Are Chinese Consumers Paying Lip Service to the Environment?
WeChat's global ambassador, Lionel Messi, was in Beijing last week for the all star football clash between Argentina and Brazil. What should have been a celebration of the beautiful game, turned out to be a demonstration of China's abominable pollution.
As PM2.5 levels soared as high as 499 on Thursday - 20 times the WHO recommended safe levels - during practice Messi frequently covered his nose and mouth, had to stop for plenty of rests and ended up leaving early. Brazil's team left the sanctuary of their hotel for just 2-hours to train over a 24-hour period. The toxic air also filled the lungs of some of the world's top riders in town for Tour of Beijing, and pop diva Mariah Carey at her outdoor concert at Worker's Stadium.
It is yet another China pollution story, coming soon after National Geographic published their 2014 global Greendex. The index compares impacts of consumer behaviour on the environment across different countries. China came in just behind India in second place - a great result. But digging a little deeper, many of the categories China scored highly on such as high public transport and scooter use, and consumption of locally grown food, are characteristics of a developing economy and generally aren't decisions made for environmental reasons.
Some concerning findings from the survey were that Chinese are the least likely consumers to want second-hand goods, placed little faith in environmentally friendly products, and had the largest portion of people dreaming of owning a big house. Other statistics not covered in the Greendex such as SUVs being the fastest growing auto segment in China, are equally worrying. This indicates that a lot of consumers aren't taking individual responsibility for the environment, even though they see the effects all around them. Many Chinese believe that it is the Government's responsibility to solve the pollution problem.
Whilst on one hand affluent Chinese consumers are turning their nose up at things such as fuel efficient cars, the environment is a key factor for purchases related to their health, that they can influence on an individual level. 59% of Chinese consumers consider environmental quality as important when buying food and beverages. Tourism, construction and real estate in many unpolluted Western cities are also reaping many benefits.
Although consumer behaviour is just one piece of China's pollution problem, it's an ever-growing part. Let's hope behaviour becomes a little more sustainable as consumers grow even more affluent.
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Here are this week's news and highlights for China:
Chinese Consumers
China Overtakes the US as the World's Single Largest Economy: By calculating GDP alongside the cost of living, the IMF has declared that China is now larger economically than the US for the first time in history. China's adjusted GDP of $17.6 trillion compares to the US GDP of $17.4 trillion. China's economy was less than half the size of the US in 2005.
China Opportunities from a European Perspective: Two themes of consumption growth are emerging in China, demand for aspirational goods and improved quality of life. Europe’s economic strengths lie where these themes converge.
Environment
Increased Fears About Environment, but Little Change in Consumer Behavior: A global study by National Geographic ranked China 2nd on the Greendex, just behind India. It wasn't all rosy though, with Chinese consumers the least likely to buy used goods. They were also among the least trusting that environmentally friendly products work well. Chinese consumers have the largest proportion stating that owning a big house is a very important life goal.
LG Electronics Launched “Localized” Air Purifier in Chinese Market: LG has launched an air purifier localised to the specific needs of China's booming market. The filter is said to have enhanced performance for the fine dust particles and pollution that plague China, and is also a round shape in gold and silver, representing good luck and wealth.
Internet, Mobile & Social Media
Two Charts That Show Why Larger iPhones May Be a Big Deal for China, Bigger Pain for Samsung: 40% of Android smartphone sales in China in December last year had screens larger than 5 inches. In August this year, it was 78%. This represents how Chinese consumers are increasingly looking for richer experiences on their mobiles.
Online Purchases Get a 'Smart' Touch: 71% of China's smartphone users have had a mobile shopping experience. 37% have used their phone to order food and 35% to trade stocks. Of the average 3.7 hours that Chinese consumers spend online a day, 2.2 hours are on mobile.
Chinese Online Shoppers Favour U.S. e-Retailers: Of the 4% of China's online purchases that happen overseas, US sites have the highest frequency - more than double the second highest UK according to Visa. Hong Kong, Germany, Japan, France and Australia are the next highest. The average value for purchases on US and Australian websites is 50% higher than the average. On the topic, Guangzhou has just streamlined customs for overseas ecommerce sites.
Chinese Tourists
Holiday Spending Habits Change: Union Pay spending habits of Chinese abroad during the Golden Week holiday reinforce tourists are moving to experiences, with spending on entertainment up 56.6%, dining and hotels increasing 52.2%, whilst the old favourite shopping grew just 30.4%. Tourist spending in South Korea, Germany, UAE, New Zealand, Spain, Australia and Canada increased at least 80% over last year.
Food & Beverage
Would You Trust Chicken from a KFC in China? The Chinese Still Don’t: KFC and Pizza Hut's parent company Yum Brands has big plans to grow its existing 6,387 restaurants in China to 20,000 by 2020. That wouldn't have been helped by the latest expired meat scandal, which saw same store sales drop 14% in the third quarter of this year. Reassuring consumers their food is safe food is vital to success, but given their advertising campaigns prior to expired chicken focused on this, it will be even harder to play that card.
Dutch Dairy Giant Eyes Further Success in China: Royal FrieslandCampina has established a joint venture with Huishan Dairy in China, hoping to hit €1 billion ($1.3 billion) in turnover in China next year. The company aims to tap into the local partner's "professionalism in terms of farming," and add its "control mechanism and quality control professionalism". Some recipes will be tailored for Chinese babies.
Smell the Coffee: The average Finn drinks 1,340 times the amount of coffee that average Chinese consumer consumes - a paltry 10 grams a year. But times are changing. Between 2012 and 2013 Starbucks opened 500 stores in China, more than the last 12 years combined, in addition to new cafes from the Brits, Australians, Taiwanese, Koreans, Singaporeans and a slew of local cafes. Between 1965 and 1980, demand for coffee in Japan grew six-fold by comparison, seeing the Japanese consume almost as much as the Americans per capita.
Health & Beauty
China’s Skincare Obsession Goes High-Tech With Growing Device Market: Combining China's love of tech with its compulsion for skincare, LVMH-owned Sephora stores are selling Talika's device that uses LED lights to treat signs of aging.
Entertainment
Who's Betting Big on China's Growing Box Office: Although China's box office is a third the size of the US & Canada's, it grew 27% last year versus 1% across the Pacific. PWC picks China's box office will rise 88.5% to $5.9 billion by 2018. Banking on that growth, Chinese investment in US entertainment, including film, has been around $2.7 billion since 2000. iQiyi, a Netflix-type service, is picking China's online movie market could rival its physical box office in 5-years.
Auto
Chinese Luxury Car Market: An Overview: 60% of surveyed Chinese car users consider selecting a car as important a decision as choosing what to pay for their kid’s education, or buying an apartment according to McKinsey.
That wraps up this week's Skinny! On the to-dos this week, why not contact China Skinny to discuss how we could help with your marketing, online initiatives or research to take advantage of China's opportunities. Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.
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