Olympic GOLD

For the 2016 Olympics Coca-Cola has adapted it’s global campaign idea to the Chinese market. The 2016 Message: “Gold” is not about winning at all costs.

The campaign is an example of how marketers in China try to tap into the national zeitgeist. China experienced years of fast-paced economic growth and development; growth has slowed, and the government has pushed to rebalance the economy to something more sustainable. That feeling has trickled down to ordinary people too, with a sense that after years of striving to get ahead, it’s time to take stock of what’s important.

“People are trying to lead a more balanced life – it’s not about winning at any cost,” said Richard Cotton, head of creative excellence for Coca-Cola China.

See the video and further background from AdAge here.

Coca-Cola partnered with internet giant Tencent and its social network Qzone, which has 588 million monthly active users. It has a feature similar to Facebook’s “On This Day,” which offers prompts about memories people have shared in the past. Coke is sponsoring the memories, turning them into “Gold Moments.”

Apple Uber

Apple Inc said on Thursday, May 12 2016, it has invested $1 billion in Chinese ride-hailing service Didi Chuxing, a move that Apple Chief Executive Tim Cook said would help the company better understand the critical Chinese market.

The tech giant’s rare investment gives it a stake in two burgeoning waves of technology – the sharing economy and car technology – as the iPhone business that propelled it to record profitability shows signs of maturing. 

Apple is trying to reinvigorate sales in China, where it has come under greater pressure from regulators, and Cook is traveling to the country this month.

The move aligns Apple with Uber Technologies Inc’s chief rival in China, as automakers and technology companies forge new alliances and make cross investments. General Motors, for example, recently bought autonomous driving technology company Cruise Automation and has also taken a stake in U.S. ride-sharing company Lyft.

Analysts say the deal offers a glimpse of how Apple may diversify its business as sales of the iPhone level off. Apple has emphasized its burgeoning revenue from services such as Apple Music and mobile payment Apple Pay, a strategy that the ride-sharing investment appears to reinforce, said analyst Patrick Moorhead of Moor Insights & Strategy.

Investors are eagerly watching to see whether Apple will enter the automotive business. Apple has hired a wide range of automotive experts, and the company is exploring building a self-driving car, sources have told Reuters.

You can see the article in full from Reuters here.

Leftover WOMEN

A hard hitting campaign from Japanese premium cosmetics brand SK-II, supports Chinese womens’ fight agains the suffocating notion of ‘leftover women’.   It captures a new form of femininity in China – confident, independent and uncompromising in terms of what they will achieve in their lives.

SK-II outlines the cultural phenomena of the ‘leftover women’ as a form of psychological torture for women you must face at the pressure of getting married ‘to a certain man’ of a ‘certain station in life’.

The brand has been active on social media using the hashtag #Changedestiny.

See this campaign and the article in full from Social Brand Watch here.

Government FOCUS

At China’s annual meeting of its top legislative body, three draft reports are usually submitted for delegates to discuss and approve.

They comprise the premier’s government work report, the National Development and Reform Commission’s economic development report, and the Ministry of Finance’s budget report.

The documents provide a review of the past year and explain how the central authorities will govern the country in the coming year.

This year’s plenary session will also review and approve the proposed 13th five-year plan for the period from 2016 through to 2020. 

Here are the five key points to take away from the draft plan and reports.

1. Growth target set at 6.5 to 7 per cent

This year’s proposed target for gross domestic product expansion has been set at a range between 6.5 per cent to 7 per cent.

The range, rather than a specific number, reflects China’s dilemma between pursuing economic growth and pushing ahead with reforms.

Innovation would be the top driving force for future growth, according to Li’s work report.

2. Hong Kong, Macau to play bigger roles in China’s economic development; Taiwan policies to be maintained

Beijing will “elevate Hong Kong and Macau’s positions and roles in China’s economic development and opening up” according to their “distinctive strengths”, Li said.

In its draft 13th five-year plan, also released on Saturday, China pledged to support Hong Kong in furthering its status as a global financial, shipping and trading hub.

