Outrageous Advertising Claims in China
Fancy a tonic favoured by Chinese emperors that cures painful joints, frail kidneys, and weakness and anemia in women? Or how about a milk beverage that will enlarge your breasts from an A-cup to a D? Perhaps a coconut drink that whitens your skin and will make you more buxom?
Believe it or not, these are all advertising claims in China, and not by small fly-by-night operations. The cure-all tonic was a top-seller from Hongmao Pharmaceutical, who outspent P&G in 2016 to become China's largest advertiser. The breast-enlarging milk drink was the product of China's largest beverage group Wahaha, and the magical coconut juice comes from the producers of China’s most popular coconut milk.
Reports of such advertising and other headline-grabbing news such as hordes of Chinese tourists lured to Sydney University believing it was a setting in Harry Potter movies may have some believe that Chinese consumers are a gullible posse. Don't be misled. Whilst some consumers in lower tier cities are making discretionary purchases for the first time and lack some confidence, most middle-affluent class Chinese are incredibly sophisticated. While we're seeing a rise in impulsive purchases, Chinese consumers typically don't take things at face value and do significantly more research before purchasing products and services than their Western peers.
Much of this research comes down to an inherent lack of trust. This is confirmed in virtually every project China Skinny works on, in which Chinese consumers’ purchase journey involve an extensive series of touch points across online and offline channels before a purchase is made.
Most readers will be aware of the fake vaccines, fake condoms and even fake zoo animals. Yet Chinese consumers can't even rely on cross border ecommerce, which is held up as the beacon of trust - supposedly straight from the source from a more dependable origin. In reality this isn't true; 40% of cosmetics sold through cross border on Singles' Day '17 were fake for example.
Although China updated its advertising laws in 2015 to be much more punitive, many false promises continue to slip though. China has the most fragmented bricks & mortar retail landscape of any major economy, and an online sector containing tens of millions of stores that even Alibaba and Tencent struggle to control in light of their advanced data mining and AI. The regular scams have been one of the drivers behind China's $9 billion key opinion leader (KOL) industry, who are often more trusted than brands even though close to 70% of KOLs have fake fans and engagement. Regardless, over 60% of Chinese consumers are receptive to online influencers compared with 49% in the US and 38% in Japan.
Although China's marketing landscape is littered with fakes, foreign brands shouldn't take Chinese consumers to be fools - they are anything but. It is good to be aware of the misleading claims out there, but don't dare to try it yourself. It will be found out and shared on social media en masse. Chinese consumers are unforgiving to those who disrespect their intelligence, particularly foreign brands. China Skinny can assist to ensure you can still succeed by keeping everything above board.
On another note, we're hiring! If you're a native English speaker based in Shanghai who is curious, intelligent and personable and happy working across diverse and fascinating projects, go ahead and apply. More information here.
Here are this week's news and highlights for China:
Chinese Consumers
Chinese Firm Wahaha Sorry for Label Claiming Milk Drink Could Make Breasts Bigger: A “consumer quote” on the packaging of Vitamin A&D Calcium Milk drink that said it could enlarge breasts from an A cup to a D has been removed following widespread social media criticism for being misleading and vulgar.
Chinese Women More Independent, Mentally and Economically: Over 50% of Chinese females spend for “personal demand and development,” with more than 80% willing to take 30-120 minutes every day to read and learn. 23% of Chinese wives have more income than their husbands and over 50% of wives directly control the whole family’s income. 58% of tourists in China are women.
Consumer Inflation Dips for Fourth Straight Month in February: China's CPI rose 1.5% last month from a year ago, dipping from January's 1.7% increase. Falling food prices have driven down the index, which was hit by lower pork prices following the African swine fever. Increases in non-food prices such as health care, education, entertainment and house rent contributed 1.34 percentage points to the headline inflation rate.
Digital China
How China’s Online Opinion Leaders – or KOLs – Convert Fans to Sales, Creating a Nearly $9 Billion Industry: Chinese KOLs can be columnists, socialites, photobloggers, or short video creators – and they have multiple channels through which they can become famous. KOL Becky Li is an example of how the celebrity endorsement industry has evolved with a staff of 70. More than 70% of Chinese Gen Z consumers, those born after 1995, prefer buying products directly via social media than through other channels, compared with the global average of 44%. In the US and UK, online influencers who do not disclose a sponsored ad are in violation of advertising regulations, whereas in China KOLs are not legally obliged to disclose if the content is paid.
