the number of automatic teller machines or ATMs shrank by more than 80,000 last year.
China’s Daigou Personal Shoppers Aren’t Going Away: With international travel constricted during the global pandemic, supply chain and logistical challenges, and factory and store closures, daigou shoppers found their very existence in doubt. But the trade began to pick up again after April last year. 70-80% of Chinese expenditure on the overseas luxury market went through daigou shoppers last year – between $25 and $28 billion according to BCG.
How Chinese Shop Luxury Online: 2 minute video: from virtual fittings to 3D showrooms, this is how consumers shop for luxury items from over 200 luxury brands on Tmall’s Luxury Pavilion.