He added that Beijing would adhere to previous policies on Taiwan, “firmly oppose secessionist activities” and maintain peaceful development of cross-strait ties.

3. Further interest rate liberalisation; government-managed floating system to stay

China has pledged to further liberalise interest rates and stick to a government-managed floating system.

Beijing aimed this year to keep the yuan generally stable on a “reasonable and balanced level” and to control “abnormal flow of cross-border capital effectively”, according to the annual report of China’s top economic planner, the National Development and Reform Commission.

4. China to boost overseas defence

The premier also pledged to improve China’s ability to protect its citizens and businesses abroad.

China would ensure that the G20 summit in Hangzhou this September would go smoothly, Li said. Beijing would “participate constructively” in seeking solutions for global issues, he added.

The government has budgeted 954 billion yuan (HK$1.13 trillion) for defence spending this year – a 7.6 per cent increase from last year. 

5. Slack officials warned, blundering ones to get second chance, rewards for innovators

Li warned officials against neglecting their duties.

China has been facing a situation in which many cadres chose not to perform their duties at all for fear of making mistakes and getting hauled up amid the country’s ongoing corruption crackdown.

Li warned that the Communist Party would have zero tolerance for officials who slacked off on their jobs. There was room for correction for those who made mistakes and rewards for innovators, he said.

See the full article from the South China Morning Post here.

 

MASS Tourism

One of the new notions Premier Li Keqiang put forward in this year’s Government Work Report on March 5 is a “New era of mass tourism”.

In it, the phrase “Paid vacations” appears again as a fundamental aspect of the trend. “We will ensure people are able to take their paid vacations, strengthen the development of tourist and transport facilities, scenic spots and tourist sites, and recreational vehicle parks, and see that the tourist market operates in line with regulations. With these efforts, we will usher in a new era of mass tourism,” he said.

Premier Li’s mention of “Paid vacations” has ignited widespread public reactions.

Liang Jianzhang, co-founder of Ctrip (a leading online travel agency), who views tourism as the most promising industry in the future, believes that the implementation of “Paid vacations” is an incentive to Chinese economy. He maintains that “the average number of travels made by Chinese tourists is still far below that of the developed countries, so in the decades to come, China’s tourism industry will have to make great strides and will eventually become a significant driver for economic growth. During this process, opportunities for innovation and employment will increase”.

In Liang’s opinion, facilitating paid vacations can bring a new cycle of tourism consumption and investment-as long as competent travel products can be developed, stable profit can be expected in the long run.

As far as public holiday arrangement is concerned, several proposals emerged into the spotlight during the ongoing two sessions, all of which focus on a modification of the current holiday arrangement. NPC deputy, deputy director of Shaanxi Provincial Tourism Bureau CSU Mingzheng proposesthat the Spring Festival holiday should be extended to 10-12 days from the current 7-day vacation.

Whatever the solution, what can’t be denied is the substantial potential China has for tourism and Chinesepeople’s ever-increasing need to upgrade their consumption style. According to reports of theNational Tourism Administration, in 2015, 120 million Chinese went overseas and spent$104.5 billion.

“Tourism is a high-level spiritual need”, said Liang Jianzhang, and this inner driving force candefinitely lead China into an era of mass tourism.

See the full article from China Daily here.

RED Envelope

WeChat had more mobile transactions over just Chinese New Year than PayPal had during 2015

The scale of social and messaging platforms in China is at its peak on Chinese New Year, as statistics on usage of platforms such as WeChat and Weibo reveal.

According to WeChat, owned by digital media business Tencent, 420 million people sent each other lucky money via the app’s payment service on the eve of Chinese New Year. According to WeChat, it has seen a total of 8.08 billion red envelopes sent so far for Chinese New Year, eight times more than last year. 

To put this into context, according to PayPal it made 4.9 billion transactions in 2015 (half of the number of transactions made on WeChat just for Chinese New Year) and only 28 per cent were made on a mobile device.

The lunar new year festivities spread to the UK this year, with many foreign brands taking to the streets and online to help people celebrate. But it is the digital channels that are changing the shape of celebrations in Asia.

