Last week, lots of important people met for four days in Beijing to formulate the development plan for China for the next five years. A fun video has been doing the rounds to explain what huge deal it is.
This plan is the 13th Five Year Plan, and whilst every plan is very significant for the world’s most populous nation, the 13th is particularly important.
The plan comes at a time when China’s unprecedented economic growth is slowing, as it hopes to transition to a more sustainable, higher value, consumption-led economy. It is also the plan that will dovetail into the 100-year anniversary of the founding of the Communist Party of China in 2021, in which Beijing will move mountains to ensure they put on a good show.
Although the full 13th Five Year Plan won’t be released until next March, a communique was published after the meeting outlining the highlights of the plan. Anyone who has been following recent China policy closely won’t notice any major surprises, which isn’t a bad thing as it signals that Beijing is comfortable with how things are tracking.
The headline policies are lowering GDP targets to 6.5% until 2020, a faster pace of urbanisation, a continued innovation drive, further opening up of the economy and more anti-corruption measures – including adding golf and gluttony to the list of taboos. Probably the most talked about policy is the end of the One Child Policy, although we don’t believe this will have a significant impact on Chinese family sizes over the next five years.
Anyone doing business in China should pay close attention to the Five Year Plan as its policies will impact your market no matter what you’re selling or buying. We’ve put together a list of 13 things to watch in the 13th Five Year Plan, with our views on their impact. Click here to see it. We hope you enjoy this week’s Skinny.
China’s 13th Five Year Plan: 13 Things Foreign Businesses Should Know: 13 areas that the 13th Five Year Plan will have a big impact on including the affected industries.
What Slowdown? Survey Suggests China’s Consumers Coping: 84% of Chinese expect to spend more this year according to McKinsey research. Food & beverage, leisure travel and entertainment are the top-3 categories consumers expect to increase spending. 44% of those looking to spend more on food cite new product categories as the top reason. Heavy online shoppers, 25-34 year olds and consumers living in Tier 1 cities are especially “unbothered” by the slowdown. Westpac’s October sentiment figures show a much less rosy picture, particularly among 35-54 year olds.
China Pessimism Is Overblown, IMF Says, Citing Booming Services Sector: International Monetary Fund’s top Asia economist, Changyong Rhee, says pessimism in China’s economy may be unwarranted. He argued the booming services sector – which accounts for more than 50% of the economy – is offsetting the collapse in manufacturing.
Alibaba Cheat Sheet: Revenue Beats Estimates: The 346 million active monthly mobile users accounted for 61% of all sales on Alibaba’s platforms in Q3 – up 121% from a year ago. Overall ecommerce sales grew 28% with 386 million shoppers spending $112 billion in the quarter.
How China’s Strict Content Controls Led to an Innovative Ecommerce Platform: Innovative made-in-China products are becoming more common as entrepreneurs build services that are leapfrogging what’s available elsewhere.
Apple Revenues In China Shoot Up 99%: Apple’s fiscal year ended with 99% growth from China – $12.5 billion, up from $6.3 billion in 2014. By mid-next year, Apple plans to add another 16 stores to its current 24 in the Mainland.
Yum China: Can it Become ‘Finger Lickin’ Good’ Again?: Once the pin up kid for how Western brands should operate in China, KFC’s fortunes have turned since late 2012, following a string of scandals and failure to move with the market. It’s now betting on a new structure, coffee and cosier restaurants to turn things around.
Is Blue Hat Old Hat ? Circumventing China’s Health Food Registration and Filing: Registration of health foods in China bearing functional claims takes 2-4 years and an average investment of $70,000. Many international health brands are circumventing the blue hat badge and selling directly through cross border commerce. This may change with new bills drafted.
How Do Chinese Tourists Really Feel About Paris?: Interviews with two Chinese consumers give good insights into why Chinese like Paris and its shopping; representing overall trends in the evolution of Chinese tourists.
Baidu to Benefit Most from Ctrip-Qunar Merger: China’s two biggest online travel agencies Qunar and Ctrip are merging, with Baidu looking to control their 70% combined market share.
KLM Opens Online Shop via Alibaba’s Alitrip Online Travel Platform: KLM Royal Dutch Airlines will be the first non-Asian airline to sell tickets directly via Alibaba’s Alitrip. It follows the airline’s earlier move to offer 24/7 customer service via the Chinese social media platforms Weibo and WeChat.
Why Michael Jordan went to China for Nike: Basketball was the only Western sport not banned during the Cultural Revolution because Mao loved it so much. That has indirectly helped Nike Jordan high tops become more prevalent in certain areas of China than anywhere in America – the shoes are running so hot right now, they risk becoming a fad as so many things do in China. 65% of Air Jordan sales are estimated to be for lifestyle, and 35% for performance.
Has Shanghai Got What it Takes to be a Fashion Capital?: Following Shanghai Fashion Week last month, there is a lot of buzz about whether Shanghai has what it takes to take the crown of Asia’s fashion capital.
Global Luxury Goods Market Exceeds €1 Trillion: Whilst demand for personal luxury items like jewellery and handbags is slowing, strong sales of luxury cars (up 8%) and fine art (6%) have helped push the global luxury market over €1 trillion ($1.1 trillion) for the first time. Chinese helped things the most, accounting for 31% of global luxury sales, followed by US consumers at 24% and Europeans at 18% according to Bain. 80% of Chinese luxury shopping is done overseas.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
This plan is the 13th Five Year Plan, and whilst every plan is very significant for the world’s most populous nation, the 13th is particularly important.
