“Be agile, adapt and redefined to the change that is China marketing” says Adil Zaim, CEO of Carat China

There’s no shortage of jaw-dropping numbers in China, however it’s the speed those numbers are changing that’s most fascinating. Since Adam first met Eve, the world has never seen changes on the scale that are currently happening in China.

There’s a stunning spot in Idaho, where sweet and plump cherries grow. Many miles away in Shanghai, consumers on Tmall are clicking ‘buy’. As those US cherries are looking nice, they’re picked and sent with bags of ice.

It will be interesting to see how the Fonterra milk fiasco pans out in China. Not just for those peddling dairy products, or New Zealand businesses trading on the ‘clean green’ brand, but for any businesses operating on scale in China and those whose marketing builds on their country’s image – which makes up a large portion of foreign businesses in China.

This week, China Skinny launched a new online tool, The City-Nator, which offers a quick and compelling insight into the huge opportunities that exist in China’s cities outside of the Beijing-Shanghai-Guangzhou-Shenzen Tier-1 markets.

Back in 2011, a long time ago in Chinese marketing years, everyone was talking about Weibo as the silver bullet for Chinese marketers. Businesses were scrambling to attract as many Weibo followers as they could, hiring ‘Weibo experts’ to post enthusiastically, and giving away all sorts of goodies. Since then, Weibo has done good things for some businesses: building brands, attracting a loyal following and creating a great platform to spread their messaging and promotions far and wide.

In the Weekly China Skinny on March 26, we wrote about the rise of the China brand, a trend that has been further confirmed in a recent online survey by Global Times and QQ.com. The survey found that 41.8% of Chinese consumer’s impressions of foreign brand standards in China has worsened in the past year. In the Chinese film industry, once dominated by a small number of western movies, Chinese movie box office takings grew 144% in the first half of 2013, whereas takings from foreign movies were down 21%. It may be from maturing Chinese film makers understanding the local market, bad choices for the 34 foreign film quota allowed into China each year, or Chinese movie-goers preferring foreign films before Hollywood went to great lengths to ‘China-fy’ their blockbusters. Whatever the reason, it’s further validation that Western products and services are going to have to keep working harder and smarter to retain their advantage in China.

Chinese consumers go online more than any other information channel to find out about products and services. Ipsos research in 2012 found that 38% regularly increase their brand awareness and 48% increase their purchase intent through a company website; less than 32% do the same through state-run TV, newspapers and radio. There has been numerous research backing this up including Accenture’s April 2013 survey confirming the Internet as the channel most consumers turn to when looking for information about a brand or company. With that in mind, it is remarkable how many businesses targeting Chinese consumers still have poor websites.

In most countries when consumers think of milk, it’s likely they’d picture smiling kids with milk-moustaches. They may visualise families in chorus, skipping through emerald green pastures amongst big-eyed cows with bulging udders. Chinese consumer’s perceptions aren’t so rosy. Every time someone in China has a sip or a suck of the white juice sourced from Inner Mongolian paddocks, there’s a small part of them worried that they’ll be bed-bound by morning, or worse still, their precious child will be. Hence the premium consumers pay for foreign dairy products, and why foreign milk powder producers account for 60% of China’s market.

House prices in China are continuing their seemingly never-ending rise. Prices in 69 of China’s 70 main cities are up from last year. In most countries when house prices are on the up, consumers feel wealthier and spend more. Not so in China. Although slowing GDP growth is affecting confidence, climbing house prices aren’t helping things either. Just over one in four Chinese consumers plan to spend more this year, 29% less than last year. That in itself marks one of the biggest differences between Chinese and Western consumers.

The rise of Tencent’s WeChat/Weixin in China has been quite remarkable. Just two years after launching, WeChat had already clocked 300 million registered users. To reach that many users, Facebook and Twitter took more than five years; even Sina Weibo’s legendary rise to 300m took two and a half years. And, unlike some other social media platforms, where numbers are bolstered by users who can register as many accounts as they have email addresses, WeChat accounts are tied to mobile devices, so there are a lot less ‘zombies’.

