Turn on the TV in the UK recently, and you will struggle to miss the adverts for resale platforms like Vinted and eBay. Millions of people have started buying and selling second-hand apparel, homeware and more amid growing environmental concerns and a severe cost-of-living crisis.

In China, although second-hand or vintage clothing has not traditionally been desirable for the average consumer, the resale market has also been taking off in recent years.

Data show that the value of the market rose from RMB 300 billion (£32 billion) in 2015 to RMB 1.05 trillion (£112 billion) by 2020, and according to a 2021 report released by consulting firm Frost & Sullivan and Tsinghua University’s Institute of Energy, Environment and Economy, it is expected to reach nearly RMB 3 trillion (£320 billion) in 2025.

Much of this growth has been supported by apps like Plum (Hongbulin), Alibaba-owned Idle Fish (Xianyu), and Tencent-backed Zhuan Zhuan, which tap into the well-established e-commerce habits of Chinese consumers. Idle Fish and Zhuan Zhuan are consumer-driven marketplaces (similar to Vinted or Depop), while apps like Plum manage the whole consumption process, from authentication for luxury goods to photography to logistics.

Idle Fish’s user base surpassed 500 million in May 2023, and the platform recently introduced a social commerce element via a community forum called Seafood Market, where users can discuss hashtag-based topics. The forum has already proven to be popular with the hobbyists who use the platform to trade collectibles.

What is driving the growing appreciation of second-hand clothing and goods?

Pre-owned luxury goods are driving a lot of growth in China’s second-hand market, reflecting the cost-conscious, savvy mindset of many Chinese consumers. Chinese consumers came out of China’s strict Covid lockdowns with RMB 6.6 trillion (£760 billion) of savings, but many still feel wary about big spending. The excitement of finding a desirable bag or pair of shoes at a more accessible price is a big reason why many people browse second-hand apps or stores.

However, sales of second-hand luxury goods raise questions about authenticity and counterfeiting. A survey by iiMedia Research found that lack of trust and fear of receiving counterfeit goods stopped over 30% of people from using second-hand platforms.

In response, in March 2023, Idle Fish bolstered its authentication capabilities, allowing users to authenticate over 18 million different items in as little as eight hours.

Beyond luxury goods, a growing awareness of the environmental impact of consumerism – especially among Gen Z/younger millennial consumers – is leading conversations about second-hand clothing in China.

A June 2022 consumer survey by PwC showed that 34% of Chinese consumers “often” or “always” agree that a business’ environmental actions influenced their decision to buy – in the US this figure was just 29%. The Covid-19 pandemic also seems to have accelerated this trend. For example, a KPMG study in 2021 found that since the beginning of the pandemic, 65% of consumers from Greater Bay Area cities have become more conscious of a product’s origins.

Idle Fish claims that the platform and its users reduced three million metric tonnes of carbon emissions over the past year by shopping second-hand instead of buying new.

However, as Zhang Na, founder of sustainable fashion brand Reclothing Bank, pointed out in a recent interview with Tong, second-hand and vintage clothing is also an outlet for creativity and self-expression. “[Previously], the marketplace was conditioned to encourage those consumers [born in the 70s and 80s] to express themselves through luxury brands and a pursuit of upward mobility,” she says. “Now, the new generation of consumers care more about their own unique experiences and identities.”

The CBBC view

International platforms are likely to have a hard time competing with homegrown apps like Xianyu in the resale field. However, there are still a number of key lessons that British brands can learn from this trend.

While offering resale solutions may not be an option for every brand, incorporating conversations about sustainability into marketing in China in an authentic way is increasingly important for all brands. This can include working with influencers or key opinion consumers (KOCs) that talk about sustainability.

Moreover, it underscores that Chinese consumers are cost-conscious but willing to spend money on high-quality items.

The post Is second-hand and vintage shopping popular in China? appeared first on Focus - China Britain Business Council.

According to Statista, almost 60% of China’s online live commerce shoppers are female, and they make up around 51% of Chinese e-commerce users in general. But with so much noise, and so many choices, what influences the platform they decide to shop on, and how can their habits inform your China strategy?

We asked four women what their typical buying journey looks like: Jenny Jing, a 38-year-old production manager and mother of two living in Beijing; Cecilia Wu, a 38-year-old editor living in Kunming; Fiona Yang, a 34-year-old teacher living in Beijing; and Cicely Shang, a 34-year-old working in tech and living in Shanghai.

What were the last products you bought for yourself online?

Jenny Jing: Skincare products from a Canadian brand called Cocoon.

Cecilia Wu: Two pairs of Birkenstock sandals

Fiona Yang: Bleaching agent (for clothes). I accidentally died my favourite jacket blue and wanted to get it back to white again. It worked! Made my jacket good as new.

Cicely Shang: Cosmetics, coffee capsules and catnip

Which platform did you use to make your purchase and why?

Jenny: Xiaohongshu this time. But I often use Taobao. I follow a skincare professional on Xiaohongshu who has her own clinic, so she is able to share industry knowledge, insider tips and secrets. Taobao used to be my first choice for this kind of thing, but now I only go there for Li Jiaqi.

Cecilia: Douyin. Normally I use Taobao because they have almost everything, but for these Birkenstocks, the brand’s official Douyin store offered a discount, so I went with that.

Fiona: Taobao. I always use Taobao because it puts the customer’s needs first. If you have a dispute or an issue arises between you and the seller, you feel confident that if something goes wrong, they will fix it. In general, you have more options with Taobao than JD.com and the quality is almost the same.

Cicely: The Harmay mini programme, then Tmall. Harmay [a retail chain selling beauty brand samples with a market value above US$76.4 million] carries so many niche brands and the prices are below market rate.

If an influencer persuaded you to buy this product, tell us more about them. Which influencers do you like and trust, and why? 

Jenny: Yes, there are loads of small influencers on Xiaohongshu who influence me, I’d say. The main one is called Haha Chen. We have a similar body size, she lives in Beijing like me, has a daughter like me. She’s aged around 34. The fact that we are similar means I can trust that I won’t be going too wrong if I follow her lead.

