China's Ecommerce Global Expansion
Few segments represent the dizzying rise of China and its unique characteristics like eCommerce. In addition to breathtaking growth rates, online shopping is fundamentally altering consumer behaviour across both online and offline channels, from product research to purchasing.
Last week's announcement that America's second largest retailer, Costco, is launching in China just on Tmall further emphasises this. Whereas Costco is predominantly a physical big-box retailer in its traditional markets, it realises that China needs a different approach. The high cost of real estate, low car ownership, HR challenges and the popularity of online shopping in China has seen many large-format Western retailers from Home Depot to Media Markt fail.
Ecommerce enables easier setup for Costco in China and will help it capture the ever-increasing share of the affluent and open-minded consumers shopping online. It can reach consumers in many of the 152 cities with more people than Seattle, without the need to build and operate hundreds of physical stores. Tmall is also popular for competitively-priced, bulk packaged food products which aligns with Costco's typical product mix.
Alibaba isn't just attracting the world's largest retailers to sell on its Chinese platforms, it is looking to infiltrate the websites in their home countries as well. Capitalising on the international exposure from its record-setting IPO, Alibaba has announced a new service, ePass, allowing retailers to sell to Chinese consumers in RMB with Alipay on their Western sites, and ship internationally to Chinese consumers using its affiliated Cainiao logistics network. Uber Taxis and AirBnB already use ePass.
With Single's Day less than 3-weeks away, there will be a strong international focus this year. Tmall CEO Wang Yulei stated that the key word for Single's Day this year is 'globalisation'. Tmall Global is offering heavily discounted products from seven countries including the US, UK and Germany. It is also offering free international shipping on selected items to international destinations such as Spain, Brazil and Russia. Tmall is hoping to grow the biggest shopping day on the planet by 40% from ¥35 billion ($5.7 billion) in 2013 to ¥50 billion ($8.2 billion) this year. We'll keep you informed about how it all turns out.
We hope you enjoy this week's Skinny!
Chinese Consumers
1.1 Billion Yuan Retrieved for Disgruntled Consumers in China: Chinese authorities retrieved ¥1.1 billion ($180 million) for disgruntled consumers from January to September this year as the Government places greater emphasis on protecting customer rights.
Internet, Mobile & Social Media
Costco Goes to China Without Opening a Single Store: US warehouse retailer Costco has entered China on Tmall, not through its usual bulk retail format, and without membership fees. Food and healthcare products will be the mainstay initially. The most recommended products are unsalted nuts, Starbucks instant coffee, dried cranberries, cotton pyjamas for 4-year old girls and olive oil.
Alipay Helping More Western Companies Sell to Chinese Consumers: Alipay's new ePass allows Western websites to sell goods in RMB through Alipay. Goods can then be shipped cross-border using Cainiao (China Smart Logistics Network), a multi-billion dollar logistics consortium investment whose shareholders include Alibaba, retailer Yintai Group, Fosun and four major Chinese courier companies.
China’s State TV Network Just Launched a Food Ecommerce Site: CCTV has launched an online food shore FaxianGO, most likely on the back of the success partnering with Tmall for shows such as A Bite of China.
Ecommerce Supply Chain Platform Brings Made-in-Italy to China: CCIG, a new ecommerce platform will make it easier and more reliable for Chinese businesses to get Italian products from 27 October. Targeted businesses include traditional shopping centres as well as hotels, restaurants and sports clubs across China.
Social Media Influences Young Chinese Consumers’ Purchasing Behaviour: 40% of 18-35 year old urban Chinese consumers consider social media their top information source according to Accenture.
Food & Beverage
Chinese Red Wine Sees Growing Competition from Foreign Labels: The average price of imported red wine in China grew 3.9% in the past year, just offsetting the 1% drop in volume. Domestic red wine volumes dropped 8.5%. Red imports currently account for 20% of the market, but are expected to be 50% by 2020 and 80% by 2030 according to the Fortune Character Institute.
How Bright Food is Furthering its International Strategy: State-owned Bright Food, China's second largest food-processor, acquired a majority stake in Italian olive oil manufacturer Salov Group earlier this month. This adds to recent foreign acquisitions which include stakes in the UK's Weetabix, Australia's Manassen Foods, New Zealand's Synlait Milk and Israel’s biggest food producer, Tnuva, reflecting Chinese consumers' increasing demand for safe imported food, but also fuelling the company's global growth ambitions.
Chinese Tourists
Shangri La Becomes Fastest Growing Luxury Hotel: Chinese consumers' interest in luxury hotels grew 39% between July 2013 and July 2014, joined by UAE (16%) and India (12%) as the only countries not to have single digit or negative growth according to Digital Luxury Group. China's favourite luxury hotel brand, Shangri-La, rose the fastest globally on the back of China's growth.
90% Of Traveling Chinese Luxury Shoppers Plan Purchases Before Trip: Most Chinese travellers buying luxury goods do considerable research before leaving home. 38% know exactly which products they will be buying. 50% find out information on luxury brands’ official sites and 49% research on social media - the primary sources of information.
Chinese Tourists Rank US Third Best: The China Tourism Academy has found Italy, Singapore and the US are rated as the top-3 for tourism satisfaction by Chinese consumers - different results to similar research recently.
Universal Studios Beijing Update 2014: Biggest Theme Park To Open In 2019: Universal have received Government approval to build a $3.25 billion Universal Studios movie theme park. Universal's biggest theme park - initially covering 300 acres (1.2 square kms), and expanded to 1,000 acres (4 square kms) over time, will include strong Chinese elements and pay "proper homage to culture in China."
Health
European Study Shows Chinese Consumers are Far More Enthusiastic About Future Smartwatch Services: 69% of Chinese consumers are interested in using their smart watches to carry health information and share information with doctors and hospitals, versus 50% of US, 43% of South Koreans, 34% of Brits and 25% of Germans according to a GFK survey. Chinese were also by far the most enthused about every other category including public transport payment, secure online identification, wireless identification to state authorities and wireless payments.
Sports
Beijing Marathon Runners Don Masks to Cope With Smog: The Beijing Marathon joins the list of high profile sporting events plagued with smog in the city this month. Many of the 30,000 registered runners pulled out for health reasons and thousands of others ran with face masks.
Fashion
Topshop’s Mainland ShangPin Launch All About Mobile: Topshop's exclusive China launch on ShangPin is heavily supported by mobile obvious throughout its pop-up stores. Currently 40% of ShangPin's sales are through mobile, with 50% of them being though its app and 20% through WeChat.
That's the Skinny for the week! On the to-dos this week, why not contact China Skinny 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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