Barely a Weekly Skinny passes by without a mention of some food scandal in China. With each toxin-infused grain of rice or vermin masquerading as mutton, Chinese consumers are constantly reminded that their food supply is simply, ratty. It’s helped countless Western food and beverage suppliers charge substantial premiums, while enjoying never-ending growth rates.

It was barely a year ago when everyone was singing the praises of KFC in China. And quite rightfully too. Consumers in China’s cities couldn’t get enough of Colonel Sander’s secret herbs and spices. KFC accounted for 40% of China’s fast food market across almost 4,000 restaurants, and there were another 16,000 planned. The chain had localized the menu sufficiently to appeal to the Chinese palate, but kept the restaurants American enough, giving diners an affordable way to live the ‘Western dream’. At a time when watermelons were exploding, Chinese pigs were pumped full of toxins and local restaurants fried their noodles in gutter oil, food from KFC and other western fast food chains was trusted to be safe – they abided by better-enforced foreign laws. Oh how perceptions have changed in China.

94 million Chinese are expected to travel abroad this year. By some counts, it will be 400 million within five years. Those numbers have many of the world’s tourist hotspots busily upping their China marketing budgets, educating local tourism operators, simplifying visa processes, negotating Chinese flight paths, and doing whatever they can to woo the biggest prize in international tourism since the jetliner. Of the world’s tourist destinations, only Taiwan appears to be trying to reduce the Mainland tourists it hosts.

China is a vast and varied land. From the western deserts of Xinjiang, to the factory sprawl of the Pearl River Delta, there are 700 cities with more people than Geneva. That’s a lot of consumers. However, it’s the consumers in Shanghai, Beijing, Guangzhou and Shenzhen and maybe Chengdu, Chongqing, Qingdao, Hangzhou, Suzhou, Wuhan, Dalian and Tianjin who get most of the attention in China. What about the other 98% of cities? By 2020, 75% of affluent Chinese consumers – those with the disposable income and inclination to make discretionary purchases – will hail from smaller Chinese cities that most people reading this will have never heard of.

If you needed further proof that China is constantly changing, look no further than consumer habits. The Luxury segment, not long ago a bastion of guaranteed growth for western businesses in China, has hit the brakes. Chinese consumers are increasingly looking beyond the most expensive wares as the only ones to be seen with. For the first time in recent history, mid-range retailers grew faster than luxury retailers in China. Even in Hong Kong, where 35 million Chinese tourists annually have a big impact the retail industry, outlet stores are seeing much faster growth than mid-level malls, which are growing faster than high-end ones.

Ask a random westerner about sport in China, and they may rattle off Olympic swimming women, ping pong stars, badminton legends and a basketballer. Considering its population, China isn’t well known for its sporting prowess. Nevertheless, like most segments in China, sport is big business and is on the rise. The NBA website, for example, has had 4.5 billion page views from China this season and 3.2 billion games streamed online, up 169% from last season. NBA has more than 100 employees servicing the mainland and a budget of hundreds of millions of dollars, in a market worth tens of billions in advertising, sponsorship and merchandise. Nike’s China fortunes alone are picked to increase $4 billion if LeBron James‘ Heat wins the playoffs.

Outside of China’s once-every-four-year Olympic gold medalists, China is starved of global sports stars. When one of their own does make it, the patriotic Chinese are quick to elevate them to Messiah status, with the riches inevitably following. Much of the NBA’s runaway success in China can be attributed to Yao Ming’s presence in the league, which helped him become one of China’s youngest yuan billionaires. When Li Na won her first Grand Slam title at the 2011 French Open, almost overnight, sponsorship deals saw her become the 2nd highest paid sportswoman in the world and tennis’ popularity soared in China.