Cecilia: No influencer persuaded me to buy the Birkenstocks.

Fiona Yang: I wasn’t influenced by a streamer this time. I don’t even have Douyin downloaded now because it’s too addictive.  

Cicely: This time, I was watching 钳钳妈阿曼达 (‘Qian Qian’s Mom Amanda’) on Xiaohongshu. I think she’s just over 30 years old and I’ve been following her for more than three years now. Her style/aesthetic is similar to mine, and the items she recommends are always really practical and it’s clear she uses them herself.

What convinced you to buy this product when it came down to it?

Jenny: Nothing really, I just wanted to try something different, and you can return the product within seven days so it was a pretty low-risk purchase.

Cecilia: In this case, the time-limited discount!

Fiona: It was the best price I could find. If I didn’t get this deal, I knew I would regret it. In general, these time-limited deals definitely make me more impulsive. If a site or a person says ‘take advantage of this deal or you’ll miss out’ I usually just pull the trigger.

Cicely: The product seemed to perform well according to the influencer, so I thought I’d give it a try.

Did you get a special discount on this item?

Jenny: Yes, the influencer gave a discount price on the items I bought.

Cecilia: Yes, because I bought on Douyin, the price was RMB 100 (£11) lower than the store.

Fiona: Yes, that’s the major reason why people like me prefer to buy online these days instead of at a shopping mall.

Cicely: No discount this time.

Did you buy the product directly in the app or did you see it in one app, then go and buy it in a different one?

Jenny:  Yes, I bought the items directly from Xiaohongshu because the discounted price can only be claimed during the influencer’s live stream. But sometimes, before I decide to buy it in Xiaohongshu, I quickly go to Taobao, search the same item and check people’s reviews and comments there too.

Cecilia: Yes, I bought the shoes directly from the Douyin app, because it’s cheaper and the delivery is fast.

Fiona: I don’t shop around. It’s too time-consuming. That’s why I really just use Taobao. It gives me a headache doing lengthy comparisons. I prefer to have options because I want to see different styles and prices, but overall I prefer just to buy from a platform I trust and know than shop around for the cheapest products.

What I like about the way Taobao functions is that once you see a product you like and click ‘Like’, when you go back to the previous page, Taobao automatically shows you options for the same product (so you don’t need to search again) and makes it super easy to do your own price comparison. It takes so little effort. Then you can just focus on the reviews rather than the price.

Cicely: I saw the recommendation on Xiaohongshu and then went to Harmay and then finally to Tmall to make the purchase.

How often do you buy imported/foreign brand products on these platforms? 

Jenny: I never buy foreign brand clothing, but I do buy many international brand products for the children as well as skincare products. I buy foreign brand skincare and make-up every two or three months on Taobao and kids’ stuff every one or two weeks, such as baby formula, Vitamin D or A and nappies.

Cecilia: I’d say I buy foreign brand beauty products like La Roche-Posay and Lancôme once every one to two months.

Fiona: I buy imported brands from Taobao (Tmall) since it was one of the earliest platforms to stock foreign brands, and the prices are always similar to duty-free shops at the airport. I also think Tmall has stronger relationships with overseas brands and better quality control. I know it’s the real thing. Mostly I buy cosmetics like Lancôme or Dior or Cote perfume. Sometimes I buy little things from Coach or sports brands like Puma or Nike. If they have something that domestic stores don’t, that’s when I buy them from Tmall because I’m getting something I couldn’t otherwise.

Cicely: I’d say I buy foreign brand products once every quarter – mostly Lululemon and Nespresso!

What influences your decision to buy those foreign brands, and which country’s brands do you trust the most?

Jenny: For me, it’s about quality and safety. In general, I trust Japanese and German brands the most because I know they are serious about quality control. Also, there is a British clothing brand called Next that I like a lot! The designs are really cute, it’s good quality and the price is good too. Unfortunately, it only had an online shop in Taobao for a while, and then it closed, so now there are no online or offline shops in mainland China for it, but it is available in Hong Kong, I think.

Cecilia: The quality and safety aspect, for sure. I feel products from the UK, Europe and the US are especially good.

Fiona: I just buy things based on my personal taste. I seldom try new things. I’m quite a loyal customer. If I like a brand, I use it for years, like Lancôme, for example. Most of the brands I like are from the US, and in general, I think that’s because I see them as mid-range luxury. They’re more affordable than high-end European brands.

Cicely:  I like Lululemon because I know it’s a durable product. And Nespresso holds up for daily consumption too.

Which is your favourite e-commerce platform and why?

Jenny: It’s hard to say. I use Xiaohongshu mostly for myself, JD.com mostly for the children and Taobao for daigou or stuff I can’t buy on JD mall.

Cecilia: Taobao because of the sheer selection, and JD.com for same-day or next-day delivery.

Fiona: Taobao.

Cicely: Tmall for brand assurance, fast logistics, and convenient returns and exchanges.

Are there any platforms that you never use? And if so, why not? 

Jenny: Amazon. I don’t see the reason why I need it. Many years ago, the page looked messy, and the payment method wasn’t China-friendly, but I haven’t used it for years, so maybe they’ve made some changes [Amazon shut down its domestic operations in 2019].

Cecilia: I don’t use Xiaohongshu. I feel like the content is more about showing off, whereas people on Douyin are just having fun.

Fiona: Pinduoduo. It’s like Taobao but with a much lower price, sometimes even below RMB 10, but the quality can’t be guaranteed, so I don’t like it. I also get annoyed by their model. You can make things cheaper by getting bonus discounts for sharing deals with your friends. In other words, you have to ask your friends to help click on the link Pinduoduo sends you to get the price down, usually by just RMB 1 or 2.

But so many friends send you these links. Ok, it’s an easy favour to do for people, but it’s so annoying! Go there and click, go there and click. I didn’t want this app on my phone, but I felt obliged to download it to help my friends get cheaper deals. Since then, I deleted the app. Now when friends ask me to open their links to get them discounts, I just say, “sorry, it’s not worth it for RMB 1!”

