August: Another Strong Month for Business Confidence in China

china business confidence

 

 

 

Growth in business confidence for August was driven by increases in output, new orders – both domestic and export – and by buying quantity.  At the same August was the fifth straight month in which employment fell.  Lower overhead and increased output means higher profits.  It also implies that automation is affecting the production line in China.

 

Sources: Trading Economics; National Bureau of Statistics, China

Mobile Header Bidding on the Rise

header bidding

Header bidding is a growth industry, especially if it’s of the mobile variety.  PubMatic’s Quarterly Mobile Index reveals that while “desktop header bidding remained dominant, mobile header bidding grew by 285%.”  Mobile header bidding growth contributes mightily to the almost equal increases in both overall impressions (149%) and eCPMs (150%).  Further, the 92% increase for mobile header bidding in the Americas points to the source of the growth.  Source: The Drum

Changing Purchasing Patterns among Wealthy Chinese

impulse luxury

A study by McKinsey identifies an interesting change in luxury item purchasing patterns among wealthy Chinese.  They are becoming more impulsive and that adds wait to first impressions.  The data show a significant increase in single day decision making – a measure of impulse buying – among these folks. “Wealthy Chinese consumers are heavy spenders, spending on average RMB 71,000 ($10,846 USD) annually on luxury goods; 38 percent of them spend more than RMB 100,000 ($15,281 USD) annually. This number has been increasing by more than 5 percent a year since 2010.”  Selling strategists for luxury brands would be wise to take this change into account.  Source: McKinsey & Co.

Machines to Take Over Radio Advertising

programmatic radio buying

If the projections drawn from this survey of 9,000 advertising, media-buying executives and radio industry professionals are correct, the swing to programmatic buying of radio will solidify in the next twelve months.  Fully 87% of those media buyers will make the programmatic move.  That’s a 57 point increase over current practice.  As always there are lagers – 13% will not give into the machines.  Source: MediaPost

Chinese Consumer Confidence Soars

china consumer conidence

 

 

 

July marked the sixth consecutive month in which consumer confidence in China was above 110.  This measure has not been that high during the time we have been watching – back to January 2015.  The good news in this number is that the buying class is ready to do business with the selling class – a rich advertising environment.

Sources: Trading Economics; National Bureau of Statistics, China

Movie Grosses Up

top 10 movies

Western cultural influence continues to penetrate China as six of China’s top 10 films in the first half of 2017 originated in the US – this in spite of the government’s entry limit of 34 foreign films per year.

Notice the kind of movies that succeed tend not to be romantic comedies or serious dramas.  One wonders how their movie choices influence Chinese perceptions of the west.  Movie grosses increased 11.2% over the same period last year.  Source: China Daily

Golden Arches Bend in China

mcdonalds

 

Changes at McDonald’s in China are a reflection of the country’s evolving economy.  As of mid-August, the company sold a majority stake to state-owned CITIC and CITIC Capital.  China now owns 52% of the Big Mac, the Carlyle Group owns 28% and McDonald’s the remaining 20%.  Why?

McDonald’s, which used to be the hot new thing from the west, has grown over twenty years to 2,500 stores mostly located in top tier markets. In recent years the stores have devolved to teen hangouts.  Its former glamour has shifted to Starbuck’s and others.  The pattern follows the growing sophistication of the Chinese consumer.

The plan by the new ownership is dramatic expansion into the lower-tier markets.  Forty five percent of the 2,000 new stores projected by 2020 will reach into the tier 3 and 4 cities – a pattern that follows the trend by many other sellers. Future Chinese growth is seen as coming from the hinterland.

Source: South China Morning Post

Brand Safety Comes at a Price

cost audience seasawAdvertisers that are fixated on efficiency, getting the most eyeballs for the lowest price, will inevitably run the risk of ads landing next to content that is inappropriate says Tony Chen, CEO and founder, Channel Factory, in an interview on ExchangeWire.com.  He makes the distinction between safety and the even further audience limiting desire to find content relevant to the ad being served.  Both limit the reach, content relevancy more than safety, and both drive up the cost per thousand – an idea that demand players will have to adjust to if they want tools such as “channel scoring, third-party tracking, custom targeting curation and other brand-safety measurements.”  These tools will add to the cost-per-thousand.

Source: ExchangeWire

Steady Prices are a Good Thing

china consumer price index

Consumer Prices in China have remained relatively stable over the last three months. The Index for July 2017 is a hair below the 101.6 average for the 13-month period ending in July. Steady consumer prices are a good thing for the economy because it removes uncertainty, which gives consumers license to continue spending – always good for sellers.  Sources: Trading Economics; National Bureau of Statistics, China

No Surprise, China’s Retail Sales Increase Again

china monthly retail sales growth

This blog has tracked China’s retail sales growth on a monthly basis since June 2014.  It has increased every month throughout that 38-month stretch, which puts it in contrast to virtually every other trend chart we have every seen in any context. And even more astonishing is that the lowest increase was still over a half percent, which only happened once.  Chinese consumers have an ever-increasing appétit for goods and services.  Sources: Trading Economics; National Bureau of Statistics, China