The Far-Reaching Uses of Big Data in China
China Skinny has been utilising big data for analysis, trend spotting and recommendations for some years now. Chinese consumers' spirited uptake of the Internet and wide scale integration offline means that much of what online Chinese do during their day is recorded, allowing us to help demystify consumer behaviour.
Online Chinese are among the world's most easy-going with data privacy, creating a treasure trove of insights for those who can make sense of it. Yet with so much data available, fake sales on ecommerce platforms and fake WeChat fans, likes and comments are common and social listening can be skewed by a vocal minority; so it's wise to cross reference the data with other offline and online sources.
Even though marketers have access to some very helpful data, we only get a glimpse of what is available. Even Alibaba, Tencent or China Mobile have a limited view of Chinese consumer behaviour. It is those in Beijing who have access to insights that would have most consumer analysts weak at the knees. In late 2013, we saw early signs of this, with cooperation between the Government and companies such as Baidu, Alibaba and China Unicom to assist with data collection for Chinese statistics. The Government's enthusiastic embrace of their Internet Plus policy and online focus in recent Five Year Plans isn't just to grow innovation, productivity and consumption. It enables them to better track everything from food supply chains to the opinions and behaviour of Mr. Zhou in Xuhui District.
Although most of us know in the Snowden era that our online activities aren't off-limits to most Governments, the Chinese Government is a little less subtle about it. In fact, they have recently released a high level document outlining their social credit system, a scoring method based on online behaviour which Beijing hopes will build a culture of “sincerity” and a “harmonious socialist society” where “keeping trust is glorious.” Beijing plans to have it in place by 2020.
Those 'poorly behaved' online may struggle to take out a loan, book the "soft sleeper" class on trains, travel abroad or get their children into good schools, among many other things. There is even potential for social credit scores to be advertised on dating sites as a way to tempt potential suitors. Similar conduct is already happening on the popular Baihe dating site, where 15% of users display their Sesame Credit scores to add to their plausibility.
Chinese consumers already have to register their ID to use many online services and are well aware that they are being tracked. But such prescribed consequences may influence some behaviour online going forward, creating an even more unique environment. We will watch with interest.
For our Shanghai and China-based readers in the auto industry, China Skinny's Nadja Rauscher will be presenting on Consumer Trends in China at the Global Automotive Plastics Industry Summit 2016 on Friday November 11. Come over and introduce yourself if you are there. More info here.
Here are this week's news and highlights for China:
Chinese Consumers
China’s Plan to Organize its Society Relies on ‘Big Data’ to Rate Everyone: Beijing has ambitious plans to develop a far-reaching social credit system by 2020, utilising big data to score China's online population to ultimately determine whether they can borrow money, get their children into the best schools or travel abroad, get a room in a fancy hotel, a seat in a top restaurant or even get a date.
Here's What the West Gets Wrong About China, According to Alibaba and Didi Execs: U.S. firms should not mistake Chinese innovation as copycatting and the market as not being free. It is in fact, the most competitive market ever, which creates companies that are stronger and more innovative, and increasingly ready to play a global game.
After Acquiring Uber China, Didi Chuxing’s First Major Change is to Stop Foreigners from Using It: Uber China's app can now only be used in China, and Uber apps from outside China no longer work. The English interface has been removed, as has the ability to use foreign credit cards in the latest version.
Digital China
This One Consumer Group is About to Have a Huge Impact on the Future of Online Shopping in China: Alibaba commands a 52% market share for FMCG compared to its 70% overall market share for online shopping, indicating a more fragmented category. Cosmetics chain Sephora draws shoppers to its own platform by only listing half the products on third party platforms than it does on its own store.
Wal-Mart Takes Another Step Forward With Chinese E-Commerce Giant JD.com: Following the Yihaodian-JD merger, Wal-Mart is investing in JD-backed online grocery specialist called New Dada. It is also launching new Sam's Club and Wal-Mart flagship stores on JD and offering 2-hour delivery service for any consumers living within a 3km radius of the 20 participating Wal-Mart stores.
Chinese Brands Winning War of the Mobile Phones: Chinese brands accounted for well under a third of smartphones sold in China just five years ago. They currently make up 85% of sales and are on track for 90% by the year end. The three top players in Q2, Huawei, Oppo and Vivo, collectively shared 47% of sales.
Fake WeChat Clicks Highlight Trouble with China’s User-Generated Media: Some of the most popular accounts on WeChat have a large share of fake views, forwards and comments. The going rate on Taobao for 1,000 WeChat page views costs ¥30 ($4.43), 100 forwards costs ¥40 ($5.91) and 500 followers costs ¥20 ($2.91).
Chinese Tourists
Political Risks Rock China’s Tourism Industry: October has been a tumultuous month for Chinese tourist firms with several developments shaking up the industry. From South Korea to Thailand, changes are afoot as the government sets its sights on the tourism industry.
Crocodile Dundee-Era Hotels Fail to Impress Discerning Chinese Tourists: Australia was 17th among worldwide destinations for Chinese tourists on package holidays in the second quarter, lagging behind Russia in 13th place according to the China National Tourism Administration. Common complaints are five-star hotels look too old, service is not so good and prices are high for what you get. Thailand, South Korea, Japan, Hong Kong and Taiwan were China's top-5 most-favoured package holiday destinations. Interestingly, the country consistently scores close to the top for luxury and FIT travellers.
Food & Beverage
1 in 2 Chinese are Adventurous Foodies: 45% of Chinese consumers consider themselves "adventurous" foodies- a third higher than it was four years ago (34%) according to Kantar TNS. The research indicated how fragmented the market has become. Consumers are more open to new, upgraded products and they are ready to pay more for products with add-on benefits, presenting a market that demands the food and beverage industry to be bold in innovation.
Tasmania to Get First Direct Flight to China (But Only for Milk): Chinese businessman Lu Xianfeng plans to fly fresh milk from his massive dairy operation in Tasmania to his home city of Ningbo and then Beijing. Weekly flights will begin next year, with 2-3 flights a week expected within 12-months. Milk will sell for between $7.60-$11.40 a litre.
Yili Surges on $680 Million Shengmu Organic Milk Stake Buy: Yili, China’s top dairy company by retail sales with a 22.3% market share, will own up to 73% of Shengmu, China's only dairy company to produce certified European-standard organic milk. Yili hope to improve its brand equity in the sought-after high-end segment, where its rival Mengniu currently has the advantage.
Bright Food Stays on Global Acquisition Push: Undaunted by the yuan’s devaluation, Bright Food plans to step up its acquisitions of overseas food companies, with its focus remaining on the United States, Europe, Australia and New Zealand, as well as Southeast Asia.
Beauty & Health
Unilever’s LUX Hair Care Brand Redesigned to Push Premium Credentials: LUX wanted to achieve a stronger impact on shelf and establish itself as "owners of 'Shine'" within the Chinese hair-care category, with new glossy white and gold packaging targeting 22-40 year old Chinese women.
Cars
Chinese Seek In-Car Connectivity: About 40% of Chinese car buyers are willing to switch car brands for better connected technology. In-car technology allowing better connectivity was more important than price and engine performance when deciding to buy according to PWC.
That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
