Xiaomi Continues its March to Leadership
Xiaomi Co-founder, Li Wanqiang, estimates the company will sell in excess 18 million units in the third quarter, 70% of which are sold online. Sales for the first half of 2014 reached 26.11 million units generating total revenue of USD $5.4 billion.
This result could change Kantar Worldpanel’s market share report from the first five months of 2014, which had Xiaomi’s market share (21%) just behind market leader Samsung (23%) and well ahead of the iPhone’s 16% share. Source: China Internet Watch
China’s Shift to 3G/4G is Relentless
The October numbers from China’s three carriers show sustained growth for 3G/4G subscribers. While the total population of new subscribers was only about 5 million in October, the number of 3G/4G subscriptions went up by about 16 million. That reflects movement from feature phones to smartphone by existing subscribers. Given the current run rate, YoloBlog projects the 600 million mark for 3/G/4G subscriptions will be crossed by February 2015. Source: YoloBlog
Galaxy of the Guardians, More than a Big Film
Since its August 1st release date Guardians of the Galaxy has earned $768 million worldwide according to Boxofficemojo.com. Forty-three percent of the total comes from US box office sales ($330 million) while China has contributed $96 million or 12.5% of the total. It was second only to the US and the third highest opening for any Disney release in China, behind Iron Man 3 and Captain America: The Winter Soldier.
But box office isn’t the end of the story. The mobile game of Guardians of the Galaxy hit the top 10 charts in app stores’ game category and top 80 in the action game gross revenue. At the same time, the action figure toy of the character Groot became a highly desired toy in China. Stories circulated about people from China pre-ordering the toy from American Amazon even though they knew the toy was made in China.
This is yet another instance of American culture embedding itself deeply into China’s consumer class and of how the super hero speaks to Chinese people. Sources: Boxoffice mojo.com, Wikipedia.org, marvel.com
Universal Beijing Gets Chinese Government Approval to Open in 2019
Universals largest theme park ever is now scheduled to open in 2019, after approval by the Chinese government – 13 years in the making.
What’s behind this big deal?
Universal sits at the nexus of two major trends in the China, the love affair with movies, especially American movies, and an equally explosive romance with theme parks.
Senior media analyst for Rentrak, Paul Dergarabedian, forecasted that China will pass the US as the largest film market in the world by 2018. He said, “We’re seeing annual growth over the past 10 years of 30 percent in annual box office receipts. You can’t ignore China if you’re in the movie business.”
Chinese filmgoers spent $3.6 billion in 2013, according to Rentrak data. Other reporting indicates that half of that revenue went toward American films.
At the same time the theme park business in Asia is exploding. 2013 attendance up 7.5 percent compared with the previous year, according to a new report from the Themed Entertainment Association. That compares with a modest 2.5 percent increase for North and South America and a dip of nearly 1 percent in Europe and the Middle East.
With Shanghai Disneyland set to open in 2015, it is not surprising that Universal wants to put its stamp on it too. Sources: NY Post, Hollywood Reporter, International Business Times
The Red Wine Indicator
Another sign of increasing sophistication among Chinese consumers is the report from the Fortune Character Institute (FCI), a luxury research and consulting agency, which predicts that imported red wine will own half of the Chinese market by 2020 and will hold an 80 percent market share by 2030.
China’s homegrown red wine is under pressure from the growth of imports already. Recent reports showed decreasing sales of domestic red wine, which stood at USD $6.64 billion in 2013, a year-on-year drop of 8.52 percent.
The report also showed the average price of foreign red wine hit a record high of USD $4.15 per liter, a 3.5-percent year-on-year increase and an astonishing 439 percent increase from 2002.
Zhou Ting, dean of the FCI, said that, “After years of development, Chinese consumers’ taste in red wine has evolved, prompting demand for quality wine. Source: Xinhua, english.news.cn
Breakthroughs at the Asia-Pacific Economic Cooperation Forum in Beijing
Coming out of the Asia-Pacific Economic Cooperation forum in Beijing, The New York Times reports that the US and China have agreed to eliminate more than 200 categories of tariffs on technology products. Myron Brilliant, the head of international affairs of the United States Chamber of Commerce said, “With trade in tech goods surpassing $4 trillion annually, the commercial significance of these negotiations is obvious.”
This agreement is the result of determined negotiations that run parallel to the Trans-Pacific Partnership, a regional trade pact that is a central to the US shift in focus to Asia.
Governments are not the only points of contact; companies are well represented at the forum. Apple, which garners 15% of its revenue from Greater China, was there to announce an expansion of Apple stores in China from 15 currently to 40 within the next two years. Chief Executive Tim Cook said,
“We’re investing like crazy in the market,” Cook said on the call. “When I look at China, I see an enormous market where there are more people graduating into the middle class than any nation on Earth in history.” Sources: Reuters, New York Times
MEF will release its 4th annual global consumer survey next month. It will confirm what this blog has shown before, that China’s mobile purchasing leads the world and is well above the global average. It will also reveal that in spite of its lead in purchasing, Chinese consumers also lead in their mistrust of the mobile – an odd juxtaposition that should inform western e-sellers about offering honest deals and delivering on promises. Source: Venture Beat
What a Difference a Year Makes
This striking comparison of top selling smartphones in China shows a very volatile market over the course of one year. Samsung has gotten squeezed out of its formidable leadership position back in September 2013. It was done in by the combination of Apple entering the 3G/4G space on the high-end and homegrown Xiaomi powering in from the low-end. Source: Bloomberg.com
When it comes to smartphones, size clearly matters. The trend line for sales of Android phones with screens larger than 5 inches goes from 40% to 78% in nine months and that’s before the iPhone 6 hit the market in mid-September. YoloBlog has already reported on the jolt to China’s retail sales that the iPhone’s release gave to September. Source: Bloomberg.com