Foreign Youth's Contribution to China's Future
Beijing recently acknowledged that it needs to attract more foreign talent to help its transition to an economy led by consumer spending and innovation. It has even announced plans to set up its first immigration office to assist.
China is right in doing more to attract foreigners to its shores. 44% of startups in the Silicon Valley had at least one immigrant according to a 2012 survey.
Whilst China has unique characteristics and shouldn't be blindly trying to replicate the world's international cities and innovation hubs, it could probably learn a thing or two from them. Around 40% of residents in New York, London, Singapore, Sydney, Toronto and Los Angeles are born overseas, whereas Shanghai and Beijing have less than 1%. Shanghai's foreigner population actually declined 2% in the first quarter of last year. About 600,000 foreigners officially live with China's 1.4 billion people - there are five times more migrants in London alone.
In follow up to the announcement about opening an immigration office, the State Administration of Foreign Experts Affairs stated it would be 'simplifying' the working permit process for foreigners. From 1 November, expat eligibility for work permits will be scored on current salary in China, educational background, number of years of work experience in China, Chinese language proficiency, age and location.
Although the scoring system hasn't been announced, it is likely that adventurous youth will find it very difficult to legally work in China unless they graduated from a top university, speak incredible Chinese, are on an epic salary and live in the middle of nowhere. The Beijinger did a great speculative quiz on how expats' acceptability could be ranked.
As we've said before, youth present some of the greatest opportunities for China to up its game for innovation and marketing.
For innovation, youth often have a different way of looking at things and are less biased by long-held beliefs or habits - two of the key ingredients for game-changing innovation.
Youth can play an even bigger role in China's ability to market itself and its brands. China spends an estimated $10 billion annually on "external propaganda" with very little return. A global study by London-based Portland Communications recently found China ranked dead-last of 30 countries for soft power.
While hosting a few big events, opening Xinhua news offices and Confucius Institutes around the world, and building sports stadiums all helps; the most powerful gains in China's brand will come from the viral digital channels of the grassroots influencers championing the country through their social networks.
Trends worldwide are rarely set by crusty middle-aged men with love handles, but rather the digitally active youth with cooler haircuts and a better fashion sense. There are plenty of them wanting to live in China, so the country should be doing what it can to welcome them to cities like Shanghai, Beijing and beyond.
We appreciate that China shouldn't just let anyone in, but when the new pilot expat ranking system is launched on November 1, we hope that Beijing has considered the importance of youth in continuing their momentum to becoming a true world leader for innovation. We will all be richer for it. Here are this week's news and highlights for China:
Chinese Consumers
Are You a Grade-A Expat? Beijing's New Work Permitting System Aims to Score, Rank Foreigners: Expats eligibility for work permits will now be scored on six criteria, this is how it could look.
How China’s Growing Army of Consumers Will Drive Global Growth: 700 Chinese cities will generate US$7 trillion or 30% of global urban consumption growth between now and 2030 according to McKinsey. China’s urban working-age consumers will rise from 521 million to 628 million in that time. Beijing, Shanghai, Guangzhou and Shenzhen will each add more than one million households with annual income above US$70,000. With urban incomes in China now reaching a threshold where spending on goods and services accelerates rapidly, per capita spending is set to jump from US$4,800 to US$10,700.
Marriage Falls in China, Transforming Finances and Families: 12 million Chinese couples got married last year, marking the second consecutive year of decline. There were 3.8 million divorces, more than double 2005's number. Some brands are capitalising on the trend; selling jewellery for the unmarried, smaller rice cookers for singles, and foreign fertility services freezing eggs as it is prohibited for single women in China.
Digital China
Brands Turn to WeChat Influencers to Reach Chinese Consumers: Certain Chinese celebrities can charge in the millions to be an ambassador on WeChat, with public appearances, TV commercials and print ads thrown in.
Huawei’s Global Ambition Wins Fans at Home: Huawei’s claim that it can surpass Apple and Samsung to become the world’s top smartphone maker by sales in five years adds to the company’s allure with inherently nationalistic Chinese consumers. Huawei spent a billion dollars more on R&D than Apple last year. Apple's iPhone 7 launched last week with a more muted response than previous years.
Alibaba Acquires EyeVerify: Alibaba is on its path to world domination in biotech authentication. Fresh on the heels of acquiring a share of KFC China, Alibaba’s Ant Financial has bought US-based EyeVerify. The $70 million investment will be used to authenticate online transactions using shots of a smartphone user's eyeball.
Food & Beverage
Putin's Gift to Xi Paves the Way For Russian Ice Cream to Chinese Market: Russian ice cream imports into China grew 206% last year, with the products already hugely popular in the border cities of Suifenhe and Manzhouli. Xi Jinping reportedly asks for Russian ice cream to take back home on every trip to the country. Meanwhile, Alibaba has launched a Russian Pavilion on Tmall, mainly selling food products - chocolate and oatmeal in particular.
Chinese Energy Drink Consumption Increased by 25%, Four Times More than the US: The uncarbonated China Red Bull has a majority market share with 80.6% of value and 78.2% of volume according to Mintel. Marketers focusing beyond just sports to occasions such as fashion, music and video games stand to be most effective in the market.
Chinese Tourists
Authorities Drafting New Standards for Senior Groups: As Chinese society ages, a larger number of elderly tourists have flooded into the market demanding age-appropriate services. The China Association of Travel Services is drafting a standard for tourism operators selling products to seniors with rules such as schedules that aren't too cramped with early bedtimes, and arranging for the provision of a balanced, healthy menu.
Health & Beauty
Skin Lighteners Market in APAC to Grow at 10%: There are more than 3,000 cosmetic enterprises registered in China, with over 25,000 brands. Over 550 brands come from foreign countries.
Sports
Chinese Sportswear Heavyweights Hit their Stride on the Back of a National Health Kick: The first half of 2016 saw China's domestic athletic brands stage a concrete comeback following years of painstaking inventory clearances. Leading domestic brand Anta grew sales 20% and Li Ning sales rose 13%. They still face a tough race against overall market leaders Adidas and Nike who continue to increase their investment in the market.
Investments & Finance
Private Banks Ramp Up Tactics to Attract China’s Newly Rich: Offers of sipping wine with Princess Marie von Liechtenstein, access to private schooling in Europe or the US for their kids, yachting lessons, golf trips, exclusive speaker events and mock art auctions are a few examples of how China's private banks are differentiating themselves in hope of attracting increasingly lucrative Chinese clients.
Cars
Audi Inks MOU With Alibaba, Tencent, Baidu For Connected Cars: Audi is working with Alibaba on mapping technologies, including real time traffic data and high-resolution 3D Maps. Tencent's WeChat MyCar services will adapt location and music sharing services for cars. It will also launch Baidu’s ‘CarLife’ in its latest models in 2017, providing an in-vehicle digital platform designed for using Baidu applications. It is the first attempt by an auto company to simultaneously integrate cross-platform technology of this scale.
Porsche's Chinese Expansion Not Slowing Down: Porsche's sales in China and HK have grown 9% year-on-year, with more than 60,000 cars expected to sell this year in China - its largest market. The company puts continued growth down to its long term commitment to elegance and variety of models, including a made-for-China model, the Panamera. Tier 1 & 2 cities account for 90% of sales.That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