According to the data from Tencent, women were more generous as 56.5 per cent of senders were female.

One significant difference in the digital version of the tradition seems to be the amount being sent. The statistics revealed that the most popular amount gifted was RMB 8.88 ($1.35), (eight is a lucky number). This is a lot lower than would be gifted in envelopes in person and is likely to be a lot lower than the average transaction amount on a platform like PayPal.

See the full article from the Drum here.

Rising SUNS

While China’s economy is still blazing ahead at an amazing pace, regions outside the conventional Tier 1 markets may offer the most lucrative opportunities. In 2016, more than ever given the shifting patterns of China’s economy, it will be worth looking at the vast country through the changing fortunes of its cities.

The key to growth may now lie in the “Rising Suns”: Places that few outsiders have heard of, such as Guiyang, Xiangyang and Hengyang, which will shine brightly in 2016, their economies growing by up to 12%. Coincidentally, in their names they all have the character yang, which means “sun” in Chinese.

A key shift in these markets has made them an ideal growth market: 40% of all Chinese prefecture-level cities will have an average disposable income of at least 30,000 yuan (nearly $5,000) by 2016—an important threshold, at which people start to spend on goods other than food and clothes.

A brief overview on the Rising Suns cities below, see the original article from the Economist here, a synthesised review of the top cities below (from the original post here).

No. 1: Guiyang

Guiyang is the capital of Guizhou province of Southwest China. Guizhou has been the poorest of China provinces with economy heavily relying on state owned enterprises. With the population of 2.8 million, it is now becoming a hub of operations for Chinese giant telecom companies. Private companies are also following the lead with Alibaba setting up cloud-computing facilities in the city.

Guiyang also serves as an important transportation hub for South Western China with Guiyang–Guangzhou High-Speed Railway already operating and three more high-speed rail lines tocommence operations within the next few years.

Disposable income per person is currently at USD 5,100, almost half of China’s average of USD 9,800. Guiyang has been ranked number 1 fastest growing local economy by the Economist.

No.2: Xiangyang

Xiangyang is a prefecture-level city in northwestern Hubei province. Xiangyang possesses large water energy resources whilst its mineral deposits include rutile, ilmenite, phosphorus, barite, coal, iron, aluminum, gold, manganese, nitre, and rock salt.

Textile production has been the mainstream industry of the area, however, in the last few years, it has become an attractive destination for industrial transfers, the trend of companies relocating their manufacturing facilities to cheaper locations.

With its population of 1.6 million and disposable income per person stands at USD 4,300 and the city has been ranked at number 2 among China emerging cities.

No.3: Hengyang

Hengyang is the second largest city of Hunan Province after its capital Changsha. The population of the metro area is 1.3 million but if counting the suburbs, it reaches over 7 million people. Hengyang’s disposable income per person is currently USD 4,900.

No.4: Chongqing

Chongqing is a major city in Southwest China and one of the five national central cities in China. Administratively, it is one of China’s four direct-controlled municipalities (the other three are Beijing, Shanghai and Tianjin), and the only such municipality in inland China. Chongqing disposable income per person stands at USD 5,400.

It is an enormous city of 8.9 million people and booming real estate market. It is also one of the fastest urbanizing centers in China with more than 1,300 people moving into the city daily, adding almost 100 million yuan (US$15 million) to the local economy.

No.5: Suqian

Suqian is a prefecture-level city in northern Jiangsu Province. With the population of about 1 million and relatively low disposable income per person (USD 4,100), Suqian is still one of the cheapest location for manufacturing in the province.

LUNAR Ads

See a wrap up of the best Lunar New Year campaigns by AdAge here.

It’s been a busy time for brands in China. During the Lunar New Year period, marketers tap into the festive spirit with messages about family, getting together — and surviving the insanity of holiday travel in China.

Travel, especially trains, is a constant theme in commercials. Just about everybody travels back to their hometown, crowding trains and leaving road traffic at a standstill (and just imagine the lines at highway rest stop bathrooms). The official Xinhua news agency reported that people made 1.15 billion trips during the travel season. And despite the stress of getting home for the holidays, ads usually end on the same note: family’s worth it.

