Why Trains & Bikes Mean Much More than Transport for Modern China
In 1990, Greater China's metro systems covered just three cities. By 2020, over 40 cities will sport modern, efficient underground commuter networks. In that same three decades, Beijing has gone from a couple of lines and Shanghai from nothing, to the two largest and busiest networks in the world.
Anyone who has immersed themselves in the swarms of China's metro systems will have noted that subways are playing their part in fuelling the mass movement of consumers. Even with barely any room to move, heads are fixed on smartphones – be it social media, ecommerce, playing games or watching video, all consciously and subconsciously feeding China's consumption machine. Yet more importantly, the zealous expansion of China’s subways represents something much bigger. It signifies the rapid rate of change and progress altering Chinese consumers' cities and as a result, their residents' lifestyles, behaviour and expectations.
While [often highly indebted] local governments are funding the expansion of subway networks, private enterprise is driving another transport phenomena that makes the metro expansions look slow. By Q1 this year China's bike loan schemes accounted for more trips than all on-demand transport in North America, Europe, Middle East, Africa and India combined with their Ubers, Lyfts, Olas, etc. Two thirds of China's bike-loan users now ride three or more times a week.
China had just a few small single-city bike loan schemes until last year, when funding allowed them to expand nationwide and internationally. The rest is history. Ofo alone is said to have 20 million registered users and 6 million yellow bikes in 100 cities. Mobike claims to be even larger. And another 30 rivals vie for market share in yet another example of how spoilt for choice Chinese consumers are, and how quickly they embrace new trends.
No one saw it coming. Brands looking to build long-term strategies for China should keep that in mind. Everything from the types of holidays Chinese consumers choose, to the food they buy, where their health budgets go, to their preference for cars is changing as quickly as the adoption of new transport options. Add that to the regular stream of new regulations and sales channels and a China strategy is hard to pin down.
It is not unusual for foreign brands to want to build 5 or 10-year plans for China. While it is important to have a long-term focus in China, rigid plans will very quickly become irrelevant. Things that have taken 5-10 years to evolve in some markets can take 12-18 months in China.
Chinese entrepreneurs have been brought up in a constantly changing environment and many run their businesses with the same expectation, ensuring they maintain the agility to adopt new initiatives in weeks that bureaucratic corporations can take years to do. Anyone in the China market is competing against such companies, meaning staying ahead of the trends is imperative. Agencies like China Skinny can assist with just that.
Here are this week's news and highlights for China:
Chinese Consumers
China's Breakneck Metro System Growth, in One Amazing GIF: Greater China's metro systems have gone from covering just three cities in 1990 to over 40 by 2020. In this time, Beijing and Shanghai in particular have ballooned from nearly nothing into the world's two largest, in both length and passenger numbers.
A Word of Caution: Choose Your China Ambassadors Wisely: Negative comments flooded in following Dior's first post about their brand ambassador Angelababy, and she hasn't had a mention since. Angelababy’s public image isn't fitting for Dior’s independent feminist spirit in the eyes of Chinese consumers.
Digital China
Mary Meeker’s Focus on China: The Key Highlights: Mary Meeker spent a good deal of time discussing technology growth in China in her legendary annual trends report last week. In short, she believes China's Internet sector has entered an entertainment golden age. Private tech companies are driving China’s wealth creation. Chinese consumers spend most of their media time — 55% — on the internet with livestreaming monetisation huge. Full 355 slide report here.
China Becomes Gaming Goliath: Last year, more than 600 million game players in China spent $24.6 billion of $101.1 billion globally. 2nd placed America spent $24.1 billion. China has 11 gaming firms worth more than $1 billion versus 6 in Europe and 2 in the US.
Online Auctions Prove a Big Hit: The most popular items on Alibaba's online auctions are jewelry, luxury goods, tea, wine, seal-carving products and real estate. The majority of the online bidders are aged between 26 and 35, and unlike normal online shopping, men make up the majority of bidders in the provinces where auctions are most popular.
Is Virtual Reality the Future of Retail in Asia Pacific?: 95% of respondents in a WorldPay survey say they’ve used VR or AR technology in the past three months, and more than half use them at least once a week. Only 1% say they’d never be comfortable making a purchase in a virtual environment.
China’s New Cyber-Security Law is Worryingly Vague: New laws mean MNCs operating in China are likely to need to take the costly step of separating their local IT systems from their global networks. The two main concerns are that the law is overly broad and mischievously vague providing little guidance on what constitutes “critical information infrastructure” (though impact on “social or economic well-being” is a criterion) and which firms are “network operators” (so even individuals with multiple computers could fall foul of the law).
Food & Beverage
AmCham Shanghai’s Food, Agriculture & Beverage Committee Hosts Conference on Changing Chinese Diets: Product innovation, traceability, fraud concerns, digital marketing and what the future looks like both for China's F&B industries and the individual Chinese consumer were the key takeouts from AmCham's annual food conference.
Wealthy Young Chinese Want to Have Their Cake and Bake it at Home: “People don’t typically associate China with baking, but in the last three years we’ve seen a surge in its popularity,” says Jingdong. Sales of high-end embedded ovens have soared on the platform in the last two years to more than 4 million sales, and stand mixers have increased almost five fold between 2014 to 2016, with millennial consumers the main drivers of the growth.
The Packaging Pitch: How to Find Produce Branding Success in China: Seven things that will help a fresh produce company find brand success in China: 1. Understand your product…and your brand; 2. Make sure China is for you; 3. Have an open mind; 4. Create a Chinese brand name; 5. Protect your brand early; 6. Don’t just translate – localise; and 7. Test everything – small details matter.
‘Adventurous Food’ Trend Benefits Imports: Retail sales of packaged foods in 2016 were estimated at ¥12.5 trillion ($1.8 trillion), adding 7.5% from a year ago, according to Euromonitor. The Institute of Food Technologies expected China’s imported food sales to grow 15% annually and reach ¥480 billion ($71 billion) by 2018.
Investments
Revealed: The Sneaky Ways Chinese are Moving Money Across the Border: China’s foreign currency regulator has shed light on the mass underground exodus of cash from the country, coming up with a list of 10 top cases of individuals and firms moving money covertly over the border. Five companies alone were accused of forging contracts or invoices to remit a combined US$226 million offshore since 2015.
Health
China's Biggest Developers Are Betting on $2,400 Nose Jobs: The amount invested into private hospitals in China has exceeded that of public hospitals since 2015, with companies like the indebted China Evergrande Group betting on Chinese shelling out $2,400 for nose jobs and $1,000 double-eyelid plasties.
Cars
Is This the Magic Bullet Detroit Automakers Are Looking For in China?: For years, pickups/utes have been seen as low-end, no-frills vehicles in China that farmers and construction workers use to haul agricultural products and building materials. Based on what was on display at Auto Shanghai, automakers are going to start pushing more profitable trucks into the Chinese market. Ford showed off its almost ¥500,000 ($72,435) F-150 Raptor and introduced its Ranger, GM was flaunting Chevrolet Silverado and Colorado and at least 10 Chinese automakers introduced new pickups. There aren't that many truck brands in the US.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