The plan comes at a time when China’s unprecedented economic growth is slowing, as it hopes to transition to a more sustainable, higher value, consumption-led economy. It is also the plan that will dovetail into the 100-year anniversary of the founding of the Communist Party of China in 2021, in which Beijing will move mountains to ensure they put on a good show.
Although the full 13th Five Year Plan won’t be released until next March, a communique was published after the meeting outlining the highlights of the plan. Anyone who has been following recent China policy closely won’t notice any major surprises, which isn’t a bad thing as it signals that Beijing is comfortable with how things are tracking.
The headline policies are lowering GDP targets to 6.5% until 2020, a faster pace of urbanisation, a continued innovation drive, further opening up of the economy and more anti-corruption measures – including adding golf and gluttony to the list of taboos. Probably the most talked about policy is the end of the One Child Policy, although we don’t believe this will have a significant impact on Chinese family sizes over the next five years.
Anyone doing business in China should pay close attention to the Five Year Plan as its policies will impact your market no matter what you’re selling or buying. We’ve put together a list of 13 things to watch in the 13th Five Year Plan, with our views on their impact. Click here to see it. We hope you enjoy this week’s Skinny.
![Consumers,]()
Chinese Consumers
Chinese ConsumersChina’s 13th Five Year Plan: 13 Things Foreign Businesses Should Know: 13 areas that the 13th Five Year Plan will have a big impact on including the affected industries.
What Slowdown? Survey Suggests China’s Consumers Coping: 84% of Chinese expect to spend more this year according to McKinsey research. Food & beverage, leisure travel and entertainment are the top-3 categories consumers expect to increase spending. 44% of those looking to spend more on food cite new product categories as the top reason. Heavy online shoppers, 25-34 year olds and consumers living in Tier 1 cities are especially “unbothered” by the slowdown. Westpac’s October sentiment figures show a much less rosy picture, particularly among 35-54 year olds.
China Pessimism Is Overblown, IMF Says, Citing Booming Services Sector: International Monetary Fund’s top Asia economist, Changyong Rhee, says pessimism in China’s economy may be unwarranted. He argued the booming services sector – which accounts for more than 50% of the economy – is offsetting the collapse in manufacturing.
![Online:]()
Internet, Mobiles, Social Media & Ecommerce
Internet, Mobiles, Social Media & EcommerceAlibaba Cheat Sheet: Revenue Beats Estimates: The 346 million active monthly mobile users accounted for 61% of all sales on Alibaba’s platforms in Q3 – up 121% from a year ago. Overall ecommerce sales grew 28% with 386 million shoppers spending $112 billion in the quarter.
How China’s Strict Content Controls Led to an Innovative Ecommerce Platform: Innovative made-in-China products are becoming more common as entrepreneurs build services that are leapfrogging what’s available elsewhere.
Apple Revenues In China Shoot Up 99%: Apple’s fiscal year ended with 99% growth from China – $12.5 billion, up from $6.3 billion in 2014. By mid-next year, Apple plans to add another 16 stores to its current 24 in the Mainland.
![Premium]()
Food & Beverage
Food & BeverageYum China: Can it Become ‘Finger Lickin’ Good’ Again?: Once the pin up kid for how Western brands should operate in China, KFC’s fortunes have turned since late 2012, following a string of scandals and failure to move with the market. It’s now betting on a new structure, coffee and cosier restaurants to turn things around.
![Overall]()
Health
HealthIs Blue Hat Old Hat ? Circumventing China’s Health Food Registration and Filing: Registration of health foods in China bearing functional claims takes 2-4 years and an average investment of $70,000. Many international health brands are circumventing the blue hat badge and selling directly through cross border commerce. This may change with new bills drafted.
![Overseas]()
Chinese Tourists
Chinese TouristsHow Do Chinese Tourists Really Feel About Paris?: Interviews with two Chinese consumers give good insights into why Chinese like Paris and its shopping; representing overall trends in the evolution of Chinese tourists.
Baidu to Benefit Most from Ctrip-Qunar Merger: China’s two biggest online travel agencies Qunar and Ctrip are merging, with Baidu looking to control their 70% combined market share.
KLM Opens Online Shop via Alibaba’s Alitrip Online Travel Platform: KLM Royal Dutch Airlines will be the first non-Asian airline to sell tickets directly via Alibaba’s Alitrip. It follows the airline’s earlier move to offer 24/7 customer service via the Chinese social media platforms Weibo and WeChat.
![Chinese sport]()
Sports
SportsWhy Michael Jordan went to China for Nike: Basketball was the only Western sport not banned during the Cultural Revolution because Mao loved it so much. That has indirectly helped Nike Jordan high tops become more prevalent in certain areas of China than anywhere in America – the shoes are running so hot right now, they risk becoming a fad as so many things do in China. 65% of Air Jordan sales are estimated to be for lifestyle, and 35% for performance.
![Accessories and]()
Fashion
FashionHas Shanghai Got What it Takes to be a Fashion Capital?: Following Shanghai Fashion Week last month, there is a lot of buzz about whether Shanghai has what it takes to take the crown of Asia’s fashion capital.
![Premium and]()
Luxury
LuxuryGlobal Luxury Goods Market Exceeds €1 Trillion: Whilst demand for personal luxury items like jewellery and handbags is slowing, strong sales of luxury cars (up 8%) and fine art (6%) have helped push the global luxury market over €1 trillion ($1.1 trillion) for the first time. Chinese helped things the most, accounting for 31% of global luxury sales, followed by US consumers at 24% and Europeans at 18% according to Bain. 80% of Chinese luxury shopping is done overseas.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
The post The Importance of China’s 13th Five Year Plan appeared first on China Skinny.