China in 2013: The Year That Was
With Christmas upon us next week, this is the last Skinny for 2013, providing a good opportunity to reflect on the year that was. It's difficult to do justice to China's past 12-months by squeezing them into a few paragraphs, but we've done our best.
As 2013 kicked off, it was the pollution that was the talk of the town. More transparent monitoring and rampant posting on social media helped raise awareness, quantifying the seriousness of the 'fog' that was suffocating China's cities. The foul air has been a recurring theme for much of the year, keeping the Chinese indoors, with many opting to shop online rather than brave the air outside. Not surprisingly, one of the fast-growing categories on Taobao this year was facemasks, which grew 181%.
By early April, China had a new reason to stay at home - bird flu - driving consumers away from poultry, and another blow for KFC which was already floundering in bad press. Pollution and sick roosters were just two of many catalysts which saw Chinese consumers shop online in droves, climaxing on November 11's Singles' Day, when almost $10 billion - 2% of China's yearly eCommerce takings - was taken in 24-hours. Online shopping's massive impact in China this year saw Alibaba's founder Jack Ma receive the well-deserved title of Person of the Year from the Financial Times.
One notable shift from 2012, was the rise of the smartphone shopper; with mobile payments growing 500% in the past 12-months. Mobiles accounted for 21% of Taobao/Tmall goods purchased on Singles' Day, up from 5% a year earlier. By 30 June, some 464 million of China's consumers were accessing the Internet on a smartphone, around 80% of China's online population. With local brands like Xiaomi and Baidu selling feature-packed mobiles for less than ¥800 ($132), the mobile Internet has become within reach of the masses, and with it, hugely-popular mobile apps such as WeChat.
Through innovative marketing and great value products, Xiaomi has blazed the trail in China. In 2012, many image-conscious Chinese wouldn't be seen out with a Chinese-made device; now they can't get enough of them. Four of China's top-five selling mobile brands are from the Mainland. This is further evidence of increasingly confident and mature Chinese consumers in 2013, who have quickly become more discerning about products, services and brands, seeking value and quality. China's first lady wearing local fashion labels, and Chinese brands raising the standard such as Xiaomi and WeChat, has seen Chinese consumers hold local goods in a better light. They've also been helped by the Government, using state-run media channels to sway public opinion against pin-up Western brands such as Apple and Starbucks. Western brands still have an advantage in many categories, but they have to work harder and smarter to retain it.
As 2013 began, maturing Chinese consumers were already shying away from brash, logo-brandished luxury products, a trend that was further fuelled by the Government's crack-down on corruption during the year. Discrete boutique brands that are well marketed have seen healthy growth, although the whole category grew just 2.5% overall in China. Nevertheless, Chinese consumers still accounted for 47% of this year's record $217 billion expenditure on luxury goods worldwide. 73% of their purchases were overseas, mirroring the rise of Chinese tourists who have become the number one spenders globally, shelling out $102 billion. Domestic tourism has grown also, with China's top tourist sites seeing 20% more visitors during October's Golden Week than in 2012. China's growing appetite for tourism has helped drive up the value of travel and hotel brands across the country.
Western food and beverages continue to soar in popularity in China. On Tmall alone, sales of imported food grew 500% in the first 6-months of the year. Even the Fonterra botulism scare did little to dampen appetites for imported fare, as consumers grew wealthier and were bombarded by a stream of local scandals from tainted rice to rat dressed as lamb. Although measures such as China's GDP growth are slowing, the outlook for most products and services looks rosy in China. The continued rise of the middle and affluent classes and an increasing focus on consumerism, has driven consumer confidence up to 110, from 106 a year ago and the highest point in three years, with consumers in smaller cities showing notable growth. We hope that you can enjoy a piece of it.
For our readers celebrating Christmas this year, we wish you the Merriest of Festive Seasons. We trust that 2014 begins well for you all, and look forward to being back in touch early in the New Year. We hope you enjoy our last Skinny for 2013.
See below highlights of the news this week:
Chinese Consumers
China: Fastest Growing Consumer Market in the World: China's consumption growth continues to outpace the world's other major economies.
China CCTV Starbucks Report Set Off Storm Inside Network: Great investigative reporting into CCTV's singling out of Western companies for unfair treatment of Chinese consumers. Starbucks have read the local market well, positioning themselves differently than in other countries, providing an affordable way for Chinese consumers to feel and show off 'affluence'. Patrons have taken to it en masse, but Starbucks' success has seen them slated by the state-run TV channel for charging more than in other countries.
China Mobile tops BrandZ’s Most Valuable Chinese Brands: China's SOEs still dominate the most valuable brands in the Mainland, however tech firms Tencent and Baidu are in the top-5. Chinese consumer's increasing wanderlust is pushing travel and hotel brands brand values up, whereas alcoholic brands aren't faring so well. Although local brands have poor awareness in the West, with 94% of Americans unable to name a Chinese brand, China's brands are still hugely valuable with a massive domestic market, and 20-29% in awareness in the other BRICS markets.
5 Lessons From China’s Top 100 Brands: 1. Technology, telecoms and banking brands dominate; 2. China’s tech businesses already stand toe-to-toe with the global giants; 3. Chinese tech companies want to be banks, too; 4. The scale of mobile is incredible; and 5. Chinese business stereotypes are out of date.
