Quotes from the Chinese Economists 50 Forum

50 Form

The 50 Forum is a one of China’s leading economic think tanks and as such is instrumental in setting the framework for the 13th Five Year Plan that will cover 2016 – 2020.  These plans have set the basis for the economic transformation that we have been watching over the last 20 years.   To get a sense of how economic leaders are thinking we offer the following quotes from the annual meeting of Chinese Economists 50 Forum.

Fan Gang, head of the National Economic Research Institute and former advisor to China’s central bank, said ,”The average pace of economic growth for the next five years is likely to be 7 percent, and a potential growth of 7 to 7.5 percent is also achievable.”

Xu Lin, director of the Department of Development Planning under the National Development and Reform Commission (NDRC), said, “Economic growth for the next five years, under the state of new normal, should be aiming at higher quality and efficiency, driven by innovation, with a greener mentality.”

Yang Weimin, vice minister of the Office of the Central Leading Group on Finance and Economic Affairs, said, “Ten big questions have to be answered in planning out the 13th Five-Year plan, including how to maintain steady economic growth, how to increase income, especially that of the low-income groups, how to reform the traditional development mode, as well as how to expand the scale of opening up.” Source: Global Times

Samsung Under Pressure in China

Samsung

Samsung is feeling the pressure from both Apple on the high-end and several of the low-end smartphone manufacturers – Xiaomi and Huawei – in China.  The Company’s 2014 profit was its lowest since 2011 a mere US$22.7 billion.  Nothing to sneeze at, but still there are those challenges – what to do?

The answer my friend is in China’s tier 3 and 4 cities where Samsung is planning expansion.  YoloBlog have noted t this strategy in the past.  Half the country’s population lives in rural areas and that is the place to look for China’s next growth pert.  Source:  wantchinatimes.com

Drive Time in China

Licenses Cars

Seventeen million new cars were sold in China last year as compared to the 16.5 million sold in the US.

Some 35 cities have more than 1 million cars, ten of which have more than 2 million, including Beijing, Chengdu, Shenzhen, Tianjin, Shanghai, Guangzhou and Chongqing.  Drive time is not fun in those cities.  In response to the crowding eight cities now limit the number of new car plates issued in a year.

Source:  wantchinatimes.com; New York Times

Fifteen Million New Smartphone Users in January

Carrier Data-Jan15

The number of total mobile subscribers continues to grow incrementally – by about 3 million in January.  Contrast:  The number of smartphone subscribers jumped by 15 million.  The size of the mobile market remains relatively stable with millions of feature phone users migrating to smart.  Smartphone growth is still on track to double the entire US population by the time March numbers are counted.  Sources: China Mobile, China Unicorn, China Telecom

Market Phenomenon

Beibei.comLogo

Here is the classic story of recognizing a market problem, solving it and making money.  The problem is that Chinese parents don’t trust Chinese-made products for their babies.  The solution is BeiBei.com, which started in April 2014 to sell a full range of imported products for infants, toddlers and their moms.  Ten months later it raised US$100 million in its second round of funding on a valuation of US$1 billion.

CEO Zhang Lianglun says, “Beibei now has 5,000 brands, 10 million registered users, churns US$32 million in monthly sales and 100,000 items sold daily. Seventy percent of orders come from mobile devices.”

The percentage of sales from mobile is indicative of the consumer environment in China.  It is active and it is mobile.  If your product or idea solves a real problem and its message can be delivered on a mobile platform, it has the potential to win big.   Source:  TechInAsia

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Does China Still Have Growth in its Future?

Consumption-rural

Virtually everyone in the major cities in China is an e-commerce customer.  They have been driving the mobile commerce growth to this point.  Where is the next burst of sales growth?  Answer: It lies in rural China.  According the iResearch 50% of the China’s 1.36 billion people live in rural areas.  Less than 30% of them are online and only 10% have ever bought anything online.  Connect them to smartphones and there will be released a whole new wave of pent-up demand.

AliReseach projects rural e-commerce to have been US$29 billion in 2014 and that it will reach US$75 billion by 2016. Source: Tech Node

Crossing the Line #2

Market Value

For the first time three of the top five Chinese brands are market-driven companies rather than state-owned.  According to a new BrandZ study by consultancy Millward Brown and WPP, the top five are:

  1. Tencent               Market-driven
  2. Alibaba                 Market-driven
  3. China Mobile     State-owned
  4. ICBC bank            State-owned
  5. Baidu                     Market-driven

Doreen Wang, the global head for BrandZ notes, “Market-driven brands are still relatively young, but their growth rate has been amazing.”  The data show that in 2014 47% of the value in the top 100 came from market-driven brands as compared to 2013 when only 29% of the value came from the market.  Technology brands account for 23% of the list’s total value.

The study focuses on the top 100 most valuable publicly traded Chinese brands, which explains why Xiaomi, the third largest smartphone company does not get into the longer list. Source: Ad Age

Happy Chinese New Year 2015… The Year of the Goat

Chinese New Year

Crossing the Line #1

ConsumptionGDP

The mantra by government economists for several years has been that the Chinese economy must move to a more consumer driven and less state driven economy.  For the first time the numbers are beginning to confirm the strategy may be working as Chinese consumption crosses the 50% line driven by growth in car sales, retail sales and sales of household appliances.  And given the consumer confidence numbers reported by Nielsen China, the consumer growth is likely to continue.

Wang Tao, chief China economist at UBS expects consumption as a “share of GDP should rise by another 3 to 4 percentage points by the end of 2020.”  Source: South China Morning Post

ConsumptionSegments