China Consumer 2023

This article was produced as part of a series for China Consumer 2023.

Learn more about CBBC’s flagship consumer event of 2023 here.

The post How Chinese women really shop: 4 case studies appeared first on Focus - China Britain Business Council.

The Covid-19 pandemic has reshaped the retail industry forever. Consumers are buying online more than ever before, and when they are shopping in-store, they expect the offline experience to be integrated with the apps and websites they’re using at home. Retailers have not only been forced to respond to growing digital engagement, but also increasing demands for authenticity, sustainability and brands that demonstrate a strong sense of purpose.

“The retail brands who have best survived this rapid transition are those who have proven agile in their response to the growing demand for digital engagement,” says Alice Yip, Head of Consumer and Industrial Markets, Hong Kong, KPMG China, commenting on a recent research report. The report, entitled ‘Retail’s Realignment: The Road Ahead for Omnichannel across the Greater Bay Area,’ offers insight into six key trends that are reshaping retail in China.

Five key China retail trends

Shopping behaviours have changed for good

There have been significant changes to the way consumers shop. Due to the outbreak of Covid-19, there has been a rapid acceleration of the migration of consumers from physical to digital retail channels. KMPG’s report found that since the beginning of the pandemic, 50% of Hong Kong consumers and 59% of those from Greater Bay Area (GBA) cities – e.g., Guangzhou, Shenzhen, and Zhuhai – in mainland China feel more comfortable shopping online.

Consumers have developed new purchasing habits, with many shoppers choosing not to return to physical stores. Around a quarter of the consumers surveyed by KPMG said they could live without physical stores.

“The coronavirus is a catalyst, but it is not the critical factor – the consumer is. They want to change because the online model is significantly superior to the offline model in terms of choice,” says Ricky Wong, vice president and group CEO of HKTVmall.

Consumers expect integrated O2O experiences

An overwhelming majority of consumers expect a seamless transition from in-store to online – 77% of Hong Kong respondents, and 85% of those polled in mainland China’s GBA cities said retailers need to have a better connection between channels to create a seamless customer journey. Convenience is driving the preference for O2O (online to offline) experiences; consumers want to engage with brands across social media, access easy payment methods, and have the option to choose flexible delivery options.

These expectations are highest among Gen-Z consumers. Gen Z is the first generation of consumers to have grown up constantly connected to digital devices, particularly smartphones, and with so many options available at their fingertips, these consumers are putting experience at the centre of their purchasing journey. And the way Gen-Z shops influences the entirety of the retail environment. “Gen-Z consumers are the influencers for other generations,’ says Jessie Qian, Country Sector Head, Consumer & Retail, KPMG China. “[This includes] millennials who want to feel young and active, and parents and grandparents who will make purchases for their Gen-Z children and grandchildren.”

All the above suggests that brands and retailers who forge an online-to-offline solution that encompasses multiple digital points of engagement will enjoy a significant market advantage in the future, particularly in the apparel and personal care and beauty sectors. However, many brands are still behind the curve. Among the retail executives surveyed, less than 50% of businesses were currently adopting strategies that could help them create a more seamless O2O experience.

The coronavirus is a catalyst, but it is not the critical factor – the consumer is. They want to change.

Authenticity + purpose = trust (+ purchases)

The pandemic has sharpened consumers’ focus on health, sustainability and wellbeing. A brand’s authenticity and purpose have become the most important attributes that consumers pay attention to. Since the beginning of the pandemic, 68% of Hong Kong consumers and 65% of those from mainland China GBA cities say they are more conscious of a product’s origin.

Anson Bailey, Head of Consumer & Retail, ASPAC for KPMG China, emphasises that brands are facing an urgent imperative to be more purpose-driven. “We are seeing a perfect storm emerge with investors, bankers, regulators and consumers all calling out for brands and retail groups to become more purpose-led and demonstrate both their societal and green credentials in the communities that we live and work in,” he says.

Brands should also pay attention to how consumers search for product information and develop trust. Among the consumers KPMG surveyed, the most trusted sources of information are the opinions of family and friends, a brand’s website and online user reviews. Mainland Chinese consumers are also more likely to trust the opinions of KOLs and live streamers.

Sourcing, upskilling and reskilling talent remains a key challenge

The KMPG report also reveals that there is widespread concern about the availability of skilled talent, particularly in digital technology-focused areas. For instance, in Hong Kong, there is a current “shortage of talent in e-commerce, digital marketing” according to Plato Wai, General Manager of smart commerce solutions provider Shopline.

IT and systems support, data analytics and research and development as technical areas are also facing significant talent shortages. Sales, marketing and communication roles are also an area of concern. Luckily, research shows that China is set to produce more than four million STEAM graduates over the next five years, providing an essential resource for retailers to address talent shortages and future-proof their businesses. “Corporates need to come together with academia and EdTech providers to upskill and reskill our current workforce… covering the latest coding, AI, data and blockchain skills,” argues Bailey.

Consumers expect brands to deploy technology to speed fulfilment and reduce costs

As consumers become more adept at searching, shopping and paying for goods online, they expect brands to step up their implementation of technologies to make the shopping process faster and more efficient.

Many find online shopping much more convenient and are willing to pay a premium for added-value services, such as the ability to refund or exchange products that are usually non-refundable. However, concerns remain about data security, and about 76% of respondents in KMPG’s survey believe companies provide a moderate, low, or insufficient level of data security.

The future of the retail industry in China

More than two years since the onset of the Covid-19 pandemic, it is clear that consumer spending on online retail channels has greatly accelerated. But beyond that, there is overwhelming evidence that how consumers browse, buy and pay for goods will not go back to the way things were before once the pandemic subsides. Retailers operating in China should keep note of these trends and chart their own courses over the next few years.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner or supplier to support the growth of your business in China.

This article was adapted from KMPG, GS1 Hong Kong and HSBC’s 2021 report, ‘Retail’s Realignment: The Road Ahead for Omnichannel across the Greater Bay Area.’

