Archive for ‘Consumer’

06/05/2013

* Chinese buyers lured by local goods

China Daily: “Foreign brands no longer top choice for Chinese customers, says survey

Buyers lured by local goods

Chinese customers are no longer swayed by the lure of foreign brands and would instead prefer to buy more brands that are made in China, a survey said.

According to the 2013 China customers’ loyalty study conducted by marketing research firm Epsilon, six out of the 10 Chinese respondents endorsed foreign brands. However, there is a growing preference to buy products that are made in China. Local-brand supporters have grown to 43 percent from 31 percent in 2011, the report said.

Such trends are already visible in the Chinese fashion industry. In March, China’s first lady Peng Liyuan sparked off a craze for Chinese brands after dressing up in Chinese-made apparel for diplomatic visits.

Her elegant dressing code was dubbed by netizens as “Liyuan style”. Analysts argued that Peng’s support for domestic labels had stirred interest in local products and also helped attach a new, sophisticated image to Chinese-made clothes.

“Since local brands started to improve quality, establish appeal and step up their sophistication, they have garnered a bigger share from Chinese shoppers,” said Viven Deng, client services director of Epsilon China.

Chinese brands have started to win hearts not only from buyers pursuing extensive product features, but also from picky local consumers who previously stuck to foreign labels, she added.

Qi Lulu, a Beijing college student, who used to be a customer of leading international clothing brands such as Burberry and Polo Ralph Lauren, said she now focuses more on local brands.

“I buy dresses online, and I have found some domestic brands that have exquisite taste,” the 22-year-old woman said. Recently, Qi fell in love with a Beijing brand called Liebo, which featured traditional Chinese flavors and colorful patterns.

Self-branded products from other industries, such as cars and consumer electronics, are also growing in popularity. More Chinese people said they would support Chinese-made cars, especially after the Diaoyu Island dispute between China and Japan. Currently, Japan is still the major car vendor in the Chinese car market.

With a more than 1.1 billion mobile population in hand, China has grown into the world’s biggest smartphone market. The country manufactured the most number of smart devices, 224 million units, across the world last year.

Four out of the top five smartphone vendors in the Chinese market are domestic brands, with the South Korea-based Samsung Electronics Co the only international player in the list.

Huawei Technologies Co and ZTE Corp even successfully ranked as the world’s third and fifth smartphone manufacturer in the fourth quarter last year, according to research firm IDC Corp.”

via Buyers lured by local goods[1]|chinadaily.com.cn.

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03/05/2013

* Credit-Card Companies Battle in China

BusinessWeek: “The Ms. Magic credit card from China Citic Bank (601998) is dotted with Swarovski crystals and offers free beauty treatments and health insurance. Huaxia Bank’s (600015) Pretty Lady card, co-issued with Deutsche Bank (DB), entices women with triple points for cosmetic purchases and fitness club memberships. Citigroup (C), which last year became the first U.S. bank allowed to issue its own solo logo cards in China, offers to waive its first-year annual fee of 300 yuan ($49) for Rewards cardholders applying before March or spending more than 20,000 yuan by the end of December.

Credit-Card Companies Battle in China

They’re all part of a battle for affluent consumers in the world’s fastest-growing market for plastic, even as delinquencies have tripled in the past five years and profits remain elusive. “Credit cards are the ultimate growth area and also the battlefield for banks in China,” says Rainy Yuan, an analyst in Shanghai for Taipei-based Masterlink Securities. “Some may never earn a profit out of it, but they have to join the fight, as that’s the most efficient way of grabbing deposits and cross-selling other financial services.”

With interest rates fixed by the government at 18 percent annually, China’s banks can’t compete by lowering rates, so they differentiate themselves by offering merchant discounts and gifts, including Coach (COH) wallets, Hugo Boss (BOSS) quilts, and free Starbucks (SBUX) upgrades to a larger coffee. Chen Junjun, a marketing manager at China Guangfa Bank, spends 10 hours a day, seven days a week trying to lure customers to his roofless booth outside a subway station in Shanghai’s Pudong district. Among the gifts he offers: a wireless mouse, storage boxes, and coffee mugs. “No annual fees, buy-one-get-one-free for Starbucks coffee, and you get a free Coach wallet, too,” Chen says to a female passerby. “If you have a job, you are qualified. If you have a credit card, you are qualified.””

via Credit-Card Companies Battle in China – Businessweek.

