Mark Tanner
19 May 2021 0 Comments

This week’s news and trends in China:

Consumers,  Chinese Consumers

China’s Households Shrink to Fewer Than Three People for First Time: Households have dropped to 2.62 people on average – the first time it has been below three. The average has fallen from 4.43 in 1964 to 3.96 in 1990 and 3.1 in 2010, according to official data. Numbers declined most sharply between 1990 and 2005.

Five Chinese University Students Sentenced to up to 2.5 Years in Jail for Swindling Free KFC Meals: A group of university students from Jiangsu Province were given prison sentences of up to two-and-a-half years for fraud after they took advantage of loopholes in KFC’s mobile application and WeChat account to obtain free meals and make profits, and caused over ¥200,000 ($31,174) losses to the company. Since April 2018, a student not only ordered free meals for himself but also sold the meals and coupons to others to make a profit. He also taught four other students how to beat the system.

China’s Retail Sales up 17.7% in April: In the first four months of 2021, China’s retail sales of consumer goods grew 29.6% year-on-year to reach ¥13.84 trillion ($2.15 trillion), with online sales up 27.6% – not as fast as retail overall, largely due to the lockdown skewing ecommerce sales last year, particularly during February and March. Analysts were expecting April retail growth to be a quarter higher. Imports in April rose 43.1% year-on-year.

China’s FDI Inflow Surges Nearly 40% in Jan-April: Foreign Direct Investment into Mainland China in the first four months of 2021, increased 38.6% year on year to ¥397 billion yuan ($61.5 billion). Investment from ASEAN countries grew 65.2%, countries along the Belt and Road invested 62.8% more and the European Union was up 9.2%. Investment in Eastern China (the area which includes Shanghai) grew fastest at 39.1%, followed by central China at 37.5%.

Online: Digital China

China’s Hottest Livestream Trend: Fraud: Scams appear to be becoming more common as the commercial livestreaming boom triggered by China’s COVID-19 outbreak begins to lose steam.

WeChat to Stop Mini-Programs That Jump Onto Other Platforms: WeChat, China’s most popular social media application, will disable mini-programs that lead to other mobile apps this week.

Premium Food & Beverage

Sam’s Club China Enters New City and Announces Major Expansion Plan: Walmart’s Sam’s Club opened its first store in Huizhou, Guangdong at the end of April, raising the total number of Sam’s Club China stores to 32. The company plans to continue adding 4-5 new Sam’s Club stores a year in China over the next few years. Sam’s Club presently covers 23 cities and has more than 3 million members in China, 80% of which have been members for at least two years. Its main difference to Walmart are its membership model, discounts on bulk purchases, relatively upscale offerings and attraction of their Member’s Mark private label products.

Disgraced Luckin Coffee Founder Lu Zhengyao Cooks Up New Business: Luckin Coffee founder Lu Zhengyao is preparing to launch a noodle restaurant chain after he was removed from his chairmanship of Luckin in July 2020. The noodle chain is expected to be called Xiaomian Riji, or Noodle Diary. Luckin’s former CEO as well as two vice presidents have joined Lu’s new venture, which is anticipated to involve 500 noodle restaurants.

Overall Beauty

Why Clean Beauty Brands are Heading for China: Expect a surge of activity as beauty brands sense new opportunities in China over the next 12 to 24 months as animal testing requirements are removed from imported cosmetics into China. Aesop and The Body Shop plan to open physical stores in China by 2022. Brands in the SuperOrdinary portfolio, which includes Drunk Elephant and The Ordinary, are expected to open physical flagships in China next year. Days before the new regulations came into place, Australian clean beauty brand Frank Body welcomed a closed investment from China-based private equity firm EverYi Capital. The investment, values the brand at AUD $100 million ($77.4 million). New York-based beauty and fragrance brand incubator Perfumarie will open the first Perfumarie Asia digital store in China in 2021, followed by flagship locations in Shanghai and Beijing in early 2022.

Staying Health

Why China Is Running Out of Lab Monkeys: Trade restrictions and an increase in biomedical research, including into COVID-19 vaccines, have driven the price of animals used in experiments to new heights with the price of lab monkeys increasing 4-fold since late-2016. The number of lab monkeys sold and used in China grew from 7,000-8,000 in 2013, to almost 30,000 in 2019. The US used more than 74,000 in 2017.

Video & Entertainment

Tencent is Paying Users to Try its New Classic TV Streaming App in Effort to Quickly Grow Elderly, Rural User Base: Offering entire seasons of popular classic TV series ad-free, Tencent’s Pianduoduo gives users digital coins in exchange for watching. Paying users is an increasingly common tactic among China’s internet companies to quickly grow their user base, especially those who are less tech-savvy and have more free time like the elderly and rural. More than 100 million Chinese consumers aged above 50 use the mobile internet, spending an average of 136 hours a month on their smart devices.

Autos and Cars

All the Electric Car Companies in China — a Guide to the 31 Top players in the Chinese EV industry: Beijing plans to reach 20% penetration of new energy vehicles by 2025. By 2035 EVs will become the dominant new vehicles sold in China. Every Chinese company wants to make EVs – here at the top-22 manufacturers in China and nine tech giants including Alibaba, Baidu, ByteDance, Didi Chuxing, DJI, Huawei, JD, Meituan and Tencent. 360 and OPPO also want to be China’s next big electric vehicle maker, even if they don’t make cars yet. China’s April auto sales rose 8.6%, the 13th straight month of growth.

Premium and Luxury

Global Luxury Brands Stand a Better Chance of Weathering China’s Nationalistic Consumer Fervour, says Credit Suisse: International luxury brands are less likely to be affected by the “China Pride” phenomenon that is gripping the country’s consumer market, as they tend to be well established and produce better quality goods. “Domestic brands are more down to earth, especially in how they leverage the online short-form video platform. They are able to react quicker to consumers,” says Credit Suisse. “More local brands manage to express their own personality as well.”

Why Hainan is a Luxury Hotspot: Some 600 foreign exhibitors exhibited at the Hainan Consumer Products Expo earlier this month, adding up to 1,365 brands from 69 different countries. During China’s five-day May holiday, duty-free sales in Hainan surged 248% year-on-year to reach ¥993 million ($153 million). But Hainan’s transformation from travel retail hotspot to true luxury shopping destination on a par with other international tourism destinations in Europe, Japan and South Korea still presents challenges, with the retail luxury on offer still in need of rapid upgrades.