Success in China can depend on how the Government feels about your industry or brand. At the opening of China’s annual parliamentary meeting in Beijing this month, Premier Li Keqiang outlined the Government’s “Internet Plus” strategy, increasing support for China’s ecommerce industry and its international expansion – if it wasn’t growing fast enough already.
One of the hot topics for ecommerce in China is Cross-border commerce, which grew from 11.9% to 14.8% of China’s total foreign trade last year, and is expected to account for a fifth by 2017 according to iResearch. Alibaba was in the game early with its B2B platform and more recently, Tmall Global for consumers. JD.com is following suit, launching a run of international promotions.
Among the fastest growing categories for cross-border shopping is food and beverage, due to lower prices and concerns about fakes locally. The Dutch postal service cited a 13% increase in milk powder sent to China last quarter, expecting it to rise further following recent publicity about fakes on China’s domestic platforms. Food and beverages are the most-frequently bought goods online – some 34 purchases a year per person versus 22 apparel buys according to a McKinsey survey.
Tmall Global has capitalised on this trend well, courting over 5,000 businesses to its platform last year. It has promised easier access to the massive Chinese market, without the need for a Chinese business license and less hoops to jump through. Organisations such as Australia Post, NZ Post and recently Britain’s Royal Mail and Neteven have launched on the platform to assist small and medium businesses into the market.
Alibaba rarely publishes data about Tmall Global sales, instead promoting a few individual success stories such as Costco’s impressive launch on the platform. In reality, most merchants have performed poorly versus stores on Tmall proper, due to the additional steps for consumers purchasing on Tmall Global, slower delivery times and limited advertising opportunities.
Foreign businesses on Tmall Global may see their fortunes improve with initiatives such as China’s first cross-border ecommerce pilot zone approved for Hangzhou, and as more realise they also need to promote their goods on other mediums such as social media, websites and targeted offline channels to be noticed in the ocean of products sold online in China. Contact China Skinny for help with that. We hope you enjoy this week’s Skinny.
The Three Elements of a Good Brand Story in Asia or Anywhere: Story telling is a key component of communications and should connect with the target market at a deeper, emotional level. Engagement is vital, encouraging the audience to share their experience as everyone relates and connects to stories told by “someone like me”. A universal spirit or theme to break the cultural barrier is vital for businesses with global aspirations.
China Shows its Teeth with P&G Fine Over Crest Advert: The Shanghai Municipal Administration of Industry and Commerce have hit P&G with a ¥6 million ($958,000) fine for false advertising using digitally-altered images to make teeth look whiter. It is the largest penalty of its kind in China.
Chinese Businesses Eye Purchasing Power of LGBT Community: Mainland China’s “Pink Economy” is estimated to be worth $300 billion, with China’s lesbian, gay, bisexual and transgender consumers having above-average brand loyalty for companies they see as friendly. Although homosexuality was decriminalized in 1997, the market is still undeveloped, with companies like Alibaba and gay dating app Blued – with its 15 million users – leading the way.
Male Undergrad Hits the Streets to Sell Sanitary Pads in DRAG: A male student in Sichuan province is getting creative with a frock, cosmetics and high heels to sell sanitary pads to fellow students on campus, making more than ¥10K ($1,600) a month.
Chinese Consumer Rights Show Slams Foreign Firms’ ‘Inferior Cars’: One of the categories where foreign brands’ lead keeps getting bigger in China – automobiles – was featured on CCTV’s annual 315 Gala show as part of World Consumer Rights Day. Mercedes, Volkswagen, Range Rover and Nissan were slammed for poor vehicle quality and after sales service. China’s three mobile operators and WeChat’s confusing AA payment feature were also criticised.
Internet, Social Media & Ecommerce
China Backs Ecommerce Expansion in Win for Alibaba, JD.com: The China Government’s “Internet Plus” strategy will promote cloud computing, online banking, mobile internet and ecommerce, in addition to increasing state investment in the Internet industry.
Ecommerce Giants, Gov’t Create New Markets in China’s Rural Areas: Alibaba estimates China’s rural ecommerce market was worth ¥180 billion ($29 billion) in 2014 and will soar to ¥460 billion ($74 billion) in 2016. The company is not only promoting the benefits of buying online to villagers, but also how to sell their goods such as radishes, cabbages, chestnuts and tickets to tourist sites. Although China’s rural areas have just 19% Internet penetration, 64% of those make purchases online.
Weibo’s CEO Gaofei Wang on Q4 2014 Results: Weibo’s monthly active users grew 36% to 176 million in 2014, with daily active users up 31% to 81 million. 80% of users were on mobile.
WeChat City Services: WeChat’s new City Services tool being tested in Shenzhen, Guangzhou and Foshan allows users to book doctor appointments, view traffic camera feeds, pay power bills, book long distance transport, monitor air quality, pay traffic fines, make police reports and more, all from the app.
Food & Beverage
Guide to Geographic Indications in China: Protecting your region’s brand, such as ‘Champagne’, ‘New Zealand Manuka honey’, ‘Scotch whiskey’ or ‘Parma ham’ is as important in China as anywhere. Registering as a collective or certification trademark under China’s Trademark Law should be a priority, and if resources allow it, registering with the Administration for Quality Supervision Inspection and Quarantine (AQSIQ) will further secure your brand. At the start of 2013, 1,745 trademarks had been registered, although only 42 were foreign. By 2013, just 12 regions were registered with the AQSIQ.
Chinese Tourists Are Headed Your Way With $264 Billion: 174 million Chinese tourists are picked to travel overseas by 2019, spending $264 billion according to Bank of America Merrill Lynch. Travellers aged 15-34 will account for 62% of passengers. Spending from China’s 109 million overseas tourists topped ¥1 trillion ($163 million) last year.
The Colossal Strangeness of China’s Most Excellent Tourist City: “Ordos, a magical land in the just north of China, is a dazzling pearl in the world history and culture,” so the plaque says. In reality, it is a tall claim, but Ordos is a fascinating place to visit as a monument of China’s instant cities and rampant urbanisation.
Chinese Consumers Are More American Than Americans: Retail deliveries of passenger vehicles grew 16% in China in January and February. SUV sales surged 66%.
Why Land Rover Leads Among China’s Second-Tier Luxury Brands: While it’s hard for any luxury automaker to challenge Audi, BMW and Mercedes’ combined 70% share of China’s luxury auto market, Land Rover leads the rest of the pack. It has tapped into soaring demand for SUVs, its locally made models are 22% cheaper than imports, and the exterior styling such as muscular bumpers, clamshell hood, floating roof and the continuous waistline appeals to Chinese buyers.
Affordable Luxury Comes to the Fore in China: 2013 buzzwords defining China’s luxury industry were ‘outlet’, ‘quality’, ‘traditional brands’, etc. In 2014 they became ‘fashion’, ‘style’, ‘value for money’, ‘exclusivity’. 80% of luxury consumers expressed a willingness to buy lesser-known brands in the next three years. Of the ten luxury brands who opened the most new stores last year, four were emerging brands.