19/04/2013

* China’s 2020 consumer is in a town you’ve never heard of

Reuters: “Wearing a floral brocade cardigan and toting a Huawei smartphone, Guo Qian, 22, gushes over her latest purchases on Taobao, China’s largest e-commerce platform. As an administrative worker, Guo makes only 3,000 yuan a month and spends most of it.

Customers selects hats at a street stall at the business area of Jiaozuo, China's central Henan province, December 20, 2012. REUTERS-Aly Song

Not only does she spend nearly all of her own money, Guo also fritters away most of her father’s 1,000 yuan monthly pension on trinkets and clothes on Taobao. “Sometimes I feel guilty using his money, so I buy him some clothes.”

Guo, a Zhengzhou native, already owns an apartment – her parents helped finance the purchase last year – and is on the upward climb to join China’s burgeoning middle class.

As Beijing tries to engineer a crucial macroeconomic shift– toward more consumption and less investment, the crucial “rebalancing” China’s new leadership is committed to, and the rest of the world is counting on — it is young consumers like Guo Qian who may hold the key to the transition.

Raised in an era of unprecedented prosperity, Guo, like many other members of what is known as the `post-80s’ generation (anyone born after 1980) has a very different answer than her parents when it comes to a central economic question: whether to spend the money she has, or save it?

“I don’t save at all,” she told Reuters. ” Why should I?”

Her “spend it if you’ve got it” attitude, some economists argue, may help unlock the surge in consumption that China urgently needs to rebalance its economy over the next decade, ending an era of lopsided, investment driven growth.

“This 18-35 group, for a variety of reasons, are much more optimistic and more open to risk, because they haven’t yet experienced bad times at all,” says Benjamin Cavender associate principal analyst with China Market Research. “They tend to have high disposable income relative to their earning power, and they tend not to be saving heavily.”

This generational change in mindset, harnessed to the sheer number of people growing more prosperous in once poor provinces throughout the country – such as Guo’s native Henan – is recasting China’s economic landscape: both the composition of growth, and its geography, are about to change significantly.”

via Insight: China’s 2020 consumer is in a town you’ve never heard of | Reuters.

06/02/2013

* China OKs sweeping tax reforms to tackle inequality

First the talking – now the walking.

Reuters: “China unveiled sweeping tax reforms on Tuesday to make wealthy state-owned firms, property speculators and the rich pay more to narrow a yawning gap between an urban elite and hundreds of millions of rural poor.

A family arrives at Beijing West Railway Station February 5, 2013. REUTERS/Jason Lee

The plans approved by the State Council – China’s cabinet – also included commitments to push forward market-oriented interest rate reforms to give savers a better return and more security.

Chief among the reforms is a requirement to raise the percentage of profits contributed by state-owned firms to the government by about 5 percentage points by 2015.

Together with measures to raise wages and improve households’ return on assets, the reforms signal an attempt to shift economic growth towards increased consumption and away from the current reliance on investment spending.

“The State Council is not just talking about the gap between rich and poor, they’re talking about the whole economy and how income is distributed among various actors – the households, the corporations and the government,” said Andrew Batson, research director of GK Dragonomics, an economic consultancy in Beijing.

“It’s about changing the entire flow of income around the national economy.”"

via China OKs sweeping tax reforms to tackle inequality | Reuters.

See also: http://chindia-alert.org/2012/12/10/china-wealth-gap-continues-to-widen-survey-finds/

02/02/2013

* Earl Grey descendants sell English tea to China

Taking coal to Newcastle and tea to China!

Reuters: “An estate owned by descendants of the 19th century British aristocrat for whom Earl Grey tea was named is turning history on its head by selling English tea to China.

Wesley Goldsworthy picks tea leaves at the Tregothnan Estate near Truro in Cornwall January 14, 2013. REUTERS-Stefan Wermuth

The Tregothnan estate in the southwestern English county of Cornwall started selling tea from its tiny plantation in 2005 and last year produced about 10 metric tons (11.023 tons) of tea and infusions.

Although a drop in the ocean of global tea production, which the UK Tea Council estimated to be about 4.3 million metric tons, Tregothnan has found a niche for its products by trading on England’s historical reputation as a nation of tea-lovers.