Beauty
Pop Idol Alliances Key for Beauty Engagement in China: 84% of all premium beauty brand engagement on Weibo is driven by posts featuring celebrities. Estée Lauder products that were mentioned and linked by celebrities saw a 723% growth in sales. In addition to mobilizing famous influencers, the smartest beauty labels are investing in their marketplace visibility and WeChat services according to Gartner L2.
Shiseido’s China Insights: Whitening, Prestige and Make-Up are Biggest Opportunities: While concerns like anti-pollution are rising, Chinese cosmetics buyers are most concerned about yellowish, sallow skin with the degree of whiteness differing from north to south according to Shisedo. Prestige lines are also seeing rising demand.
Food & Beverage
Premium Trumps Sustainability in Chinese Chocolate, Coffee and Tea Markets: Analysis of the 150 top-selling products found that 9% of products made sustainable claims versus 15% in India and 33% in Australia. In China, products making such claims were also generally priced lower than products that didn't. The most common claim in China was the Rainforest Alliance Certification, unlike other countries where Fairtrade hailed to be most prevalent. Green tea was the category that yielded the most sustainability claims.
China's Demand for Tea Is Boiling Over: China’s tea production hit a high of 2.8 million tons in 2018, yet imports of tea to China have also risen - up 33.9% in 2017 to a total value of $1.49 billion. Imports of Western-style teas are particularly rosy.
Chinese Tourists
Hilton-Sponsored Study Examines What Chinese Travellers Want: 83% of Chinese travellers who have stayed in an upscale hotel are “keen to explore” different local cultures; 82% enjoy “self-pampering”; 77% are “open” to socializing with locals; and 77% are “self-expressive” by seeking out new experiences. Travellers also expect hotels to feature a blend of culture, comfort, socialization and personalization, and seek places where unique spaces, special gourmet experiences and customized services come together to define a distinctive lifestyle.
Healthy
Diabetes Related to Pollution, says 11-Year China Study of 88,000 People: A study conducted over a decade in China found that the risk of diabetes increased by 15.7% with an increase of 10 micrograms per cubic metre of long-term exposure to the PM2.5 pollutant. The adverse effects were larger among young-to- middle-aged Chinese, females, non-smokers and people with lower body mass index.
Kids
A Flurry of Ideas to Reverse China’s Declining Birth Rate, but Will Beijing Listen?: Virtually all families can now have two children in China, but the anticipated baby boom has not materialised. In the last two years, births have dropped precipitously, falling by 12% in 2018. Suggestions to raise fertility rates include ending financial penalties for babies born out of wedlock, lowering the legal age of marriage (currently 22 for men and 20 for women), banning discrimination against mothers and mothers-to-be in the workplace, and extended parental leave to fathers.
Pets
Chart of the Day: China’s Pet Market Fetched 27% More in 2018: China's pet market grew 27% in 2018 to reach ¥170.8 billion ($25.4 billion). Owners spent ¥5,016 ($747) per pet, up 15% from 2017. There were about 73.55 million pet owners in urban areas last year: 46.1% owned dogs, 30.7% cats, 27.3% aquatic animals, 19.4% reptiles and 17.3% rodents. Of China's 55.9 million dogs, 32.6% were rescued from the street and 19.9% adopted from shelters.
Entertainment
Why Audiences in China are Loving Green Book: Although Oscar winners typically don't do well in China, Alibaba-backed Green Book and its fried chicken scenes have struck a chord with Chinese movie-goers. Online review site Douban saw the movie outperform 98% of comedies and 97% of dramas despite criticism in the US for its excessively simplistic portrayal of race relations. It's pace, humour and touching scenes about an important time in America growing up from being racially segregated all appealed.
Fashion
Out of Vogue: Chinese Consumers Are Tired of ‘High-Level Faces’: Burberry's Chinese New Year campaign left Chinese netizens feeling more chilled than cheered, wondering how they could make Lunar New Year look like Tomb-Sweeping Day. Zara, Vogue America and of course D&G have similarly being slammed online. When it comes to connecting with China’s fashionistas, Western luxury and fashion brands aren’t exactly models of success.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing strategy, research and digital advice and implementation.
