There's Plenty to Smile About in China's Consumer Market
It's easy to spot grim news about China with a quick scan of the headlines these days. News of plummeting stocks, slowing GDP and sales growth could be interpreted as the end of China's golden run.
However, there's been plenty of headlines to smile about in the past week or so. Last Wednesday, Westpac Bank announced the results from their latest monthly consumer sentiment index, which closely monitors consumer confidence in the Mainland. July's survey was taken at the height of the stock market turmoil, but found consumer confidence was actually 1.9% higher than the previous month. The results reflect just how disconnected China's stock markets are to the average consumer on Main Street China, who still have plenty of wind in their sails.
Similarly, Nielsen's Consumer Confidence Index for the second quarter found Chinese consumer's desire to spend was increasing, with China's massive consumer base rating the seventh most confident globally.
One of the more interesting pieces of news, was that LVMH sales to Chinese consumers increased 10% globally in the first half of 2015, amid all of the 'doom and gloom' of China's luxury sector downturn. Of particular note was that sales of its iconic 'monogram' items - often reported being shunned for being too flashy - were “strong.”
China is a challenging market, but it is also abound with opportunities. It's where there is a large - and growing - affluent demographic who are prepared to drop $11/litre for safe milk and almost $450/kg for Wagyu Beef at the supermarket. It's where new opportunities arise every day, such as the anticipated rise in skiing, snow fashion, accessories and mountain culture, as the Government actively promotes winter sports after being awarded the Winter Olympics in 2022. It's also where brands who adapt their positioning to the constantly changing market, such as BMW, are likely to come out on top. China Skinny can assist with that. We hope you enjoy this week's Skinny.
Chinese Consumers
Most Chinese Consumers 'Laughed Off' Stock Rout: McKay: 6 minute vid: Westpac's latest consumer sentiment survey taken at the height of the stock market turmoil found consumer confidence rose 1.9% from a month earlier. The results indicate how little impact stock prices have on most mainstream consumers, unlike the housing market which is the key investment most Chinese have.
Global Consumer Sentiment Is Souring, Except Where You’d Expect: China and Europe are two regions showing improving consumer sentiment according to Nielsen's global survey. Chinese consumers’ desire to spend is growing, especially in the lower-tier cities and in the rural parts of the country, with the seventh highest willingness to spend of the 60 countries surveyed.
What Stock Market Slump? Louis Vuitton Sales Are Thriving Among Chinese Shoppers: Louis Vuitton’s sales were up about 10% among Chinese consumers, who were doing more buying in Japan and Europe, with revenue accelerating over the second quarter.
Internet & Mobile
Chinese Consumers Go Online To Slake Their Thirst For Imported Goods: 26% of Chinese online consumers buy imported goods on foreign sites according to Paypal research. A further 17% plan to in the coming year, with 35% saying they'll do it more often. They often consolidate their orders to minimize the impact of shipping costs, with the average order for clothing $485, consumer electronics $1,229 and cosmetics $512. USA, Hong Kong and the UK are the top-3 destinations.
WeChat Censorship Report: 1.5% Of Posts Get Censored: University of Toronto's Citizen Lab tracked 36,000 Official Account posts on WeChat and found 1.48% of accounts were suspended and 1.55% of posts were censored by the system.
You What, Guv? Cortana Gets A Regional Makeover: Microsoft is localising its personal assistant with its Windows 10 launch. Research in China found consumer preference for a personal assistant who sounded like she was smiling, and tracked air pollution data.
Buzzwords: China's Tech Trends: Making sense of those tech buzzwords we're increasingly hearing, and their relation to China.
Health
Some Chinese Grandparents Are Making Their Grandkids Fat: Chinese children who are primarily cared for by grandparents are twice as likely to be overweight or obese. Those who had two or more grandparents living with them are 70% more likely to be.
Tourists From China Empty Japanese Pharmacies: "Miracle medicines" made in Japan have been widely discussed online in China. Kobayashi Pharmaceutical sales have grown 5-fold in the last year. Products such as cooling patches for fevers, mosquito bite ointments and other vitamins have all sold out largely due to Chinese tourists.
Food & Beverage
Danone Gives Up China Formula Brand For Larger Mengniu Stake: Danone has sold its local Dumex infant formula, as locally-produced brands struggle to compete with safer imported brands. The market is increasingly challenging, particularly as China's "mini baby boom" between 2008-2014 has ended because of lower numbers of women of childbearing age, and a decreasing or delayed willingness to have children despite the government's easing of its one-child policy.
Tmall.com Promotes Same-Day Grocery Delivery in China: Tmall's supermarket has launched a ¥1 billion ($161 million) online grocery promotional campaign targeted at Beijing users, offering same day delivery in the city. 40% of Chinese consumers have bought food online according to McKinsey.
Thinking Beyond Drinking: Blending Wine Into Chinese Consumers' Daily Life: Four in five Chinese wine drinkers agree that drinking wine can better reflect their taste compared with other types of alcoholic drinks according to Mintel. Food pairing could be a good way to promote wine, with 91% of drinkers having drunk alcohol while dining out, and nearly three-quarters of out-of-home drinkers agreeing that it is important.
Chinese Tourists
Delta To Buy 3.55% Stake Of China Eastern For $450m: Delta and China Eastern plan to invest in making a seamless experience on the airlines, which share flight codes on 80 routes. The deal comes as China is announced as the second-biggest source of foreign-tourist spending within the US, spending an average of $10,800 each.
How The UK Can Capitalise On The Growing Wealth Of Chinese Consumers: Research found three quarters of Chinese tourists to the UK bought luxury items worth at least £500 in the past year, with 46% planning to spend more next year. Almost half of those surveyed plan to spend 75% or more of their luxury budget in the UK next year, although this isn't representative of the Chinese traveller overall. Oxford Street was the top destination for Chinese shoppers, with 64% wanting to visit the West End, followed by Bicester Village and Heathrow Airport.
Sports
Beijing Wins Winter Olympics Despite Lack of Snow, Human Rights Protections: Beijing will become the first city to ever host both the Summer and Winter Olympic Games, narrowly beating Kazakhstan to host the 2022 Winter Games. It is hoped the games will help promote skiing and other winter sports to hundreds of millions of Chinese consumers.
Auto
BMW Revamps China Marketing To Focus Less On Status: BMW will increase spending on online marketing in China and emphasize its technology as part of its efforts to target younger buyers, who care more about a car's latest features than its emblem as a status symbol.
That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