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This question has become more pressing after leading Chinese e-commerce platforms began de-listing popular Western brands such as H&M last month. This came after the Communist Youth League unearthed a statement issued by the Swedish retailer a year earlier, stating that it wouldn’t source cotton from Xinjiang. Chinese netizens threatened to boycott H&M products, while its stores hurried to cover their shop signs. Is this evidence that Chinese consumers no longer want to buy from foreign brands, British ones included?

Thankfully for foreign companies trading in China, it’s not that simple. There is, as yet, no blanket preference for Chinese brands amongst local consumers; foreign brands are thriving here, too. But events in geo-politics are beginning to have a greater impact on consumer goods brands sold in the China market.

This phenomenon is part of a broader trend known in Chinese as guochao (国朝), which can be translated as ‘the rise of the national brands,’ and refers to a situation in which political or socio-economic undercurrents promote the rise of Chinese domestic brands.

The last time guochao was a major issue for foreign companies selling into the China market was during the late 1990s and early 2000s. At that time, foreign companies were predominantly competing with socio-economic forces that were promoting the rise of Chinese brands; Chinese companies had access to cheap labour and could manufacture substitute goods at a fraction of the cost of their foreign rivals.

The new forces pushing guochao are far more complicated to navigate, with the two most pressing being millennial consumer preferences and rising nationalist sentiment. Foreign firms need to be particularly wary of these two factors because they can easily lead to a boycott of their goods, as Western brands have recently discovered the hard way. While there is a whole host of other factors pushing guochao, these are the only two with the potential to alienate foreign brands from the China market.

The sectors most susceptible to guochao

The sectors most susceptible to guochao are those in which China developed manufacturing capability during the late 1990s and early 2000s. Chinese companies successfully managed to reverse engineer products that they used to manufacture cheaply for foreign brands 20 years ago and are now launching their own versions that are often more innovative than the originals.

China’s millennials have cottoned on to this, and are increasingly likely to buy from Chinese brands as a result. Millennials also tend to have higher levels of disposable income than previous generations and are more inclined to believe in local manufacturing capabilities. To this generation, a product that is ‘Made in China’ isn’t cheap and tacky; rather, it is seen as likely to be cheaper because it is new and innovative.

China’s technology sector provides a good example. Whereas Chinese consumers used to flock to buy Apple iPhones bearing ‘Made in China, Designed in California’ stickers, they are now choosing to buy Huawei phones that were both designed and made in China. In 2015, Apple and Huawei held 14% of the smartphone market in China apiece, but today, Huawei enjoys 39% market share, while Apple holds just 8%.

To counter such risks, some foreign companies have acquired Chinese brands to front their sales into the local market, putting a barrier between their shareholders and Chinese consumers who might react negatively to broader political currents. A number of American breweries, for example, have acquired Chinese provincial beer brands, with US brands having become increasingly unpopular in the world’s largest beer market thanks to the political climate.

Sectors that appear less susceptible to guochao include the automobile, packaged food and beverages (particularly milk and products consumed by infants), and cosmetics industries. L’Oréal, Lancôme, Olay, and SKII remain the biggest selling cosmetic brands in China, for example.

Technological factors driving guochao

The role of Baidu and China’s e-commerce platforms in driving the guochao phenomenon cannot be overstated, thanks to the role the search engines and their algorithms play in directing consumers to products.

During guochao phase one, consumers were mainly influenced by a product’s price, packaging and analogue advertising when considering making a purchase. Now, products are predominantly advertised online on news sites or on pages maintained by key opinion leaders (KOLs).

KOLs and popular user responses on sites such as Xiaohongshu (Little Red Book) play a key role in driving Chinese consumers to buy, and make it far harder for foreign brands to control the environment for their product. Furthermore, millennials form the consumer group most likely to be engaging with content relating to politics and China’s tensions with the wider world. A full 63% of users searching for information around terms such as “trade war” are under 30 and otherwise browsing the internet and e-commerce platforms, according to Baidu. This is an unhelpful situation for foreign brands, considering that millennials also constitute the most active consumer group in China.

Does this mean that British brands are at a disadvantage when selling in China?

While there is no doubt that the guochao phenomenon has a powerful effect, Chinese and British brands alike are susceptible to falling foul of netizens. Chinese brands that aim to grab the attention of Chinese consumers by being overly reliant on being Chinese risk being perceived as clichéd or insincere too.

British brands can also take steps to appear more Chinese and benefit from the guochao wave. Using popular Chinese brand ambassadors or key opinion leaders (KOLs) to engage with the customer base is one example. A recent CBBC live-streamed session advertising British brands with Ji Jie – a popular KOL in Beijing – attracted an audience of 2.6 million.

UK companies could also take the further step of acquiring or rebranding an existing presence in the market as a Chinese brand. For example, Wusu, a popular Chinese lager branded originating from Xinjiang Province, is in fact owned by Carlsberg.

A UK Super Brand Day live stream with well-known KOL Ji Jie

Should British brands be worried about the Dual Circulation Strategy?

Guochao could mean that the ongoing trade tensions involving China and the promotion of the Dual Circulation Strategy make it less beneficial to be foreign branded when selling into China. This is because Chinese consumers are typically more driven by emotions when considering a purchase. This not only manifests itself in adherence to the opinions of KOLs, but also issues such as trade tensions and comments made by the Party on the country’s economic performance. The 14th Five-Year Plan sets out clearly how the Party expects China to become less reliant on foreign goods and services providers, and that manufacturing to meet domestic demand should be the priority. It is easy to see how Chinese consumers could misconstrue this messaging as “buy BYD rather than Mercedes Benz”, particularly if it is couched in anti-Western rhetoric stating that China is in a state of trade war.

The CBBC view

Chinese consumers still want to buy British, but consumers only prefer to buy foreign goods in certain sectors. In sectors where quality or safety are important, such as cosmetics, food and beverages for infants, and the automotive industry, foreign brands retain a significant lead in market share.

British brands should be mindful of the fact that Chinese companies learnt from the first phase of guochao, and have made great strides in terms of product quality, packaging and perception – the technology industry provides a good example.

