China News This Week: Wednesday 3 November 2021
This week's news and trends in China:
Chinese Consumers
Goldman Lists 50 China Stocks to Benefit From Common Prosperity: Companies connected to themes such as manufacturing upgrading, green energy, state-owned enterprise reforms and mass consumption stand to gain from President Xi's ambitions. Brands include Xiaomi, LONGi Green Energy and Li Ning. The 50 companies named by Goldman have a combined market capitalisation of about $1 trillion, and could grow at a compound annual growth rate of 27% in the next two years. Goldman believes "Common Prosperity is more than just about redistribution but an overarching development plan led by the Communist Party that could reshape China’s future growth trajectory in the years to come."
Chinese Influencers Can’t Go to LA, So They’re Posing at a Shanghai Costco: To cope with travel bans, Chinese influencers have found a new way to entertain themselves and their followers: taking photos in front of American big box store Costco’s Shanghai store, and 'pretending' to be in Los Angeles. On Chinese social media, many young have posted pictures of themselves in photogenic spots in China with captions such as "pretending to be in a foreign country."
Family PU Letter Applications Now Accepted: In a positive development for reuniting expat families in China, authorities are now accepting applications for family PU letters.
Beauty
2021 Beauty Industry White Paper: China's evolving beauty consumer demands have pushed brands to innovate. While no brand can guarantee holding their market share, all brands have the potential for phenomenal growth through adaptation and transformation.
Digital China
Singles Day to See More First-Time Shoppers from Lower-Tier Cities: For this year’s Singles Day shopping festival, there will be more first-time shoppers from lower-tier cities than from first and second-tier cities according to a Bain study. About half of those surveyed said they plan to spend more than last year; only 8% plan to reduce their spending.
New WeChat Function: Get a Second WeChat Account Without a Second Mobile Number: For WeChat users hoping to separate close friends and family from the innumerable ‘business contacts’ in China, there have been some promising developments.
Food & Beverage
Vegetables Pricier than Pork Worry Chinese Consumers as Costs Swell: Vegetable prices are surging in China after heavy rain swamped crops, fuelling concern over food prices at a time when consumers must brace for a hike in energy costs in the run-up to winter. The price of spinach has jumped to ¥16.67/kg ($2.61) this week from ¥6.67/kg in late September. The prices of broccoli, cucumbers, and cabbage have also more than doubled in recent weeks. The average wholesale price of vegetables in Beijing has jumped by 39.8% since last month, while some leafy vegetables rose more than 50%.
Luckin Coffee Reports Strong First Half on Higher Prices, Volume Tailwinds: NASDAQ-delisted Chinese coffee chain Luckin Coffee reported 106% growth for the first half of 2021 from 2020, with total net revenues of ¥3,182.5 million ($492.9 million). The growth was primarily driven by the increased average selling price, the increase in the number of monthly transacting customers and the number of products sold.
Health
Pricy and Unpleasant, ‘Yangsheng’ Drinks Are Flying Off Shelves: Young people who want to compensate for their hectic lives are flocking to supposedly healthy beverages. Trending yangsheng drinks include those that promise results like a clearer complexion, more energy, weight loss, and reduced edema, priced ¥20-40 ($3-$6). Night owl drinks are among the most popular. Nearly 80% of late sleepers, defined as people who don’t go to bed until after midnight, are between 18 and 34 years old. Meanwhile, nearly two-thirds of white collar workers in China buy health products for themselves, with their top two reasons being maintaining everyday health and dealing with the effects of staying up late.
Chinese Tourists
China Steps Up Plans for ‘Duty-free Economy’ with 5 city Metropolises Leading Domestic Consumption Charge: China is exploring more ways to support its so-called dual circulation strategy, which aims to boost the economy with more domestic consumption. Beijing, Shanghai, Guangzhou, Tianjin and Chongqing will play a leading role as international consumer centre cities. In September, Beijing and Shanghai announced that they had already laid out plans to attract more international brands, increase the number of duty free shops, allow more categories of duty-free goods and increase the duty-free shopping quota per consumer. Chinese consumers spent more than ¥180 billion ($28 billion) overseas on duty-free products in 2019, accounting for 40% of total global duty-free sales.
Shanghai Disneyland Locks in More than 30,000 People for Testing After COVID Scare on Halloween Night: Shanghai Disneyland was not “the happiest place on earth” on Halloween night for thousands of visitors who had to wait in line for hours to get tested for COVID-19 after a person who had tested positive for COVID-19 was found to have visited the site the day before. With an army of police officers blocking the park’s exits and securing the grounds, 33,863 people - including both guests and employees - underwent mandatory nucleic acid testing before they were allowed to leave.
Cars
Tesla Opens First R&D Centre Outside the USA in Shanghai: Tesla's Shanghai R&D centre employs teams of engineers in software, hardware, electronics, materials and power engineering. Among other things, they are to develop products and services that are strongly tailored to the needs of Chinese consumers. In total, the centre will have 28 labs, including a low-voltage electronics lab, a firmware lab and a materials lab.
Luxury
Why a Record Number of Luxury Brands Are Taking Part in This Year’s 11.11: Luxury brands won't just be offering special deals on Double-11, but also exclusives on some collections, unique services or very particular experiences. New this year will be a better 'integrated omnichannel experience', with consumers able to have post-purchase caring services for their online purchases. Brands such as Burberry will be using the virtual idol Ayayi to present its 1,000 deer NFT (non-fungible token) with a limited-edition scarf for ¥2,900 ($454). Even Porsche is investing in virtual idols.
How Fashion's Megabrands Will Adapt to Post-Pandemic Customer Behaviour: Legendary Parisian department store Samaritaine has finally reopened and is aiming to attract Parisians, which will also attract returning Chinese tourists who will want an "authentic" experience. Since the pandemic, Chinese luxury consumers are seeking more exclusive and limited edition products; are loving logos again - but differently from before, and are online more than ever. Sales associates doing online consultations with customers have been popular for Kering during pandemic times.
