China News This Week: Wednesday 31 August 2022

This week's news and trends in China:

 Chinese Consumers

Are Foreign Brands Dead in China? — Q&A with Mark Tanner: Mark Tanner talks to Jeremy Goldkorn from the illustrious Sup China (which will be The China Project from tomorrow) about the current China consumer market.

Value of the Top 100 Most Valuable Chinese Brands Exceeds $1.24 Trillion Despite a Challenging Year: Tencent, Alibaba, Moutai, Douyin and Meituan rounded out China's top-5 most valuable brands according to the Kantar BrandZ index. 15 new brands entered the top-100 with Xiaohongshu the top newcomer at 37, followed by iFLYTEK at 53. Li-Ning grew the fastest, climbing 66% to 64th place. 47 brands in the China Top 100 are building their value outside of China, which is an all-time high, up from just 40 brands in 2021.

Ikea Bets on China with $772 Million Investment: Ikea plans to invest ¥5.3 billion yuan ($772.9 million) in China in the next fiscal year, starting next month. Investment will be used for digitalisation, expanding its footprint and operational development. Ikea had 37 stores across the country as of June.

With ‘Instant Retail,’ Brick-and-Mortar Stores are Making a Comeback: Ecommerce sales growth of China's top-100 ecommerce companies has slowed from 30.1% in 2020 to 19.3% in China. Growth of brick & Mortar sales picked up to 13.6% in 2021 from -8.8% in 2020. Retailers like Wumart, Century Mart, Meiyijia, Rainbow, and Wushang have "innovated with new products, new services, and new models to create new forms of consumption" such as 'Instant Retail.'

Digital China

Selling on Douyin/TikTok and Taobao: In China, livestream commerce will account for as much as 20% to 25% of online sales in 2023. It is helping companies to generate immediate sales, reach new consumer segments, introduce new products, educate consumers and create buzz in China - and increasingly in other markets. Livestreaming should be integrated into marketing strategies and not seen as an independent marketing vehicle.

China’s High-End Smartphone Share Expands Against the Trend: Sales of ultra premium smartphones - those worth $1,000 or more - increased 110% in Q2 from a year ago, accounting for 20% of the premium market (¥2,750 / $400 and above), up from 8% a year ago. Whereas affordable premium - $400-$599 - dropped 37%, with the share dropping from 51% to 36%. The premium category was up 31% overall. Apple's share increased to 46% from 43% in the same period last year.

Weibo Comments on Certain Posts to Be Visible on User Profiles: Weibo will make it compulsory for users’ comments on certain posts to be displayed on their profile pages, thereby warning netizens about being cautious with their words on the public platform in an attempt to curb cyber violence. The trial phase includes comments made on government and media accounts. Unlike Twitter, which requires users to reply to a tweet using their social media handle and is visible on their profiles, Weibo so far allows people to respond to posts without automatically disclosing themselves to their followers.

ByteDance Launches New Search App "Wukong": Douyin/Tiktok parent ByteDance has launched a new search app, providing users with an ad-free search experience.

Food & Beverage

Bubble Tea Madness: ‘Modern China Tea Shop’ Opening Creates Chaos in Nanjing: Modern China Tea Shop, Chayan Yuese's, Nanjing opening got so crazy that police had to intervene and scalpers were reselling tea for ¥200 ($30) per cup. The shop had to close after 30 minutes due to the crowds.

Dynasty Fine Wines's White Wine Revenue Transcends Red Wine for The First Time in The First Half of 2022: Set up in 1980 as part of a JV with Remy Martin, Chinese premier wine maker Dynasty has seen white wine sales exceed those of red wine, driven by China's growing interest in white wines, particularly in coastal regions.

First Direct China-Scotland Shipping Route Begins: More than a million bottles of whisky will leave the west coast of Scotland in the country's first direct shipping container service to China. The new shipping route has been hailed as a "game changer for Scotland." Six ships will operate on the route, with each ship capable of carrying about 1,600 shipping containers.

 Fashion

Don't Bother. These Wild Guesses about Foreign Brands are Simply Rumours: Rumours that Gap is abandoning the China market have been dispelled following the opening of a new Gap store in Qingdao. The rumours started after some stores in Beijing and Shanghai began offering heavy discounts on products. "While the Chinese market is one with rapid changes and strong competition, we remain confident about the long-term, sustainable development here," says Chris Mohler, GM of Gap China. Maybelline NY was also rumoured to be leaving China, but has changed its strategy from its traditional department store business to focus on online channels. China's inbound foreign investment rose 17.3% year-on-year to ¥798.3 billion ($117 billion) in the first seven months, with South Korea, the US, Japan and Germany the fastest growth contributors.

Education

Chinese Parents Look to Send Children Abroad Again for Education as Coronavirus Fears Ease: The pandemic forced many Chinese parents to suspend plans to send their children overseas for study, but that is starting to change as the world reopens. 36.7% of affluent Chinese families whose children study foreign curriculums say they would send them abroad at high school age or younger, compared to 15.7% last year. 96% of parents are determined to send children abroad for schooling at some stage, be that elementary education or university. The United States and Britain remain the most popular destinations, but Singapore, Hong Kong and Germany are gaining in favour, a new survey shows.

Cars

Nio Is Winning EV Drivers' Hearts as Competition in China Spikes: Nio CEO William Li credits the car company's customers with saving the company from one near-death experience. In its first four years of existence, Nio had racked up $5 billion of losses and was losing almost $5 million a day by the second quarter of 2019. Sales of 8,000 cars in the fourth quarter of 2019 proved crucial to seeing the company through.