Carlsberg’s acquisition of Wusu beer demonstrates that there are also instances where Chinese consumers want to buy foreign but don’t realise that they are doing so. China’s Wusu drinkers are not alone in this regard, there are lots of examples of Chinese brands that are famous for their quality but are owned by – and manufacture to the standards of – foreign brands.

Adaptability is the name of the game: As long as a brand can swiftly adapt to trends, they should be able to survive and thrive in China, regardless of brand origin. Click here to read the original analysis.

Want more insights like this? UK-China Consumer Week 2021 starts on April 19th and will shine a spotlight on opportunities for UK brands to re-engage with China. Find out more and sign up here.

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As we pull curtains on a year forever marked with an asterisk, some may see it as foolish to reflect on big emerging consumer trends, as they may be deemed “pandemic-fuelled” and easily erased at the push of a syringe – but China tells a different tale. China has been in full stride for much of the year, and although Covid has been a factor, many trends have developed independently of the virus. Let’s take a look at the key ones.

2020: the perfect storm for traceability improvements

A national blockchain platform will enable the exact provenance of food products to be logged

When you next sit down to your bacon and eggs, how much more would you pay to know with absolute certainty where those animals were raised? The kind of diet they were on? That they never came close to a cage or a crate?

After a lull in marked improvements in consumer-facing traceability applications the last several years, 2020 contained the right mix of events to up the standard. One of the pandemic’s lingering effects has been the public on high alert to stories of Covid samples found in imported food products and on packaging. China’s huge investment in establishing a national blockchain platform is said to reduce costs for developers by up to 97%, and it is only a matter of time until a purchase journey includes a scannable experience to assure you of the exact provenance of the product being bought alongside a myriad of other packets of information timestamped onto a supply-chain report.

How much more would you pay to know with absolute certainty where those animals were raised? The kind of diet they were on? That they never came close to a cage or a crate?

Of course, this is where domestic brands will take a lead, with the government already pouring money into traceability infrastructure to support high-trust categories like infant formula. It will take a savvy effort from foreign trade organisations to enact something similar, but in the meantime, there are providers who are aware of these market shifts and the need for foreign brands to mitigate this market risk.

Community group-buying growing and expanding to premium categories

Group buying will expand outside of the traditional grocery category

When the government has to step in to try to pour water on a surging commerce channel you know something’s going right (just look at daigou for the past decade). On the 22nd December 2020, the government announced restrictions on China’s internet giants spending millions to own and operate this thriving localised purchasing channel.

Essentially it works on the back of China’s very dense living situations – with often thousands living in a series of apartment blocks within a compound. These compounds will have leaders or ‘group buyers’ who organise big purchases on behalf of the residents through retailers or even directly with brands. Often operated through WeChat group chats with fellow residents, the leader will gauge orders and then take care of everything for you. Pay your fee, walk downstairs, grab your goods and it’s as easy as that.

It is a great tool for smaller brands who are active on the ground to gain some traction for their brand, and we expect 2021 will only see this channel become further established and brands increasingly outside of the main grocery category beginning to leverage it.

A country falling out of love? Maybe the only thing the government cannot control

Low birth rates and high divorce rates mean China is increasingly a nation of singletons

Chasmic gender gaps, unbearable social pressures, severely limited socialising through childhood – whatever your view is, it is clear that the lack of love in China is beginning to seriously worry officials. Despite relaxing the one-child policy, China’s birthrate is still slow. At April’s People’s Congress, China enacted its first ever civil code, with an entire chapter on marriage and family. The new regulations come in to force in 2021 to try to hold back skyrocketing divorce rates: reports of overwhelmed registry offices in December abound as many rushed to get their divorces through. Estimates now suggest that China’s single adult population tops 250 million.

In almost every category we work in, we are seeing an increasing need for product, marketing and branding that connects with the single consumer – or one that is breaking with the entrenched familial-focused mindset that has defined Chinese lifestyles for generations. It’s not just the data that supports this all-consuming trend, but in the thousands of conversations we have with young Chinese people we have started to note the real fall in the number of people aspiring to a government-endorsed family life.

China embraces a new kind of thrift

As a burgeoning second-hand market emerges, quality craftmanship will prove a hit

Chinese notoriously love a deal, and commerce platforms have been pushing the envelope on discounting tactics since day one. My colleagues even recently complained that you now need a mathematics degree to understand what combination of vouchers you’re entitled to and the price you need to pay on Singles’ Day. Nevertheless, this deal-hunting has always been limited to new products, but 2020 saw the concept of desirable second-hand goods emerge.

Now, for the first time, this concept of ‘thriftiness’ has entered the consumer psyche, with some measurable impact. Government researchers have predicted second-hand goods sales to top £103.5 billion this year. The Alibaba second-hand goods platform Xian Yu kicked into gear in February and March, with users looking to ‘Marie Kondo’ their lives under lockdown.

In almost every category we work in, we are seeing an increasing need in product, marketing and branding to connect with the single consumer

Keep in mind that most consumers in China have never before bought secondhand goods. Now that millions have taken the plunge on the platform (or elsewhere — WeChat groups have been brimming with secondhand sell-offs) and have had a positive experience with it, brands need to sense what this means for connecting with their consumers. Suddenly longevity is starting to climb up the list of needs for certain products. By no means does China have the ‘buy it for life’ mentality that you see in the West, but when paired with burgeoning messaging around sustainability, this area could quickly grow.

Our research into UK perceptions has shown that craftsmanship and quality is the dominant association in China – something that may grow in importance in-line with this trend.

Ethical branding set to surge

The demand for eco-friendly and sustainable products is growing, especially in the cosmetics sector

Foreign brands have long waited for Chinese consumers to adopt the same values when assessing sustainability and ethics in a brand. Mid-2019’s milestone regulation saw Shanghai initiate a recycling system – becoming the first city in China to do so. Slowly but surely other cities have followed suit.

Our Category Trackers survey thousands of respondents each quarter on a variety of brand and product factors. It has been hard to ignore the steady progression that ‘eco-friendly production’ has had through the rankings.

