China’s Car Market Defined

Auto Breakout

  • Domestic volume brands are basic, economy vehicle.  Leading brands include: Wuling, Changan, and Dongfeng, BYD and Great Wall.
  • Foreign volume brands are cars and light commercial vehicles priced. This segment is dominated by foreign joint ventures that assemble vehicles in China such as General Motors and Nissan. Volkswagen is the market leader, followed by Hyundai and Toyota.
  • Foreign premium brands are cars at the high end of the Chinese car market. Audi, BMW, and Mercedes-Benz are the clear leaders, while Land Rover and Porsche are well positioned in their niche segments.

Brand loyalty in all three categories is below 50% and is particularly low among volume brands, both domestic and foreign.  It appears value brand owners are not happy with their current car status, which opens opportunity for brands to poach owners on their next purchase.   Source: Boston Consulting Group

Playing Catch Up

Intel Logo

Intel, the company famous for recognizing the inflection point in the 1970s that ultimately put the personal computer on everyone’s desk is playing catch up in the mobile space 40 years later.  In order to establish a better position in mobile chip making verses market leader Qualcomm, the company has made a $1.5 billion investment to acquire a 20 percent stake in Spreadtrum Communications and RDA Microelectronics, two mobile chip manufacturers that have ties to the government of China.

With the deal, Intel will be gaining a stable foothold in the mobile chip market in China. But deals go both ways.  It will also allow the two Chinese chip manufacturers to gain access to the design and development expertise at Intel.  Spreadtrum CEO and Chairman Leo Li said, “The adoption of Intel’s architecture technology will enable us to accelerate the development of mobile SoCs that expand the breadth of our portfolio, benefiting handset makers addressing both China and the global market.” Source: Tech Times

China’s Mobile Audience Sustains Growth

Carrier Data-Sep2014

The mobile advertising audience in China, which YoloBlog defines as 3G/4G subscribers, continues to grow at a healthy pace according to numbers released for September by the country’s three telecoms.  Sources: China Mobile, China Unicom, China Telecom

China: Global Retailing’s Laboratory of the Future

Mintel’s Digital Trends China 2014 demonstrates how much mobile retail is meshing with the physical store experience in new and exciting ways.  The message here is about the complete integration of digital and mobile technologies into the selling experience.

Experiments in Tech Integration:

  • Geo-location alerts telling people about money-off promotions
  • Scanning a QR codes is common practice. According to mobile coupon company Imageco, 113.6 million QR codes were scanned in China during October 2013, an increase of over 38% from the previous month.
  • Intime Department Store, which established its yintai.com online platform in 2010, has also established a “flagship” store on Tmall, in addition to two mobile shopping consumer apps and presence on social networks.
  • In April 2013, both Gap and Uniqlo launched mobile shopping apps, featuring mobile online shopping, exclusive coupons, QR code scanning and in-store search.
  • Multi-screen approach could also be used in-store by retailers, where in-store screens showing advertisements for products, provide scanning codes to locate those items in-store, or simply order and pay online.
  • Chinese property developer Vanke has teamed with Baidu to develop “intelligent” shopping malls, which will use location based services to help shoppers find stores, bargains and even parking spaces, as well as gather big data on shopper behaviour to help tailor data-based marketing campaigns.
  • In the restaurant sector, there are iPad menus, smart phones menu to locate outlets and pre-order meals online.

The report finishes by saying, “Online (especially mobile) retail innovations are coming thick and fast in China, outpacing developments in even highly developed markets such as the US.  And increasingly those innovations forged in China will spread to the rest of the world, giving the phrase “Made in China” a whole new meaning.”  Source: Mintel’s Digital Trends China 2014

Fourteen Principles of App Design

Retail App Building

This list of 14 key principles of app design are meant for apps built by retailers, but by our count, 10 of them apply to virtual any app design in any category.  Source: ClickZ

200 Million Chinese to Travel Abroad in 2020

Five lessons for western travel organizations trying to lure Chinese vacationers:

Independent Traveler.  In spite of the growth in outbound travel, Chinese reluctance to travel abroad alone has been a drag on growth. New data suggests another social change in China:  Sixty-three percent of China’s outbound travelers now plan to move independently, up ten points from a little over a year ago.

