China's Golden Week “Tourist Apocalypse”: A Good Sign
Welcome back to our China readers, we hope you had a good break. If peak hour crowds at People's Square or Xizhimen subway stations are your thing, then let's hope you managed to get out to see some of China's tourist attractions over the golden week just passed. In what has been described as “tourist apocalypse”, a reported 100 million Chinese were on public transport each day of the national holiday, 50% more than this year's record Spring Festival traffic. China's top 125 tourist attractions saw almost 20% growth from last year's golden week.
All the old favourites were inundated with countless tourists. On Monday, Tiananmen Square hosted 110,000 visitors and the five tons of litter they left behind. On Wednesday, a lack of buses and gridlock saw more than 4,000 tourists in Sichuan's Jiuzhaigou Valley stranded for up to ten hours. On Thursday, the two and a half hour drive between Yunnan's Dali and Lijiang took more than ten hours. National parks around the Mainland were sold out, and some of Gansu's Mogao Caves may have to close after thousand-year old paintings were damaged by the excessive carbon from masses of heavy-breathing tourists. If you didn't make it to the Great Wall, Hangzhou, The Bund or the Yellow Mountain, here's a few snaps to see what you missed.
The massive hordes of tourists should be music to the ears of China Skinny readers. The local tourist chaos is likely to drive a few more Chinese consumers to travel further a field next year to escape the extreme crowds. Even more importantly, the record travelling numbers for this golden week are further affirmation that Chinese consumers are feeling wealthier and more optimistic, and are spending like they never have before. In August, China reported year-on-year retail sales growth of 13.4 percent, the highest in 2013 and almost double that of GDP growth.
In other news, it's just two weeks until the China Digital Marketing & Social Media Summit in Sydney - the Southern Hemisphere's largest conference of its kind. China Skinny's founder Mark Tanner will be presenting insights about eCommerceandmarketing in China. If you can be in Sydney on Thursday 24 October, sign up at thechinagap.com. On Wednesday 23 October, Mark is available to discuss opportunities for your business in China . If you're in the neighbourhood, please reply to this email to arrange a time to meet.
We hope you find something in this week's Skinny that helps you get a share of that increased spending. Enjoy!
See below highlights of the news this week:
Chinese Consumers
China Has Problems, but Household Consumption Isn't One: April to June this year may have seen consumption in China dropas a percentage of GDP, but that measure is affected by the volatile swings in investment. A safer gage of household consumption is China's real consumption growth, which has been steadily risingat an average rate of more than 9% for the past five years.
Harrods Targets Chinese Consumers: By 2030, 13 million households in China would be earning more than $150,000 a year, and Harrods London is doing what it can to attract them. The store has hired more than 70 Mandarin speakers, produced Chinese store guides and expanded it's tax return service. Chinese now account for 35% of international sales, with watches, jewellery, fashion and accessories most popular.
How Can Firms Tap Into Chinese Consumers?: A 3:28 video about 20-something-year-old Chinese consumers - discovering their self-identity much sooner than earlier generations, much more open minded and more likely to debate and love technology.
Overseas Marketers' Real Problem In The Chinese Consumer Market: Unlike other developing markets, where the essentials arrive first, then the luxury goods, everything has come at once in China, creating an unusual market where the masses are fickle, willing to change brands rapidly, with many shopping on price alone. However, there is a fast-growing segment who are more loyal to brands, demonstrating similarcharacteristics as consumers from developed markets.
Internet, eCommerce, Mobile & Social Media
Chinese Smartphone Owners are Heavy Entertainment Users, But Only 27% Actually Pay for Content: Excluding texting and calling, Chinese smartphone users spend 60.6% of their time on entertainment services - 109 minutes a day on average. Just 26.9% of those have forked out money for it - although that's still a lot of consumers.
Chinese Actor Tests Out Paid Membership for Fans in WeChat: In the name of getting more consumers to pay for things on their mobile, ¥18 a month ($3) will get you special access to Chinese actor Chen Kun's fans-only account on WeChat. WeChat users can also spend their TenPay balance to buy from selected vending machines or order dinner on WeChat. In other news, WeChat's parent's Tencent have just paid $448 million for a minority share in search engine Sogou (a small percentage of Tencent's $100 billion+ value) as China's online space consolidates further.
