Will the Chinese Consumer Turn?

China v US Trade

This blog has always spoken of the Chinese consumer in a positive light because they are a consumption force to be reckoned with in the modern era.  According to BloombergOpinion, China passed the US in December 2017 as the world’s biggest retail market.  To this point, China’s purchasing power has been a great difference-maker for major US companies such as GM, Starbucks, Procter & Gamble Co., Coca-Cola Co., Apple and gambling giants Las Vegas Sands Corp. and Wynn Resorts Ltd.

But it can go another way.  It can turn negative.

In 2012 when China and Japan were arguing about some China Sea islands Chinese consumers took it out on Toyota and Panasonic while last year when tension erupted with Korea over a defense shield, Hyundai’s car sales dropped by about 50% and Korean retailer, Lotte Shopping Co., sales crashed by 84%  – literally driving them out of China.

Thus far, the China – US trade struggle has caused no visible ripple among Chinese consumers.  That may be because on both sides of the rift, consumers still like the deal they are getting from the other.  We must hope that continues.  Source: Hellenics Shipping News

The Invoice Mystery

Broken Invoice

Digidays’ secret marketer reveals a major driving force behind the ‘bring it in-house’ movement: a suspicion of agency over-billing.   Scenario: An agency deal may assume 1,000 hours a month, but in reality accrues 2,000 hours.  While the agency doesn’t up-charge immediately, the extended hours become the basis for the next deal’s increase.  Meanwhile knowing exactly what is causing the extra billing hours is a mystery. Is it unnecessary meetings with more unnecessary people?  Or is it low-balling on the front end?  Those are the questions that may be driving the in-house movement and they suggest another side of the transparency issue.   Source: Digiday

We Ain’t Seen Nothin’ Yet

Private Consumption

This blog has tracked the expansion and evolution of the Chinese consumer from unsophisticated bling chasers to what is now a rather sophisticated buyer.  President of Lane Crawford stores in China, Andrew Keith, says, “We are not teaching them, they are teaching us.”

The change has taken a mere five to seven years and the country’s total consumption accounts for only 8% of the world’s consumption, but as it edges past Japan to be the number two behind the US, there is obviously plenty of room for growth.

According to Karl Gerth, an expert on Chinese consumption at the University of California, San Diego, “The future of the world will be profoundly shaped by China’s rush toward consumerism.”  That’s why China, regardless of the challenges it presents, is a place marketers should focus for growth in the near-term future.   Source: The Economist

Mr. Ding’s Big Bang


If you sat on your beach chair on the local high school’s football field to watch your town’s July 4th fireworks extravaganza, there is a 70% chance those explosions where courtesy of one Chinese man named Ding Yan Zhong.  Through his two companies Shanghai Huayang and Firstrans International, he controls the fireworks supply chain in both China and the US.

Mr. Ding’s control is almost complete.  From the loading docks behind fireworks manufacturers in Liuyang, China to the container docks of Long Beach, California eleven thousand miles away, Mr. Ding’s logistics operation is the moving force behind it all – the trucks, the barges and the ships.  Naturally, with near control come higher prices.  Source Chicago Tribune

GDPR Timeline Suggests Recovery for Programmatic

GDPR Effect


Data inferred from initial anecodal responses suggest that compliance concerns at the beginning of GDPR implementation on May 25th, as expected, caused a sharp decline in programmatic buying.  It dropped anywhere from 20 to 50% immediately.  Thirty days later, the decline appears to be in the 20 to 25% range, which is something of a recovery.


  • Jon Slade, Financial Times, said, “FT’s demand recovered after five days.”
  • Gerhard Louw, Deutsche Telekom said, “Some buys immediately after the law took effect, but its programmatic spend has returned to pre-GDPR levels.”
  • Chris Hogg, Lotame said some brands “may have temporarily shifted [programmatic] budgets, we’re seeing a return across the board.”

Source: Digiday

Digital Gamers Profiled

Gamer Hands


From an AppsFlyer/Facebook analysis of 250 million nonorganic app installations (ad-driven) came some real insight into gamers.  Four facts of the digital gaming life speak about their value in the advertising space.

Gamer profile:

  • Fewer than 4% of gamers make in-app purchases
  • More than 30% of paying gamers make more than three purchases within the first 90-days
  • Number of paying gamers is only 6% higher for organic verses non-organic (ad-driven) users
  • Gaming revenue from an average iOS user is 28% higher than from an Android user

Missing is a similar profile for other user categories.  Source: VentureBeat

“Jurassic World: Fallen Kingdom” Fourth Highest 3-Day Opening in China

Jurassic in China

“Jurassic World: Fallen Kingdom” captured the fourth highest 3-Day opening ever for a Western film in China.  Even more notable is the 86% share of revenue for Friday’s opening day according to researcher Ent Group.

China only allows 34 US films per year into the country and they are rarely, if ever, small intimate films. The blockbusters that do get in vie for numbers like the 175,000 screenings per day that China can deliver.  That is the draw for movie makers and defines the underlying culture competition between the West and China.  They limit our films in an effort to limit our cultural influence.  Source: Variety

Mobile’s Value Continues to Increase

LTV growth

Across all categories – gaming, shopping and travel – measured by an AppsFlyer analysis of Facebook data, life-time user value from advertising has risen 82.8% for mobile apps in the two years between Q1 2016 and Q1 2018 with the big leap having seen in the period Q12016 to Q12017.  The analysis looked at 250 million nonorganic app installations (ad-driven) and $2.4 billion in revenue generated by 3,800 apps in the first quarter of 2018.

More mature new media markets in the US and the UK generate far more revenue in a highly competitive environment, which opens the potential for growth in emerging markets where the markets are more forgiving.  Source: VentureBeat

GDPR Non-Compliance Can Be Costly

GDPR Compliance

GDPR regulations are not to be dismissed given the costly repercussions of a compliance complaint issued by the Information Commissioners Officer (ICO).  Sanctions come in a range of possible wrist slaps such as warnings, reprimands, ordering of specific compliance requests and communication of data breaches, but can also expand to eye-watering fines as high as $23.2 million or 4% of annual turnover.

To avoid these penalties, you have to get your opt-in permissions in order.  The negative resulting from these regs is that campaigns will be smaller while the positive is that the audience for the campaign will be more willing to see your message.  Regardless, you should not be standing still on this subject.  Source: The Drum

Three Drivers for Chinese Consumption Growth

Projected Consumption 2020

Consumption growth in India, the US and China are in a class above the rest of the world.  Perspective: India’s expected growth starts from a relative low point compared to either the US or China, which explains its high rate.  US consumption is about three times the size of China’s and China’s consumption is slightly more than three times that of India.

China’s growth in consumption is being driven by two demographic factors and on big technological change:

  1. The rise of the upper-middleclass and affluent households, which is expected to double to 100 million or 30% of the country’s households.
  2. The rise of the “younger generation,” those born in the 1980’s, 1990s and 2000s, are now the dominant buying force in the economy.
  3. The rise of e-commerce, which was 3% of China’s 2010 consumption, has grown five-fold to 15% today.

Together these forces drive China’s ever-maturing economic growth and its successful shift to a consumer economy. Source: World Economic Forum