Perhaps the biggest impact on consumer sentiment is in the beauty category. This year saw the draft legislation to remove the requirement for animal testing pass, and all signs point to everything being set in stone in early 2021. This will usher in a number of new entrants with immense marketing budgets who are well-known for their cruelty-free messaging globally.

These are just a handful of the consumer trends that we have really seen coming to the fore in 2020, and ones we would recommend are considered when planning your China engagement for 2021.

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Christmas in China isn’t a national holiday, it’s not even a tradition, its more of a gimmicky festival like Halloween – but that doesn’t mean it’s not a great reason to dress up, put up some decorations and eat some ‘festive’ foods. Here are some Christmas traditions re-imagined the Chinese way. 

Giving apples to send peace 

Giving apples at Christmas is becoming a new Chinese Christmas tradition

While you may associate oranges with Christmas – discovering them at the bottom of stockings, sometimes pinned with cloves, it’s apples that dominate Chinese celebrations. 

On Christmas Eve, people like to gift apples. Why? The pronunciation of Christmas Eve in Chinese (平安夜 píng ān yè, literally peaceful evening) sounds similar to the word for apple (píng guŏ 苹果). Apples are also less commonly known as píng ān guŏ (平安果), meaning ‘peaceful fruit’. As such, people give apples to wish their friends and family peace and safety. 

The apples usually come wrapped in gift boxes decorated with ribbons and often personalised with Christmas messages. With China’s Christmas market expanding, Chinese merchants are coming up with more and more creative ideas to decorate apples, such as printing Christmas messages onto the apple’s skin. 

Red lips, reindeer eyes and Christmas hair baubles 

Christmas makeup and accessories are becoming increasingly popular

Rather than receiving presents or eating food, applying themed make-up has come top of some Chinese women’s wish lists during the Christmas period. On top of Valentine’s Day and Halloween, Christmas is another imported festival that offers the opportunity for women to add a touch of sparkle. 

These Christmassy looks are inspired by stars and colours associated with Christmas, such as red and gold. Women will apply shimmery red lipstick, snowy white eyelashes and colourful eyeshadow with Christmas elements, such as reindeer antlers, Santa hats and Christmas trees. But why stop at make-up? Christmas ornaments, such as ribbons, bells and baubles, also make for fabulous hair decorations.  

Christmas-themed photoshoots 

Christmas is a great excuse for a photo shoot to share on social media

After applying their festive faces, many then enjoy engaging in photo shoots to share their make-up designs online with friends and other social media users. As a result, numerous photo studios have capitalised on this by promoting Christmas-themed photoshoot experiences which include Christmas makeovers, clothes, and special props.  

While festive photo opportunities are not missed in Western families, especially those that feature on Christmas cards, Chinese Christmas photoshoots are usually done by individuals or with friends for the purpose of sharing on social media. 

 Creative ‘Christmas’ foods 

Chinese Christmas meals focus on the ‘look’ rather than traditional ingredients

Do you associate Christmas food with turkey, stuffing, Christmas pudding, cranberry sauce, mince pies and gingerbread houses? Well, many of these foods are hard to find or unavailable in China. 

As such, meals focus on the Christmas ‘look’ rather than tasting the staples that we identify with the festival. Christmas rice balls, fruit and vegetable Christmas wreaths, salads, snowman cotton candy and intricately-designed Christmas cakes and biscuits are all popular Christmas foods in China.  

To appeal to children, merchants re-designed mountain hawthorn, a traditional Northern Chinese snack consisting of fruits covered in hard candy on bamboo skewers. The Christmas-themed take on the snack uses strawberries, black sesame and banana to make the skewer look like Father Christmas.  

Getting creative with DIY Christmas trees  

Christmas trees made from dried leaves and newspaper are popular in China

DIY Christmas trees are another way that young Chinese people like to manifest their creative Christmas spirit: one of the most popular DIY trees this year is a “caramel Christmas tree” which is made from dried leaves, newspaper, Christmas tree shaped steel wire and decorations. As well as supporting the artistic design, netizens also approved of the low price of 35 RMB (roughly £4) as it provides a much cheaper alternative to a real Christmas tree. 

Brown leaves and newspaper are certainly not decorations that many people would associate with Christmas, but the sustainable alternative is in line with the growing environmental-consciousness of Chinese consumers. 

Christmas, but not as you know it! 

Just as Christmas traditions and celebrations vary across different European countries, they also differ greatly across the world. In China, Christmas is a relatively new festival and the lack of historical connection with it means that traditions and celebrations have been adapted with a Chinese touch. As the market for Christmas continues to grow in China, brands should pay attention to how the festival is celebrated and how they can use it to appeal to Chinese audiences. 

Next stop: Chinese New Year!  

If you are interested in taking part in Chinese New Year 2021 and need a last-minute campaign, you can join our free live stream on 12 January 2021 to learn more. Register here. 

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The volume of sales on Singles Day has grown year on year as shoppers learn to hold out for the shopping festival’s sizeable discounts and retailers offer bigger promotions and exclusive or limited edition products. In 2019, shoppers ordered 1.9 billion products, and this year three million workers shipped an incredible 2.321 billion products around the country.

This year, a new term was coined – revenge spending – as shoppers whose spending had been curtailed by Covid splurged online with a vengeance.

Singles Day is no longer confined to a single day either. The e-commerce shopping festival kicked off as early as the 21^st of October this year, with over 800 million Chinese consumers snapping up offers worth more than £56 billion at the time of going to press.

A remarkable 31,766 brands from overseas are participating in the even, with 474 of those brands already reaching sales of RMB 100 million.

“A China strategy – and a digital strategy – are going to be absolutely critical for success in the future,” says Alibaba President Michael Evans. “Today’s businesses need both a China strategy and a digital strategy to succeed, particularly in the face of the challenges posed by the pandemic.”

British brands and brands from around the world will be watching China’s performance with interest and optimism as a return to normal (or better than normal) looks likely. Luxury brands that traditionally avoided the discounted shopping day for fear of damaging their reputations were more visible this year, as over 200 luxury brands took part. They hope that Singles Day will help make up for lost revenue from earlier in the year and the retail slump that Covid has caused elsewhere in the world.

