2019: Looking Back Over the Year in China
As 2019 draws to a close, it's fair to say that it has been a year of twists and turns - even by Chinese standards. With the backdrop of a slowing economy and prolonged trade war, we're happy to say that Chinese consumers have remained the main driver of the economy, spending over 8% more than they did last year, fuelled by a healthy dose of credit.
Trying to keep China's ever-larger consumer market in good stead, foreign brands have issued more apologies this year than ever before. That's been driven by unprecedented and often-polarising geopolitical issues covering Huawei to Hong Kong to Artificial Intelligence, increasing Chinese consumers' patriotism and keeping crisis management teams awake at night.
Like years before, 2019 has seen many contradictions in China. Rising nationalism has been countered by more imported FMCG products selling than ever, and American brands accounting for more top-sellers on Singles' Day than Chinese brands. As Carrefour and Metro divested from China, Costco and Aldi have taken an expansionary approach, right as the big tech companies further muscle into brick & mortar retailing, and livestreaming, social commerce and New Retail continues to alter the way consumers shop.
One of the most positive developments in China this year, was seeing more individual accountability for the environment with punitive recycling laws starting to be rolled out in China's cities. In addition to worrying about how to correctly dispose of snack wrappers and apple cores, soaring food prices - particularly pork impacted by diseased hogs - have kept consumers grumbling on social media.
Beyond the continued falling birth rates, outrageous advertising claims, and slews of data continuing to be faked, 2019 has produced its usual trove of buzzwords, wacky viral videos and trending fashion topics which all help provide a glimpse into what matters and connects with the average Zhou on her smartphone on the street.
That wraps up our last Skinny for 2019 - thanks for reading this year, we hope you found it valuable. The Skinny team wishes you a wonderfully Happy Christmas, Hanukkah, Kwanzaa, New Year or whatever else you may be celebrating. We’ll be back again in 2020, take care until then. Go to Page 2 to see this week's China news and highlights.
Here are this week's news and highlights for China:
Chinese Consumers
China Suspends Tariffs on US-Made Cars, Corn and Other Goods Amid New Trade Truce: China and the United States have agreed (but not yet signed) a Phase 1 'light' trade deal after more than 18 months of escalating tensions. The two sides have accepted the halting of additional tariffs on almost $160 billion of Chinese consumer electronics and toys that were set to take effect December 15. Economic penalties imposed on goods in September will be reduced by half. New commitments by the Chinese to buy US farm goods and other products have also been unveiled. Many details of the agreement remain largely unknown.
Top 10 Chinese Buzzwords of 2019: Yao Wen Jiao Zi, the monthly periodical on Chinese culture and language announced the top buzzwords of the year (translated): Mutual learning among civilizations; blockchain; hardcore; mixing up punch lines/plots; among tens of thousands of …, … is the very first one; green as a lemon elf with envy; the 996 work schedule; life is so hard for me; I don't want to hear what you think about it, I want it my way; and Bullying.
Majority of Chinese Consumers More Focused on Quality: Survey: 95.5% of respondents said they are paying more attention to the quality of the products and services than ever before according to a China Youth Daily survey. 58% of the respondents purchased fewer but higher-quality products, and nearly half of the respondents showed tendencies to buy practical and unique products.
Jack Ma Outlines Bold Vision For His Philanthropy Foundation: The Jack Ma Foundation owns $4.6 billion worth of Alibaba shares and has spent hundreds of millions to date supporting causes such as: 1. Wetland protection; 2. Women's soccer in China; 3. Africa Netpreneur Prize Initiative; 4. Queen Rania Foundation; 5. Teacher talent in China; 6. Ma & Morley scholarship, University of Newcastle; and 7. Rural education in China.
Digital China
China’s Top Viral Videos of 2019: Part I, Part II and Part III: Bizarre drink-driving accidents, employees crawling on the streets, kids with sparklers blowing up manholes, cross-dressing police officers, lonely stampeding elephants, how to make your American boss feel at home in China, fixing broken sinks with instant noodles, an albino panda, wetting the Baidu CEO, a woman slaughtering a live dog in a metro station, peeing in a lift (x2), an escaped ostrich and a man getting his arm stuck in a toilet were some of the videos that went viral this year in China. Here are the internet celebrities who went viral this year.
Multi-Purpose WeChat Wants to be a Better Search Engine: WeChat’s search capabilities are being expanded next year to allow users to find a slew of new content. This will include entertainment options like music, games and memes. Users will also be able to search for online stores, medical information and stocks.