There are 42 million iPhones on China Mobile already. All of them stuck on GPRS/EDGE, no 3G: China Mobile's 42 million iPhone subscribers (5.7% of their base) currently get slooooow data on the network. They're some of the most likely buyers of the new iPhones if Apple and China Mobile do a deal. This opportunity is the main contributor to IDC's forecasts that Apple will double its smartphone share in China in the next year. Nevertheless, if you wanted further evidence that the new iPhone 5C isn't hitting the mark with Chinese consumers, Apple is already giving 5C discounts of a few hundred kuai.
Anger Spreads Faster On Social Media Than Any Other Emotion: Posts with powerful emotions such as anger and joy are more commonly shared on Weibo than those without, although anger is most likely to be forwarded and inspire similar messages according to a survey of 200,000 Weibo users.
No, China is NOT Unblocking Facebook (or Anything Else) in Shanghai Free Trade Zone: A more liberated Internet in a small part of China turned out to be a pipe dream. Very disappointing.
Food and Beverage
KKR, CDH, Modern Dairy Partner to Build Large Scale Farms in Shandong Province: China's dairy consumption grew at 10% over the past 5 years. During that period, premium dairy products almost doubled in market share from 10% to 19%.
Beijing to Grant Baby Formula Makers CN30Bn in Largest Reshuffle: On the subject, the Chinese Government is still playing on the uncertainty caused by Fonterra's contamination false alarm, by providing aid of up to ¥30 billion ($4.9 billion) to help five local infant formula companies restructure to better compete with foreign brands. It still has a long way to go, signalled by the social media mocking of President Xi Jinping for his comments that New Zealand should take tough measures on food quality.
Herbal drink giant's recipe for home-grown success: JDB Group, maker of the herbal tea that unseated Coke to become the top selling canned drink in China, remains humble, admitting it has a lot to learn from Coca Cola, even with ¥20 billion ($3.3 billion) in sales in last year.
Chinese “E-tailing” Emerging as Exciting New Channel for U.S. Meat: Online food sales topped $8 billion in China, and with logistics improving, chilled meat exports have become a viable proposition to China.
Cargill Enters China's Challenging Poultry Sector: Cargill has faith in China's poultry industry, investing heavily in the country. China is expected to account for 20% of global growth in poultry in the next five years as diets and incomes change.
Fashion
What's Up With Those Chinese Tour Buses at Barneys in Beverly Hills?: Chinese pop stars take front row seats at NY Fashion Week and Beverly Hills stores have changed their opening hours for Chinese tour buses who want cutting-edge trends coming out of NY and Hollywood.
Italian Footwear Industry Attaches Growing Importance to Chinese Market: In the first five months of 2013, Italian exports of footwear to China grew 31%, leading Asia in becoming "a decisive role for the internationalization strategy of Italian companies."
Entertainment
China's Wanda Unveils $8.2 Billion Movie Fund as Hollywood A-Listers Lend Support: China's richest man has put his weight behind China's movie industry, investing in a massive studio in Qingdao which will produce 30 foreign and 100 local movies a year, in a bid to make China's movie industry the biggest in the world within 5 years. Nevertheless, the event hasn't been praised by some of the Western guests of honour, claiming "to be shown like monkeys".
Chinese Woman’s Rom-Coms Boost $2.8 Billion Film Industry: Women hold up half the sky in China and may soon hold up half the movie industry. There are more female directors making movies in China than any other country as Rom-Coms boost its massive box office.
Sport
Aussie Builds the World's Largest Skate Park: The world's largest skateboard park, bigger than 4 football fields, is being built in Guangzhou as popularity of skateboarding culture and fashion soars in the Mainland.
Property
More Than 100 Million Worldwide Dream of a Life in the US: USA is the world's most desired destination for migrants, with 19 million Chinese dreaming of moving there according to a worldwide poll by Gallup.
Art
Selling Jesus to Atheist - Chinese Art Market Overview: The Chinese art market is picked by some to have halved since 2011, although still a respectable $6.5b. Chinese art buyers are still focused on investment and status and less on style, technique, or uniqueness.
Cars
Chinese Consumers Not Charged Up By Green Car Subsidies: China is aiming to have 500K hybrid and electric cars on its roads by 2015, and 5 million by 2020. Of the 19.3 million cars sold in China last year, just 11,375 were electric, so the Government is subsidising up to 60K RMB ($9,800) and hoping negative safety and quality perceptions will improve to meet targets.
Luxury Goods
China’s Luxury E-Commerce Market to Be Worth $27 Billion in 2013: 67% of Chinese luxury shoppers are confident about, or willing to try buying luxury goods online.
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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