Western Car Makers to Build Capacity in China

Car Commitments

Cars sales in China may be off, sitting well below the 7% growth predicted by the China Association of Automobile Manufacturers (CAAM), but Western car companies are committed.  They are building capacity that will allow them to produce millions more cars in the next four years.

Lower sales are surely a reflection of China’s slower economy.  But slow is relative.  Even at current growth rates China has the one of the fastest growing economies in the world and that is why these companies drive on with plant investments worth $12.7 billion, according to an annual Canadian study of automakers’ outlays.  Source: Reuters

The Big Shift Continues

Carrier Data - March 15

China’s big shift to 3G/4G phones continues unabated.  The number of overall mobile subscribers increased by a mere four million in March as compared to February while the number of 3G/4G subscribers increased by 16 million during the same period.  You can see those feature phones being tucked away, never to return.  Source: China Mobile, China Telecom, China Unicom

Chinese Outbound Travel, Part 2: The Future

Oxford Economics

Key findings from Oxford Economics’ report on The Future of Chinese Travel reveal the following:

Scale of the opportunity

In the next decade, over 60 million Chinese households will cross the annual income threshold of $35,000, making international travel affordable.  Because of the income increase, 88 million Chinese households will be able to travel overseas by 2023

Three key trends in Chinese travel will emerge over the next 10 years:

  1. Chinese demand for overseas travel will overtake the US, UK and Germany by 2020. New sophistication will result in more expensive, longer-haul trips[
  1. By 2023, sixty-two percent of total Chinese outbound travel will be driven by leisure rather than  business.  That’s a shift.
  1. Per-trip spending by Chinese travelers is expected to grow nearly 75% in nominal terms by 2023

Over 85% of travelers will head for major international cities, which will grab nearly 95% of travel spending. Naturally, destinations with easier access, including simpler visa policies will gain most.

Source: Intercontinental Hotels Group

Chinese Outbound Travel, Part 1: The Present

Chinese Travelers data

Outbound travel by the Chinese is increasing, in general, partly due to the relative ease of making arrangements that is afforded by the internet.  It is increasing more specifically among youthful, independent travelers.  Almost 17% more travelers were going it alone in 2014 than in 2013.  At the same time traveling in groups is on the decline, down more than 6%, in spite of a larger overall pool of travelers.  It is a reflection on the increasing sophistication of the Chinese consumer.  No longer do they need the handholding a group offers.  Sources: South China Morning Post; Travel China Guide

$2 Trillion and Climbing

eComm Data

As each new set of numbers emerge, evidence supporting the claims of enormous growth in China’s e-commerce economy mounts.  The China eCommerce Research Center (CECRC) is the latest to provide eye opening numbers.  Of interest to us is that mobile commerce represented 33% of all online retail sales and that mobile internet users have reached better than 500 million.  They are all potential customers.  Source: International Business News

China’s eCommerce Economy to Grow 84% by 2017

Kearney

According to A.T. Kearney, the e-commerce market in China will grow at a 25% annual rate for the next few years.  It is projected to grow from $390 billion in 2014 to $718 billion by 2017.

Three key trends are shaping the near-term changes:

  1. Growth of Mobile Shopping: Mobile shopping’s share of China’s online shopping market rose from 1.5 percent in 2011 to 9.2 percent in 2013.  A.T. Kearney projects a 20 percent annual growth rate in the near future.
  2. The Consumer Economy is Growing: Business –to-consumer sales are expected to reach 53% of the market by 2017.
  3.  Expanded Growth in lower-tier cities: Online shopping is growing throughout China, but fastest the growth is coming from lower-tier cities.  It is a trend that’s likely to continue.

In spite of China’s e-commerce growth in 2014, A.T. Kearney’s 2015 Global Retail E-Commerce Index ranked the US as number one and China as number two, a reversal from last year’s index as the two countries vie for world economic leadership.  Source: A.T. Kearney

Diamond’s Contrarian Trend

Diamonds

Conspicuous consumption may be the new taboo because of the government’s anti-corruption pressure, but diamond sales in China increased 6% in 2014 in contrast to a global increase of only 3% to a record high of USD $81 billion, so reports DeBeers Group.

Executive Vice President of Marketing for DeBeers Group, Stephen Lussier, commented, “Retailers in the industry are looking forward to another year of solid growth, as the market will be pushed along by the process of urbanization as well as the expanding middle class.” Much of the expected growth will come from tier 2 and tier 3 cities.  Source: Want China Times

Chinese Consumer Confidence Jumps

Consumer Sentiment

Chinese consumer confidence increased 2.3% in March according to the Westpac MNI China Consumer Sentiment Indicator.  It jumped to 114.7 from February’s 112.1.  The number has stayed within a tight range since a significant drop in July of last year.

Westpac economist Huw McKay wrote, “Chinese consumers have now responded positively to both of the interest rate cuts delivered so far in the current cycle. That underlines the fact that policy settings were overly tight in 2014, and that the progressive unwinding of those settings will benefit the economy this year and next. While the structural challenges confronting the economy are genuine, the survey argues very strongly that policy remains a potent cyclical force in the minds of consumers.”

In English…Adjustments made by the central bank combined with lower energy costs have contributed an improvement in household finances and that is reflected in an improvement in consumer sentiment.  Source: Financial Times; Westpac MNI China Consumer Sentiment Indicator

China, The Land Where Mobile Shopping is Standard Operating Procedure

Mobile Purchasing

 

 

According to a survey conducted by MasterCard, the Chinese are mostly likely of all Asians to shop online and, here’s the key, 70.1% of them use their smartphone to make the purchases regularly.

Also revealed are the top considerations in making an online purchase by shoppers from Hong Kong:

1. Secure payment facility and reputation of the website (77.6 per cent)

2. Low or no extra payment charge (75.4 per cent)

3. Convenient payment methods (74.2 per cent)

The survey was done in the fourth quarter of 2014 and talked to more than 7,000 respondents across 14 Asia/Pacific markets.  Source: InsideRetail.Asia

Shopping!

Patterns in Mobile

 

Growth among categories such as group-buying (whatever that is), shopping, payment, banking and travel was extraordinary in 2014. And when shopping and group-buying are combined, the growth for total shopping was humongous – all of which is good for those of us who are trying to sell products in China.  Source: Jing Daily