“It’s unique. There’s no one else who’s growing tea in England and putting English tea on the market,” owner Evelyn Boscawen told Reuters.

The long history of immersing tea leaves in hot water for a refreshing drink is not lost on the son of the current Viscount Falmouth and a descendant of British Prime Minister Charles Grey, for whom the bergamot-flavored Earl Grey tea is named and whose Reform Act of 1832 sowed the seeds of modern parliamentary democracy and universal suffrage in Britain.

Chinese tea has been coming to Britain since the East India Company first imported it in the 17th century for consumption by wealthy aristocrats.

By the Victorian era, taking tea had become a regular ritual at almost every level of society from elaborate afternoon tea for the rich in country houses to tea and gruel for the working poor as depicted by author Charles Dickens.

But the Boscawens at Tregothnan are bucking the historic trend of tea flowing from East to West by beginning to export some of their wares to China and elsewhere.

“We do see China as an opportunity at the moment,” Boscawen said. “The Chinese are great lovers of buying exotic things from all over the world. Even if it might have come from China (originally).”

Tea, native to Asia, is not traditionally grown in Britain but can be cultivated outdoors at Tregothnan, which is situated in England’s southwest and benefits from an unusual microclimate similar to that of Darjeeling in India.

Less similar to India is the tiny scale of production at Tregothnan, which might be large enough to be considered a small Darjeeling tea garden, the English estate’s commercial and garden director Jonathan Jones said.

“We went into this right from the outset as being able to put the English into English tea,” Jones said. “We weren’t ever looking at being the new India or China, that’s ridiculous.”"

via Earl Grey descendants sell English tea to China | Reuters.

See also: For all the Tea in China by Sarah Rose: the smuggling of and transplanting tea from China into India took several years to effect though eventually, British tastes turned to Indian tea in preference to Chinese tea.

 

02/02/2013

* Coming of age: China’s used car market outpaces new sales growth

This also means that tyre companies will be selling tyres to replace the original sets.  Invest in rubber company shares!

Reuters: “Used car sales in China grew faster than new car sales for a second straight year in 2012, and should account for half of all sales within seven years as the world’s biggest autos market matures.

People select automobiles at a second-hand market in Shenyang, Liaoning province December 10, 2011. REUTERS/Sheng Li

While new cars still outsold used vehicles by more than 3 to 1 last year, they are sputtering after a period of breakneck growth, and the potential for the pre-owned market to be the industry’s growth engine is prompting foreign automakers to open more used-car outlets.

A key target for them are buyers like Jiang Meng, a 32-year-old office worker in the southeastern city of Guangzhou, who this month went shopping for a sport utility vehicle, and hadn’t considered a second-hand car until she came across a used car dealer run by Nissan Motor Co’s (7201.T) local joint venture.

“I wanted an SUV, but I wasn’t sure of getting a used one until I stepped into the store. There are so many models and they offer a warranty,” said Jiang, who traded in her 2-year-old Nissan Tiida sedan for a 4-year old silver Qashqai. The deal cost her 25,000 yuan ($4,000). A new Qashqai is priced at around 189,000 yuan.

“The car was very clean inside and outside and it drives very well. Many of my friends thought it’s new,” she said.”

via Coming of age: China’s used car market outpaces new sales growth | Reuters.

21/01/2013

* India Agency Clears IKEA’s Investment Proposal

Another step forward in liberalisation.

WSJ: “India’s foreign investment promotion agency has cleared Swedish furniture giant IKEA Group’s proposal to invest nearly $2.0 billion for setting up wholly owned retail stores in the country, Economic Affairs Secretary Arvind Mayaram said Monday.

Mr. Mayaram is also the head of the Foreign investment Promotion Board, the agency which clears foreign direct investments in India.

A spokeswoman for IKEA didn’t immediately comment.

The board had cleared the retail giant’s proposal in November subject to certain conditions. However, IKEA wasn’t happy with the conditions, which prevented it from selling products that it doesn’t brand, including secondhand furniture, textile goods, toys, books and consumer electronics as well as food and beverage items in cafeterias within its stores.

It thereafter wrote to the Indian government, seeking the removal of these conditions.

“Now, the proposal has been cleared in its entirety,” said another official, who didn’t want to be named.

IKEA now needs the approval of the federal cabinet to set up its outlets in India.”

via India Agency Clears IKEA’s Investment Proposal – WSJ.com.

