Big Data for a Big China
Big data is a buzzword that gets bandied around a lot these days, and with good reason. When companies like Google, and more recently Baidu, can uncover flu outbreaks from spikes in web searches long before health agencies become aware, you know you're onto something good.
Applications for big data are starting to be used everywhere, but nowhere is it more relevant and powerful than in China. China's sheer scale and diversity makes it the perfect environment to utilise the power of lots of data. Although just 47% of China's population are online, they are mainly the urban, educated and wealthy classes who are likely to buy imported and premium goods and services, making the data particularly relevant.
For the 47% of Chinese who are connected, the Internet has become a deeply integrated part of their lives. Social media, online shopping, QR-Code scanning and mobile usage rates are among the highest in the world. That behaviour, coupled with a population that isn't overly protective about sharing their information online yet, makes China the perfect breeding ground for helpful data analysis. Data can be analysed to understand and even predict a consumer's journey, preferences and influences, to target them in a way that is most relevant to their needs and desires.
Big data's relevance goes far beyond just the Internet, and can even assist in refining strategies for brick and mortar shopping centres. One of China's best known companies for harnessing big data online and offline is Alibaba. In addition to its ecommerce interests, Alibaba owns businesses in segments as diverse as finance, film and football, giving it access to data across countless touch points of consumers' lives.
For Alibaba's finance business, it has an extensive insight into the eligibility of borrowers through all of its data channels, providing a competitive advantage over traditional competitors. Likewise for films, big data can help determine the direction of the entertainment it funds - hopefully not taking too much of the artistic license away from creators. What happens with football will be interesting, but if you were an online beer seller in Guangzhou, some of those insights could be interesting.
Taobao's popular mobile app allows consumers to scan barcodes on over-the-counter drugs to check their authenticity, which also gives a lot of insights into who may be unwell, and with what ailments.
China Skinny uses a lot of big data for our research and strategy, right through to our web and social media services. One of the more curious insights from big data we've seen lately is that women who buy larger bra sizes, are more likely to spend more online.
Here are this week's news and highlights for China:
Chinese Consumers
Chinese State Broadcaster Loses Viewers, Morale: Spending on online advertising in China this year will total ¥148.3 billion ($24.2 billion) surpassing TV's ¥119 billion ($19.5 billion) for the first time according to iResearch.
APAC Consumer Survey: How We Like to Shop: 66% of Greater Chinese shoppers prefer to shop in a large shopping mall with at least 50 stores according to a CBRE report. 22% prefer smaller centres and 12% like high street shopping the most. 40% of shoppers in the region consider the overall experience - not just the shops - when choosing a destination. Food and beverage is particularly important.
Digital Dopamine: 71% of Chinese consumers consider it necessary for brands to reward loyal customers, 54% think that loyalty programs are important and 75% consider offers and promotions are key.
Condé Nast Grapples With Rapid Change In China: “China is coming into its own as a major economic and technological power, and that is impacting every aspect of business here with Chinese consumers adapting new technologies at a rapid pace,” says Liz Schimel, President of Condé Nast China. “In particular in the digital arena everything in China is different and the speed of creation and ‘creative destruction’ is like nowhere else in the world.”
Finance & Investments
China’s Banks Face Disruption: Traditional banks are facing stiff competition from online competitors with lots of data. Chinese consumers hold about 60% of their personal financial assets in bank deposits, versus 12% for US consumers. However, as the internet lowers the minimum threshold for investing while improving financial literacy and convenience, customers are diversifying their portfolios. Almost 80% of banking transactions in China took place online in 2013.
Shanghai FTZ to Allow Chinese Individuals to Invest Overseas: Although specific details are yet to be released, the new Shanghai Free Trade Zone policy is likely to remove regulatory obstacles currently preventing wealthy Chinese from investing in foreign real estate and other assets. The lacklustre domestic property outlook and volatile stock market are driving more investors to diversify overseas. There are 152 billionaires in China according to Forbes.
Internet, eCommerce & Mobile
Baidu Became China’s Largest Android App Distribution Platform in H1 2014: Baidu appears to be winning as China's app stores consolidate. Baidu, 360 and Tencent now account for more than 70% of the app distribution market.
Chinese Shoppers Choose to Buy British Online: 25% of overseas shoppers buying online from the UK are Chinese according to Paypal research. of the 32% who have purchased from online store internationally in the last 12 months, 45% of online Chinese consumers have bought clothing, footwear or accessories. 38% purchased cosmetics or beauty products, and 31% bought consumer electronics.
Food & Beverage
McDonald’s Enlists Orcs and Elves in Chinese Food Fight: McDonald's is hoping to turn around the 23% drop in revenue following July's food scandal by appealing to the estimated two out of five Chinese who are gamers. Warcraft-themed outlets and virtual item give-aways such as magic turtles tied to the popular online role-playing game have helped quadruple sales of chicken boxes since launching on 24 September.
China Free Trade Deal Boosts Aussie Wine: The current 14%-20% tariffs on Australia wine exports to China will be removed within four years, allowing wine makers to compete on an even footing with tariff-free New Zealand and Chile. Lower duties are expected to soften the blow of the slowdown following the Chinese Government's clampdown on gifting. Many Chinese believe Australian wine is natural, healthy, powerful and elegant.
Chinese Tourists
Theme Park-Boom in China: New Shanghai Disney Resort Nine Times Larger than Vatican: Pictures and details of Disney's new mega-theme park in Shanghai have been released, with the castle to be the biggest yet.
Education
Pace of Chinese Enrolments in U.S. Slows: The number of Chinese students enrolled in higher education in the U.S. grew the slowest in seven years this year, but was still a respectable 16.5% up to 275,000, accounting for 25.4% of all international students in America.
Environment
Consumers Seeking Protection from Pollution: 40% of urban Chinese consumers bought items designed to protect themselves from the effects of environmental pollution in the past year according to Mintel.
Luxury
Why The Reign Of China’s Luxury Shoppers Has Just Begun: ‘Bling Dynasty’ Author Erwan Rambourg believes Chinese consumers will make up half of luxury purchases by 2020 due to (1) the immense wave of middle class able to afford the products; (2) the emergence of female luxury consumers; (3) the social and cultural need to stand out and fit in; and (4) Travel - just a small percentage of Mainlanders currently have passports.
Weird & Wonderful
How Women's Bra Sizes Weirdly Correlate To Their Spending Habits: Chinese women who buy larger bras, tend to spend more overall according to Alibaba data.
That's the Skinny for the week! 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.
If you've missed earlier news or need to learn more, there's a library of information about Chinese consumers in prior China Skinny Weekly's right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In. If you have any feedback or suggestions for future articles, please let us know.