Apple iPhone Sales Down 35% In China As Huawei Soars: Apple iPhones saw a 35% year-on-year drop in China in November according to Credit Suisse. This drop came despite the Chinese smartphone market being slightly up, with Apple 5th placed in the market, holding a 5.1% annualised share. Huawei has caught a staggering 42% of the market due to the patriotic response to its US-blacklisting, although the brand has hit some bumpy water recently over employee treatment.
They Flatter and Flirt With Single Women for Money – in China, Virtual Boyfriends Offer Intimacy on Demand to a Career-Focused Generation: China’s one-child policy created a generation of self-confident women who have a home and financial security, but lead isolating lives and are looking for love. Some engage men who charge for friendly and flirty online communication, from wake-up calls to lengthy text exchanges and video conversations. Prices can be a few thousand yuan to keep a companion on retainer for phone calls throughout a month.
Food & Beverage
Costco Plans More China Openings as Sales Boom at Shanghai Store: Costco's Shanghai store has exceeded expectations, prompting plans to open another location in China in 2021. More than 240,000 new customers became members at its Shanghai location since it opened in August, with other Asia-located countries stores getting around 120,000 signups after a year or two. It may still take several years for China to break even after more stores open and average shipping and stock costs are reduced. Aldi is also expanding its China-reach by opening a Tmall Global cross-border ecommerce store in March offering wine, snacks and breakfast products using Australian suppliers.
Chinese Criminal Gangs Spreading African Swine Fever to Force Farmers to Sell Pigs Cheaply So They Can Profit: A report by state media says some offenders are leaving infected feed in sties and are even using drones to spread contamination. Pork prices have spiked as a result of the disease and gangs can profit by getting around controls to smuggle meat across provincial boundaries. Pig farming king Qin Yinglin from Muyuan Foodstuff has seen his net worth quadruple to $8.6 billion as smaller players are pushed out and big players' profits increase.
Tmall Global Expands Cold-Chain Offerings: The cross-border ecommerce site has created an end-to-end service that handles shipping for temperature-sensitive products, from foods to pharmaceuticals, solving a problem faced by any brands looking to sell fresh items to China: namely, the need to hire multiple logistics partners to fulfil an order. Tmall Global also handles customs clearance online, with items receiving approval immediately after the order is placed. Once in China, the goods are stored in Tmall Global’s warehouses, allowing for delivery in as little as 24 hours. China's cold-chain logistics market is expected to reach over ¥339 billion ($48.2 billion) this year, up 17.6% from 2018.
China-Africa: "Huge" Ag Cooperation Potential: African agriculture is likely to be feeding more Chinese in the future following the "Sanya Declaration" where the Chinese Minister of Agriculture pledged to expand investment in Africa by Chinese companies, build demonstration farms, expand cooperation with African research centres, host African technicians for 10,000 trainings in the next 3 years, boost annual China-Africa agricultural trade to $10 billion within a decade from its current level of $6.9 billion and achieve basic food security for Africa by 2030.
Chinese Tourists
UnionPay International and Ctrip Release 2019 Chinese Outbound Travel Consumption Report: In 2019, there were 10% more female outbound travellers than male although the average expenditure per person of male travellers is higher. There has been a steady growth in outbound tourists from second- and third-tier cities. The post-80s and 60+ age bracket made up the highest spending, while people born in the 2000s are following the trend of solo travel.
China’s Social Travel Platform Mafengwo to Lay Off 40% of Staff: Tencent-backed Mafengwo, once a top travel site in China known for its user-generated reviews and other travel-based content, is losing out to larger rivals after a number of scandals this year battered its reputation among China’s consumers.
Fashion
Top Nine Trending Fashion Topics in China in 2019: The Zara Freckles-Gate, high fashion t-shirt scandals, crazy collabs, the Beijing Bikini ban, Vogue Insta beauty, Fendy Beauty coming to China, Dazed gets a Chinese edition, Forever 21 no more, and Kim K perfume cover up were among the most talked-about fashion topics on Chinese social media.
Luxury
What Luxury Brands Can Learn from Taobao Boutiques: Shopping on Taobao boutiques for fashion items has become extremely trendy with young and fickle Chinese consumers because they offer strong branding and design as well as more value for money. It is also driven by personal 360-degree online customer service as well as understanding the customer's pain points and helping to solve them.That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
