As recently as 2012, most Chinese consumers considered international labels categorically better than local alternatives. KFC was a good example: although consumers knew deep-fried drumsticks weren’t a super-food, they were from an American company so must be safer, and therefore healthier, than Chinese options that could be cooked in gutter oil, with additives like melamine. That perception helped fuel more than two new KFC restaurant openings a day in China that year.
Things took a turn in late 2012 when state media accused a KFC supplier of pumping toxic chemicals into chicken. Subsequent scandals such as meat on the floor and altered expiry dates have shown Chinese consumers that even foreign brands with local supply chains can’t be completely trusted.
This has seen the monumental rise of unadulterated imported food into China. It’s why Carrefour just opened their biggest supermarket in Asia in Beijing, with a strong focus on imported food. It’s why the big ecommerce platforms are putting so much effort behind promoting imported food and cross border commerce, and a large reason why Alibaba just opened offices in France and Germany.
Yet, just as Chinese consumers won’t blindly purchase a foreign brand with supply chains in China, they won’t indiscriminately purchase products just because they appear to be imported. In 2013, a CCTV journalist travelled to New Zealand to find the source of a so-called New Zealand baby formula brand. The address on the can turned out to be a panel beater’s yard in Auckland whose staff had never heard of the dairy company. The exposé further fuelled Chinese consumers’ lack of trust and reinforced their need to do extensive research before making a purchase.
In a related event on Single’s Day this year, Weidendorf milk made headlines for selling out of 250,000 cases within 24 hours. The celebrations were short lived when local media and social networks were ablaze with reports that Weidendorf was not a German brand, and unavailable in German shops. The brand was in fact, owned by a Shanghai company. It turned out that the local company sourced the raw material, manufactured and packaged in Germany, apparently to EU standards, yet many Chinese consumers were still enraged about being misled and didn’t consider it truly German milk.
With more than 600 million Chinese now armed with a smartphone at all times, it is easy for them to do a background check on a brand, and most do. There are typically more than ten online and offline touch points on a Chinese consumer’s journey before they make a purchase, so deception doesn’t go unnoticed for long, and will spread like wildfire on social media. Consumers need more than just a foreign flag or pretty foreign scene on packaging to be convinced of its authenticity. China Skinny can assist with that. We hope you enjoy this week’s Skinny.
Wang Jianlin on Why the Wanda Phenomenon Works: China’s richest person and international property, entertainment, sports and finance tycoon, Wang Jianlin, talks about why he is diversifying and how Wanda’s scale and access to consumer data presents significant opportunities.
China’s Great Economic Shift Brings Little to Global Rebalancing: China’s rising trade imbalance with the rest of the world has been dragged down by falling commodity prices, yet service imports are booming with China’s trade deficit growing from $9.3 billion in 2005 to $159.9 billion in 2014. More than $100 billion of that shortfall was from international tourism.
Carrefour Opens Largest Asian Store in Beijing: The 71,380 square metre Carrefour aims to focus “on imported food products as there has been a sea change in the food preferences of Chinese consumer.” 15% of the more than 40,000 products will be imported.
Alibaba Opens Offices in France and Germany as it Seeks New Products for Chinese Consumers: Alibaba has opened offices in Paris and Munich as it hopes to source more products from Europe to further feed China’s growing appetites for imported products.
Did imported German milk deceive Shanghai shoppers?: During Single’s Day this year, ‘imported’ milk brand Weidendorf made headlines for selling out of 250,000 cases within 24 hours. There has since been an uproar online that the brand isn’t German, but a locally owned company which isn’t actually sold in Germany, although it is manufactured and packaged there.
Chinese Beer: Under Pressure as Economy Slows Amid Competition: Imported beer accounts for just 1% of the world’s largest beer market, but that is changing. Imported beers grew 63% in the first half of 2015, while the volume of beer overall fell 8%.
Spain’s Prized Ibérico Hams Can’t Cure Fast Enough for China: Fresh pork exports to China from Spain — including heads, ears and other parts — rose 35% last year, making it the second-largest export market in volume after neighbouring France. It is also driving Chinese tourism. Seeing the potential, Fosun has bought a share of one of Spain’s top Ibérico Ham brands.
WeChat Extends Cashless Payments to Chinese Tourists Overseas: WeChat payments is now available for Chinese travellers making purchases in US dollars, British pounds, Hong Kong dollars, Japanese yen, Canadian dollars, Australian dollars, Euro, New Zealand dollars, and Korean won. They will be targeting destinations such as Harrods, which accounts for 20% of all Chinese tourist spending in the UK.
Hoteliers Rejoice: China’s Business Travel Budgets Remain on the Rise: Chinese corporate travel and entertainment budgets rose 4.8% this year, following a 3.1% rise last year. Budgets for international travel were up 6%. Travel is booked online by 89% of companies.
