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Entries in China (4)

Friday
Jul082016

China's emerging consumer class

A recent article in the Economist pulls together CPG industry data to produce an interesting snapshot of the emerging consumer class in China.

The authors found consumer tastes in China are changing as the country's economy shifts from one predicated on industry to a more service-driven model. As the ranks of blue-collar workers shrink, the growing urban middle class is seeking out more premium goods and brands. For example, the sales volume for instant noodles - long an indicator of consumer growth - fell by 12% last year, while sales of makeup grew by over 15% and skin care products went up by 13%. Some other consumer trends include:

  • Chinese travelers are taking more trips abroad, spending about $1,200 each time on shopping;
  • Chinese tourists return home with a taste for cosmetics brands based in South Korea, whose cosmetics exports to China surged by 250% last year;
  • Brands promoting healthy lifestyles are also thriving, including restaurants and supermarkets. As well, fitness is becoming more popular;
  • Functional drinks favored by the health-conscious are going down well, as is yogurt and soup that's MSG-free; and
  • Sales of pet food rose by nearly 12% in 2015, a reflection of a softening of Chinese attitudes toward animals.

These trends can give us insight into the evolution of the consumer goods marketplace as more people in the middle of the economic diamond enter the consumer class.

-- Catalysts

Friday
Jun242016

Alibaba, rural consumers and the last mile

China's leading ecommerce company, Alibaba, may be dealing with some growing pains, but there is no question that it has been successful in expanding its size and reach.

One factor in this success is Alibaba’s Taobao Village project, which is bringing rural areas of the country access to online shopping. In October 2014, Alibaba announced plans to invest 10 billion yuan in logistics, hardware, and training to push its e-commerce model into 100,000 villages in the next three to five years. It’s opening warehouses and working with delivery companies and local officials.

A Bloomberg article from last August profiles how the project works in Yunnan. The project is centered on the Taobao rural service center -- often located in local convenience stores -- where villagers can access a computer and Internet connection to browse and order goods. Their purchases are then delivered through the same service center, a convenience for the customer, and a benefit to the shop owners. Alibaba provides computers and monitors, ensures timely delivery of purchases, and trains villagers to serve as its representatives in the centers.

This is happening against a backdrop of shifting demographics and economics in China. More Internet-savvy migrant workers are returning home, and Alibaba's success is even attracting competition. JD.com planned to open more than 500 rural service centers by the end of 2015.

According to Bloomberg, the companies’ rural forays fit in with government policy. Beijing wants to boost household consumption as a share of gross domestic product, so China’s government will “support migrant workers, college graduates, and army veterans who wish to return to their rural home towns to start new businesses” and “encourage e-commerce in rural areas” the Xinhua News Agency reported last June.

We are interested in how Alibaba and its competitors are trying to solve the last mile infrastructure and talent issue in the countryside by working with local businesses and government, while attracting Internet-savvy migrant workers to return to their homeland.

Image source: Alibaba.com

-- Yichen Rao 饶一晨

 

Friday
Jan092015

China's vast pet potential

This article from Ad Age explains the huge potential of Petfood in China, a country with 40 million pets, but with only 5-6% of the pet population being fed commercial food. Lots of dog owners, especially the older ones, cook for their pets. Some of them combine home-cooked with dry commercial food.

It's the second-largest pet population in the world behind the U.S. But commercial food coverage is the lowest in the world."

Image source:  Ad Age

--Sorin Patilinet

Wednesday
Apr112012

Corporate Responsibility and Sustainable Economic Development in China: Implications for Business

This paper provides a strategic briefing on the state of corporate social responsibility (CSR) in China. It seeks to inform companies, policy researchers, and stakeholders concerned with China’s development and CSR more generally. A note on terminology: “CSR” has become the most common umbrella term in China for the constantly evolving domain that includes the social, environmental, and economic impacts of business. For the purpose of this paper, CSR is treated as analogous with the international use of terms such as corporate responsibility and business sustainability.

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