02/01/2013

* China’s taste for pork serves up a pollution problem

This is but an indication of what is going to happen when billions of poor people become affluent enough to want the things that affluent Westerners take for granted.

The Guardian: “Fan Jianjun points to a concrete pipe jutting from the lake bank. Sludge spews from its mouth and arcs across the water, the surface bubbling with the bodies of flies.

Piglets being fed on a farm near Suining, Sichuan province, China - 27 Apr 2009

Fan has lived in Houtonglong village all his 31 years. The water was clear, he says, before the pig farm was built and people’s health began to suffer.

No one consulted the villagers before Shengtai pig farm was built 100 metres from their homes. The farm produces 10,000 animals a year – a relatively small concern in the world of industrialised farming – but there is so much waste to dispose of, the village air is thick with the stench. In the rainy season manure escapes from the farm, covering the roads. Villagers are developing respiratory problems and Fan struggles to raise chickens and ducks, which die soon after hatching.

In the 10 years since the farm arrived, the villagers have tried to get it dislodged. “We pulled down the walls several times, and blocked the gate with mud and trucks,” said Fan, a self-employed businessman. Complaints to the local government have gone unanswered, so Fan turned to internet forums to raise awareness. “We can only hope the farm will stop polluting our environment,” he added. “Our village was once a very beautiful place.”

Pork is China’s favourite meat: last year the country produced 50m tonnes – more than half the world’s total – and as the disposable incomes of China’s 1.3 billion people rise, their appetite is growing. “Pork is wrapped up in ideas of progress and modernity,” said Mindi Schneider, a sociologist at Cornell University. Until the 1990s typical families only ate meat at Chinese new year.

Memories of the devastating famine that killed tens of millions in the early 1960s still weigh heavy on the Chinese psyche. “I’ve heard people talking about eating meat in ‘revenge,’” Schneider said. “It was so limited before. Now it’s like: ‘look at this progress, we can eat as much meat as we want.’”

In 1980 the average Chinese person ate 14kg of meat. Today that person eats over four times more, almost 60kg. In comparison, the average American eats 125kg of meat each year and the average Briton about 85kg.

The livestock industry is transforming accordingly. Seen from a hilltop 200 miles from Houtonglong, the future of Chinese pork production takes the form of 32 identical redbrick pig sheds, shaded by leafy trees.”

via China’s taste for pork serves up a pollution problem | World news | The Guardian.

22/12/2012

* Yiwu’s purveyors of Christmas tat give China a dose of ho-ho-ho

This article illustrates extremely well our view that the Chinese mindset is practical, materialistic and down-to-earth. And I am talking about the entrepreneurs at Yiwu City and the shopkeepers embracing the Christmas spirit (or at least the Christmas decorations anyway); as well as the average urbanite who wants to celebrate international festivals whatever the origin and raison d’etre.

The Times: “On Thursday the Ling Guo massage parlour, in the central business district of Beijing, suddenly turned festive.

A vendor hangs Christmas decorations in between Santa Claus dolls at her stall ahead of Christmas at a wholesale market in Wuhan, Hubei province, ChinaAn outsized image of Father Christmas beamed from the window, flanked by a manic array of snowmen, reindeer and present-stuffed stockings. The masseuses greeted customers in Santa hats.

It is not a triumph of Western culture, but of raw Chinese salesmanship, entrepreneurial flair and desperation.

Elsewhere, the festive decorations are up, adorning everything from roadside noodle shops to suburban shopping malls. Where China’s Christmas lights used to be restricted to the big hotels and stores in Beijing and Shanghai, the briskest sales are now to small shops in provincial cities.

“We are absolutely focused more on the Chinese market and we are shifting 2,000 plastic Christmas trees a day domestically,” said Liu Qing, from Yanghang Art and Crafts, who has been part of the all-out push by manufacturers to persuade the Chinese to celebrate someone else’s season of goodwill.

“Our biggest buyers are now from Shandong and Chongqing, which is so different from a couple of years ago,” Mr Liu said. “Chinese people’s living standards have improved so much, so people start going after something more spiritual. Christmas is a lively holiday. The younger generations like it.”

