Chinese Consumers in the Trump Era
To many Chinese he was just a source of entertainment who fuelled Government propaganda about the folly of US democracy. That all changed on November 8 when the US moved on from its first black president to a slightly orange one.
Mentions of Trump, or Chuan Pu (川普) as he is informally known, shot to the top of Chinese social media last week; grateful posts lauding China’s political system were plentiful; some suggested a referendum could lead to teen entertainment idols Li Yifeng or Wu Yifan becoming president; others mocked parents who spent tens of thousands of dollars for their kids to study in an American education system that results in a reality TV star being elected; rumours were rife that Katy Perry cancelled her performance at Alibaba's 11.11 gala as a result of the election; and of course there were the predictable nationalistic chest-beating posts about the fall of the American empire.
Trump's proposed insular, protectionist, and carbon policies look set to erode America's global standing. In its wake China will hold more sway in everything from trade to environmental leadership, with growing soft power as a result. Although the US is integral to the world's economy, its importance has diminished in China. This is reflected in stable Chinese stock markets post-election while other exchanges spun. China's rising consumer class has seen exports account for a lower share of overall manufacturing. America's share of Chinese exports of steel for example, has fallen to 2.5% from 6.6% a decade ago. Trump is not stupid, so let's hope he and his chums consider that when concocting policies on how to "Make America Great Again."
Beijing seeks stability, and many there see Trump as a loose cannon. Beijing hasn't enjoyed decades of being lectured about how to run their country from the US, but one of the interesting outcomes of the election is China has offered some policy advice to America. State-media Xinhua reminded the US that their isolationist policies had "accelerated the country's economic crisis" during the Great Depression. In a rare step, China even provided advice on environmental policy.
If The Don does implement anti-China policies, they will not only start a trade war, but will inevitably set off more anti-American sentiment through the Chinese propaganda machine. We saw this with anti-Japanese rhetoric in 2012, which materially impacted consumer perceptions of Japan in China. Whether it was cars, holidays and most things in between, Japanese exports tanked. It took a couple of years before Japan was in favour again with Chinese consumers.
It's unlikely Brand America will fall from its aspirational positioning any time soon, but it will be impacted. It is hard to pick whether this has a flow-on effect for other Western countries who trade on similar values to America; it may have a positive impact as Chinese seek their Western lifestyle leadership from other lands.
All of us operating in China are used to adapting to constant change. Let’s hope Trump doesn’t test us on this, and keeps his policies away from the extreme end of the spectrum.
On a lighter note, for our Vienna-based readers in the tourism industry, China Skinny’s Ann Bierbower will be presenting on digital marketing to reach Chinese travellers on November 24th at Vienna Tourism’s China Outbound Tourism Panel and Discussion. Come over and introduce yourself if you are there.
CORRECTION: We noted declining exports from China to the US from 6.6% to 2.5% in a decade, this was referring to the steel sector and not exports as a whole. Thank you Kevin Walmsley for pointing this out.
Here are this week's news and highlights for China:
Chinese Consumers
Trump's Vow to Crack Down on China Set to Run Into Complex Reality: Chinese President Xi Jinping was among the world leaders this week to congratulate Trump on his election, saying he hopes the two countries can continue to avoid conflict and show each other mutual respect. China is likely to retaliate if the US imposes import tariffs, although the country may actually welcome lighter US engagement in Asia.
China State Media Warns Trump Against Isolationism, calls for Status Quo: US isolationist policies had "accelerated the country's economic crisis" during the Great Depression, warned a commentary by China's official Xinhua News Agency, though it added that "election talk is just election talk." Some Chinese commentators see Trump as a potential pragmatist on foreign policy and less likely to meddle with other countries' affairs, yet Beijing fears the unpredictability of a Trump presidency as it seeks to maintain an equilibrium in Sino-US relations while working on a reform agenda to combat a slowing economy at home.