China’s Upwardly Mobile Gear Up For The Great Outdoors: Sports and Outdoor apparel category has been the fastest growing of all apparel categories this year on Tmall. 3 million pairs of running shoes sold on Single’s Day alone.
China Pollution: First Ever Red Alert in Effect in Beijing: Schools in Beijing were closed and outdoor construction was halted yesterday after the Chinese capital was issued with its first ever pollution “red alert”. The PM2.5 reading of 291 was much lower than it has been in the past, and Beijing’s decision is a good sign that high pollution is starting to be acted upon. The daily average for air in Beijing between 2008-2015 has been classified as ‘Unhealthy’, ‘Very Unhealthy’ or ‘Hazardous’ 67% of the time. If you thought Beijing was bad, Delhi hit 999 for PM2.5 last month and Shenyang broke 1,400.
Eco&more is the First Chinese Company to Join PETA’s Cruelty-Free Cosmetics List: Eco&more has become the first Chinese company to feature on PETA’s cruelty-free list of firms to ban animal testing on their products, formulations, or ingredients. Although Chinese companies are now allowed to sell cosmetics not tested on animals, foreign companies still have to pay for animal testing of their products to sell in China.
Buzzwords: Property: Chinese property investors are a hot topic of conversation in China and most major cities of the world nowadays. Some of the fascinating insights to the good and bad of Chinese property and its investors.
Chinese Cash Floods U.S. Real Estate Market: China’s home-buying spree in the U.S. began on the coasts, but is now spreading to the middle of the country, where prices are more modest and have room to run. This year, Chinese families became the largest group of overseas buyers for the first time. While they still represent a tiny share of overall sales, they account for more than 7% of sales over $1 million. Buyers from Greater China paid $831,800 on average for a house – more than three times what the average American spent.
Big Data Pumps Money at 500 Million Chinese Lacking Credit: Less than 10% of Chinese adults borrow from financial institutions, versus 25% from friends and family. Peer-to-peer lending is providing an alternative source, utilising big data from companies like Tencent, evaluating borrowers based on insights like frequency of instant messages, number of online friends, length of phone registration and use of mobile shopping and games. Interesting how that pans out with some stress testing.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
Things took a turn in late 2012 when state media accused a KFC supplier of pumping toxic chemicals into chicken. Subsequent scandals such as meat on the floor and altered expiry dates have shown Chinese consumers that even foreign brands with local supply chains can’t be completely trusted.
This has seen the monumental rise of unadulterated imported food into China. It’s why Carrefour just opened their biggest supermarket in Asia in Beijing, with a strong focus on imported food. It’s why the big ecommerce platforms are putting so much effort behind promoting imported food and cross border commerce, and a large reason why Alibaba just opened offices in France and Germany.
Yet, just as Chinese consumers won’t blindly purchase a foreign brand with supply chains in China, they won’t indiscriminately purchase products just because they appear to be imported. In 2013, a CCTV journalist travelled to New Zealand to find the source of a so-called New Zealand baby formula brand. The address on the can turned out to be a panel beater’s yard in Auckland whose staff had never heard of the dairy company. The exposé further fuelled Chinese consumers’ lack of trust and reinforced their need to do extensive research before making a purchase.
In a related event on Single’s Day this year, Weidendorf milk made headlines for selling out of 250,000 cases within 24 hours. The celebrations were short lived when local media and social networks were ablaze with reports that Weidendorf was not a German brand, and unavailable in German shops. The brand was in fact, owned by a Shanghai company. It turned out that the local company sourced the raw material, manufactured and packaged in Germany, apparently to EU standards, yet many Chinese consumers were still enraged about being misled and didn’t consider it truly German milk.
With more than 600 million Chinese now armed with a smartphone at all times, it is easy for them to do a background check on a brand, and most do. There are typically more than ten online and offline touch points on a Chinese consumer’s journey before they make a purchase, so deception doesn’t go unnoticed for long, and will spread like wildfire on social media. Consumers need more than just a foreign flag or pretty foreign scene on packaging to be convinced of its authenticity. China Skinny can assist with that. We hope you enjoy this week’s Skinny.
![Consumers,]()
Chinese Consumers
Wang Jianlin on Why the Wanda Phenomenon Works: China’s richest person and international property, entertainment, sports and finance tycoon, Wang Jianlin, talks about why he is diversifying and how Wanda’s scale and access to consumer data presents significant opportunities.
Chinese ConsumersChina’s Great Economic Shift Brings Little to Global Rebalancing: China’s rising trade imbalance with the rest of the world has been dragged down by falling commodity prices, yet service imports are booming with China’s trade deficit growing from $9.3 billion in 2005 to $159.9 billion in 2014. More than $100 billion of that shortfall was from international tourism.