CBBC‘s Tom Simpson joined KOL Ji Jie for the UK Super Brand Day

Many brands used China’s latest e-commerce trend of fashion live-streaming to drive consumer awareness of their products as well as online sales. For example, Cartier attracted an audience of almost 800,000 people to the showcase of a £21.5 million necklace.

This year also saw the second UK Super Brand Day – an even initiated by the CBBC and endorsed by the British Consulate-General in Shanghai and the UK Department for International Trade.

The event on 30^th October, saw CBBC join up with Ji Jie – a well-known Golden Collar KOL and entertainer – to promote sales of products from British consumer brands including Downland, Morgan’s and Vitabiotics.

“It’s fascinating – this 11.11 is the largest 11.11 and the youngest 11.11 yet,” says Benji Lamb, Director of China Business Development for Vitabiotics.

“There’s a very strong millennial consumer base who are looking for new healthcare products, premium overseas healthcare products, to fulfil a vast array of needs. We’re excited that we can plug into that younger demographic who will focus on prevention at a younger age,” he adds.

Tom Simpson, China Managing Director of CBBC, joined Ji Jie centre stage from his live-stream studio to co-pilot the second UK Super Brand Day, which was viewed by over 2.6 million people. As well as introducing the British brands to the Chinese audience, Simpson presented a gift from Tateossian to Ji Jie, in a bid to showcase the craftsmanship and innovation of British brands.

Smart brands will begin preparing for next year’s festival as soon as possible.

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When it comes to China’s female consumers there is no singular female demographic, explains CBBC‘s retail and e-commerce business advisor Pearl Zhu. “Women’s spending habits differ based on a wide variety of factors – marital status, location, degree of financial independence, social media engagement, working schedule…” she explains. These different factors result in very different and very specific consumption trends. For example high-end kitchenware, seasonal wardrobes, fitness and wellness spending, and luxuries. Whilst many would assume that female spending power is concentrated in China’s major cities, Zhu encouraged brands not to ignore lower-tier cities, which actually drive demand for some product categories, such as beauty devices.

Zhu also offers broader insight into how brands can connect with female consumers, highlighting the importance of understanding who your audiences are and, crucially, figuring out what message you can deliver that speaks to their needs.  “Modern femininity in China is a combination of modern and traditional traits,” she says. Understanding how specific social issues and challenges impact women’s lives is of utmost importance. Whilst women in China share many concerns with their counterparts around the world – balancing family and career, independence and connection – different social pressures apply in different countries and, in a country the size of China, even in different towns and cities. Zhu encouraged brands to “bravely step into social and real-life issues and always stay on-trend.”

Zhu encouraged brands not to ignore lower-tier cities, which actually drive demand for some product categories

International brands should carefully narrow down their target audience. One way to achieve this, suggests Adam Knight, cofounder of TONG Digital, is through a brands platform strategy. Women in China are more digitally engaged than men, and niche platforms have evolved to cater to every consumer group. Noting the trend of female-focused digital platforms, Knight says that “every brand that wants to get its content strategy right needs to understand the affordances of different platforms in China.” One example of an international brand leveraging female-focused social media in China is Louis Vuitton’s first live-streaming event, which attracted more than 152,000 page views on RED.

Knight also says that other trends relating to China’s female consumers include self-empowerment and body positivity messaging in advertising, “although these messages remain relatively niche,” he adds. He goes on to explain that there is a clear trend in the rise of clean and ethical consumerism, with 30 percent of Chinese women having bought products making anti-pollution claims. On this point, Lexie Morris, the general manager of Whittard of Chelsea in China, observes that while the momentum of sustainable consumerism in the UK has been largely consumer-led, this switch appears to be being led by brands in China. “Both brands and consumers in China are showing a lot of interest in sourcing and ingredients,” says Morris.

Chinese brands have become dominant in several female-targeted industries in recent years. Perfect Diary, founded in 2016, is a prime example. Having mastered the art of sales through storytelling and seeded content, the Chinese beauty company was able to achieve RMB 100 million in sales in only 13 minutes during its Singles Day promotions last year. This success was partially achieved, Knight argues, through its hyper-personalised and localised marketing strategy which involves the cultivation of private groups on WeChat containing a few hundred potential consumers. These groups are led by automated virtual influencers who answer questions about the brand and its products, providing an intimate, personalised experience akin to getting recommendations from a friend.

Success was partially achieved through hyper-personalised and localised marketing strategy involving the cultivation of private groups on WeChat containing a few hundred potential consumers

As Chinese brands move towards such personalised marketing strategies, a one-size-fits-all approach from international brands will no longer cut it. Noticing Chinese companies’ skill in generating followers, and the dominance of domestic brands in China, some international brands have begun collaborating with Chinese companies on crossover campaigns which have been well-received by consumers. For example, Fenty Beauty collaborated with Hey Tea, a bubble tea brand, to market a limited-edition makeup bag accompanied by a voucher for tea, and MAC Cosmetics partnered with online game Honor of Kings to release a new line of lipsticks. Given the dominance of Chinese brands, a carefully selected collaboration can be incredibly important for an international company.

International brands have also started to make forays into the world of live-streaming, KOLs, and influencer marketing. This industry is a huge driver behind consumption in China, with the best KOLs – such as Austin Li – expected to shift 10-20,000 units of a product within 10 minutes, regardless of the price point. But this industry can seem confusing to UK brands. Cecilia Yan, a Key Opinion Leader, says that although the industry started with image- and text-heavy blog promotions, it is now driven by video. “Understanding the different kinds of influencers that are out there is key,” she says.  “There are different KOLs for different industries, and different influencers provide different content and skills.”

Given the dominance of Chinese brands, a carefully selected collaboration can be incredibly important for an international company

Yan highlighted the importance of having a specific campaign objective before approaching influencers, be it branding, sales, or engagement. “If you know your objective, then you can choose the right KOL in the right industry,” she says. Morris explains that for an international brand such as Whittard of Chelsea, it’s important to “separate our KOLs into live-streaming KOLs, branding KOLs, and sales KOLs…we’re then very clear on what we’re expecting them to deliver.”