For a growing number of Chinese businesses making Christmas-related goods, domestic sales now represent their single biggest — and often fastest-growing — market. It is an unexpected development in a country that does not celebrate Christmas. Without it, though, hundreds of factories would be driven to bankruptcy because, despite strong sales, Santa’s Chinese elves are working on tiny margins.

The key to the tinsel-strewn, gold-baubled Christmas-ification of China is to be found on the country’s east coast in Yiwu, the acknowledged world hub of yuletide tat — or “ornamental handicrafts” as they are described by the city’s factory owners.

It is from these workshops that Yiwu annually exports about £200 million of plastic trees, self-illuminating angel choirs and every other Christmas decoration conceivable. Other manufacturing centres in China also feed into the great £1.3 billion flow of Christmas exports, but none do it with such determination and concentration as Yiwu.

The problem, however, is that Yiwu became too good at its trade at just the wrong moment. In 2010 the city had 400 companies making Christmas products; now there are more than 750, with about 120,000 workers engaged in making Christmas goods.

The huge jump in capacity and competition coincided with a drop of about 25 per cent in what had traditionally been Yiwu’s strongest markets for its tawdry wares, Europe and the United States. The effect on profits has been harsh. This year labour costs in Yiwu have risen by 15 per cent and material prices have risen by about 10 per cent.

Chen Jinlin, from the Yiwu Christmas Products Industry Association, said that some of his members have suffered 20 per cent to 25 per cent declines in orders. “There are nearly twice as many companies as there were two years ago fighting for pieces of a smaller cake,” he said. “We are encouraging manufacturers to develop new products, especially lower-cost ones, to adjust to the new economic reality.”

But the longer-term answer, said Mr Hu, the sales manager of the Youlide Art & Crafts Company, has to be to look for new markets, China being the most convenient and potentially vast. Many of Yiwu’s Christmas goodsmakers have seen the domestic share of their sales rocket to 20 per cent of the total over one or two years.

They have also changed the way that they look at opportunities abroad: a shift of marketing focus has made Brazil the largest export destination for Yiwu’s Christmas goods, accounting for 12 per cent of the total. A similar drive has proved successful in Russia, where sales of Yiwu’s seasonal goods have tripled in the past year.

“About 80 per cent of our products go to South America, so we’ve had to change things to reflect that,” Mr Hu said. “Brazilians like their artificial Christmas trees in a paler shade of green than the Europeans.””

via Yiwu’s purveyors of Christmas tat give China a dose of ho-ho-ho | The Times.

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24/11/2012

* No meatballs’ as IKEA hits hurdles in India

India cannot make up its mind, it seems, whether to welcome foreign retailers or not.

Hindustan Times: “Swedish retailer IKEA said Friday it was reviewing sweeping curbs imposed on what it can sell at its planned new stores in India that will reportedly prevent it offering its famed meatballs. India’s foreign investment panel has rejected 15 of IKEA’s 30 product lines, a report said on

Friday, underscoring the regulatory hurdles faced by foreign stores who are eyeing the Indian market with renewed interest.

“We are now internally reviewing the details (of the investment board’s decision),” an IKEA spokeswoman told AFP, adding that she could not confirm the curbs as reported by The Economic Times on Friday.

Among the lines IKEA has been told by the Foreign Investment Promotion Board that it cannot sell are gift items, fabrics, books, toys, consumer electronics and food, the newspaper reported.

The group will, however, be allowed to sell furniture — its core business.

The investment panel also reportedly told IKEA it cannot offer customer financing schemes because that would violate banking regulations, or open cafes and food markets because that would break food policy regulations.

IKEA’s entry into India — it has pledged to invest $1.9 billion in the coming years — is being closely watched by competitors as a test case for how a large foreign corporation negotiates India’s byzantine rules and red tape.

India’s government announced a string of pro-market and investor-friendly reforms in September that relaxed or removed barriers preventing foreign retailers from operating in the country.

IKEA hopes to open 25 of its trademark blue-and-yellow stores in India through a 100-percent owned unit, Ingka Holding, as part of a wider push into emerging markets like China and Russia.

The government initially insisted that IKEA obtain 30 percent of its supplies from small Indian manufacturers that the Swedish retailer feared would not be able to keep pace with demand.

Later the government dropped the demand specifying the size of the supplier, but kept the 30 percent local sourcing requirement.”

via No meatballs’ as IKEA hits hurdles in India – Hindustan Times.

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