Chinese people show a deeper involvement with their mobile devises than their counterparts in the US according to IAB’s newest US & China Mobile Report 2014. It doesn’t seem that people could show more mobile involved than US citizens, but these data make the point clearly. Chinese folks watch long and short form programming and interact with advertising on their mobile devises significantly more than users in the US. China’s lack of legacy technology – fewer landline PCs – and their leap directly to cellular technology is the underlying explanation. Source: Interactive Advertising Bureau
2015 China Luxury Forecast
Core realizations coming from the study by Ruder Finn, public relations firm, and researcher IPSOS Group suggest that market dynamics in China remain relatively unchanged. The consumer-class continues to grow and their interest in consuming sustains. There is however, what they call, a noticeable shift in consumption patterns.
Simon Tye, Executive Director of Ipsos said, “In mainland China, we are seeing that demand for luxury remains strong – particularly in first tier cities – and we predict that the market momentum will remain relatively unchanged. Hong Kong luxury consumers continue to pursue innovative products and design. They seek new perspective from brands and are ready to embrace new offers that incorporate strong creative and empathetic services. There is continued strong demand for unique and customized products that retain the heritage of the brand.
Customer satisfaction with domestic luxury products remains pretty low among Chinese consumers, which sustains their interest in purchasing overseas. And that encourages e-commerce purchasing.
Gao Ming, Senior Vice-President and General Manager of Ruder Finn Shanghai notes, “E-commerce is both the next big opportunity and challenge for luxury brands. To fully tap the potential of the luxury online market, brands need to consider two options: either creating their own platforms or riding on existing ones. The solution lies in striking the right balance between online product offering, customer experience, and customer service, both online and offline. Focusing on optimizing the online customer experience is more crucial to success than ever before.”
1,933 consumers from mainland China and Hong Kong were survey. Respondents were drawn from fourteen, tier 1,2, and 3 cities to get the broadest perspective.
Source: Mumbrella Asia Pte Ltd
Contrasting Attitudes about Luxury
Chinese folks are more inclined to buy luxury brands for their perceived higher quality than are folks in the US. When combining the ‘agreement’ responses, 86% of Chinese buy for quality while 72% of US respondents do the same. The contrast is even more stark when it comes to making luxury purchases at the best possible price. 49% of Chinese respondents verses 73% of US respondents agree with the statement that it is important to buy at the best possible price. Luxury marketers benefit from stressing quality in China. Source: Jing Daily
Committed to China’s Consumers
The Changing Face of China
Last night on 60 Minutes they ran a story on now retired, top tennis player Li Na from China. Reading behind the surface story of the struggles of a hard working tennis player who overcame the odds to establish herself as a leading player in the world, there is the story if a changing China and how an individual has influenced the change in her small way, in her small sphere of influence. Source: CBS 60 Minutes
Five Predictions for China in 2015
Chinese luxury spending will remain slow on the mainland but high across the world.
Because of government crack downs on corruption and because of taxes on imported products, luxury spending on the mainland was down last year. But luxury spending by Chinese travelers and via online overseas purchasing is likely to continue as a way around the internal restrictions.
Luxury retailers will up their e-tail game.
E-commerce is seen as a high risk for luxury brands with major bricks and mortar investments in China. It is the common mistake made by established businesses that are fearful about new technology cannibalizing their current business. Reality is that new ways of doing business are always coming, either you cannibalize yourself or someone else will do it for you. Think Kodak. Hence, expect smart luxury brands to find the courage to expand their e-commerce and social media presence in China.
Consumer tastes shift from self-expression to self-fulfillment.
A new stratification in China’s expanding consumer class has emerged. There are those who have evolved beyond the nouveau riche purchases of status brands. They are now travelers and the new collectors of art and antiques. At the same time, China is still producing millions of new consumers each year. These newbies are just starting to appreciate status brands. The range of purchases reflects the new realty – people find themselves on a continuum based on when they achieved their wealth status.
Quality trumps quantity when it comes to marketing strategies.
Driven by the change in China’s social media environment, the quality of messaging will become more important than viral quantity. When Weibo was the leader viral sharing drove mass messaging. Now that WeChat is predominant, one to one messaging is the standard. Quality messages that motivate people to share with their ten best friends are quickly becoming the rule.
Big data hits luxury in China.
The growth of social media and e-commerce is making it possible, for the first time, to gather user data on a mass scale in China. One can expect smart brands to use these data to improve customer experiences and better target messages to them. Source: Jing Daily
China’s Fourth Quarter Slows, but It’s All Good
A Reuters poll of 31 economists in China projects fourth quarter growth to slow to 7.2%. If the official numbers to be released shortly are consistent with the projection, 2014 will come in below the government’s goal of 7.5% – slowest growth in decades.
Naturally, trend riders see the continuation of the current direction. However, former World Bank economist, Justin Lin, has a contrarian view. He says that China’s growth will continue for quite a while. “It’s not only in the coming one or two years,” Lin said in New York on January 7th. “I think that there’s an opportunity for China to maintain this kind of robust growth rate continuously for another 10 or 15 years.”
Lin supports his view by noting that export-dependent, developing economies, such as China’s, depend on growth among importing countries like the US, Europe and Japan. Aside from the US, Europe and Japan are not growing and that is having an effect on China’s growth.
He further notes that China is changing to a consumer economy and that consumer spending is growing at 8% to 9% rate over the last three years – an increase over prior years. Looking forward, there will be even more consumer spending as the middle class continues to expand. If Europe and Japan improve, both sides of the Chinese economy will see positive growth.
The People’s Bank of China has predicted China’s GDP for 2015 to slow to 7.1 percent. Other bank’s, such as Standard Chartered have made the same prediction with the amending statement that the slower, but more balanced growth yields a better overall economy. Slow and steady. Source: China Daily
3G/4G Subscriptions Pass 600 Million in China
2014 saw close to 200 million new 3G/4G subscribers become part of the advertising consumer audience. At the end of 2013 there were 416.6 million subscribers and today we report that 2014 closes with over 600 million additional subscribers. The growth is tremendous. With a run rate of more than 20 million subscribers per month, China’s 3G/4G base will double the entire US population by March 1st.
Source: China Mobile, China Unicom, China Telecom
Chinese Consumers Mirror All Consumers
Chinese consumers are often thought of as something different from consumers anywhere else. This table shows that their concerns pretty much mirror the rest of us. When marketing to them, the advice one can extract from these data is to treat the Chinese consumer with the same respect that you would expect for yourself. Source: Jing Daily
Mobile Commerce Growth Exceeds Expectations for Alipay
In some ways growth rate data from Alipay was expected because we could feel the momentum swing all year long, still the 59% jump over 2013 is far more robust than even we imagined. Other data from Alipay indicates how that happened. Much of the reporting on growth has centered on the established urban centers like Beijing where growth moved in the very healthy 20-30% range. But the information coming from the rural areas showed growth in the 60% range. That changes everything.
The explanation for rural growth lies in lack of infrastructure. Wired computers and laptops are relatively rare in the boondocks, which have allowed Smartphones to surge. Putting up a pole is easier that wiring a village. Not to mention that there are fewer stores. Stuff is hard to get – not if it’s on the smartphone in your hip pocket. Source: Mobile Commerce Press