How China's Evolving Home Life is Impacting Marketers

As the old Chinese adage goes, away from home they will judge your clothes and outward appearance. At home, it’s what’s underneath that matters. In Chinese homes, they are increasingly looking at your clothes, and your furniture, drapes and other trappings that have allowed you to imprint your individuality. The role of one's house has been changing from a functional place to sleep to a place to live, experience and share.

There are a number of factors driving Chinese consumers to make their homes places of self-expression. A Chinese consumer today basks in about four times as much space than the average Chinese resident did 40 years ago. Kitchens and laundries have evolved from humble shared facilities to shiny tiled spaces, with 90% now containing a fridge and washing machine.

Whereas Chinese have long been out-of-home diners, the mouth-watering rise of food delivery has given consumers more reasons to stay at home. Supermarkets like Hema can deliver quality fresh produce within 30 minutes, seeing more folk staying in and cooking - often with expensive imported utensils. Throw in a few polluted days and the safest place seems to be at home breathing purified air.

These are some of the reasons - coupled with rising affluence - which have seen Chinese pay more attention to sprucing up their abodes. Home decoration, furniture, home appliances and other related categories have been among the fastest-growing retail categories over the past few years; and like with most consumer goods, Chinese shoppers are trading up. This has inspired companies like Panasonic to partner with Porsche to create expensive, connected home appliances for the increasingly house-proud consumers.

But don't just take our word for it. Alibaba has analysed their data and clearly cottoned on to the trend. In February the company invested almost a billion dollars in home improvement and furniture chain Easyhome. Earlier this month they invested $25 million in home decoration service platform Shengong007 as further reassurance that this is a sector on the rise.

Brands should be looking at China's transforming homes as more than just higher value sofas, paint and fridges. The newfound comforts are changing how they consume food and entertain themselves. It is influencing the way they research and view products overall, and is even shifting expectations of travel, souvenirs and accommodation while away. There are few brands that aren't impacted by the evolving home life of Chinese consumers, which should be factored into everything from marketing propositions to product development - some of things that China Skinny does best!

For our European readers looking to get out of home, China Skinny's Mitchell Burns will joining the esteemed line up of speakers at Europe's leading health, natural and nutrition show Hi Europe in Frankfurt 27-29 November. If you are at the event, please do come by and say ni hao. More information here.

Here are this week's news and highlights for China:

Chinese Consumers

Is Xi Jinping Finally Walking the Talk on Opening Up China’s Economy as the Trade War Heats Up?: Behind all the hype about China opening up to those consumers, the World Bank has quietly provided endorsement of China’s claim. In its annual 'Doing Business' study it reported that China now ranks 46th out of 190 economies worldwide, up from 78th last year. That's good news as the consuming power of the growing mainland upper-middle class becomes increasingly noticeable. Over 90% of Chinese families today own a washing machine and refrigerator; and the average urban household owns between two and three mobile phones.

Porsche Designed a Sleek Machine for China's Rich. It's No Car: High-end home appliances have to push the envelope in China, which has seen Panasonic partner with Porsche to design a China-exclusive smart washing machine selling for $2,900. It also sells next-generation refrigerators yielding a special, low-humidity crisper for storing dried ingredients used in Chinese cooking.

Chinese Millennials are Fuelling a Home Decoration Boom, says Dutch Paint Maker Akzo Nobel: According to Akzo, an average household repaints every three years in developed Western economies, compared to at least every eight years in China. Akzo's Dulux has launched a new marketing strategy which uses the catchphrase “Let’s Colour” in a bid to woo more young Chinese homeowners eager to express their individualism as millennials are think about personal space, and colour, in a different way than their parent’s generation. More mainland homeowners are embracing higher-quality, eco-friendly building materials.

China is Minting a Billionaire Every 3 Days as the Tech Boom Unlocks 'Stealth Wealth': In 2006, there were just 16 Chinese billionaires. By 2017 the tally hit 373 – one-fifth of the global total according to a study from UBS and PWC. 106 Chinese became billionaires in 2017 (though others dropped off the list from 2016). That comes out to roughly one new billionaire every three days. At 56 years old on average, Chinese billionaires are about a decade younger than their North American counterparts.

Digital China

Analysing Pinduoduo Claims: Do not believe the hype says Blue Orca who reviewed and analysed multiple independent data points which indicated that PDD inflates its reported revenues and GMV and understates its staffing costs and net losses.

Weibo’s Raffle Algorithm Under Scrutiny for Bias Against Men and Android Users: Weibo has come under fire for selecting just one male out of 113 winners in an 'automated' raffle selection. What’s more, 78% of the winners were iPhone users whereas the iPhone holds less than 10% of smartphone market in China.

Food & Beverage

In China's Himalayas, A Wine "Flying Above The Clouds": Moet Hennessy has bet on vineyards ranging up from 2,200 metres (7,218 feet) in Yunnan's mountains to make $300 bottles of wine. They hope the wine will buck the trends of flailing demand for domestic wine, which has fallen for five consecutive years. Imported wine grew 17% last year.

Chinese Drinkers are Paying More for Wines: As China's wine industry continues to expand, many are noting a trend towards premiumisation, especially in the last 12 months. There has been "steep growth in the average price per bottle" – as high as 45% in some cases. The market historically started buying for health, now we are seeing growth in demand for quality according to Chinese wine veteran Marcus Ford. Most of the growth in value came from wines priced at ¥500 ($72) a bottle and above which make up 42% of sales value generated in year ending July 2018.

Shaanxi Liquor Contains Excess Plasticizer that May Hurt Men’s Sperm Count: A Chinese liquor company was found mixing its alcohol with three times more than the allowable level of plasticizers, a substance that may damage the male sexual function and reduce his sperm count.

‘Can’t Call This Soy Sauce’: Almost 30 Products Fail to Meet China’s Production Standards: 29 fermented soy sauce products, including the likes of Xie Yuan and Lee Kum Kee, have failed to meet China’s production standards, according to a sample test conducted by Jiangsu Consumer Council.

Entertainment

Metal Music With Chinese Characteristics: In addition to the standard guitar, bass, and drums, DreamSpirit blends traditional Chinese instruments like the two-stringed erhu and zither-like guzheng. Their lyrics tell tales of ancient China, and during live shows, the band wears warlike makeup and dresses in a traditional Chinese garment. The group is one of dozens of China-based metal bands that combine Western-style metal music with traditional Chinese culture.

Health

China's Myopia Epidemic: Short-Sightedness High Among Schoolkids: 90% of China's urban youth are estimated to have short-sightedness by the time they complete high school, three times the rate of the US and Europe.

Travel

5 Things Rich Chinese Travelling Families Want on a Luxury Holiday: When making travel choices, 72% of affluent Chinese families view a children's club as very important, 68% want kids menus, and 66% look for local experiences/activities for children. Sustainability and health and WeChat services including loyalty were also important according to a survey by ILTM and Luxury Conversation.

Luxury

China's Stay-at-Home Shoppers Propel Luxury Sales: Local luxury purchases are soaring in China and are forecast to generate 46% of the industry’s sales by 2025, up from 33% of purchases now according to Bain. Half of total sales are forecasted to take place in China within seven years, up from a quarter today. As recently as 2015, luxury items cost 70-80% more in China than in Europe. The average premium is closer to 25 or 30% now. 45% of Chinese purchases already take place domestically for Gucci.

That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.