When looking at how big foreign brands have marked the holiday, PepsiCo, Oreo and McDonalds were clearly a few of the best.

Year of the MONKEY

This Monkey Kings ad for Pepsi has been a viral sensation in the lead up to the Chinese New Year- see the video here.

Created by independent agency Civilization Shanghai (part of thenetworkone), the video is part of Pepsi’s “Bring Happiness Home” campaign.

The six-minute mini-epic is all about legends—the kind that stretch back for centuries and, more significantly, those produced and shared over several generations by modern media. The video ties in with the Chinese Year of the Monkey, which officially begins Feb. 8.

Civilization’s Andrew Lok, who directed the film, explained the concept: “2016 is the Year of the Monkey. So there will no doubt be a bevy of marketing campaigns showcasing the Monkey King or ‘Journey to the West.’ How can PepsiCo’s ‘Bring Happiness Home’ celebrate the Monkey King, this mythological simian symbol of irreverence and fun (personality traits rarely found in the heroes of traditional Chinese literature), in a very PepsiCo manner? Believe it or not, it was easy. Because the core values of Pepsi-Cola, youth and irreverence, are the very qualities the Monkey King naturally embodies.”

Consider why it has been so successful: Millions of Chinese across a broad age spectrum fondly recall Zhang’s performance. The Monkey King series with Zhang became an important part of people’s personal history, a powerful symbol of their youth and cultural identity.

The brand film taps into such potent nostalgia with a story that also touches on timeless themes like family loyalty and duty to one’s profession—ideas that really resonate in China.

See the blog from Civilisation here and the original article from AdWeek here.

2016: TRENDS

Here are a few trends to look out for in China 2016:

1. Rural & Elderly Consumers: Expect to hear more about the hundreds of millions of China’s rural and elderly consumers being China’s biggest untapped opportunity. Beyond the hype, most foreign brands are likely to see little upside, with these consumers being much more price sensitive and nationalistic in their brand choices, which will see local brands reap most of the growth
2. Lower-Tier Cities: Consumers in lower tier cities are also less open to foreign brands than their big-city cousins.  However, increased maturity and exposure to foreign cultures through online media and overseas travel – their own and their networks’ – will see more trading up from cheap to mid-priced products.  Foreign brands positioned and priced correctly, with strong distribution networks in these cities are likely to see good growth;
3. Localising Localisation: With more companies realising that a one-size-fits-all approach for China is uncompetitive, more large to mid-sized international brands will localise for specific cities, regions and clusters;
4. Health & Wellness: Chinese consumer habits will continue to reflect their pursuit for health, with health services growing even faster than products. Sport will get a lot of exposure this year with the Olympics and investments in football. Beijing’s increased transparency around pollution will further drive this;
5. Precious Children: We expect the much-touted departure of the one-child policy to have a limited impact on fertility rates in the medium term.  However, there will be the usual rise of births in the Year of the Monkey as many would-be parents held out in the Sheep, which policy makers may try and spin. Even without a big rise in babies, spending on the precious only child will continue to go from strength to strength across most categories;
6. Devalued Yuan: The continued fall of the Yuan against the US dollar will make margins tighter for imports, but we expect it to have little impact on the growth of some categories. Premium food & beverage will continue to grow due to rising incomes, food safety and health concerns; and tourism will increase, driven by improved visa processes and flight connections, particularly in lower-tier cities;
7. Overseas Investment: A weaker Yuan will be offset by China’s volatility, seeing both individual and institutional investors seeking more stable investments overseas in property, brands and imported segments seeing strong growth from Chinese consumers.
8. Online: Expect more integration between ecommerce, online video, social media, sport, banking, the physical world and almost everything in-between. WeChat commerce, for which services make up the majority of revenue, will see large growth in product sales, driven by individuals peddling product verticals, particularly parallel imports.

With China’s increasingly affluent consumers prepared to pay a premium for many things from wine to cars, there’ll be no shortage of opportunities in China this year.

See the full article from China Skinny here.