China's High-Earning Consumers to Surge by 2030: Just the growth of China's consumption will be higher than Europe's current consumption according to the Economist Intelligence Unit. The number of people earning more than $10,000 in real terms by 2030 is expected to grow to 480 million from 132 million today. By 2030, the individual purchasing power of Chinese consumers in 2030 will be similar to that of South Korea today or the US in 2000.
Mainlanders in Quest for Unique Experience from Overseas Travel, as Shopping Loses Appeal: China's ecommerce sales are at least double of its bricks & mortar shopping malls, according to JLL. Two-thirds of 650 shopping centres investigated in 10 Chinese cities have common area facilities not meeting cleanliness standards, making shopping overseas seem relatively pleasant. More than a third of Chinese spending overseas was recorded as duty free.
Chinese Affluent Keen Consumers of International Media: International news channels have a combined reach of 45% of affluent Chinese according to Ipsos. Digital consumption accounts for a third more access than TV.
A Global City of Excellence by 2040: Shanghai aims to be a global city of excellence by 2040, establishing itself as an international economic, finance, trade, shipping and scientific innovation centre.
Environment
With Trump as President, China—China!—Will be the World’s Biggest Champion of Fighting Climate Change: Ahead of the US elections, China’s chief climate negotiator, Xie Zhenhua, took the rare step of commenting on a foreign election to say that Trump should honor the US’s existing global commitments. A “wise” politician, Xie said, was one who conformed to global trends.
Digital China
Infographic: Singles’ Day 2016: Quick Facts: The key things you need to know from the record breaking day including share of overseas brands, top countries and top brands from those countries.
$17.8 Billion in One Day: How Alibaba turned China's Singles’ Day into a Shopping Bonanza: Full credit to Alibaba: although there weren't the same Singles' Day discounts as previous years, they still managed to grow sales through interactive and entertainment initiatives - a healthy sign of a maturing consumer who is looking for more than just deals.
North Korean Products Fail to Sell on Chinese Online Sites: Goods produced in North Korea listed on sites such as Taobao and Tmall include ginseng liquor, cigarettes, and cosmetics, as well as medications touted for their efficacy in treating cardiovascular disorders and cerebral haemorrhage. But most of these are never sold, or almost never sell. In comparison, South Korean products—especially cosmetics, electronic products, and foodstuffs — have been selling from 10,000 to 100,000 cases per month.
Chinese Tourists
China's Domestic Travel Scene Gets Upgrade With Luxury Family-Centred Venues: Tourism operators are increasingly catering to China's booming family travel market.
China to Top U.S. in Theme-Park Revenue: Ticket sales at Chinese theme parks are predicted to soar to nearly $12 billion by 2020, up from $4.6 billion last year according to Euromonitor and World Travel Market. The US is projected to grow from $8 to $9 billion over the same period. The Chinese billionaire who owns Club Med is looking to build a theme park in New Zealand.
Food & Beverage
Chinese Red Wine Export Dominance Under Threat: Wine companies exhibiting at ProWine China in Shanghai last week were pleasantly surprised by the growing trend from buyers towards white wines as well as improved education and awareness of specific varietals. "As Chinese consumers become more educated, food and wine pairing will become more prevalent. As a result, a lot coastal cities that are eating seafood are going to be drinking a lot more white wine. Traditionally it has always been a male-dominated red wine market, but white wine now has a lot of growth, " according to McWilliam’s Wines' Garrick Harvison. In Hong Kong, the market is about 40% white wine.
Finance
China Online Payment Overview for Q2 2016: China's third-party mobile payment market exceeded ¥7.5 trillion ($1.1 trillion) in Q2 2016, growing 25.7% from Q1. The market was dominated by Alipay with a 55.4% market share and Tenpay at 32.1%. Payments on desktops grew 6.5% to ¥4.65 trillion ($690 billion), with Alipay commanding a 43% market share, followed by Tenpay (17%) and UnionPay (15%).
That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