More Sophisticated Traveler.  The shift from tour mob to autonomous traveler has consequence.  Modern Chinese travelers want a discount on four and five-star hotels.  They are not just buying the cheapest room they can find.

More Experimental Traveler.

  • 3,300 Chinese travelled to the South Pole from November 2013 to March 2014
  • 500 Chinese a day in Jackson Hole, Wyoming this June
  • 150 thousand Chinese projected to visit Hawaii this year

Advise: Prepare materials in Mandarin

Media Influenced Traveler.  Seattle has seen a 90% jump in Chinese visitors resulting from a romantic comedy that had a woman travel to the city to give birth.  At the same time, a film called “Lost in Thailand” is credited with an uptick in visits there.  And the success of the sit-com, “Big Bang Theory” in China requires that trips to LA detour to Pasadena where the show is set and where there is a Cheese Cake Factory.  Finally, opinion leader endorsements, even casual ones, can have a great effect.  When model Zhang Xinyu stopped by the Bridestowe Estate lavender farm and a photo  went viral, all hell broke loose.

Internet Influenced Traveler.  Assume all Chinese are on the internet all the time.  Evidence:

  • More than 80% of Chinese research online when making outbound travel plans
  • Fifty-three percent plus book flights and hotels online
  • Ninety-one percent use social media during the trip and afterwards.

In order to win the Chinese traveler, travel industry pros must create sophisticated, multilayered online strategies or miss out to those who do. Source: China Digital Review

Intent to Purchase Online Increases

Comparison of Intent to Purchase Online surveys from 2011 and 2014 demonstrate the growth in e-commerce that YoloBlog has been documenting.  The increase in purchase intention is across the board, not category specific.  Source: China Internet Watch

Intent to Purchase

Chinese e-Consumers Avoid Stores

Mobile Use

Breakouts from the Geometry Global “Connected Shopper” study reveal the intense relationship the Chinese consumer has with their mobile devices and how important they are to their purchasing behaviors. Source: WARC

Mobile is Key to Increased Consumer Spending

Falling prices for mobile devices, which leads to increased penetration, is a contributing force behind the growth of consumer spending by low and middle class Chinese.  These groups are 70% of the population and deliver two-thirds of the sales according to Accenture.  In 2013 they spent $2 trillion, a number that is projected to double by 2020.

Gianfranco Casati, Accenture’s Group Chief Executive for Growth Markets identifies the key, “Online shopping is popular among lower-income Chinese consumers in small and medium-sized cities, as they can shop as conveniently as the high-end consumers in China’s biggest cities.”

The advantage mobile provides for rural people is clear.  But it does come with a problem for sellers.  The infrastructure in rural China that does not support lots of local purchasing – opening the door for mobile purchasing – but, it also does not help when trying to deliver products and service from the outside.

Casati added, “Successfully capturing these opportunities requires companies to place digital at the heart of their strategies, and understand and embrace the demands of the different segments of China’s digital consumer.”  Example: The lower economic segment tends to be both frugal and concerned with quality while being less brand aware or brand loyal.  Source: WARC; Accenture

We Have Seen This Before

Banners

Demand for impressions in China is exploding.   AdsYolo founder, Tony Thielman, just returned from his latest trip to Beijing and bears first-hand witness to the phenom.  He has seen it before in the 2000-2001 period when internet advertising, which had been all promise and much fizzle, went kaboom.  It happened again for mobile three or four years ago when smartphones gained mass penetration in the US.  And today the promise of advertising in China is being realized.  Big brands have arrived and established their positions in the mobile advertising space.  In do so; they bring new legitimacy to advertising in mobile China.

Who’s there?  Honeywell, BMW, Porsche, Ford – not to mention worldwide of fashion brands – and they are being challenged for impressions by hoards of local brands.  YoloBlog has already been tracking the success of Xiaomi with its low-cost smartphones and its pure e-commerce marketing plan.  Source: YoloBlog