Recognizing the Difference Between American and Chinese Consumers: Some key differences in American and Chinese cultures including the differences in social attitudes and the influence of the Government in business.
"Baby Back Home" Reunites Missing Children With Their Families: Very cool advertising integrating outdoor, mobiles and active participation with a goal of finding some of the estimated 20,000 kids that go missing each year in China.
Companies in China Assess Content Marketing Trends, ROI Impact: 31% of businesses marketing in China plan to reduce investment in traditional media channels, to focus on more visual, humanized, real-time and interactive marketing such as social and mobile.
Internet, eCommerce, Mobile & Social Media
What China is Shopping For: Taobao’s 2013 Keyword Search Trends: More than 100,000 Taobao customers have spent more than ¥8.5 million ($1.4 million) buying rubber duckies online this year. Almost 6,000 shoppers spent over ¥1 million ($160K) on Taobao. China's rampant pollution has driven sales of facemasks up by 181% this year and air purifiers by 131%.
China Has Over 1.3 Billion Microblog Accounts: There are now 1.3 billion microblog accounts in China, although many are 'zombies'. Media institutions account for 37,000 accounts and Government microblogs grew 2.5 times to 170,000 last year.
Martell’s Savvy WeChat Campaign Engages China’s Frequent Flyers: Nice use of WeChat by Martell to help their Cognac brand, encouraging active engagement of their ads to attract affluent duty free shoppers at Chinese airports.
WeChat Launches Voice Open Platform: Official WeChat accounts can now add speech to their features. QQ Music and Soso Maps are two of the first to integrate it.
China Has 604 Million Netizens: As at 30 September this year, more than 600 million Chinese were online, with mobiles being the most popular form of access.
Food & Beverage
Diners Not Biting on KFC's China Revival Campaign: KFC's China slogan, "Trust in every bite", part of the "I Commit" campaign, doesn't appear to be making great headway in the market. A survey in November found 39% of Chinese were still very concerned about antibiotic use in KFC chicken. With 4,500 restaurants in China accounting for almost half of KFC global operating profit, they want to get it right. Here's a candid look at the KFC's rise from an MBA case study into localisation, to its fall from grace in China.
McDonald’s China Kicks Off Newly “Manliness” Campaign: McDonalds is hoping to appeal to real Chinese men with their ‘Manly Man Beef’ campaign - simple, no-nonsense, straightforward and decisive. Different ads have been created for different cities, taking into account the 'Manly nuances' of each city.
'Tycoon Brand' Fruits Coveted by Young Consumers: Chu's Oranges sell for five times the price of other Chinese oranges, but are considered safer and have a great story behind them - one of strength and success, even if there were a few setbacks along the way.
Dairy Prices Rise as Supply Shrinks: China's domestic milk suppliers have raised prices 5-20%, seeing China's average price of raw milk rise for the 14th straight month. Less than 40% of China's milk comes from farms operated by companies, well below the 2011 target of 70%, although individual farmers have dropped 600,000 between 2008-2012.
Premium Labels Take Beer in China Beyond the Working Man: China's beer market may be the world's biggest, valued at $81 billion, however the average price of beer in China was just $1.20 a litre in 2012 compared to America's $3.70, and Japan's $8.40. Things are on the way up though, with the premium beer segment growing 2.5 times faster than the overall beer market.
Chinese Tourists
Global Tourism Watch China Summary: Chinese long haul destination preferences are growing, with Singapore and Thailand dropping in favour of more far-flung exotic destinations. Australia, NZ and Canada take out the top-3 spots for perceived "friendliness". France is the leader in the brand category, followed by New Zealand. Chinese travellers admire French culture and history, while New Zealand’s geography is seen as inspiring. Both destinations are seen to offer an authentic experience.
Harrods' Christmas Weibo Campaign Engages London's Chinese Tourist Influx: Harrods runs a Weibo treasure hunt in its London store, using the social network to give daily clues about hidden gifts. China is Britain's fastest growing inbound priority market, with visitor numbers growing 21% in the first 6 months of 2013 from a year ago, and spending up 132% to $299 million.
Fashion
China’s New Economy of Fashion: A deep insight into China's local fashion, with designers placing a lot of importance on identity and self-realisation, sometimes as much as profit.
Entertainment
Movies in China: 51% of the Chinese population watch movies at least one a week, versus 41% internationally. Chinese are more likely to engage with Chinese movies for a social experience, and international movies for a cultural experience.
Auto
Chinese Auto Marketers Must Explore All Avenues to Engage Consumers: If you were unsure about how competitive China has become, just look to the auto industry. 10 years ago, there were 64 car brands in China. There are now 379.
Luxury Goods
Chinese Luxury Consumers to Spend $102 Billion in 2013: Chinese consumers accounted for 47% of this year's record $217 billion expenditure on luxury goods, with $28 billion spent domestically and $74 billion abroad. New York City, Paris, and Tokyo are the most popular destinations abroad, with clothes, shoes, bags, jewellery and watches the top categories purchased.
That's The Skinny for the week! China Skinny would love 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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