Carrefour Opens Largest Asian Store in Beijing: The 71,380 square metre Carrefour aims to focus “on imported food products as there has been a sea change in the food preferences of Chinese consumer.” 15% of the more than 40,000 products will be imported.
![Online:]()
Internet & Ecommerce
Alibaba Opens Offices in France and Germany as it Seeks New Products for Chinese Consumers: Alibaba has opened offices in Paris and Munich as it hopes to source more products from Europe to further feed China’s growing appetites for imported products.
Internet & Ecommerce![Premium]()
Food & Beverage
Did imported German milk deceive Shanghai shoppers?: During Single’s Day this year, ‘imported’ milk brand Weidendorf made headlines for selling out of 250,000 cases within 24 hours. There has since been an uproar online that the brand isn’t German, but a locally owned company which isn’t actually sold in Germany, although it is manufactured and packaged there.
Food & BeverageChinese Beer: Under Pressure as Economy Slows Amid Competition: Imported beer accounts for just 1% of the world’s largest beer market, but that is changing. Imported beers grew 63% in the first half of 2015, while the volume of beer overall fell 8%.
Spain’s Prized Ibérico Hams Can’t Cure Fast Enough for China: Fresh pork exports to China from Spain — including heads, ears and other parts — rose 35% last year, making it the second-largest export market in volume after neighbouring France. It is also driving Chinese tourism. Seeing the potential, Fosun has bought a share of one of Spain’s top Ibérico Ham brands.
![Overseas]()
Chinese Tourists
WeChat Extends Cashless Payments to Chinese Tourists Overseas: WeChat payments is now available for Chinese travellers making purchases in US dollars, British pounds, Hong Kong dollars, Japanese yen, Canadian dollars, Australian dollars, Euro, New Zealand dollars, and Korean won. They will be targeting destinations such as Harrods, which accounts for 20% of all Chinese tourist spending in the UK.
Chinese TouristsHoteliers Rejoice: China’s Business Travel Budgets Remain on the Rise: Chinese corporate travel and entertainment budgets rose 4.8% this year, following a 3.1% rise last year. Budgets for international travel were up 6%. Travel is booked online by 89% of companies.
![Chinese sport]()
Sports
China’s Upwardly Mobile Gear Up For The Great Outdoors: Sports and Outdoor apparel category has been the fastest growing of all apparel categories this year on Tmall. 3 million pairs of running shoes sold on Single’s Day alone.
Sports![Pollution and]()
Environment
China Pollution: First Ever Red Alert in Effect in Beijing: Schools in Beijing were closed and outdoor construction was halted yesterday after the Chinese capital was issued with its first ever pollution “red alert”. The PM2.5 reading of 291 was much lower than it has been in the past, and Beijing’s decision is a good sign that high pollution is starting to be acted upon. The daily average for air in Beijing between 2008-2015 has been classified as ‘Unhealthy’, ‘Very Unhealthy’ or ‘Hazardous’ 67% of the time. If you thought Beijing was bad, Delhi hit 999 for PM2.5 last month and Shenyang broke 1,400.
Environment![Overall]()
Health & Beauty
Eco&more is the First Chinese Company to Join PETA’s Cruelty-Free Cosmetics List: Eco&more has become the first Chinese company to feature on PETA’s cruelty-free list of firms to ban animal testing on their products, formulations, or ingredients. Although Chinese companies are now allowed to sell cosmetics not tested on animals, foreign companies still have to pay for animal testing of their products to sell in China.
Health & Beauty![Banking,]()
Property & Finance
Buzzwords: Property: Chinese property investors are a hot topic of conversation in China and most major cities of the world nowadays. Some of the fascinating insights to the good and bad of Chinese property and its investors.
Property & FinanceChinese Cash Floods U.S. Real Estate Market: China’s home-buying spree in the U.S. began on the coasts, but is now spreading to the middle of the country, where prices are more modest and have room to run. This year, Chinese families became the largest group of overseas buyers for the first time. While they still represent a tiny share of overall sales, they account for more than 7% of sales over $1 million. Buyers from Greater China paid $831,800 on average for a house – more than three times what the average American spent.
Big Data Pumps Money at 500 Million Chinese Lacking Credit: Less than 10% of Chinese adults borrow from financial institutions, versus 25% from friends and family. Peer-to-peer lending is providing an alternative source, utilising big data from companies like Tencent, evaluating borrowers based on insights like frequency of instant messages, number of online friends, length of phone registration and use of mobile shopping and games. Interesting how that pans out with some stress testing.
That’s the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
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