Smartphones Slotting in Everywhere in China
Smartphones were always destined to take off in China. On a surface level, there's an inherent love of gadgets, the shiny and new. More importantly, it's China's leisure activities that really lend themselves to surfing on the Samsung. Playing sports and going to the pub aren't as common as in most Western countries, however popular activities such visiting shopping malls have seen the smartphone become the must-have accessory. China's consumers spend a lot of time at home in the evenings and weekends, but it's generally not out in the garden and increasingly not watching TV - China's middle class are online 34% more than in front of a TV.
Chinese spend more time on their smartphones than consumers in any Western country. The high usage rates have been self-fulfilling, incentivising more content and services to be created, which in turn, encourages more consumers to use them. With highly-specced smartphones selling for under $150, and 72.4 million 4G mobiles set to sell in China this year, China's smartphone user experience will only keep improving.
The mobile space is a source of much nationalistic pride in China. Home-grown devices such as Xiaomi are marketing with the best of them, and apps such WeChat and Alibaba's mobile shopping, are setting international standards for innovation. While online shopping is currently more popular on PCs than mobile, commerce will follow general online usage trends in China and soon be dominated by mobiles.
All of this is contributing to smartphones becoming a bigger part of Chinese consumer's lives, touching more points in the consumer journey, right through to purchasing and after sales loyalty. There's plenty more on that below.
For our Australian and New Zealand readers, China Skinny's founder Mark Tanner will be in Melbourne on 27 March presenting at the Australia China Business Week, sharing insights, advice and best practice for succeeding in China's dynamic market. More information here.
In the meantime, we hope you enjoy this week's Skinny.
Chinese Consumers
Smog Pushes Emigration: More than 80% of Chinese who want to emigrate cite pollution as the main reason. 70% of those who've already gone were the same. Recent bad smog has seen some emigration and overseas property consultancies have a 300% rise in inquiries.
2014 Forbes Billionaires List: Growing China's 10 Richest: China's middle classes aren't the only ones getting richer. China's billionaires were up 25% in 2013 to 152.
Why Western Companies Like LinkedIn Need Chinese Brand Names: Chinese brand names often take on more meaning than the original Western brand names, and brands are more likely to go viral if they have a Chinese name.
Internet, eCommerce, Mobile & Social Media
Vulnerability of China’s Online Shoppers: Mobile channels such as WeChat are allowing businesses to communicate on an intimate and individual level with consumers. With mobile shopping becoming simpler and more familiar, the point of purchase is directly where a relationship has been nurtured. But recent QR code fraud highlights that mobile shopping still has some vulnerabilities.
Chinese Consumers Will Now be Able to Buy Almost Anything Inside WeChat: WeChat users can buy a product online or in store payments through scanning a QR code. Companies with a Service Account can offer products and services which can be used to assist with loyalty, customer service and online selling campaigns.
Online and Mobile Luxury Spending on the Rise in China, Lower Prices a Key Driver: The gap between official offline prices and online parallel imports for high end brands can reach 30-100% in China, driving online and mobile purchases.
Nearly $1.6 Trillion in Mobile Payment Transactions Were Made in 2013: Last year, China's central bank handled 1.67 billion mobile payment transactions, 213% more than 2012. Transactions were up 317% to ¥9.64 trillion ($1.6 trillion). 25,000 mobile Alipay transactions take place every minute. PC transactions still dwarf mobile at ¥1,075 trillion ($177 trillion), up 29.5% for the year.
The Future of the Mobile Internet is in Asia: If you wanted some perspective of the rate of growth of the Mobile Internet in Asia, check out this animated chart - Asia was already the biggest market in 2010, but its lead has runaway since. Last year, 351 million smartphones sold in China, 80% of all mobile sales.
MasterCard Survey Finds That Nearly 60% of Chinese Online Shoppers Made Purchases via Smartphones: 59.4% of Chinese online shoppers used their smartphone to make purchases, the highest in the Asia Pacific region. Security remains the top concern for 91.8% of Chinese.
Go Long-Tail for Your SEO Strategy in China: Hosting in China improves pages included in Chinese search engines and if paid ads take over brand engagement, then long-tail should be a key SEO strategy.
Food & Beverage
Costa Coffee to Make China its ‘Second Home’: Costa Coffee plans to more than double its stores to number 700 in China by 2017. The number of coffee shops overall in China grew from 15,898 to 31,283 between 2007-2012, with Shanghai having the highest consumption per capita. At this stage, many consumers place more value on the experience and environment than the coffee itself.
Chinese Tourists
How Important is Getting on the Chinese Tourist’s ‘Shopping List’?: Chinese women travelling for the first time have 2-30 carefully researched items on their shopping list. Those who have travelled five or more times have 1-2 items, and plan to just choose a location and make impulse purchases, spending just as much.
Fashion
Defining Chinese Style: 22 min vid: The social capital gained from trendiness and an increasingly sophisticated sense of fashion is seeing Chinese consumers more willing to mix and match multiple brands, putting their own individual style at the centre, more so than the brand. Personal styles are expressing who they are, rather than having labels define them.
Gap Inc Seeks New Berth in China With Old Navy: Old Navy plans to overcome poor brand awareness in China, opening it's first store in China and putting a lot of attention on online marketing and eCommerce. The fast fashion market is showing further potential, with Zara and H&M beating store opening targets, while two thirds of high end retailers missed theirs.
Pets
With Pet Ownership Set to Boom, Chinese Pet Product e-Store Nets $25 Million in Funding: 2% of Chinese households own a cat, 7% a dog - and just 10% of those are fed commercial dog food. Rising incomes in China are expected to drive pet ownership closer to the 40% of American households who own at least one pet. Pet-related goods sales growth rates at around 10% a year have contributed to online store Boqii receiving $25 million in funding.
Health & Beauty
Male Vanity Helps Drive Cosmetics Sales in China: The average man in China’s top tier cities uses 2.5 facial products daily, whilst only 13% regularly use deodorant. Sales of personal grooming products aimed at men grew by 7% in 2013, higher than the overall 5% market growth, albeit from a smaller base. 73% of men believed looking good is essential for success with both women and work.
What Money Failed To Buy: The Limits Of China's Healthcare Reform: Between 2003 and 2011 the number of Chinese with health insurance grew from 30% to 95%, with hospital bed utilisation up from 36% to 88%. Nevertheless, by late-2013 80% of Chinese still found it hard to see a doctor, with 95% believing it was expensive to seek care.
Luxury
Made-in-USA Luxury Brands Win Fans in China: American luxury brands such as Coach, Michael Kors and Kate Spade are appealing to Chinese consumers with lower price points and an affinity with the USA.
That's The Skinny for the week! China Skinny would love 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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