Mixed Signals from Manufacturers

PMI - January-16

Contraction is indicated by a Purchasing Managers Index (PMI) below 50.  It has been one year since this indicator topped the threshold.  On the other hand, the PMI did move up two tenths, a modest improvement over December.   The contraction in China is intertwined with numbers from the US, Japan and Europe.  Sources: Markit Economics; Trading Economics

Lessons in Communication

Scarf - Armani

So, Liu Bo is a nice looking 14-year-old boy who recently attended the Shenzhen People’s Political Consultative Conference held by the regional communist party.  With all righteousness he made a speech arguing for more non-exam based methods for grading student achievement.  It’s not much different from the equally righteous speech’s you might hear in the US regarding common core testing.  But few heard what he was saying.  Instead it was his jaunty combination of a Communist Party Youth League red scarf and his navy blue Armani suit that communicated most.  The juxtaposition defines a changing China.  Source: BBC.com

The Economy’s Counter Story

2015 Consumer Spending

Growth in core retail segments, spending on home and food, tell a counter story to the dominating negative economic news coming out of China.  These data show that while decline thus far has been in the manufacturing sector, it has not yet affected the population in general.  They are still spending as though there is a positive future.  Net job growth of 13 million for 2015 has helped counter any loses in declining areas of the economy. That too has allowed people to continue their spending.  Source: China Skinny

Millennials Make the World Go Round

Chinas Millenials

Millennials make up nearly one quarter of the Chinese population.  They are the core of China’s consumer economy, its most involved mobile users and they’re very favorable to the west.  They are our people.  It is important to note that while they are positive toward the west, they are also very proud of their own culture.  When communicating to them, western advertisers must be mindful of the inner pride Chinese people feel and respect it.  Source: China Skinny

Smartphones Subscriptions Charge On

Carrier Data - January-16

Conversions to 4G saw no slow down in January as the number of smartphone subscriptions increased by 24 million after a December that saw a 21 million subscription increase.  Both months well above the 17 million run rate for all of 2015.  Translated, that means the mobile advertising consumer base is growing in defiance of the deceleration in the overall economy.  Sources: China Mobile, China Unicom and China Telecom

Chinese Consumers Continue to Stand Tall

Monkey Spending

Given the overall decline in the Chinese economy, we keep a close watch on the consumer sector to see when and if it will turn down.   To the contrary, we note that last week’s Chinese New Year celebration delivered another robust gain for the consumer side of the economic ledger.  Spending was up better than 11% versus the same week last year.  Source: Reuters

Thoughts about Cross-Border Payment Systems

Payment Platforms

Andrew Roth, chief strategy officer of consumer intelligence firm Bomoda, projected that we could see a fifty percent increase in online shopping from China in 2016.  He reinforces the point by citing Alipay data.  Alibaba’s payment platform says the number of China-based users that bought from US retailers over Thanksgiving, Black Friday and Cyber Monday in 2015 increased 700 percent from the same dates in 2014.

Given that glaring fact, western sellers interested in attracting Chinese consumers would benefit by adapting Chinese payment systems such as Alipay, WeChat’s payment system, Union Pay and Borderfree.  Source: WWD.com

Where the Money Will be Going

Chinese Consumption

A key to making money in China is knowing where consumers will spend their money.  McKinsey projects that the first half of this year will see major expenditures for food and beverages, travel and entertainment, among others.  If you are selling products in these sectors, now appears to be the time to make a marketing move.  Source: China Internet Watch

Leading Uses: Messaging, News and Social Media

Digital Consumer

Messaging, news and social media keep Chinese consumers busy.  Combining ‘Very Often’ and ‘Often” responses shows just how important these smartphone uses are – messaging combines to 88%, News combines to 82% and social media combines to 68%.  They are the reasons Chinese people buy smartphones at such incredible numbers.  Originally, they bought mobile phones of the flip variety for the communication necessity, but the fast migration to smartphones is motivated by forces well beyond mere communication.   Source: China Internet Watch

Three Keys to Marketing in China

Marketing Trifecta

  1. Relevance to Your Target Market

Knowing your target market is an obvious key to any product marketing.  If your product is for an older generation, using mobile may not be the best use of your budget.  But if you product is suited to those under 40 years old, mobile a perfect place to spend that budget.  “The 80’s and 90’s generation use their phone as an extension of their body.”

2. Timely Messages

Using WeChat messaging at the right time is key.  Top times for the largest audience are lunch time, 5pm and 10pm.

3. Engaging Content

Engaging content is tricky, but required to get consumer attention.  A direct product sales approach is likely to be avoided by Chinese consumers who are bombarded with advertising.  Creating a fun, even a weird approach is best, though you cannot be culturally offensive.

Source: China Skinny