KOLs are not amateur reviewers – some of the most popular influencers use their professional skills and experience as make-up artists, fitness coaches or journalists to offer trustworthy and informed recommendations to their followers. As Yan notes, a good KOL must embody both authority and inspiration.

Brands looking to appeal to China’s female consumers must be very intentional when designing their strategy, selecting their target group, and approaching KOLs. By targeting specific platforms, personalising advertising campaigns, bravely and sensitively approaching social issues, considering collaborations with Chinese companies, and strategically engaging expert KOLs, brands can position themselves to be as effective as possible in approaching one of the world’s most confident consumer groups.

Click here to watch more on this subject. 

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China is entering a new phase of retail, becoming more digitised and integrated, with a greater focus than ever on improving the shopping experience. Technologies such as digital price tags, mobile apps, speedy home delivery, scan & go, and facial recognition are being widely adopted – but what else is driving growth?

It is expected that China’s leading grocery retailers will grow at varying rates until 2023. E-commerce giants such as JD.com and Alibaba will see significant growth from both online and offline channels and become the country’s second and third largest grocery retailers respectively. Meanwhile, retailers with nationwide networks like Sun Art, Yonghui, Walmart, CRV and Carrefour will benefit from ongoing expansion, partnerships with e-commerce and tech companies, improved efficiencies and investment in smaller formats. Finally, regional players such as NGS and Wumart will continue their journey of transformation and consolidation.

Pursuing omni-channel retail

More and more retailers in China are pursuing what they talk about as a channel-less – or omni-channel – approach.

While multichannel as a concept has been around for some time and focuses on individual touchpoints (e.g. store, web, social media), the new omni-channel approach prioritises how all channels work together to provide a consistent, flexible and personalised customer experience. Many retailers have different terms for this omni-channel approach; for example, Alibaba refers to ‘new retail’ and JD.com to ‘boundaryless retail’.

RT-Mart, of which Alibaba is a 36 percent shareholder, has aisles designated for the most popular products available on Alibaba’s Tmall online platform, while Wumart and Dmall, a local startup, formed a partnership in 2015. Wumart’s inventory is synchronised to Dmall’s app, so that users receive updated product lists and personalised recommendations.

Suppliers should take inspiration from the concept stores that retailers are trialling and develop new products and services that address customer needs

Payment innovation

The low usage of credit cards, rapid smartphone adoption and the increasing maturity of ecommerce have resulted in the robust growth of mobile payment services in China.

The ubiquitous use of WeChat Pay and Alipay has made QR code scanning part of daily life. Almost all leading retailers have scan & go implemented in their stores.

However, very soon QR codes will be a thing of the past. Alibaba and Tencent have made huge investments in facial recognition since 2013. Carrefour, CR Vanguard, Yonghui, RT-Mart and physical stores of JD.com and Alibaba all have facial recognition payment systems installed.

Alibaba and Tencent have made huge investments in facial recognition since 2013.

Experimenting with new concepts

Different store formats are high on the agenda of China’s leading retailers, all rooted around the following three principles: adapting formats to suit local needs; generating unique in-store experiences; and making changes in-store to make shopping easier.

These retailers are not so much focused on key performance indicators such as sales per square metre, but instead are testing and learning for long-term gain.

CR Vanguard Suguo sells products that are related or often purchased in one shopping trip in several themed in-store areas. With a sales area of 600 sqm, Alibaba’s Hema fast&freshade is a convenience store and also a canteen. A high degree of self-service, a large seating area and seamless connection via the app are the store’s key features.

Adopting robot and smart carts

Technology is revolutionising grocery shopping, with an emphasis on convenience and speed. This is especially true in China, where the speed of adoption is faster than other parts of the world.

Retail robots and smart carts are starting to become the norm in many stores. They can deal with shopper queries, sell, reduce costs and greatly improve efficiency. Although it is still early days, automation will change how retailers operate and how shoppers purchase goods.

Carrefour Le Marché and Carrefour’s latest store in Beijing have robots that roam around the store, carrying promotional items and playing a soft tune to draw shoppers’ attention, while Wumart’s smart shopping carts let shoppers scan barcodes as they shop and pay for what they have picked up before leaving the store.

Carrefour Le Marché and Carrefour’s latest store in Beijing have robots that roam around the store, carrying promotional items

Making home delivery a core proposition

Home delivery is the backbone of retail growth in China. Walmart China has made it clear that it plays a very important role in its growth strategy and made further investment in delivery company Dada-JD Daojia in 2018.

All the major grocery retailers, both Chinese and global, offer express home delivery services, of which speed is the key differentiator. Customers of Yonghui Super Species can make online orders using the Yonghui app and have the goods delivered within 30 minutes. Meanwhile, Sam’s Club (Walmart) delivers more than 1,000 fresh produce items to shoppers’ homes within a one-hour timeframe, reinforcing the image of product freshness and quality.

What does this all mean for suppliers?

New technologies and new ideas are rapidly being adopted by China’s top grocery retailers, so brands need to think how to reach, connect and serve consumers in a completely new way.

Suppliers should take inspiration from the concept stores that retailers are trialling and develop new products and services that address customer needs. Alibaba and JD.com are also rapidly growing in importance. Deeper understanding of their strategies and shoppers will help suppliers create stronger, more targeted approaches.

Development of retail innovation in China is faster than other parts of the world. It is important to keep aware of what is happening, as these innovations have the potential to be hugely disruptive.

Jiong-Jiong provides insight on retailer strategies and industry trends as well as leading IGD’s innovation and drugstore workstreams in Asia. She has worked with both retailers and manufacturers in the last 10 years on shopper insight, growth strategy and category management projects. Her background is in management consulting, with experience in qualitative and quantitative research gained at GfK and dunnhumby.

Find more insights at IGD Asia: https://asia.igd.com/about/free-content

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